RISK FACTORS

The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained in this proxy statement/prospectus/information statement, you should carefully consider the material risks described below before deciding how to vote your shares of stock. In addition, you should read and consider the risks associated with the business of Opexa because these risks may also affect the combined company—these risks can be found in Opexa’s Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC. You should also read and consider the other information in this proxy statement/prospectus/information statement. Please see the section titled “Where You Can Find More Information” in this proxy statement/prospectus/information statement.

Risks Related to the Merger

The Exchange Ratio is not adjustable based on the market price of Opexa common stock so the Merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.

It is currently anticipated that, at the closing of the Merger, the Exchange Ratio will be approximately 10.4 pre-split shares of Opexa common stock for each share of Acer common stock and is expected to be approximately one post-split share of Opexa common stock for each share of Acer common stock after giving effect to the proposed reverse stock split described in Opexa Proposal No. 5, beginning on page 160 in this proxy statement/prospectus/information statement. These estimates are subject to adjustment prior to closing of the Merger, including (i) adjustments to account for the issuance of any additional shares of Acer or Opexa common stock, as applicable, prior to the consummation of the Merger, (ii) an upward adjustment to the extent that Opexa’s net cash at the effective time of the Merger is less than negative $500,000 (and as a result, Opexa securityholders could own less, and Acer securityholders could own more, of the combined company), or (iii) a downward adjustment to the extent that Opexa’s net cash at the effective time of the Merger is greater than negative $500,000 (and as a result, Opexa securityholders could own more, and Acer securityholders could own less, of the combined company). Any changes in the market price of Opexa common stock before the completion of the Merger will not affect the number of shares Acer securityholders will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger the market price of Opexa common stock declines from the market price on the date of the Merger Agreement, then Acer securityholders could receive Merger consideration with substantially lower value. Similarly, if before the completion of the Merger the market price of Opexa common stock increases from the market price on the date of the Merger Agreement, then Acer securityholders could receive Merger consideration with substantially more value for their shares of Acer capital stock than the parties had negotiated for in the establishment of the Exchange Ratio. The Merger Agreement does not include a price-based termination right. However, Acer’s obligation to consummate the Merger is conditioned upon Opexa having “Net Cash” that is greater than or equal to negative $1,250,000, as defined and described under “ The Merger Agreement—Conditions to the Completion of the Merger .” Because the Exchange Ratio does not adjust as a result of changes in the value of Opexa common stock, for each one percentage point that the market value of Opexa common stock rises or declines, there is a corresponding one percentage point rise or decline, respectively, in the value of the total Merger consideration issued to Acer securityholders.

Failure to complete the Merger may result in Opexa or Acer paying a termination fee to the other party and could harm the common stock price of Opexa and future business and operations of each company.

If the Merger is not completed, Opexa and Acer are subject to the following risks:

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In addition, if the Merger Agreement is terminated and the board of directors of Opexa or Acer determines to seek another business combination, there can be no assurance that either Opexa or Acer will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger.

If the conditions to the Merger are not met, the Merger may not occur.

Even if the Merger is approved by the shareholders of Acer and change of control and related share issuance are approved by the shareholders of Opexa, specified conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described in the section titled “ The Merger Agreement—Conditions to the Completion of the Merger ” in this proxy statement/prospectus/information statement. Opexa and Acer cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or will be delayed, and Opexa and Acer each may lose some or all of the intended benefits of the Merger.

The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and other causes.

In general, either Opexa or Acer can refuse to complete the Merger if there is a material adverse change affecting the other party between June 30, 2017, the date of the Merger Agreement, and the closing of the Merger. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on Opexa or Acer, including:

If adverse changes occur and Opexa and Acer still complete the Merger, the stock price of the combined company may suffer. This in turn may reduce the value of the Merger to the shareholders of Opexa, Acer or both.

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Some Opexa and Acer executive officers and directors have interests in the Merger that are different from yours and that may influence them to support or approve the Merger without regard to your interests.

Some officers and directors of Opexa and Acer participate in arrangements that provide them with interests in the Merger that are different from yours, including, among others, the continued service as an officer or director of the combined company, severance and retention benefits, the acceleration of stock option vesting, continued indemnification and the potential ability to sell an increased number of shares of common stock of the combined company in accordance with Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. For more information regarding the interests of the Opexa and Acer executive officers and directors in the Merger, see the sections titled “ The Merger—Interests of the Opexa Directors and Executive Officers in the Merger ” and “ The Merger—Interests of Acer Directors and Executive Officers in the Merger ” of this proxy statement/prospectus/information statement.

The market price of Opexa common stock following the Merger may decline as a result of the Merger.

The market price of Opexa common stock may decline as a result of the Merger for a number of reasons, including if:

Acer and Opexa securityholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company as compared to their current ownership and voting interest in the respective companies following the completion of the Merger.

After the completion of the Merger, the current shareholders of Acer and Opexa will own a smaller percentage of the combined company than their ownership of their respective companies prior to the Merger. Immediately after the Merger, Acer securityholders will own approximately 88.8% of the common stock of Opexa, with Opexa securityholders, whose shares of Opexa common stock will remain outstanding after the Merger, owning approximately 11.2% of the common stock of the combined company, each assuming that Acer closes its concurrent financing immediately prior to the effective time of the Merger. If the concurrent financing does not close and the Merger is consummated, then Acer securityholders would own approximately 85.1% of the common stock of the combined company and Opexa’s securityholders would own approximately 14.9% of the common stock of the combined company. These estimates are based on the anticipated pre-split Exchange Ratio and post-split Exchange Ratios and are subject to adjustment. In addition, the seven-member board of directors of the combined company will initially consist of Chris Schelling, Stephen J. Aselage, Hubert Birner, Michelle Griffin, John M. Dunn, Luc Marengere and one additional independent director to be identified by Acer. Consequently, securityholders of Acer and Opexa will be able to exercise less influence over the management and policies of the combined company than they currently exercise over the management and policies of their respective companies.

During the pendency of the Merger, Opexa and Acer may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger Agreement, which could adversely affect their respective businesses.

Covenants in the Merger Agreement impede the ability of Opexa and Acer to make acquisitions, subject to specified exceptions relating to fiduciary duties or complete other transactions that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a

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disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging or entering into specified extraordinary transactions, such as a merger, sale of assets or other business combination, with any third party, subject to specified exceptions. Any such transactions could be favorable to such party’s shareholders.

Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.

The terms of the Merger Agreement prohibit each of Opexa and Acer from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when such party’s board of directors determines in good faith, after consultation with its independent financial advisor, if any, and outside counsel, that an unsolicited competing proposal constitutes, or would reasonably be expected to result in, a superior competing proposal and that failure to take such action would be reasonably likely to result in a breach of the fiduciary duties of the board of directors. In addition, if Opexa or Acer terminate the Merger Agreement under specified circumstances, including terminating because of a decision of a board of directors to recommend a superior competing proposal, Acer may be required to pay Opexa a termination fee of $1,000,000 and/or up to $200,000 in expense reimbursements, or Opexa may be required to pay Acer a termination fee of $250,000 and/or up to $200,000 in expense reimbursements, as defined and described under “ The Merger Agreement—Termination of the Merger Agreement and Termination Fee. ” This termination fee may discourage third parties from submitting competing proposals to Opexa or Acer or their shareholders, and may cause the respective boards of directors to be less inclined to recommend a competing proposal.

Because the lack of a public market for Acer’s capital stock makes it difficult to evaluate the fairness of the Merger, the shareholders of Acer may receive consideration in the Merger that is less than the fair market value of Acer’s capital stock and/or Opexa may pay more than the fair market value of Acer’s capital stock.

The outstanding capital stock of Acer is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Acer’s capital stock. Because the percentage of Opexa equity to be issued to Acer shareholders was determined based on negotiations between the parties, it is possible that the value of the Opexa common stock to be received by Acer shareholders will be less than the fair market value of Acer’s capital stock, or Opexa may pay more than the aggregate fair market value for Acer’s capital stock.

Risks Related to Opexa

Risks Related to Opexa’s Business

Opexa’s business to date has been almost entirely dependent on the development of Tcelna for multiple sclerosis. In the fourth quarter of 2016, Opexa announced that its Phase IIb clinical study, known as the Abili-T study, failed to reach its primary efficacy endpoint. Opexa has communicated that it will no longer continue the development of Tcelna and is evaluating the viability of its preclinical program for OPX-212 in NMO and the related T-cell platform. It is possible that Opexa may ultimately decide not to pursue any further drug development. Although Opexa has decreased its cash burn substantially, Opexa’s cash needs over the next few months may be unpredictable.

On October 28, 2016, Opexa announced that the Phase IIb Abili-T clinical trial designed to evaluate the efficacy and safety of Tcelna (imilecleucel-T) in patients with SPMS did not meet its primary endpoint of reduction in brain volume change, or atrophy, nor did it meet the secondary endpoint of reduction of the rate of sustained disease progression. Opexa had previously devoted substantially all of its research, development, clinical efforts and financial resources toward the development of Tcelna. Opexa implemented a reduction in workforce of 40% of its then 20 full-time employees, announced on November 2, 2016, while it reevaluated its programs and various strategic alternatives in light of the disappointing Abili-T study data. On December 14, 2016, a further

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workforce reduction was implemented to conserve cash, reducing the number of full-time employees by an additional 25% of the then 12 employees. In January 2017, an additional workforce reduction of seven full-time employees was implemented to conserve cash. As of June 30, 2017, Opexa had two full-time employees. After further analysis of the data from the Abili-T trial, Opexa has determined that it will not move forward with further development of Tcelna. Opexa is conducting a review of its preclinical program for OPX-212 in NMO and the related T-cell platform, to assess the viability of continuing to pursue this program. Opexa cannot fully predict whether or to what extent it will resume drug development activities, and Opexa cannot predict its future cash needs for any such activities.

If Opexa decides to continue one or more of its development programs, it will be required to raise additional capital. Given the disappointing results from the Abili-T clinical study, raising additional capital may be challenging. If sufficient capital is not available, Opexa may not be able to continue its operations, which may require it to suspend or terminate any ongoing development activities, modify its business plan, curtail various aspects of its operations, cease operations or seek relief under applicable bankruptcy laws.

As of June 30, 2017, Opexa had cash and cash equivalents of $1.8 million as well as accounts payable, short-term notes payable and accrued expenses aggregating $368,547. Opexa’s operating cash burn rate during the three months ended June 30, 2017 was approximately $310,944 per month, consisting mainly of general and administrative expenses.

Opexa believes that it has sufficient liquidity to support its current activities in winding down the Abili-T trial and for general operations to sustain the Company and support such activities into September 2017. However, if Opexa’s projections prove to be inaccurate, or if it encounters additional costs to wind down the trial or to sustain its operations, or if Opexa incurs other costs such as those associated with pursuing further research and development, it would need to raise additional capital to continue its operations.

If Opexa decides to continue research and development in one or more of its programs, Opexa would expect to incur significant expenses and increasing losses for the next several years. In this situation, Opexa would need to raise additional capital. Given the disappointing results of the Abili-T trial, Opexa believes its ability to issue equity securities or obtain debt financing in the future on favorable terms, or at all, has been substantially impaired, particularly if the intended use of proceeds would be for the continued development of Tcelna.

As Opexa pursues the proposed Merger with Acer, it will continue to explore potential opportunities and alternatives to preserve options should the Merger not be consummated. Additional options may include raising additional capital through either private or public equity or debt financing as well as using its ATM facility and cutting expenses where possible. If Opexa is unable to obtain additional funding to support its current activities and operations, or is not successful in attracting a development partner, it may not be able to continue its operations as proposed, which may require it to suspend or terminate any development activities, modify its business plan, curtail various aspects of its operations, cease operations or seek relief under applicable bankruptcy laws. In such event, Opexa shareholders may lose a substantial portion or even all of their investment.

Opexa does not maintain any external lines of credit or have any sources of debt or equity capital committed for funding, other than its ATM facility. Should Opexa need any additional capital in the future beyond these sources, management will be reliant upon “best efforts” debt or equity financings. Opexa can provide no assurance that it will be successful in any funding effort. The timing and degree of any future capital requirements will depend on many factors, including:

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If Opexa raises additional funds by issuing equity securities, shareholders may experience substantial dilution. Debt financing, if available, may involve restrictive covenants that may impede Opexa’s ability to operate its business. Any debt financing or additional equity that Opexa raises may contain terms that are not favorable to it or its shareholders. There is no assurance that Opexa’s capital raising efforts will be able to attract the capital needed to execute on its business plan and sustain its operations.

There is substantial doubt as to Opexa’s ability to continue as a going concern, which may make it more difficult for it to raise capital.

The report of Opexa’s independent auditors in respect of the 2016 fiscal year expressed substantial doubt about Opexa’s ability to continue as a going concern. Specifically, it noted Opexa’s recurring losses, negative operating cash flows and accumulated deficit. Opexa’s consolidated financial statements as of March 31, 2017 and for the three-month period then ended were prepared assuming that it will continue as a going concern, meaning that it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. While Opexa has historically recognized revenue related to the $5 million and $3 million payments from Merck Serono received in February 2013 and March 2015 in connection with the Option and License Agreement and the Amendment over the exclusive option period based on the expected completion term of the Abili-T clinical trial, Opexa has never generated any commercial revenues, nor does it expect to generate any commercial revenues for the foreseeable future or other revenues in the near term that will result in cash receipts. As of June 30, 2017, Opexa had cash and cash equivalents of $1.8 million as well as accounts payable, short-term notes payable and accrued expenses aggregating $368,547.

On October 28, 2016, Opexa announced that the Abili-T trial did not meet its primary or secondary endpoints, and, in order to conserve cash resources while it reevaluated its programs and explored various strategic alternatives, during the fourth quarter of 2016 and the first quarter of 2017 Opexa implemented several reductions in workforce totaling 90% of its then 20 full-time employees. As of June 30, 2017, Opexa had two full time employees. After further analysis of the data from the Abili-T trial, Opexa has determined that it will not move forward with further studies of Tcelna, and it is conducting a review of its preclinical program for OPX-212 in NMO and the related T-cell platform to assess the viability of continuing to pursue this program. Opexa believes that it has sufficient liquidity to support its current activities in winding down the Abili-T trial and for general operations to sustain the company and support such activities into September 2017.

As Opexa pursues the proposed Merger with Acer, it will continue to explore potential opportunities and alternatives to preserve options should the Merger not be consummated. Additional options may include raising additional capital through either private or public equity or debt financing as well as using its ATM facility and cutting expenses where possible. In the absence of significant additional funding to support Opexa’s operations, there is substantial doubt about its ability to continue as a going concern. Opexa’s financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Additionally, in light of the disappointing Abili-T study results, there can be no assurance that Opexa will be able to secure additional funds, or if such funds are available, that the terms or conditions would be acceptable. If Opexa is unable to obtain additional funding to support its current activities and operations, it may not be able to continue its operations as proposed, which may require it to suspend or terminate any development activities, modify its business plan, curtail various aspects of its operations, cease operations or seek relief under applicable bankruptcy laws. In such event, Opexa shareholders may lose a substantial portion or even all of their investment.

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Opexa has a history of operating losses and does not expect to be profitable in the foreseeable future.

Opexa has not generated any profits since its entry into the biotechnology business and it has incurred significant operating losses. Opexa expects to incur additional operating losses for the foreseeable future. Opexa has not received, and it does not expect to receive for at least the next several years, any revenues from the commercialization of any potential products. Opexa does not currently have any sources of revenues and may not have any in the foreseeable future.

The employment agreement with Opexa’s President and Chief Executive Officer may require it to pay severance benefits if he is terminated under specified circumstances, including in connection with a change of control of Opexa, which could harm its financial condition or results.

The employment agreement with Opexa’s President and Chief Executive Officer contains change of control and severance provisions providing for the payment of severance and other benefits, including accelerated vesting of stock options, in the event of a termination of employment under specified circumstances, including in connection with a change of control of Opexa. The accelerated vesting of options could result in dilution to Opexa’s existing shareholders and harm the market price of Opexa’s common stock. The payment of severance benefits could harm Opexa’s financial condition and results of operation. In addition, these potential severance payments and benefits may discourage or prevent third parties from seeking a business combination with Opexa.

Opexa’s business is at an early stage of development. To date, Opexa has devoted substantially all of its resources to research and development efforts relating to Tcelna.

Opexa’s business is at an early stage of development. Opexa does not have any products on the market. Opexa has discontinued further development of its only clinical candidate, Tcelna, and is evaluating whether to continue development of its preclinical candidate, OPX-212 in NMO, and the related T-cell platform. If Opexa decides to continue the development of its preclinical program, it will need to commence and complete additional clinical trials, manage clinical and manufacturing activities, and obtain necessary regulatory approvals from the FDA in the United States and from foreign regulatory authorities in other jurisdictions. Any of Opexa’s potential products will require regulatory approval prior to marketing in the United States and other countries. Obtaining such approval requires significant research and development and preclinical and clinical testing. Opexa may not be able to develop any products, obtain regulatory approvals, enter clinical trials (or any development activities) for any product candidates, or commercialize any products. Any of Opexa’s potential products may prove to have undesirable or unintended side effects or other characteristics adversely affecting their safety, efficacy or cost-effectiveness that could prevent or limit their use. Any product using any of Opexa’s technology may fail to provide the intended therapeutic benefits or to achieve therapeutic benefits equal to or better than the standard of treatment at the time of testing or production.

The Abili-T trial results cast doubt about the probative value of the results in earlier clinical trials of Tcelna.

Trial designs and results from previous trials are not necessarily predictive of future clinical trial designs or results. For example, although the results of prior clinical trials of Tcelna for the treatment of MS included evidence of efficacy, the Abili-T trial for the treatment of patients with SPMS failed to meet either its primary or secondary endpoints.

There is a high failure rate for drug candidates proceeding through clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, regulatory delays or rejections may be encountered as a result of many factors, including changes in regulatory policy during the period of product development.

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Opexa will need regulatory approvals for any product candidate prior to introduction to the market, which will require successful testing in clinical trials. Clinical trials are subject to extensive regulatory requirements, and are very expensive, time-consuming and difficult to design and implement. Any product candidate may fail to achieve necessary safety and efficacy endpoints during clinical trials in which case Opexa will be unable to generate revenue from the commercialization and sale of its products.

Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous FDA requirements, and must otherwise comply with federal, state and local requirements and policies of the medical institutions where they are conducted. The clinical trial process is also time-consuming. Failure can occur at any stage of the trials, and problems could be encountered that would cause Opexa to be unable to initiate a trial, or to abandon or repeat a clinical trial.

The commencement and completion of clinical trials may be delayed or prevented by several factors, including:

In addition, Opexa or the FDA (based on its authority over clinical studies) may delay a proposed investigation or suspend clinical trials in progress at any time if it appears that the study may pose significant risks to the study participants or other serious deficiencies are identified. Prior to approval of any product candidate, the FDA must determine that the data demonstrate safety and effectiveness. The large majority of drug candidates that begin human clinical trials fail to demonstrate the desired safety and efficacy characteristics.

Furthermore, changes in regulatory requirements and guidance may occur and Opexa may need to amend clinical trial protocols, or otherwise modify its intended course of clinical development, to reflect these changes. This, too, may impact the costs, timing or successful completion of a clinical trial. In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities, members of Congress, the U.S. Government Accountability Office, medical professionals and the general public have raised concerns about potential drug safety issues. These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products, and establishment of risk management programs that may, for instance, restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials. Data from clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion or require longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than originally sought.

Even if regulatory approval is obtained for any product candidate, any such approval may be subject to limitations on the indicated uses for which it may be marketed. Opexa’s ability to generate revenues from the commercialization and sale of any potential products, whether directly or through any development arrangement, will be limited by any failure to obtain or limitation on necessary regulatory approvals.

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As a result of the disappointing data from the Abili-T trial and the reductions in Opexa’s workforce during 2016 and early 2017, Opexa’s workforce has been reduced substantially. If Opexa is unable to retain its remaining employees, or rebuild its workforce if it decides to continue one or more of its development programs, Opexa’s business will be seriously jeopardized. It will be difficult to grow or operate Opexa’s business with the current limited number of employees.

On November 2, 2016, Opexa announced a reduction of 40% of its then full-time workforce of 20 employees as a result of the disappointing data from the Abili-T study. Opexa’s Chief Development Officer resigned in November 2016 after announcement of the Abili-T trial results. On December 14, 2016, a further workforce reduction was implemented to conserve cash, reducing the number of full-time employees by an additional 25% of the then 12 employees. During January 2017, an additional workforce reduction of seven full-time employees was implemented to conserve cash, and the employment of Opexa’s Chief Scientific Officer was terminated as part of the reduction. As of June 30, 2017, Opexa had two full-time employees. Opexa has only one officer remaining, who serves as the President, Chief Executive Officer and Acting Chief Financial Officer.

Opexa’s recent exploration of strategic alternatives and cash conservation activities may yield unintended consequences, such as attrition beyond Opexa’s planned reductions in workforce and reduced employee morale which may cause Opexa’s remaining employees to seek alternate employment. In such event, Opexa may be unable on a timely basis to hire suitable replacements to operate its business effectively. The loss of the services of any of Opexa’s employees could have a material adverse effect on its business and results of operations. Opexa’s restructuring initiatives have caused disruption in its business operations, and it may not be able to effectively realize the savings anticipated by any restructuring initiative and reductions-in-force. Additionally, there may be future changes in Opexa’s workforce, including as a result of changes that may occur in its operations or operating plan, or other reasons or events. There may also be possible changes in the amount of charges and cash payments associated with any workforce reduction, including the possibility that Opexa may incur unanticipated charges or make cash payments that are not contemplated.

Additionally, if Opexa ultimately decides to pursue one or more of its development programs, it will need to rebuild its workforce and management team. Opexa may be unable on a timely basis to hire and train suitable new employees to continue to operate its business and further any such development programs. It will be difficult to grow or operate Opexa’s business with the current small number of employees it has.

Funding from Opexa’s ATM facility may be limited or be insufficient to fund its operations or to implement its strategy.

Opexa will need to keep current its shelf registration statement and the offering prospectus relating to the ATM facility with Brinson Patrick (now a division of IFS Securities, Inc.) in order to use the program to sell shares of Opexa’s common stock. The number of shares and price at which Opexa may be able to sell shares under its ATM facility may be limited due to market conditions and other factors beyond its control.

Opexa may make changes to discretionary R&D investments that may have an impact on costs.

Opexa conducted an immune monitoring program on blood samples collected over time to detect Tcelna-induced immune modulation. While certain data has been analyzed to date, a correlation analysis of immune monitoring T-cell phenotypes to MRTC bio-activity has not been conducted. Expenses associated with the immune monitoring program are incurred at Opexa’s discretion and are not required to satisfy any FDA-mandated criteria. Consequently, Opexa may make changes to the parameters that are being analyzed, or it may elect not to proceed with certain analyses, and these changes may result in either increased or decreased expenses for any such study.

Opexa may also incur discretionary expenses related to preclinical, Phase I, Phase II and/or Phase III development programs, manufacturing scale-up/automation and technology transfer, research on additional indications and business development activities. There is no assurance that any such future expenses would be recovered by Opexa.

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Opexa would need to rely on third parties to conduct its clinical trials and perform data collection and analysis, which may result in costs and delays that may hamper its ability to successfully develop and commercialize any product candidate.

Although Opexa has participated in the design and management of its past clinical trials, Opexa does not have the ability to conduct clinical trials directly for any product candidate. Opexa would need to rely on contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct any clinical trials and to perform data collection and analysis.

Any clinical trials Opexa may conduct could be delayed, suspended or terminated if:

Failure to perform by any third party upon whom Opexa relies may increase the development costs, delay the ability to obtain regulatory approval and prevent the commercialization of any product candidate. While Opexa believes that there are numerous alternative sources to provide these services, it might not be able to enter into replacement arrangements without delays or additional expenditures if Opexa were to seek such alternative sources.

If Opexa fails to identify and license or acquire other product candidates, it will not be able to expand its business over the long term.

Opexa has focused on MS as the first disease to be pursued off its T-cell platform technology, and in 2014, Opexa initiated development activities for OPX-212, its drug candidate for NMO, as the second disease it is pursuing. As a platform technology, there exists the potential to address other autoimmune diseases with the technology. While preclinical development and manufacturing activities have been conducted for OPX-212 in NMO, such work is modest compared to the effort that has been committed to Tcelna for the lead MS indication. However, inasmuch as the Abili-T study of Tcelna in SPMS did not meet either its primary or secondary endpoints, Opexa has determined that it will not move forward with further studies of Tcelna and is assessing whether to continue its other development activities. Opexa’s business over the long term is substantially dependent on its ability to develop, license or acquire product candidates and further develop them for commercialization. The success of this strategy depends upon Opexa’s ability to expand its existing platform or identify, select and acquire the right product candidates. Opexa has limited experience identifying, negotiating and implementing economically viable product candidate acquisitions or licenses, which is a lengthy and complex process. Also, the market for licensing and acquiring product candidates is intensely competitive, and many of Opexa’s competitors have greater resources than Opexa does. Opexa may not have the requisite capital resources to consummate product candidate acquisitions or licenses that it identifies to fulfill its strategy.

Moreover, any product candidate acquisition that Opexa does complete will involve numerous risks, including:

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If Opexa fails to meet its obligations under any license agreements, Opexa may lose its rights to key technologies on which Opexa’s business depends.

Opexa’s business depends on licenses from third parties. These third-party license agreements impose obligations on Opexa, such as payment obligations and obligations diligently to pursue development of commercial products under the licensed patents. If applicable, Opexa may also need to seek additional licenses to move into Phase III trials or the commercial stage of operations. These licenses may require increased payments to the licensors. If a licensor believes that Opexa has failed to meet its obligations under a license agreement, the licensor could seek to limit or terminate Opexa’s license rights, which could lead to costly and time-consuming litigation and, potentially, a loss of the licensed rights. During the period of any such litigation, Opexa’s ability to carry out the development and commercialization of potential products could be significantly and negatively affected. If Opexa’s license rights were restricted or ultimately lost, Opexa’s ability to continue its business based on the affected technology platform could be adversely affected.

Opexa no longer leases a research and manufacturing facility in which to conduct development or manufacture product candidates for its programs or clinical trial activities or, if any such clinical trials were to be successful, commercial applications.

Through January 2017, Opexa conducted its research and development in a 10,200 square foot facility in The Woodlands, Texas, which included an approximately 1,200 square foot suite of three rooms for the manufacture of T-cell therapies. On February 1, 2017, Opexa assigned the facility lease to a third party, who assumed from Opexa all of Opexa’s remaining rights and obligations under the lease. In connection with the lease assignment, Opexa also sold certain furniture, fixtures and equipment (including laboratory and manufacturing equipment) as well as Opexa’s laboratory supplies located at its corporate headquarters to the third party for cash consideration. In light of the continuing evaluation of Opexa’s strategic alternatives following the release of data from the Abili-T clinical study, Opexa deemed it advisable to reduce its office, R&D and manufacturing space and corresponding rent obligations. As a result, Opexa is currently using temporary office space in the same facility but no longer has the capacity for any research and development or for any manufacturing operations. If Opexa decides to continue to pursue development of any of its product candidates, Opexa would need to locate and obtain a new facility, arrange for R&D and manufacturing staff, contract with corporate collaborators or other third parties to assist with future drug production and commercialization, or defer to a collaborative partner or third party to address these needs.

In the event that Opexa decides to again establish a R&D or manufacturing facility, it would require substantial additional funds and would be required to hire and train significant numbers of employees and comply with applicable regulations, which are extensive. Opexa does not have funds available for building an R&D or manufacturing facility, and Opexa may not be able to build a facility that both meets regulatory requirements and is sufficient for its needs.

Opexa may arrange with third parties for the manufacture of its future products, if any. However, Opexa’s third-party sourcing strategy may not result in a cost-effective means for manufacturing its future products. If Opexa employs third-party manufacturers, it will not control many aspects of the manufacturing process, including compliance by these third parties with cGMP and other regulatory requirements. Opexa further may not be able to obtain adequate supplies from third-party manufacturers in a timely fashion for development or commercialization purposes, and commercial quantities of products may not be available from contract manufacturers at acceptable costs.

Problems with Opexa’s manufacturing process or with a manufacturing facility (whether Opexa’s or a third party’s) could result in the failure to produce, or a delay in producing, adequate supplies of any of Opexa’s

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product candidates. A number of factors could cause interruptions or delays, including equipment malfunctions or failures, destruction or damage to a manufacturing facility due to natural disasters or otherwise, contamination of materials, changes in regulatory requirements or standards that require modifications to Opexa’s manufacturing process, action by a regulatory agency or by a manufacturer (whether Opexa or a third party) that results in the halting or slowdown of production due to regulatory issues, any third-party manufacturer going out of business or failing to produce as contractually required, or other similar factors.

Difficulties, delays or interruptions in the manufacture and supply of any of Opexa’s product candidates could require it to stop treating patients in its clinical development of such product candidate and/or require a halt to or suspension of, or otherwise adversely affect, a clinical trial, thus increasing Opexa’s costs and damaging its reputation. If a product candidate is approved, difficulties, delays or interruptions in the manufacture and supply of such product candidate could cause a delay in or even halt or suspend the commercialization of such product candidate, potentially causing a partial or complete loss of revenue or market share.

Tcelna was manufactured using Opexa’s proprietary ImmPath ^® technology for the production of an autologous T-cell immunotherapy utilizing a patient’s own blood. Opexa’s manufacturing process may raise development issues that may not be resolvable, regulatory issues that could delay or prevent approval, or personnel issues that may prevent the further development or commercialization, if approved, of any product candidate.

Tcelna was based on Opexa’s novel T-cell immunotherapy platform, ImmPath, which produces an autologous T-cell immunotherapy utilizing a patient’s own blood. OPX-212 may be similarly produced. The manufacture of living T-cell products requires specialized facilities, equipment and personnel which are different than the resources required for manufacturing chemical or biologic compounds. Scaling-out the manufacture of living cell products to meet demands for commercialization will require substantial amounts of such specialized facilities, equipment and personnel, especially where the products are personalized and must be made for each patient individually. Because Opexa’s manufacturing processes are complex, require facilities and personnel that are not widely available in the industry, involve equipment and training with long lead times, and the establishment of new manufacturing facilities is subject to a potentially lengthy regulatory approval process, alternative qualified production capacity may not be available on a timely basis or on reasonably terms, if at all. In addition, not many consultants or advisors in the industry have relevant experience and can provide guidance or assistance because active immune therapies are fundamentally a new category of product in two major ways: (i) the product consists of living T-cells, not chemical or biologic compounds; and (ii) the product is personalized. There can be no assurance that manufacturing problems will not arise in the future which Opexa may not be able to resolve or which may cause significant delays in development or, if any product candidate is approved, commercialization.

Regulatory approval of product candidates that are manufactured using novel manufacturing processes such as Opexa’s can be more expensive and take longer than other, more well-known or extensively studied pharmaceutical or biopharmaceutical products, due to a lack of experience with them. FDA approval of personalized immunotherapy products has been limited to date. This lack of experience and precedent may lengthen the regulatory review process, require that additional studies or clinical trials be conducted, increase development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization, or lead to significant post-approval limitations or restrictions.

In addition, the novel nature of product candidates also means that fewer people are trained in or experienced with product candidates of this type, which may make it difficult to find, hire and retain capable personnel for research, development and manufacturing positions.

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If any product Opexa may eventually have is not accepted by the market or if users of any such product are unable to obtain adequate coverage of and reimbursement for such product from government and other third-party payors, Opexa’s revenues and profitability will suffer.

Opexa’s ability to successfully commercialize any product it may eventually have, to the extent applicable, and/or its ability to receive any revenue will depend in significant part on the extent to which appropriate coverage of and reimbursement for such product and any related treatments are obtained from governmental authorities, private health insurers and other organizations, such as health maintenance organizations, or HMOs. Third-party payors are increasingly challenging the prices charged for medical products and services. Opexa cannot provide any assurances that third-party payors will consider any product cost-effective or provide coverage of and reimbursement for such product, in whole or in part.

Uncertainty exists as to the coverage and reimbursement status of newly approved medical products and services and newly approved indications for existing products. Third-party payors may conclude that any product is less safe, less clinically effective, or less cost-effective than existing products, and third-party payors may not approve such product for coverage and reimbursement. If adequate coverage of and reimbursement for any product from third-party payors cannot be obtained, physicians may limit how much or under what circumstances they will prescribe or administer them. Such reduction or limitation in the use of any such product would cause sales to suffer. Even if third-party payors make reimbursement available, payment levels may not be sufficient to make the sale of any such product profitable.

In addition, the trend towards managed health care in the United States and the concurrent growth of organizations such as HMOs, which could control or significantly influence the purchase of medical services and products, may result in inadequate coverage of and reimbursement for any product Opexa may eventually have. Many third-party payors, including in particular HMOs, are pursuing various ways to reduce pharmaceutical costs, including, for instance, the use of formularies. The market for any product depends on access to such formularies, which are lists of medications for which third-party payors provide reimbursement. These formularies are increasingly restricted, and pharmaceutical companies face significant competition in their efforts to place their products on formularies of HMOs and other third-party payors. This increased competition has led to a downward pricing pressure in the industry. The cost containment measures that third-party payors are instituting could have a material adverse effect on Opexa’s ability to operate profitably.

Any product candidate, if approved for sale, may not gain acceptance among physicians, patients and the medical community, thereby limiting Opexa’s potential to generate revenues.

Even if a product candidate is approved for commercial sale by the FDA or other regulatory authorities, the degree of market acceptance of any approved product candidate by physicians, healthcare professionals and third-party payors, and Opexa’s profitability and growth, will depend on a number of factors, including:

If any product candidate does not provide a treatment regimen that is as beneficial as the current standard of care or otherwise does not provide patient benefit, that product candidate, if approved for commercial sale by the FDA

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or other regulatory authorities, likely will not achieve market acceptance and Opexa’s ability to generate revenues from that product candidate would be substantially reduced.

Opexa has incurred, and expects to continue to incur, increased costs and risks as a result of being a public company.

As a public company, Opexa is required to comply with the Sarbanes-Oxley Act of 2002, or SOX, as well as rules and regulations implemented by the SEC and The NASDAQ Stock Market, or NASDAQ. Changes in the laws and regulations affecting public companies, including the provisions of SOX and rules adopted by the SEC and by NASDAQ, have resulted in, and will continue to result in, increased costs as Opexa responds to their requirements. Given the risks inherent in the design and operation of internal controls over financial reporting, the effectiveness of Opexa’s internal controls over financial reporting is uncertain. If Opexa’s internal controls are not designed or operating effectively, it may not be able to conclude an evaluation of its internal control over financial reporting as required or Opexa or its independent registered public accounting firm may determine that Opexa’s internal control over financial reporting was not effective. Opexa currently has a very limited workforce, and it may be difficult to adhere to appropriate internal controls over financial reporting or disclosure controls with such limited staffing. In addition, Opexa’s registered public accounting firm may either disclaim an opinion as it relates to management’s assessment of the effectiveness of its internal controls or may issue an adverse opinion on the effectiveness of Opexa’s internal controls over financial reporting, especially in light of the fact that Opexa currently has a very limited workforce. Investors may lose confidence in the reliability of Opexa’s financial statements, which could cause the market price of Opexa’s common stock to decline and which could affect its ability to run its business as it otherwise would like to. New rules could also make it more difficult or more costly for Opexa to obtain certain types of insurance, including directors’ and officers’ liability insurance, and Opexa may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the coverage that is the same or similar to Opexa’s current coverage. The impact of these events could also make it more difficult for Opexa to attract and retain qualified persons to serve on its board of directors, its board committees and as executive officers. Opexa cannot predict or estimate the total amount of the costs it may incur or the timing of such costs to comply with these rules and regulations.

Under the corporate governance standards of NASDAQ, a majority of Opexa’s board of directors and each member of Opexa’s Audit and Compensation Committees must be an independent director. If any vacancies on Opexa’s Board or Audit or Compensation Committees occur that need to be filled by independent directors, Opexa may encounter difficulty in attracting qualified persons to serve on its Board and, in particular, its Audit Committee. If Opexa fails to attract and retain the required number of independent directors, Opexa may be subject to SEC enforcement proceedings and delisting of its common stock from the NASDAQ Capital Market.

Any acquisitions that Opexa makes could disrupt its business and harm its financial condition.

Opexa expects to evaluate potential strategic acquisitions of complementary businesses, products or technologies on a global geographic footprint. Opexa may also consider joint ventures, licensing and other collaborative projects. Opexa may not be able to identify appropriate acquisition candidates or strategic partners, or successfully negotiate, finance or integrate acquisitions of any businesses, products or technologies. Furthermore, the integration of any acquisition and management of any collaborative project may divert Opexa’s management’s time and resources from its core business and disrupt its operations. Opexa does not have any experience with acquiring companies, or with acquiring products outside of the United States. Any cash acquisition Opexa pursues would potentially divert the cash Opexa has on its balance sheet from its present clinical development programs. Any stock acquisitions would dilute Opexa’s shareholders’ ownership. While Opexa from time to time evaluates potential collaborative projects and acquisitions of businesses, products and technologies, and anticipate continuing to make these evaluations, Opexa has no present agreements with respect to any acquisitions or collaborative projects.

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Risks Related to Opexa’s Intellectual Property

Patents obtained by other persons may result in infringement claims against Opexa that are costly to defend and which may limit Opexa’s ability to use the disputed technologies and prevent it from pursuing research and development or commercialization of potential products, such as Tcelna.

If third party patents or patent applications contain claims infringed by either Opexa’s licensed technology or other technology required to make or use its potential products, such as Tcelna, and such claims are ultimately determined to be valid, there can be no assurance that Opexa would be able to obtain licenses to these patents at a reasonable cost, if at all, or be able to develop or obtain alternative technology. If Opexa is unable to obtain such licenses at a reasonable cost, it may not be able to develop any affected product candidate commercially. There can be no assurance that Opexa will not be obliged to defend itself in court against allegations of infringement of third-party patents. Patent litigation is very expensive and could consume substantial resources and create significant uncertainties. An adverse outcome in such a suit could subject Opexa to significant liabilities to third parties, require disputed rights to be licensed from third parties, or require Opexa to cease using such technology.

If Opexa is unable to obtain patent protection and other proprietary rights, Opexa’s operations will be significantly harmed.

Opexa’s ability to compete effectively is dependent upon obtaining patent protection relating to its technologies. The patent positions of pharmaceutical and biotechnology companies, including Opexa’s, are uncertain and involve complex and evolving legal and factual questions. The coverage sought in a patent application can be denied or significantly reduced before or after the patent is issued. Consequently, Opexa does not know whether pending patent applications for its technology will result in the issuance of patents, or if any issued patents will provide significant protection or commercial advantage or will be circumvented by others. Since patent applications are secret until the applications are published (usually 18 months after the earliest effective filing date), and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, Opexa cannot be certain that the inventors of its owned or licensed intellectual property rights were the first to make the inventions at issue or that any patent applications at issue were the first to be filed for such inventions. There can be no assurance that patents will issue from pending patent applications or, if issued, that such patents will be of commercial benefit to Opexa, afford Opexa adequate protection from competing products, or not be challenged or declared invalid.

Given Opexa’s limited cash resources and the current priorities it has set for its use of cash, certain costs related to intellectual property, including those for continued prosecution of individual patents, patent applications and patent counsel costs have been reduced or have ceased. The focus on preservation of cash resulting in reduced patent expenses may cause certain patents to become abandoned and/or prosecution to be dropped. This could materially affect Opexa’s patent estate and could jeopardize the ability of Opexa to continue its development programs, secure a development partner, protect its global patent position and its ability to challenge future patent infringement.

Issued U.S. patents require the payment of maintenance fees to continue to be in force. Opexa relies on a third-party payor to do this and their failure to do so could result in the forfeiture of patents not timely maintained.

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Many foreign patent offices also require the payment of periodic annuities to keep patents and patent applications in good standing. As Opexa may not maintain direct control over the payment of all such annuities, it cannot assure you that its third-party payor will timely pay such annuities and that the granted patents and pending patent applications will not become abandoned. In addition, Opexa or its licensors may have selected a limited amount of foreign patent protection, and therefore applications have not been filed in, and foreign patents may not have been perfected in, all commercially significant countries.

The patent protection of product candidates, such as Tcelna, involves complex legal and factual questions. To the extent that it would be necessary or advantageous for any of Opexa’s licensors to cooperate or lead in the enforcement of its licensed intellectual property rights, Opexa cannot control the amount or timing of resources such licensors devote on its behalf or the priority they place on enforcing such rights. Opexa may not be able to protect its intellectual property rights against third-party infringement, which may be difficult to detect. Additionally, challenges may be made to the ownership of Opexa’s intellectual property rights, its ability to enforce them, or its underlying licenses.

Opexa cannot be certain that any of the patents issued to it or to its licensors will provide adequate protection from competing products. Opexa’s success will depend, in part, on whether it or its licensors can:

The degree of future protection for Opexa’s proprietary rights (owned or licensed) is uncertain. For example:

Confidentiality agreements with employees and others may not adequately prevent disclosure of Opexa’s trade secrets and other proprietary information and may not adequately protect its intellectual property, which could limit its ability to compete.

Opexa relies in part on trade secret protection in order to protect its proprietary trade secrets and unpatented know-how. However, trade secrets are difficult to protect, and Opexa cannot be certain that others will not

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develop the same or similar technologies on their own. Opexa has taken steps, including entering into confidentiality agreements with its employees, consultants, outside scientific collaborators and other advisors, to protect its trade secrets and unpatented know-how. These agreements generally require that the other party keep confidential and not disclose to third parties all confidential information developed by the party or made known to the party by Opexa during the course of the party’s relationship with Opexa. Opexa also typically obtains agreements from these parties which provide that inventions conceived by the party in the course of rendering services to Opexa will be its exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to Opexa. Further, Opexa has limited control, if any, over the protection of trade secrets developed by its licensors. Enforcing a claim that a party illegally obtained and is using Opexa’s trade secrets or know-how is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets or know-how. The failure to obtain or maintain trade secret protection could adversely affect Opexa’s competitive position.

A dispute concerning the infringement or misappropriation of Opexa’s proprietary rights or the proprietary rights of others could be time consuming and costly, and an unfavorable outcome could harm Opexa’s business.

A number of pharmaceutical, biotechnology and other companies, universities and research institutions have filed patent applications or have been issued patents relating to cell therapy, T-cells, and other technologies potentially relevant to or required by Opexa’s product candidates such as Tcelna. Opexa cannot predict which, if any, of such applications will issue as patents or the claims that might be allowed. Opexa is aware of a number of patent applications and patents claiming use of modified cells to treat disease, disorder or injury.

There is significant litigation in Opexa’s industry regarding patent and other intellectual property rights. While Opexa is not currently subject to any pending intellectual property litigation, and is not aware of any such threatened litigation, it may be exposed to future litigation by third parties based on claims that its product candidates, such as Tcelna, or their methods of use, manufacturing or other technologies or activities infringe the intellectual property rights of such third parties. If Opexa’s product candidates, such as Tcelna, or their methods of manufacture are found to infringe any such patents, Opexa may have to pay significant damages or seek licenses under such patents. Opexa has not conducted comprehensive searches of patents issued to third parties relating to Tcelna or OPX-212. Consequently, no assurance can be given that third-party patents containing claims covering Tcelna or OPX-212, their methods of use or manufacture do not exist or have not been filed and will not be issued in the future. Because some patent applications in the United States may be maintained in secrecy until the patents are issued, and because patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, Opexa cannot be certain that others have not filed patent applications that will mature into issued patents that relate to Opexa’s current or future product candidates that could have a material effect in developing and commercializing one or more of Opexa’s product candidates. A patent holder could prevent Opexa from importing, making, using or selling the patented compounds. Opexa may need to resort to litigation to enforce its intellectual property rights or to determine the scope and validity of third-party proprietary rights. Similarly, Opexa may be subject to claims that it has inappropriately used or disclosed trade secrets or other proprietary information of third parties. If Opexa becomes involved in litigation, it could consume a substantial portion of Opexa’s managerial and financial resources, regardless of whether it wins or loses. Some of Opexa’s competitors may be able to sustain the costs of complex intellectual property litigation more effectively than Opexa can because they have substantially greater resources. Opexa may not be able to afford the costs of litigation. Any legal action against Opexa or its collaborators could lead to:

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As a result, Opexa could be prevented from commercializing current or future product candidates.

Risks Related to Opexa’s Industry

Opexa is subject to stringent regulation of its product candidates, which could delay development and commercialization.

Opexa, its third-party contractors and suppliers, and its product candidates are subject to stringent regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries. None of Opexa’s product candidates can be marketed in the United States until it has been approved by the FDA. No product candidate of Opexa’s has been approved, and Opexa may never receive FDA approval for any product candidate. Obtaining FDA approval typically takes many years and requires substantial resources. Even if regulatory approval is obtained, the FDA may impose significant restrictions on the indicated uses, conditions for use and labeling of such products. Additionally, the FDA may require post-approval studies, including additional research and development and clinical trials. These regulatory requirements may limit the size of the market for the product or result in the incurrence of additional costs. Any delay or failure in obtaining required approvals could substantially reduce Opexa’s ability to generate revenues.

In addition, both before and after regulatory approval, Opexa and its product candidates are subject to numerous FDA requirements covering, among other things, testing, manufacturing, quality control, labeling, advertising, promotion, distribution and export. The FDA’s requirements may change and additional government regulations may be promulgated that could affect Opexa and its product candidates. Given the number of recent high profile adverse safety events with certain drug products, the FDA may require, as a condition of approval, costly risk management programs, which may include safety surveillance, restricted distribution and use, patient education, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, preapproval of promotional materials and restrictions on direct-to-consumer advertising. Furthermore, heightened Congressional scrutiny on the adequacy of the FDA’s drug approval process and the agency’s efforts to assure the safety of marketed drugs resulted in the enactment of legislation addressing drug safety issues, the FDA Amendments Act of 2007. This legislation provides the FDA with expanded authority over drug products after approval and the FDA’s exercise of this authority could result in delays or increased costs during the period of product development, clinical trials and regulatory review and approval, and increased costs to assure compliance with new post-approval regulatory requirements. Opexa cannot predict the likelihood, nature or extent of government regulation that may arise from this or future legislation or administrative action, either in the United States or abroad.

In order to market any of Opexa’s products outside of the United States, Opexa must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Approval procedures vary among countries and can involve additional product testing and additional administrative review periods and the time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States. Approval by the FDA does not automatically lead to the approval of authorities outside of the United States and, similarly, approval by other regulatory authorities outside the United States will not automatically lead to FDA approval. In addition, regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. Opexa’s product candidates may not be approved for all indications that Opexa requests, which would limit uses and adversely impact Opexa’s potential royalties and product sales. Such approval may be subject to limitations on the indicated uses for which any potential product may be marketed or require costly, post-marketing follow-up studies.

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If Opexa fails to comply with applicable regulatory requirements in the United States and other countries, among other things, Opexa may be subject to fines and other civil penalties, delays in approving or failure to approve a product, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, interruption of manufacturing or clinical trials, injunctions and criminal prosecution, any of which would harm Opexa’s business.

Opexa may need to change its business practices to comply with health care fraud and abuse regulations, and its failure to comply with such laws could adversely affect Opexa’s business, financial condition and results of operations.

If Opexa is successful in achieving approval to market one or more of its product candidates, its operations will be directly, or indirectly through its customers, subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and False Claims Act. These laws may impact, among other things, Opexa’s proposed sales, marketing, and education programs.

The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. The Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry. Recognizing that the Anti-Kickback Statute is broad and may technically prohibit many innocuous or beneficial arrangements, Congress authorized the Department of Health and Human Services, Office of Inspector General, or OIG, to issue a series of regulations, known as the “safe harbors.” These safe harbors set forth provisions that, if all their applicable requirements are met, will assure healthcare providers and other parties that they will not be prosecuted under the Anti-Kickback Statute. The failure of a transaction or arrangement to fit precisely within one or more safe harbors does not necessarily mean that it is illegal or that prosecution will be pursued. However, conduct and business arrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government enforcement authorities such as the OIG. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil sanctions such as fines, imprisonment and possible exclusion from Medicare, Medicaid and other federal healthcare programs. Many states have also adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.

The federal False Claims Act prohibits persons from knowingly filing or causing to be filed a false claim to, or the knowing use of false statements to obtain payment from, the federal government. Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals, sometimes known as “relators” or, more commonly, as “whistleblowers,” may share in any amounts paid by the entity to the government in fines or settlement. The frequency of filing of qui tam actions has increased significantly in recent years, causing greater numbers of healthcare companies to have to defend a False Claims Act action. When an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual damages sustained by the government, plus civil penalties. Various states have also enacted laws modeled after the federal False Claims Act.

In addition to the laws described above, the Health Insurance Portability and Accountability Act of 1996 created two new federal crimes: healthcare fraud and false statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private payors. A violation of this statute is a felony and may result in fines, imprisonment or exclusion from government sponsored programs. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.

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Beginning August 1, 2013, the Physician Payments Sunshine Act, or the Sunshine Act, which is part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or the Affordable Care Act, requires manufacturers of drugs, medical devices, biologicals or medical supplies that participate in U.S. federal health care programs to track and then report certain payments and items of value given to U.S. physicians and U.S. teaching hospitals (referred to as Covered Recipients). The Sunshine Act requires that manufacturers collect this information on a yearly basis and then report it to Centers for Medicare & Medicaid Services by the 90th day of each subsequent year.

If Opexa’s operations are found to be in violation of any of the laws described above and other applicable state and federal fraud and abuse laws, Opexa may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare programs, and the curtailment or restructuring of its operations.

If Opexa’s competitors develop and market products that are more effective than Opexa’s product candidates, they may reduce or eliminate Opexa’s commercial opportunities.

Competition in the pharmaceutical industry, particularly the market for MS products, is intense, and Opexa expects such competition to continue to increase. Opexa faces competition from pharmaceutical and biotechnology companies, as well as numerous academic and research institutions and governmental agencies, in the United States and abroad. Opexa’s competitors have products that have been approved or are in advanced development and may succeed in developing drugs that are more effective, safer and more affordable or more easily administered than Opexa’s, or that achieve patent protection or commercialization sooner than Opexa’s products. Opexa’s most significant competitors are fully integrated pharmaceutical companies and more established biotechnology companies. These companies have significantly greater capital resources and expertise in research and development, manufacturing, testing, obtaining regulatory approvals, and marketing than Opexa currently does. However, smaller companies also may prove to be significant competitors, particularly through proprietary research discoveries and collaboration arrangements with large pharmaceutical and established biotechnology companies. In addition to the competitors with existing products that have been approved, many of Opexa’s competitors are further along in the process of product development and also operate large, company-funded research and development programs. As a result, Opexa’s competitors may develop more competitive or affordable products, or achieve earlier patent protection or further product commercialization than Opexa is able to achieve. Competitive products may render any products or product candidates that Opexa develops obsolete.

Opexa’s competitors may also develop alternative therapies that could further limit the market for any products that Opexa may develop.

Rapid technological change could make Opexa’s products obsolete.

Biopharmaceutical technologies have undergone rapid and significant change, and Opexa expects that they will continue to do so. As a result, there is significant risk that Opexa’s product candidates may be rendered obsolete or uneconomical by new discoveries before it recovers any expenses incurred in connection with their development. If Opexa’s product candidates are rendered obsolete by advancements in biopharmaceutical technologies, Opexa’s prospects will suffer.

Consumers may sue Opexa for product liability, which could result in substantial liabilities that exceed Opexa’s available resources and damage its reputation.

Developing and commercializing drug products entails significant product liability risks. Liability claims may arise from Opexa’s and Opexa’s collaborators’ use of products in clinical trials and the commercial sale of those products.

In the event that any of Opexa’s product candidates becomes an approved product and is commercialized, consumers may make product liability claims directly against Opexa and/or its partners, and its partners or others

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selling these products may seek contribution from Opexa if they incur any loss or expenses related to such claims. Opexa has insurance that covers clinical trial activities. Opexa believes its insurance coverage as of the date hereof is reasonably adequate at this time. However, Opexa will need to increase and expand this coverage as it commences additional clinical trials, as well as larger scale trials, and if any product candidate is approved for commercial sale. This insurance may be prohibitively expensive or may not fully cover Opexa’s potential liabilities. Opexa’s inability to obtain sufficient insurance coverage at an acceptable cost or otherwise to protect against potential product liability claims could prevent or inhibit the regulatory approval or commercialization of products that Opexa or one of its collaborators develop. Product liability claims could have a material adverse effect on Opexa’s business and results of operations. Liability from such claims could exceed Opexa’s total assets if it does not prevail in any lawsuit brought by a third party alleging that an injury was caused by one or more of Opexa’s products.

Government controls and health care reform measures could adversely affect Opexa’s business.

The business and financial condition of pharmaceutical and biotechnology companies are affected by the efforts of governmental and third-party payors to contain or reduce the costs of health care. In the United States and in foreign jurisdictions, there have been, and Opexa expects that there will continue to be, a number of legislative and regulatory proposals aimed at changing the health care system. For example, in some foreign countries, particularly in Europe, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product candidate. To obtain reimbursement or pricing approval in some countries, Opexa may be required to conduct additional clinical trials that compare the cost-effectiveness of any product candidate to other available therapies. If reimbursement of any product candidate is unavailable or limited in scope or amount in a particular country, or if pricing is set at unsatisfactory levels, Opexa may be unable to achieve or sustain profitability in such country. In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) changed the way Medicare covers and pays for pharmaceutical products. The legislation established Medicare Part D, which expanded Medicare coverage for outpatient prescription drug purchases by the elderly but provided authority for limiting the number of drugs that will be covered in any therapeutic class. The MMA also introduced a new reimbursement methodology based on average sales prices for physician-administered drugs. Any negotiated prices for any product candidate covered by a Part D prescription drug plan will likely be lower than the prices that might otherwise be obtained outside of the Medicare Part D prescription drug plan. Moreover, while Medicare Part D applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment under Medicare Part D may result in a similar reduction in payments from non-governmental payors.

The United States and several other jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals to change the healthcare system in ways that could affect Opexa’s ability to sell any product candidate. Among policy-makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access to healthcare. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. There have been, and likely will continue to be, legislative and regulatory proposals at the federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. Opexa cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect: the demand for any product candidate; the ability to set a price that Opexa believes is fair for any product candidate; Opexa’s ability to generate revenues and achieve or maintain profitability; the level of taxes that Opexa is required to pay; and the availability of capital.

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Risks Related to Opexa’s Securities

There is currently a limited market for Opexa’s securities, and any trading market that exists in Opexa’s securities may be highly illiquid and may not reflect the underlying value of its net assets or business prospects.

Although Opexa’s common stock is traded on the NASDAQ Capital Market, there is currently a limited market for its securities and there can be no assurance that an active market will ever develop. Investors are cautioned not to rely on the possibility that an active trading market may develop.

Opexa’s stock may be delisted from NASDAQ, which could affect its market price and liquidity, as well as Acer’s and Opexa’s obligation to complete the Merger.

Opexa is required to meet certain qualitative and financial tests (including a minimum bid price for its common stock of $1.00 per share and a minimum shareholders’ equity of $2.5 million), as well as certain corporate governance standards, to maintain the listing of its common stock on the NASDAQ Capital Market. While Opexa is exercising diligent efforts to maintain the listing of its common stock and warrants on NASDAQ, there can be no assurance that it will be able to do so, and its securities could be delisted.

For example, as a consequence of Opexa’s announcement on October 28, 2016 that the Abili-T trial did not meet either its primary or secondary endpoints, Opexa’s stock has traded below $1.00 per share at times. On April 10, 2017, Opexa received a staff deficiency letter from NASDAQ indicating that Opexa’s common stock failed to comply with the minimum bid price requirement because it closed below the $1.00 minimum closing bid price for 30 consecutive business days. The notice further stated that Opexa will be provided a period of 180 calendar days to regain compliance. If Opexa’s common stock maintains a closing bid price of $1.00 per share or more for a minimum of 10 consecutive business days (or such longer period of time as the NASDAQ staff may require in some circumstances, but generally not more than 20 consecutive business days) before October 9, 2017, Opexa will achieve compliance with this listing standard. If Opexa’s common stock does not achieve compliance with the minimum bid price by October 9, 2017, Opexa may be eligible for an additional 180-day grace period to regain compliance if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, and provides timely notice of its intention to cure the deficiency during the second grace period by effecting a reverse stock split, if necessary. However, if it appears to the NASDAQ staff that Opexa will not be able to cure the deficiency, or if Opexa does not meet the other listing standards, NASDAQ could provide notice that Opexa’s stock will become subject to delisting. Opexa is actively monitoring the closing bid price of its common stock and evaluating available options to resolve this deficiency and regain compliance with the minimum bid price rule.

Additionally, on May 16, 2017, Opexa received a letter from the listing qualifications department staff of the NASDAQ notifying Opexa that the stockholders’ equity of $2,241,693 as reported in Opexa’s Quarterly Report on Form 10-Q for the period ended March 31, 2017 was below the minimum stockholders’ equity of $2,500,000 required for continued listing on the NASDAQ Capital Market as set forth in NASDAQ listing rule 5550(b)(1). Opexa was provided 45 calendar days, or until June 30, 2017, to submit a plan to regain compliance with the minimum stockholders’ equity standard. Opexa timely submitted such plan. On July 18, 2017, NASDAQ notified Opexa that its plan was acceptable to NASDAQ, and Opexa was granted an extension to November 13, 2017 to evidence compliance with the minimum stockholders’ equity standard. While Opexa is exercising diligent efforts to maintain the listing of its common stock on NASDAQ, there can be no assurance that Opexa will be able to regain or maintain compliance. If Opexa does not regain compliance by November 13, 2017, or if Opexa fails to satisfy another NASDAQ requirement for continued listing, NASDAQ staff could provide notice that Opexa’s common stock will become subject to delisting. In such event, NASDAQ rules permit Opexa to appeal the decision to reject its proposed compliance plan or any delisting determination to a NASDAQ Hearings Panel.

It is also possible that Opexa could fail to satisfy another NASDAQ requirement for continued listing of its stock, such as the market value or number of publicly held shares or number of shareholders, or a corporate governance

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requirement. In addition to the minimum bid price deficiency notice Opexa received on April 10, 2017 and the minimum stockholders’ equity deficiency notice Opexa received on May 16, 2017, Opexa may receive additional future notices from NASDAQ that it has failed to meet NASDAQ’s requirements, and proceedings to delist Opexa’s stock could be commenced. In such event, NASDAQ rules permit Opexa to appeal any delisting determination to a NASDAQ Hearings Panel. If Opexa is unable to maintain or regain compliance in a timely manner or if it does not meet the other listing standards and its common stock is delisted, it could be more difficult to buy or sell Opexa’s common stock and obtain accurate quotations, and the price of Opexa’s stock could suffer a material decline. Delisting may also impair Opexa’s ability to raise capital or enter into a potential strategic transaction.

In addition, it is a condition precedent to both Acer’s and Opexa’s obligation to complete the Merger that Opexa’s shares of common stock remain continually listed on the NASDAQ Capital Market from the date of the Merger through the date the Merger is completed and that the shares of Opexa common stock to Acer shareholders in the Merger shall have been approved for listing. If Opexa’s common stock ceases to be listed on the NASDAQ Capital Market and either or both of the parties to the Merger Agreement decline to complete the Merger, the value of Opexa’s common stock may decline.

Opexa’s share price is volatile, and you may not be able to resell your shares at a profit or at all.

The market prices for securities of biopharmaceutical and biotechnology companies, and early-stage drug discovery and development companies like Opexa in particular, have historically been highly volatile and may continue to be highly volatile in the future. The following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of Opexa’s common stock:

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Broad market and industry factors, as well as economic and political factors, also may materially adversely affect the market price of Opexa’s common stock.

Opexa may be or become the target of securities litigation, which is costly and time-consuming to defend.

In the past, following periods of market volatility in the price of a company’s securities or the reporting of unfavorable news, security holders have often instituted class action litigation. This risk is especially relevant for Opexa because biotechnology companies have experienced significant stock price volatility in recent years. Moreover, following the announcement on October 28, 2016 of disappointing results of the Abili-T study, Opexa’s stock price decreased substantially, which may portend securities class action litigation against Opexa. If Opexa becomes involved in this type of litigation, regardless of the outcome, Opexa could incur substantial legal costs and its management’s attention could be diverted from the operation of its business, causing its business to suffer.

Opexa’s “blank check” preferred stock could be issued to prevent a business combination not desired by management or its majority shareholders.

Opexa’s charter authorizes the issuance of “blank check” preferred stock with such designations, rights and preferences as may be determined by Opexa’s board of directors without shareholder approval. Opexa’s preferred stock could be utilized as a method of discouraging, delaying, or preventing a change in Opexa’s control and as a method of preventing shareholders from receiving a premium for their shares in connection with a change of control.

Future sales of Opexa’s securities could cause dilution, and the sale of such securities, or the perception that such sales may occur, could cause the price of Opexa’s stock to fall.

On March 25, 2016, Opexa entered into a new Sales Agreement with IFS Securities, Inc. (doing business as Brinson Patrick, a division of IFS Securities, Inc.) as sales agent, pursuant to which Opexa can offer and sell shares of its common stock from time to time depending upon market demand, in transactions deemed to be an “at the market” offering. Opexa registered up to 1,000,000 shares of common stock for potential sale under the new ATM facility. From August 17, 2016 through December 31, 2016, Opexa sold an aggregate of 66,184 shares of its common stock under the ATM facility. Opexa generated gross and net proceeds, including amortization of deferred offering costs, of $293,345 and $276,912, respectively, with the average share price ranging from $4.12 to $4.73 per share. During January 2017, Opexa further sold an aggregate of 516,278 shares of common stock for gross and net proceeds of $490,098 and $413,662 respectively, with the average share price ranging from $0.90 to $0.97. Opexa will need to keep current its shelf registration statement and the offering prospectus relating to the ATM facility in order to use the program to sell shares of common stock in the future.

Sales of additional shares of Opexa’s common stock, as well as securities convertible into or exercisable for common stock, could result in substantial dilution to Opexa’s shareholders and cause the market price of Opexa’s common stock to decline. An aggregate of 7,657,332 shares of common stock were outstanding as of March 31, 2017. As of such date, another (i) 244,868 shares of common stock were issuable upon exercise of outstanding options and (ii) 3,468,731 shares of common stock were issuable upon the exercise of outstanding warrants. A substantial majority of the outstanding shares of Opexa’s common stock and warrants (as well as a substantial majority of the shares of common stock issuable upon exercise of outstanding options and warrants) are freely tradable without restriction or further registration under the Securities Act of 1933.

Opexa may sell additional shares of common stock, as well as securities convertible into or exercisable for common stock, in subsequent public or private offerings. Opexa may also issue additional shares of common stock, as well as securities convertible into or exercisable for common stock, to finance future acquisitions. Opexa may need to raise additional capital in order to initiate or complete additional development activities for Tcelna in MS and for OPX-212 in NMO, or to pursue additional disease indications for its T-cell technology, and

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this may require Opexa to issue a substantial amount of securities (including common stock as well as securities convertible into or exercisable for common stock). There can be no assurance that Opexa’s capital raising efforts will be able to attract the capital needed to execute on its business plan and sustain its operations. Moreover, Opexa cannot predict the size of future issuances of its common stock, as well as securities convertible into or exercisable for common stock, or the effect, if any, that future issuances and sales of its securities will have on the market price of its common stock. Sales of substantial amounts of Opexa’s common stock, as well as securities convertible into or exercisable for common stock, including shares issued in connection with an acquisition or securing funds to complete any clinical trial plans, or the perception that such sales could occur, may result in substantial dilution and may adversely affect prevailing market prices for Opexa’s common stock.

Opexa presently does not intend to pay cash dividends on its common stock.

Opexa currently anticipates that no cash dividends will be paid on the common stock in the foreseeable future. While Opexa’s dividend policy will be based on the operating results and capital needs of the business, it is anticipated that all earnings, if any, will be retained to finance the future expansion of its business.

Opexa shareholders may experience substantial dilution in the value of their investment if Opexa issues additional shares of its capital stock.

Opexa’s charter allows it to issue up to 150,000,000 shares of common stock and to issue and designate the rights of, without shareholder approval, up to 10,000,000 shares of preferred stock. In order to raise additional capital, Opexa may in the future offer additional shares of its common stock or other securities convertible into or exchangeable for its common stock at prices that may not be the same as the price per share paid by other investors, and dilution to Opexa’s shareholders could result. Opexa may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors, and investors purchasing shares or other securities in the future could have rights superior to existing shareholders. The price per share at which Opexa sells additional shares of its common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by other investors.

Opexa may issue debt and equity securities or securities convertible into equity securities, any of which may be senior to its common stock as to distributions and in liquidation, which could negatively affect the value of Opexa’s common stock.

In the future, Opexa may attempt to increase its capital resources by entering into debt or debt-like financing that is unsecured or secured by up to all of its assets, or by issuing additional debt or equity securities, which could include issuances of secured or unsecured commercial paper, medium-term notes, senior notes, subordinated notes, guarantees, preferred stock, hybrid securities, or securities convertible into or exchangeable for equity securities. In the event of Opexa’s liquidation, its lenders and holders of its debt and preferred securities would receive distributions of available assets before distributions to the holders of Opexa’s common stock. Because Opexa’s decision to incur debt and issue securities in future offerings may be influenced by market conditions and other factors beyond its control, Opexa cannot predict or estimate the amount, timing or nature of its future offerings or debt financings. Further, market conditions could require Opexa to accept less favorable terms for the issuance of its securities in the future.

Opexa’s management has significant flexibility in using the current available cash.

In addition to general corporate purposes (including working capital, research and development, business development and operational purposes), Opexa currently intends to use its available cash to continue to assess the viability of pursuing its preclinical program for OPX-212 in NMO and the related T-cell platform and to complete the strategic process that resulted in Opexa signing the Merger Agreement with Acer. Opexa cannot fully predict its future cash needs until it completes this analysis and process. However, after further analysis of the data from the Abili-T trial, Opexa has determined that it will not move forward with further studies of Tcelna in SPMS at this time.

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Depending on future developments and circumstances, Opexa may use some of its available cash for other purposes which may have the potential to decrease its cash runway. Notwithstanding Opexa’s current intentions regarding use of its available cash, Opexa’s management will have significant flexibility with respect to such use. The actual amounts and timing of expenditures will vary significantly depending on a number of factors, including the amount and timing of cash used in Opexa’s operations and its research and development efforts. Management’s failure to use these funds effectively would have an adverse effect on the value of Opexa’s common stock and could make it more difficult and costly to raise funds in the future.

An active trading market may never develop for Opexa’s Series M warrants, which may limit the ability to resell the warrants.

There is no established trading market for the Series M warrants Opexa issued in April 2015. While the warrants have been listed for trading on NASDAQ under the symbol “OPXAW,” there can be no assurance that that a market will develop for the warrants. Even if a market for the warrants does develop, the price of the warrants may fluctuate and liquidity may be limited. If a market for the warrants does not develop, then holders of the warrants may be unable to resell the warrants or be able to sell them only at an unfavorable price. Future trading prices of the warrants will depend on many factors, including Opexa’s operating performance and financial condition, Opexa’s ability to continue the effectiveness of the registration statement covering the warrants and the common stock issuable upon exercise of the warrants, the interest of securities dealers in making a market and the market for similar securities.

The market price of Opexa’s common stock may not exceed the exercise price of the Series M warrants.

The Series M warrants issued in April 2015 will expire on April 9, 2018. The warrants entitle the holders to purchase shares of common stock at an exercise price of $12.00 per share through their expiration. There can be no assurance that the market price of Opexa’s common stock will exceed the exercise price of the warrants at any or all times prior to their expiration. Any warrants not exercised by their expiration date will expire worthless and Opexa will be under no further obligation to the warrant holder.

The Series M warrants may be redeemed on short notice. This may have an adverse impact on their price.

Opexa may redeem the Series M warrants for $0.01 per warrant if the closing price of Opexa’s common stock has equaled or exceeded $20.00 per share, subject to adjustment, for 10 consecutive trading days. If Opexa gives notice of redemption, holders will be forced to sell or exercise their warrants or accept the redemption price. The notice of redemption could come at a time when it is not advisable or possible to exercise the warrants. As a result, holders would be unable to benefit from owning the warrants being redeemed.

Opexa’s ability to use net operating loss carryovers to reduce future tax payments may be limited.

As of December 31, 2016, Opexa had net operating loss carryforwards, or NOLs, for federal income tax purposes of approximately $74 million. These NOLs are generally carried forward to reduce taxable income in future years. If unused, the NOLs will begin to expire December 31, 2024. However, Opexa’s ability to utilize the NOLs is subject to the rules under Section 382 of the Internal Revenue code.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain shareholders (generally 5% shareholders, applying certain look-through and aggregation rules) increases by more than 50 percentage points over such shareholders’ lowest percentage ownership during the testing period (generally three years). In the event of an ownership change, Section 382 imposes an annual limitation on the amount of taxable income a corporation may offset with NOL carryforwards. This annual limitation is generally equal to the product of the value of Opexa’s stock on the date of the ownership change, multiplied by the long-term tax-exempt rate published monthly by the Internal Revenue Service. Any unused annual limitation may be carried over to later years until the applicable expiration date for the respective NOL carryforwards.

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The rules of Section 382 are complex and subject to varying interpretations. As a result of Opexa’s numerous capital raises, which have included the issuance of various classes of convertible securities and warrants, uncertainty exists as to whether Opexa may have undergone an ownership change in the past. Based on Opexa’s recent stock prices, Opexa believes any ownership change would severely limit its ability to utilize the NOLs. Limitations imposed on Opexa’s ability to utilize NOL carryforward amounts could cause U.S. federal income taxes to be paid earlier than if such limitations were not in effect and could cause such NOL carryforward amounts to expire unused, in each case reducing or eliminating the expected benefit to Opexa. Furthermore, Opexa may not be able to generate sufficient taxable income to utilize its NOL carryforward amounts before they expire. If any of these events occur, Opexa may not derive some or all of the benefits from its NOL carryforward amounts. Presently, impairment tests have not been conducted to verify NOL preservation. Accordingly, no assurance can be given that Opexa’s NOLs will be fully available.

Risks Related to Acer

Risks Related to Acer’s Business and Financial Condition

Acer has a limited operating history and has incurred significant losses since its inception and anticipates that it will continue to incur losses for the foreseeable future and may never achieve or maintain profitability. The absence of any commercial sales and Acer’s limited operating history make it difficult to assess its future viability.

Acer is a development-stage pharmaceutical company with a limited operating history. Pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. Acer is focused principally on repurposing and/or reformulating existing drugs for (ultra) orphan diseases with significant unmet medical need. Acer is not profitable and has incurred losses in each year since its inception in 2013. Acer has only a limited operating history upon which you can evaluate its business and prospects. In addition, Acer has limited experience and has not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the specialty pharmaceutical industry. Acer has not generated any revenue to date. Acer continues to incur significant research and development and other expenses related to its ongoing operations. Acer’s net loss for the year ended December 31, 2016 was $6.7 million. As of March 31, 2017, Acer had an accumulated deficit of $14.7 million. Acer expects to continue to incur losses for the foreseeable future as it continues its development of, and seeks marketing approvals for, its product candidates.

Acer has devoted substantially all of its financial resources to identify, acquire, and develop its product candidates, including providing general and administrative support for its operations. To date, Acer has financed its operations primarily through the sale of equity securities and convertible promissory notes. The amount of its future net losses will depend, in part, on the rate of its future expenditures and its ability to obtain funding through equity or debt financings, strategic collaborations, or grants. Pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. Acer expects losses to increase as it conducts clinical trials and continues to develop its lead product candidates. Acer expects to invest significant funds into the research and development of its current product candidates to determine the potential to advance these product candidates to regulatory approval.

If Acer obtains regulatory approval to market a product candidate, its future revenue will depend upon the size of any markets in which its product candidates may receive approval, and its ability to achieve sufficient market acceptance, pricing, reimbursement from third-party payors, and adequate market share for its product candidates in those markets. Even if Acer obtains adequate market share for its product candidates, because the potential markets in which its product candidates may ultimately receive regulatory approval could be very small, Acer may never become profitable despite obtaining such market share and acceptance of its products.

Acer expects to continue to incur significant expenses and increasing operating losses for the foreseeable future, and its expenses will increase substantially if and as Acer:

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Further, the net losses Acer incurs may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of its results of operations may not be a good indication of its future performance.

If the Merger is not completed, Acer will require, and may not be able to obtain, substantial additional financial resources in order to carry out planned activities and to continue as a going concern.

As of June 30, 2017, Acer had cash and cash equivalents totaling $2.5 million as well as current liabilities aggregating $7.9 million, consisting of accounts payable, accrued expenses and convertible notes payable, net. Acer’s existing cash resources will not be sufficient to meet its operating plan for the full 12-month period after the date of this proxy statement/prospectus/information statement. Based on available resources, Acer believes it can maintain its current operations into September 2017. As a result, to continue to fund Acer’s ongoing operations beyond September 2017, Acer would need to (i) raise additional capital through the issuance of equity, debt or other securities, (ii) convert its existing debt into equity and/or (iii) enter into strategic partnerships, alliances, collaborations or other similar transactions. Due to current market conditions and Acer’s current liquidity position, Acer believes it may be difficult to obtain additional equity or debt financing on terms acceptable to Acer, if at all, thus raising substantial doubt about Acer’s ability to continue as a going concern. If Acer is unable to raise additional capital or successfully complete the Merger or another strategic partnership, alliance, collaboration or other similar transaction, Acer will need to delay or reduce expenses or limit or curtail operations, any of which would have a material adverse effect on its business. Further, if Acer is unable to raise additional capital or successfully complete the Merger or a strategic partnership, alliance, collaboration or other similar transaction on a timely basis and on terms that are acceptable, Acer may also be required to sell or license its assets, sell the company or otherwise liquidate all or a portion of its assets and/or cease its operations altogether. If Acer cannot continue as a viable entity, its shareholders might lose some or all of their investment. Acer’s financial statements do not include any adjustments that might be necessary if Acer is unable to continue as a going concern.

Acer currently has no source of product sales revenue and may never be profitable.

Acer has not generated any revenues from commercial sales of any of its current product candidates, EDSIVO (for vEDS) and ACER-001 (for UCD and MSUD). Acer’s ability to generate product revenue depends upon its ability to successfully commercialize these product candidates or other product candidates that it may develop, in-license or acquire in the future. Acer does not anticipate generating revenue from the sale of products prior to

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2018. Acer’s ability to generate future product revenue from its current or future product candidates also depends on a number of additional factors, including its ability to:

In addition, because of the numerous risks and uncertainties associated with clinical product development, including that Acer’s product candidates may not advance through development or achieve regulatory approval, Acer is unable to predict the timing or amount of any potential future product sales revenues. Acer’s expenses also could increase beyond expectations if Acer decides to or is required by the FDA, or comparable foreign regulatory authorities, to perform studies or trials in addition to those that Acer currently anticipates. Even if Acer completes the development and regulatory processes described above, Acer anticipates incurring significant costs associated with launching and commercializing these products.

Acer will require substantial additional financing to obtain marketing approval of its product candidates and commercialize its product candidates, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force Acer to delay, limit, reduce or terminate its product development, other operations or commercialization efforts.

Since Acer’s inception, substantially all of its resources have been dedicated to the clinical development of its product candidates. As of March 31, 2017, Acer had an accumulated deficit of $14.7 million. As of June 30, 2017, Acer had cash and cash equivalents of $2.5 million as well as current liabilities aggregating $7.9 million, consisting of accounts payable, accrued expenses and convertible notes payable, net. Based on available resources, Acer believes it can maintain its current operations into September 2017. Acer believes that it will continue to expend substantial resources for the foreseeable future on the completion of clinical development and regulatory preparedness of its product candidates, preparations for a commercial launch of its product candidates, if approved, and development of any other current or future product candidates it may choose to further develop. These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining marketing approvals, and manufacturing and supply as well as marketing and selling any products approved for sale. In addition, other unanticipated costs may arise. Because the outcome of any drug development process is highly uncertain, Acer cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of its current product candidates, if approved, or future product candidates, if any.

Acer’s operating plan may change as a result of factors currently unknown to Acer, and it may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations. Such financing may result in dilution to shareholders, imposition of debt covenants and repayment obligations, or other restrictions that may adversely affect its business. In addition, Acer may seek additional capital due to favorable market conditions or strategic considerations even if Acer believes it has sufficient funds for its current or future operating plans.

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Acer’s future capital requirements depend on many factors, including:

Additional funds may not be available when Acer needs them, on terms that are acceptable to Acer, or at all. If adequate funds are not available to Acer on a timely basis, Acer may be required to:

Raising additional capital may cause dilution to Acer’s existing shareholders, restrict its operations or require Acer to relinquish rights to its technologies or product candidates.

Acer may seek additional capital through a combination of public and private equity offerings, debt financings, strategic collaborations and alliances and licensing arrangements. To the extent that Acer raises additional capital through the sale of equity or convertible debt securities, including the issuance of shares of capital stock in its concurrent financing in connection with the Merger, the ownership interest of Acer’s shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of Acer’s shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on Acer’s ability to incur additional debt, limitations on its ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact Acer’s ability to conduct its business. If Acer raises additional funds through strategic collaborations and alliances and licensing arrangements with third parties, Acer may have to relinquish valuable rights to its technologies or product candidates, or grant licenses on terms unfavorable to Acer.

Acer’s auditors have expressed doubt about its ability to continue as a going concern.

In their audited financial report, Acer’s independent auditor included in its report an emphasis-of-a-matter indicating that Acer’s recurring losses from operations raise a substantial doubt as to Acer’s ability to continue as

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a going concern. Acer anticipates that it would need approximately $3 million, not including funds raised in the concurrent financing, over the next 12 months to continue as a going concern and expand its operations in accordance with its current business plan.

As of March 31, 2017, Acer had an accumulated deficit of $14.7 million. These matters raise substantial doubt about Acer’s ability to continue as a going concern. Because Acer has been issued an opinion by its auditors that substantial doubt exists as to whether it can continue as a going concern, it may be more difficult for it to attract investors.

Risks Related to the Clinical Development and Marketing Approval of Acer’s Product Candidates

The marketing approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and if Acer is ultimately unable to obtain marketing approval for its product candidates, its business will be substantially harmed.

None of Acer’s current product candidates have gained marketing approval for sale in the United States or any other country, and Acer cannot guarantee that it will ever have marketable products. Acer’s business is substantially dependent on its ability to complete the development of, obtain marketing approval for, and successfully commercialize its product candidates in a timely manner. Acer cannot commercialize its product candidates in the United States without first obtaining approval from the FDA to market each product candidate. Similarly, Acer cannot commercialize its product candidates outside of the United States without obtaining regulatory approval from comparable foreign regulatory authorities. Acer’s product candidates could fail to receive marketing approval for many reasons, including the following:

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Before obtaining marketing approval for the commercial sale of any drug product for a target indication, Acer must demonstrate in preclinical studies and well-controlled clinical trials and, with respect to approval in the United States, to the satisfaction of the FDA, that the product is safe and effective for its intended use and that the manufacturing facilities, processes and controls are adequate to preserve the drug’s identity, strength, quality and purity. In the United States, it is necessary to submit and obtain approval of an NDA from the FDA. An NDA must include extensive preclinical and clinical data and supporting information to establish the product safety and efficacy for each desired indication. The NDA must also include significant information regarding the chemistry, manufacturing and controls for the product. After the submission of an NDA, but before approval of the NDA, the manufacturing facilities used to manufacture a product candidate must be inspected by the FDA to ensure compliance with the applicable cGMP requirements. The FDA and the Competent Authorities of the Member States of the European Economic Area, or EEA, and comparable foreign regulatory authorities, may also inspect Acer’s clinical trial sites and audit clinical study data to ensure that its studies are properly conducted in accordance with the IND regulations, human subject protection regulations, and good clinical practice, or cGCP.

Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and approval may not be obtained. Upon submission of an NDA, the FDA must make an initial determination that the application is sufficiently complete to accept the submission for filing. Acer cannot be certain that any submissions will be accepted for filing and reviewed by the FDA, or ultimately be approved. If the application is not accepted for review, the FDA may require that Acer conduct additional clinical studies or preclinical testing, or take other actions before it will reconsider Acer’s application. If the FDA requires additional studies or data, Acer would incur increased costs and delays in the marketing approval process, which may require Acer to expend more resources than Acer has available. In addition, the FDA may not consider any additional information to be complete or sufficient to support the filing or approval of the NDA.

Regulatory authorities outside of the United States, such as in Europe and Japan and in emerging markets, also have requirements for approval of drugs for commercial sale with which Acer must comply prior to marketing in those areas. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of Acer’s product candidates. Clinical trials conducted in one country may not be accepted or the results may not be found adequate by regulatory authorities in other countries, and obtaining regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. However, the failure to obtain regulatory approval in one jurisdiction could have a negative impact on Acer’s ability to obtain approval in a different jurisdiction. Approval processes vary among countries and can involve additional product candidate testing and validation and additional administrative review periods. Seeking foreign regulatory approval could require additional non-clinical studies or clinical trials, which could be costly and time consuming. Foreign regulatory approval may include all of the risks associated with obtaining FDA approval. For all of these reasons, Acer may not obtain foreign regulatory approvals on a timely basis, if at all.

The process to develop, obtain marketing approval for, and commercialize product candidates is long, complex and costly both inside and outside of the United States, and approval is never guaranteed. The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. Even if Acer’s product candidates were to successfully obtain approval from regulatory authorities, any such approval might significantly limit the approved indications for use, including more limited patient populations, require that precautions, warnings or contraindications be included on the product labeling, including black box warnings, require expensive and time-consuming post-approval clinical studies, risk evaluation and mitigation strategies or surveillance as conditions of approval, or,

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through the product label, the approval may limit the claims that it may make, which may impede the successful commercialization of its product candidates. Following any approval for commercial sale of Acer’s product candidates, certain changes to the product, such as changes in manufacturing processes and additional labeling claims, as well as new safety information, may require new studies and will be subject to additional FDA notification, or review and approval. Also, marketing approval for any of Acer’s product candidates may be withdrawn. If Acer is unable to obtain marketing approval for its product candidates in one or more jurisdictions, or any approval contains significant limitations, Acer’s ability to market to its full target market will be reduced and its ability to realize the full market potential of its product candidates will be impaired. Furthermore, Acer may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue or complete the development of any of its current or future product candidates.

If Acer is unable to submit an application for approval under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act or if Acer is required to generate additional data related to safety and efficacy in order to obtain approval under Section 505(b)(2), it may be unable to meet its anticipated development and commercialization timelines.

Acer’s current strategy for seeking marketing authorization in the United States for its product candidates relies primarily on Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, or FFDCA, which permits use of a marketing application, referred to as a 505(b)(2) application, where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use. The FDA interprets this to mean that an applicant may rely for approval on such data as that found in published literature or the FDA’s finding of safety or effectiveness, or both, of a previously approved drug product owned by a third party. There is no assurance that the FDA would find third-party data relied upon by Acer in a 505(b)(2) application sufficient or adequate to support approval and may require Acer to generate additional data to support the safety and efficacy of its product candidates. Consequently, Acer may need to conduct substantial new research and development activities beyond those it currently plans to conduct. Such additional new research and development activities would be costly and time consuming and there is no assurance that such data generated from such additional activities would be sufficient to obtain approval.

If the data to be relied upon in a 505(b)(2) application are related to drug products previously approved by the FDA and covered by patents that are listed in the FDA’s Orange Book, Acer would be required to submit with its 505(b)(2) application a Paragraph IV Certification in which Acer must certify that it does not infringe the listed patents or that such patents are invalid or unenforceable, and provide notice to the patent owner or the holder of the approved NDA. The patent owner or NDA holder would have 45 days from receipt of the notification of Acer’s Paragraph IV Certification to initiate a patent infringement action against Acer. If an infringement action is initiated, the approval of Acer’s NDA would be subject to a stay of up to 30 months or more while it defends against such a suit. Approval of Acer’s product candidates under Section 505(b)(2) may therefore be delayed until patent exclusivity expires or until Acer successfully challenges the applicability of those patents to its product candidates. Alternatively, Acer may elect to generate sufficient clinical data so that it would no longer need to rely on third-party data, which would be costly and time consuming and there would be no assurance that such data generated from such additional activities would be sufficient to obtain approval.

Acer may not be able to obtain shortened review of its applications, and the FDA may not agree that its product candidates qualify for marketing approval. If Acer is required to generate additional data to support approval, it may be unable to meet anticipated or reasonable development and commercialization timelines, may be unable to generate the additional data at a reasonable cost, or at all, and may be unable to obtain marketing approval of its product candidates. If the FDA changes its interpretation of Section 505(b)(2) allowing reliance on data in a previously approved drug application owned by a third party, or there is a change in the law affecting Section 505(b)(2), this could delay or even prevent the FDA from approving any Section 505(b)(2) application that Acer submits.

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Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

Clinical testing is expensive, and can take many years to complete, and its outcome is inherently uncertain. The FDA and comparable foreign regulatory authorities have substantial discretion in the approval process, and determining when or whether marketing approval will be obtained for Acer’s current product candidates. Even if Acer believes the data collected from clinical trials of its current product candidates are promising, such data may not be sufficient to support approval by the FDA or comparable foreign authorities. Acer’s future clinical trial results may not be successful.

It is impossible to predict the extent to which the clinical trial process may be affected by legislative and regulatory developments. Due to these and other factors, Acer’s current product candidates or future product candidates could take a significantly longer time to gain marketing approval than expected or may never gain marketing approval. This could delay or eliminate any potential product revenue by delaying or terminating the potential commercialization of Acer’s current product candidates.

Preclinical trials must also be conducted in accordance with FDA and comparable foreign authorities’ legal requirements, regulations or guidelines, including Good Laboratory Practice, or GLP, an international standard meant to harmonize the conduct and quality of nonclinical studies and the archiving and reporting of findings. Preclinical studies including long-term toxicity studies and carcinogenicity studies in experimental animals may result in findings that may require further evaluation, which could affect the risk-benefit evaluation of clinical development, or which may even lead the regulatory agencies to delay, prohibit the initiation of or halt clinical trials or delay or deny marketing authorization applications. Failure to adhere to the applicable GLP standards or misconduct during the course of preclinical trials may invalidate the data and require one or more studies to be repeated or additional testing to be conducted.

Clinical trials must also be conducted in accordance with FDA and comparable foreign authorities’ legal requirements, regulations or guidelines, including human subject protection requirements and GCP. Clinical trials are subject to further oversight by these governmental agencies and institutional review boards, or IRBs, at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with supplies of Acer’s current product candidates produced under cGMP, and other requirements. Acer’s clinical trials are conducted at multiple sites, including some sites in countries outside the United States and the European Union, which may subject Acer to further delays and expenses as a result of increased shipment costs, additional regulatory requirements and the engagement of foreign and non-EU clinical research organizations, as well as expose Acer to risks associated with clinical investigators who are unknown to the FDA or the European regulatory authorities, and with different standards of diagnosis, screening and medical care.

To date, Acer has not completed all clinical trials required for the approval of its current product candidates. The commencement and completion of clinical trials for Acer’s current product candidates may be delayed, suspended or terminated as a result of many factors, including but not limited to:

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Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications Acer is investigating.

There are significant requirements imposed on Acer and on clinical investigators who conduct clinical trials that Acer sponsors. Although Acer is responsible for selecting qualified clinical investigators, providing them with the information they need to conduct the clinical trial properly, ensuring proper monitoring of the clinical trial, and ensuring that the clinical trial is conducted in accordance with the general investigational plan and protocols contained in the IND, Acer cannot ensure the clinical investigators will maintain compliance with all regulatory requirements at all times. The pharmaceutical industry has experienced cases where clinical investigators have been found to incorrectly record data, omit data, or even falsify data. Acer cannot ensure that the clinical investigators in its trials will not make mistakes or otherwise compromise the integrity or validity of data, any of which would have a significant negative effect on Acer’s ability to obtain marketing approval, Acer’s business, and Acer’s financial condition.

Acer could encounter delays if a clinical trial is suspended or terminated by Acer, by the IRBs of the institutions in which such trial is being conducted, by the data safety monitoring board, or DSMB, for such trial, or by the FDA or comparable foreign regulatory authorities. Acer or such authorities may impose a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or Acer’s clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, safety issues or adverse side effects, failure to demonstrate a benefit from using the drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If Acer experiences delays in the completion of, or termination of, any clinical trial of its current product candidates, the commercial prospects of its current product candidates will be harmed, and Acer’s ability to generate product revenues from its product

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candidates will be delayed. In addition, any delays in completing Acer’s clinical trials will increase its costs, slow its development and approval process and jeopardize its ability to commence product sales and generate revenues. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval of Acer’s product candidates.

Moreover, clinical investigators for Acer’s clinical trials may serve as scientific advisors or consultants to Acer from time to time and receive compensation in connection with such services. Acer is required to report certain financial relationships with clinical investigators to the FDA and, where applicable, take steps to minimize the potential for bias resulting from such financial relationships. The FDA will evaluate the reported information and may conclude that a financial relationship between Acer and a clinical investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site, and the utility of the clinical trial itself may be jeopardized. This could result in a refusal to accept or a delay in approval of Acer’s marketing applications by the FDA and may ultimately lead to the denial of marketing approval of one or more of its product candidates.

Any of these occurrences could materially adversely affect Acer’s business, financial condition, results of operations, and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval of Acer’s current product candidates. Significant clinical trial delays could also allow Acer’s competitors to bring products to market before Acer is able to do so, shorten any periods during which Acer has the exclusive right to commercialize its current product candidates and impair its ability to commercialize its current product candidates, which may harm Acer’s business, financial condition, results of operations, and prospects.

Clinical failure can occur at any stage of clinical development. Because the results of earlier clinical trials are not necessarily predictive of future results, any product candidate Acer advances through clinical trials may not have favorable results in later clinical trials or receive marketing approval.

Clinical failure can occur at any stage of Acer’s clinical development. The results of preclinical studies and early clinical trials of Acer’s product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Clinical trials may produce negative or inconclusive results, and Acer may decide, or regulators may require Acer, to conduct additional clinical or preclinical testing. Data obtained from tests are susceptible to varying interpretations, and regulators may not interpret Acer’s data as favorably as Acer does, which may delay, limit or prevent marketing approval. In addition, the design of a clinical trial can determine whether its results will support approval of a product, or approval of a product for desired indications, and flaws or shortcomings in the design of a clinical trial may not become apparent until the clinical trial is well advanced. Acer has limited experience in designing clinical trials and may be unable to design and execute a clinical trial to support marketing approval for Acer’s desired indications. Further, clinical trials of potential products often reveal that it is not practical or feasible to continue development efforts. If one of Acer’s product candidates is found to be unsafe or lack efficacy, Acer will not be able to obtain marketing approval for it and Acer’s business would be harmed. For example, if the results of Acer’s clinical trials of its product candidates do not achieve pre-specified endpoints or Acer is unable to provide primary or secondary endpoint measurements deemed acceptable by the FDA or comparable foreign regulators or if Acer is unable to demonstrate an acceptable level of safety relative to the efficacy associated with its proposed indications, the prospects for approval of Acer’s product candidates would be materially and adversely affected. A number of companies in the pharmaceutical industry, including those with greater resources and experience than Acer, have suffered significant setbacks in Phase 2 and Phase 3 clinical trials, even after seeing promising results in earlier clinical trials.

In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including differences in trial protocols and design, the size

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and type of the patient population, adherence to the dosing regimen and the rate of dropout among clinical trial participants. Acer does not know whether any clinical trials it may conduct will demonstrate consistent and/or adequate efficacy and safety to obtain marketing approval for Acer’s product candidates.

As an organization, Acer has never completed any clinical trial before and may be unable to do so efficiently or at all for its current product candidates or any product candidate Acer develops.

Acer intends to conduct clinical trials of its product candidates. The conduct of clinical trials and the submission of a successful NDA is a complicated process. As an organization, Acer has not completed a clinical trial before, and Acer has limited experience in preparing and submitting regulatory filings. Consequently, Acer may be unable to successfully and efficiently execute and complete necessary clinical trials in a way that leads to NDA submission and approval of Acer’s current product candidates or for any other product candidate it develops. Acer may require more time and incur greater costs than anticipated and may not succeed in obtaining marketing approval of the product candidates it develops. Failure to commence or complete, or delays in, Acer’s planned clinical trials would prevent Acer from or delay Acer in commercializing its current product candidates or any other product candidate Acer develops.

Marketing approval may be substantially delayed or may not be obtained for one or all of Acer’s product candidates if regulatory authorities require additional or more time-consuming studies to assess the safety and efficacy of its product candidates.

Acer may be unable to initiate or complete development of its product candidates on schedule, if at all. The timing for the completion of the studies for Acer’s product candidates will require funding beyond the proceeds of the concurrent financing. In addition, if regulatory authorities require additional or more time-consuming studies to assess the safety or efficacy of Acer’s product candidates, Acer may not have or be able to obtain adequate funding to complete the necessary steps for approval for any or all of its product candidates. Additional delays may result if the FDA, an FDA Advisory Committee (if one is convened to review Acer’s NDA) or other regulatory authority indicates that the product candidate should not be approved or there should be restrictions on approval, such as the requirement for a Risk Evaluation and Mitigation Strategy, or REMS, to ensure safe use of the drug. Delays in marketing approval or rejections of applications for marketing approval in the United States or other markets may result from many factors, including:

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The lengthy and unpredictable approval process, as well as the unpredictability of future clinical trial results, may result in Acer’s failure to obtain marketing approval to market its other product candidates, which would significantly harm Acer’s business, results of operations and prospects.

Acer’s product candidates may cause undesirable adverse effects or have other properties that could delay or prevent their marketing approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if obtained.

Undesirable side effects caused by Acer’s product candidates could cause Acer or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or other comparable foreign authorities. If any of Acer’s current product candidates or any other product candidate Acer develops is associated with serious adverse, undesirable or unacceptable side effects, Acer may need to abandon such candidate’s development or limit development to certain uses or sub-populations in which such side effects are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many compounds that initially showed promise in early-stage or clinical testing have later been found to cause side effects that prevented further development of the compound. Results of Acer’s trials could reveal a high and unacceptable prevalence of these or other side effects. In such an event, Acer’s trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order Acer to cease further development of or deny approval of its product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims.

If Acer’s product candidates receive marketing approval, and Acer or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including:

Any of these events could prevent Acer from achieving or maintaining market acceptance of its product candidates, if approved, and could materially adversely affect Acer’s business, financial condition, results of operations and prospects.

Acer is heavily dependent on the success of its product candidates, which are in the early stages of clinical development. Acer cannot give any assurance that it will generate data for any of its product candidates sufficient to receive regulatory approval in its planned indications, which will be required before they can be commercialized.

Acer has invested substantially all of its efforts and financial resources to identify, acquire and develop its portfolio of product candidates. Its future success is dependent on its ability to successfully further develop,

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obtain regulatory approval for, and commercialize one or more product candidates. Acer currently generates no revenue from sales of any products, and Acer may never be able to develop or commercialize a product candidate.

None of Acer’s product candidates have advanced into a pivotal clinical trial for Acer’s proposed indications. Acer is not permitted to market or promote any of its product candidates before it receives regulatory approval from the FDA or comparable foreign regulatory authorities, and Acer may never receive such regulatory approval for any of its product candidates. Acer cannot be certain that any of its product candidates will be successful in clinical trials or receive regulatory approval. Further, its product candidates may not receive regulatory approval even if they are successful in clinical trials. If Acer does not receive regulatory approvals for its product candidates, Acer may not be able to continue its operations.

Acer may use its financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs or product candidates that may be more profitable or for which there is a greater likelihood of success.

Because Acer has limited financial and human resources, it may forego or delay pursuit of opportunities with some programs or product candidates or for other indications that later prove to have greater commercial potential. Acer’s resource allocation decisions may cause it to fail to capitalize on viable commercial products or more profitable market opportunities. Acer’s spending on current and future research and development programs and future product candidates for specific indications may not yield any commercially viable products. Acer may also enter into additional strategic collaboration agreements to develop and commercialize some of its programs and potential product candidates in indications with potentially large commercial markets. If Acer does not accurately evaluate the commercial potential or target market for a particular product candidate, it may relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements in cases in which it would have been more advantageous for Acer to retain sole development and commercialization rights to such product candidate, or Acer may allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.

Acer may find it difficult to enroll patients in its clinical trials given the limited number of patients who have the diseases for which its product candidates are being studied. Difficulty in enrolling patients could delay or prevent clinical trials of its product candidates.

Identifying and qualifying patients to participate in clinical trials of Acer’s product candidates is essential to its success. The timing of Acer’s clinical trials depends in part on the rate at which Acer can recruit patients to participate in clinical trials of its product candidates, and Acer may experience delays in its clinical trials if Acer encounters difficulties in enrollment.

The eligibility criteria of Acer’s planned clinical trials may further limit the available eligible trial participants as Acer expects to require that patients have specific characteristics that Acer can measure or meet the criteria to assure their conditions are appropriate for inclusion in its clinical trials. Acer may not be able to identify, recruit, and enroll a sufficient number of patients to complete its clinical trials in a timely manner because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical trials, and the willingness of physicians to participate in its planned clinical trials. If patients are unwilling to participate in Acer’s clinical trials for any reason, the timeline for conducting trials and obtaining regulatory approval of its product candidates may be delayed.

If Acer experiences delays in the completion of, or termination of, any clinical trials of its product candidates, the commercial prospects of its product candidates could be harmed, and its ability to generate product revenue from any of these product candidates could be delayed or prevented. In addition, any delays in completing its clinical trials would likely increase its overall costs, impair product candidate development and jeopardize its ability to

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obtain regulatory approval relative to its current plans. Any of these occurrences may harm its business, financial condition, and prospects significantly.

Even if Acer receives marketing approval for its product candidates, such approved products will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense. Additionally, Acer’s product candidates, if approved, could be subject to labeling and other restrictions, and Acer may be subject to penalties and legal sanctions if it fails to comply with regulatory requirements or experience unanticipated problems with its approved products.

If the FDA approves any of Acer’s product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP regulations and GCP for any clinical trials that Acer conducts post-approval. Any marketing approvals that Acer receives for its product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor safety and efficacy.

Later discovery of previously unknown problems with an approved product, including adverse events of unanticipated severity or frequency, or with manufacturing operations or processes, or failure to comply with regulatory requirements, or evidence of acts that raise questions about the integrity of data supporting the product approval, may result in, among other things:

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay marketing approval, manufacturing or commercialization of Acer’s product candidates. Acer cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If Acer is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or not able to maintain regulatory compliance, it may lose any marketing approval that may have been obtained and it may not achieve or sustain profitability, which would adversely affect Acer’s business.

If Acer fails to obtain regulatory approval in jurisdictions outside the United States, it will not be able to market its products in those jurisdictions.

Acer intends to market its product candidates, if approved, in international markets, or in conjunction with collaborators. Such marketing will require separate regulatory approvals in each market and compliance with numerous and varying regulatory requirements. The approval procedures vary from country to country and may require testing in addition to what is required for a marketing application in the United States. Moreover, the time required to obtain approval may differ from that required to obtain FDA approval. In addition, in many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that country. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities

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in other foreign countries or by the FDA. The failure to obtain approval in one jurisdiction may negatively impact Acer’s ability to obtain approval in another jurisdiction. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval and additional or different risks. Acer may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize its products in any market.

Agencies like the FDA and national competition regulators in European countries regulate the promotion and uses of drugs not consistent with approved product labeling requirements. If Acer is found to have improperly promoted its current product candidates for uses beyond those that are approved, Acer may become subject to significant liability.

Regulatory authorities like the FDA and national competition laws in Europe strictly regulate the promotional claims that may be made about prescription products, such as EDSIVO or ACER-001, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or comparable foreign regulatory authorities as reflected in the product’s approved labeling, known as “off-label” use, nor may it be promoted prior to obtaining marketing approval. If Acer receives marketing approval for its product candidates for Acer’s proposed indications, physicians may nevertheless use Acer’s products for their patients in a manner that is inconsistent with the approved label if the physicians personally believe in their professional medical judgment it could be used in such manner. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses.

In addition, the FDA requires that promotional claims not be “false or misleading” as such terms are defined in the FDA’s regulations. For example, the FDA requires substantial evidence, which generally consists of two adequate and well-controlled head-to-head clinical trials, for a company to make a claim that its product is superior to another product in terms of safety or effectiveness. Generally, unless Acer performs clinical trials meeting that standard comparing its product candidates to competitive products and these claims are approved in Acer’s product labeling, Acer will not be able promote its current product candidates as superior to other products. If Acer is found to have made such claims it may become subject to significant liability. In the United States, the federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in improper promotion. The FDA has also requested that companies enter into consent decrees or corporate integrity agreements. The FDA could also seek permanent injunctions under which specified promotional conduct is monitored, changed or curtailed.

Acer’s current and future relationships with healthcare professionals, investigators, consultants, collaborators, actual customers, potential customers and third-party payors in the United States and elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, health information privacy and security and other healthcare laws and regulations, which could expose Acer to sanctions.

Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription of any drug candidates for which Acer obtains marketing approval. Acer’s current and future arrangements with healthcare professionals, investigators, consultants, collaborators, actual customers, potential customers and third-party payors may expose Acer to broadly applicable fraud and abuse and other healthcare laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, that may constrain the business or financial arrangements and relationships through which Acer sells, markets and distributes any drug candidates for which it obtains marketing approval. In addition, Acer may be subject to physician payment transparency laws and patient privacy and security regulation by the federal government and by the U.S. states and foreign jurisdictions in which Acer conducts its business. The applicable federal, state and foreign healthcare laws that may affect Acer’s ability to operate include the following:

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Further, the Affordable Care Act, among other things, amended the intent requirement of the federal Anti-Kickback Statute and certain criminal statutes governing healthcare fraud. A person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it. In addition, the Affordable Care Act provided

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that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

Efforts to ensure that Acer’s future business arrangements with third parties will comply with applicable healthcare laws and regulations may involve substantial costs. It is possible that governmental authorities will conclude that Acer’s business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws. If Acer’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to it, Acer may be subject to significant civil, criminal and administrative penalties, including, without limitation, damages, fines, imprisonment, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of Acer’s operations, which could significantly harm its business. If any of the physicians or other healthcare providers or entities with whom Acer expects to do business, including its current and future collaborators, if any, are found not to be in compliance with applicable laws, those persons or entities may be subject to criminal, civil or administrative sanctions, including exclusion from participation in government healthcare programs, which could also affect Acer’s business.

The impact of recent healthcare reform legislation and other changes in the healthcare industry and healthcare spending on Acer is currently unknown, and may adversely affect its business model.

In the United States and some foreign jurisdictions, legislative and regulatory changes and proposed changes regarding the healthcare system could prevent or delay marketing approval of Acer’s drug candidates, restrict or regulate post-approval activities and affect its ability to profitably sell any drug candidates for which Acer obtains marketing approval.

Acer’s revenue prospects could be affected by changes in healthcare spending and policy in the United States and abroad. Acer operates in a highly regulated industry and new laws, judicial decisions, or new interpretations of existing laws, or decisions, related to healthcare availability, the method of delivery or payment for healthcare products and services could negatively impact Acer’s business, financial condition, results of operations and prospects. There is significant interest in promoting health care reform, as evidenced by the enactment in the United States of the Affordable Care Act. Among other things, the Affordable Care Act contains provisions that may reduce the profitability of drug products, including, for example, revising the methodology by which rebates owed by manufacturers for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated, extending the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care plans, imposing mandatory discounts for certain Medicare Part D beneficiaries, and subjecting drug manufacturers to payment of an annual fee.

In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. On August 2, 2011, the Budget Control Act of 2011 among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions to Medicare payments to providers of 2% per fiscal year, which started in April 2013, and, due to subsequent legislative amendments, will remain in effect through 2024 unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, also reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers.

Acer expects that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that it receives for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent Acer from being able to generate revenue or commercialize Acer’s drugs.

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It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing healthcare legislation. Acer cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

If Acer fails to comply with environmental, health and safety laws and regulations, Acer could become subject to fines or penalties or incur costs that could have a material adverse effect on its business, financial condition or results of operations.

Acer’s research and development activities and its third-party manufacturers’ and suppliers’ activities involve the controlled storage, use, and disposal of hazardous materials, including the components of its product candidates and other hazardous compounds. Acer and its manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at Acer’s and its manufacturers’ facilities pending their use and disposal. Acer cannot eliminate the risk of contamination, which could cause an interruption of its commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products. Although Acer believes that the safety procedures utilized by it and its third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, Acer cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, Acer may be held liable for any resulting damages and such liability could exceed its resources and state or federal or other applicable authorities may curtail Acer’s use of specified materials and/or interrupt its business operations. Furthermore, environmental laws and regulations are complex, change frequently, and have tended to become more stringent. Acer cannot predict the impact of such changes and cannot be certain of its future compliance. Acer does not currently carry biological or hazardous waste insurance coverage.

Other Risks Related to Acer’s Business

Due to Acer’s limited resources and access to capital, it must decide to prioritize development of its current product candidates for certain indications and at certain doses. These decisions may prove to have been wrong and may materially adversely affect Acer’s business, financial condition, results of operations and prospects.

Because Acer has limited resources and access to capital to fund its operations, it must decide which dosages and indications to pursue for the clinical development of its current product candidates and the amount of resources to allocate to each. Acer’s decisions concerning the allocation of research, collaboration, management and financial resources toward dosages or therapeutic areas may not lead to the development of viable commercial products and may divert resources away from better opportunities. If Acer makes incorrect determinations regarding the market potential of its current product candidates or misreads trends in the pharmaceutical industry, Acer’s business, financial condition, results of operations and prospects could be materially adversely affected.

Acer may not be able to win government, academic institution or non-profit contracts or grants.

From time to time, Acer may apply for contracts or grants from government agencies, non-profit entities and academic institutions. Such contracts or grants can be highly attractive because they provide capital to fund the

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ongoing development of Acer’s product candidates without diluting its shareholders. However, there is often significant competition for these contracts or grants. Entities offering contracts or grants may have requirements to apply for or to otherwise be eligible for certain contracts or grants that Acer’s competitors may be able to satisfy that Acer cannot. In addition, such entities may make arbitrary decisions as to whether to offer contracts or make grants, to whom the contracts or grants may or will be awarded and the size of the contracts or grants to each awardee. Even if Acer is able to satisfy the award requirements, there is no guarantee that Acer will be a successful awardee. Therefore, Acer may not be able to win any contracts or grants in a timely manner, if at all.

If Acer fails to attract and retain key management and scientific personnel, it may be unable to successfully develop or commercialize its product candidates.

Acer’s success as a specialty pharmaceutical company depends on its continued ability to attract, retain and motivate highly qualified management and scientific and clinical personnel. The loss of the services of any of Acer’s senior management could delay or prevent obtaining marketing approval or commercialization of its product candidates.

Acer may not be able to attract or retain qualified management and scientific personnel in the future due to the intense competition for a limited number of qualified personnel among specialty pharmaceutical businesses, and other pharmaceutical, biotechnology and other businesses. Acer’s failure to attract, hire, integrate and retain qualified personnel could impair its ability to achieve its business objectives.

If a successful product liability claim or series of claims is brought against Acer for uninsured liabilities or in excess of insured liabilities, Acer could be forced to pay substantial damage awards.

The use of any of Acer’s product candidates in clinical trials, and the sale of any approved products, may expose Acer to product liability claims. Acer currently maintains product liability insurance coverage for up to $5.0 million per occurrence, up to an aggregate limit of $5.0 million. Acer intends to monitor the amount of coverage it maintains as the size and design of its clinical trials evolve and adjust the amount of coverage it maintains accordingly. However, there is no assurance that such insurance coverage will fully protect Acer against some or all of the claims to which it might become subject. Acer might not be able to maintain adequate insurance coverage at a reasonable cost or in sufficient amounts or scope to protect it against potential losses. In the event a claim is brought against Acer, it might be required to pay legal and other expenses to defend the claim, as well as uncovered damages awards resulting from a claim brought successfully against Acer.

Furthermore, whether or not Acer is ultimately successful in defending any such claims, Acer might be required to direct financial and managerial resources to such defense and adverse publicity could result, all of which could harm Acer’s business.

Acer’s employees, independent contractors, investigators, contract research organizations, consultants, collaborators and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

Acer is exposed to the risk that its employees and other third parties may engage in fraudulent conduct or other illegal activity. Misconduct by employees and other third parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to Acer that violate FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA, manufacturing standards, federal and state healthcare fraud and abuse laws and regulations, or laws that require the reporting of financial information or data accurately. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials, which could

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result in regulatory sanctions and serious harm to Acer’s reputation. It is not always possible to identify and deter employee and other third-party misconduct, and the precautions Acer takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Acer from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws. If any such actions are instituted against Acer, and Acer is not successful in defending itself or asserting its rights, those actions could have a significant impact on Acer’s business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings and curtailment or restructuring of Acer’s operations, any of which could adversely affect Acer’s ability to operate.

Acer will need to expand its organization and Acer may experience difficulties in managing this growth, which could disrupt its operations.

As of June 30, 2017, Acer had three full-time employees. As Acer’s development and commercialization plans and strategies develop, Acer expects to need additional managerial, operational, sales, marketing, financial, legal and other resources. Its management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these growth activities. As Acer advances its product candidates through clinical trials, it will need to expand its development, regulatory, manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for Acer. As Acer’s operations expand, Acer expects that it will need to manage additional relationships with such third parties, as well as additional collaborators and suppliers.

Acer may not be able to effectively manage the expansion of its operations, which may result in weaknesses in its infrastructure, operational mistakes, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. Acer’s expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional product candidates. If its management is unable to effectively manage its growth, its expenses may increase more than expected, its ability to generate and/or grow revenue could be reduced and Acer may not be able to implement its business strategy. Acer’s future financial performance and its ability to commercialize product candidates and compete effectively will depend, in part, on its ability to effectively manage any future growth.

Acer’s internal computer systems, or those of its development collaborators, third-party clinical research organizations or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of Acer’s product development programs.

Despite the implementation of security measures, Acer’s internal computer systems and those of its current and any future CROs and other contractors, consultants and collaborators are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While Acer has not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in its operations, it could result in a material disruption of Acer’s development programs and its business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in Acer’s marketing approval efforts and significantly increase its costs to recover or reproduce the data. Likewise, Acer intends to rely on third parties to manufacture its product candidates and conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on Acer’s business. To the extent that any disruption or security breach were to result in a loss of, or damage to, Acer’s data or applications, or inappropriate disclosure of confidential or proprietary information, Acer could incur liability and the further development and commercialization of its product candidates could be delayed.

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Risks Related to Commercialization of Acer’s Product Candidates

Even if Acer obtains the required regulatory approvals in the United States and other territories, the commercial success of its product candidates will depend on market awareness and acceptance of its product candidates.

Even if Acer obtains marketing approval for its current product candidates or any other product candidates that it may develop or acquire in the future, the products may not gain market acceptance among physicians, key opinion leaders, healthcare payors, patients and the medical community. Market acceptance of any approved products depends on a number of factors, including:

Market acceptance is critical to Acer’s ability to generate revenue. Any product candidate, if approved and commercialized, may be accepted in only limited capacities or not at all. If any approved products are not accepted by the market to the extent that Acer expects, Acer may not be able to generate revenue and its business would suffer.

If the market opportunities for Acer’s product candidates are smaller than Acer believes they are, then Acer’s revenues may be adversely affected and its business may suffer.

The diseases that Acer’s current and future product candidates are being developed to address are rare. Acer’s projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with Acer’s product candidates, and Acer’s assumptions relating to pricing are based on estimates. Given the small number of patients who have the diseases that Acer is targeting, its eligible patient population and pricing estimates may differ significantly from the actual market addressable by its product candidates.

Currently, most reported estimates of the prevalence of vEDS, UCD and MSUD, and are based on studies of small subsets of the population of specific geographic areas, which are then extrapolated to estimate the prevalence of the diseases in the broader world population. It is difficult to precisely measure the incidence or prevalence of vEDS in any population. Studies estimate the prevalence of vEDS as ranging from approximately 1 in 90,000 to 1 in 250,000. Studies indicate that MSUD affects an estimated 1 in 185,000 infants worldwide.

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Approximately 3,000 patients suffer from MSUD worldwide, of whom approximately 800 are located in the United States. It is estimated that vEDS, UCD and MSUD collectively impact approximately 4,900 patients in the United States. As new studies are performed the estimated prevalence of these diseases may change. The number of patients may turn out to be lower than expected. There can be no assurance that the prevalence of vEDS, UCD or MSUD in the study populations accurately reflect the prevalence of these diseases in the broader world population. If Acer’s estimates of the prevalence of vEDS, UCD or MSUD or of the number of patients who may benefit from treatment with EDSIVO or ACER-001 prove to be incorrect, the market opportunities for Acer’s product candidates may be smaller than Acer believes they are, Acer’s prospects for generating revenue may be adversely affected and its business may suffer. Likewise, the potentially addressable patient population for each of Acer’s product candidates may be limited or may not be amenable to treatment with its product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect Acer’s business, financial condition, results of operations and prospects

Acer currently has limited marketing and sales experience. If Acer is unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell its product candidates, Acer may be unable to generate any revenue.

Acer has never commercialized a product candidate, and Acer currently has no marketing and sales organization. To the extent Acer’s product candidates are approved for marketing, if Acer is unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell its product candidates, Acer may not be able to effectively market and sell its product candidates or generate product revenue.

Acer has never commercialized a product candidate, and Acer currently does not have marketing, sales or distribution capabilities for its product candidates. In order to commercialize any of Acer’s products that receive marketing approval, it would have to build marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and Acer may not be successful in doing so. In the event of successful development of Acer’s product candidates, if Acer elects to build a targeted specialty sales force, such an effort would be expensive and time consuming. Any failure or delay in the development of Acer’s internal sales, marketing and distribution capabilities would adversely impact the commercialization of these products. Acer may choose to collaborate with third parties that have their own sales forces and established distribution systems, in lieu of or to augment any sales force and distribution systems Acer may create. If Acer is unable to enter into collaborations with third parties for the commercialization of approved products, if any, on acceptable terms or at all, or if any such collaborator does not devote sufficient resources to the commercialization of Acer’s product or otherwise fails in commercialization efforts, Acer may not be able to successfully commercialize its product candidates if it receives marketing approval. If Acer is not successful in commercializing its product candidates, either on its own or through collaborations with one or more third parties, its future revenue will be materially and adversely impacted.

If Acer fails to enter into strategic relationships or collaborations, its business, financial condition, commercialization prospects and results of operations may be materially adversely affected.

Acer’s product development programs and the potential commercialization of its current product candidates will require substantial additional cash to fund expenses. Therefore, in addition to financing the development of Acer’s product candidates through additional equity financings or through debt financings, Acer may decide to enter into collaborations with pharmaceutical or biopharmaceutical companies for the development and potential commercialization of its product candidates.

Acer faces significant competition in seeking appropriate collaborators. Collaborations are complex and time-consuming to negotiate and document. Acer may also be restricted under existing and future collaboration agreements from entering into agreements on certain terms with other potential collaborators. Acer may not be able to negotiate collaborations on acceptable terms, or at all. If that were to occur, Acer may have to curtail the development of a particular product, reduce or delay its development program or one or more of its other

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development programs, delay its potential commercialization or reduce the scope of its sales or marketing activities, or increase its expenditures and undertake development or commercialization activities at its own expense. If Acer elects to increase its expenditures to fund development or commercialization activities on its own, Acer may need to obtain additional capital, which may not be available to Acer on acceptable terms or at all. If Acer does not have sufficient funds, Acer will not be able to bring its product candidates to market and generate product revenue. If Acer does enter into a new collaboration agreement, it could be subject to the following risks, each of which may materially harm Acer’s business, commercialization prospects and financial condition:

Acer’s product candidate EDSIVO has not been approved for any indication in the United States, which may result in greater research and development expenses, regulatory issues that could delay or prevent approval, or discovery of unknown or unanticipated adverse effects.

EDSIVO is a repurposing of celiprolol for the treatment of vEDS. An NDA for this drug in the treatment of hypertension was filed with the FDA in 1987 but not approved. However, the drug was approved in Europe for the treatment of hypertension since 1984. There can be no assurance that problems related to the development of this drug candidate will not arise in the future, which may cause significant delays or Acer may not be able to resolve.

Regulatory approval of EDSIVO may be more expensive and take longer than for other, more well-known or extensively studied pharmaceutical product candidates due to Acer’s and regulatory agencies’ lack of experience with celiprolol. The novelty of this product candidate may lengthen the regulatory review process, require Acer to conduct additional studies or clinical trials, increase Acer’s development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of Acer’s product candidates or lead to significant post-approval limitations or restrictions. There is also an increased risk that Acer may discover previously unknown or unanticipated adverse effects during Acer’s clinical trials and beyond. Any such events could adversely impact Acer’s business prospects, financial condition and results of operations.

Coverage and reimbursement may be limited or unavailable in certain market segments for Acer’s product candidates, which could make it difficult for Acer to sell its products profitably.

There is significant uncertainty related to third-party coverage and reimbursement of newly approved pharmaceuticals. Market acceptance and sales of any approved product candidates will depend significantly on the availability of coverage and adequate reimbursement from third-party payors and may be affected by existing and future healthcare reform measures. Patients who are prescribed treatments for their conditions and providers performing the prescribed services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Government authorities and third-party payors, such as private health insurers, health maintenance organizations, and government payors like Medicare and Medicaid, decide which drugs they will pay for and establish reimbursement levels. Increasingly, third-party payors are requiring that drug companies

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provide them with predetermined discounts from list prices and are challenging the prices charged for drugs and products. Coverage and reimbursement may not be available for any product that Acer commercializes and, even if coverage is provided, the level of reimbursement may not be satisfactory. Inadequate reimbursement levels may adversely affect the demand for, or the price of, any drug candidate for which Acer obtains marketing approval.

Reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is, among other things:

Obtaining coverage and adequate reimbursement approval for a product from a government or other third-party payor is a time consuming and costly process that could require Acer to conduct expensive pharmacoeconomic studies and provide supporting scientific, clinical and cost-effectiveness data for the use of Acer’s products to the payor. Acer may not be able to provide data sufficient to gain acceptance with respect to coverage and adequate reimbursement. In addition to examining the medical necessity and cost-effectiveness of new products, coverage may be limited to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication. There may also be formulary placements that result in lower reimbursement levels and higher cost-sharing borne by patients, any of which could have an adverse effect on Acer’s revenues and profits. Moreover, a third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available to enable Acer to maintain price levels sufficient to realize an appropriate return on its investment in product development. Additionally, coverage and reimbursement for drug products can differ significantly from payor to payor. One third-party payor’s decision to cover a particular drug product does not ensure that other payors will also provide coverage for the drug product, or even if coverage is available, establish an adequate reimbursement rate.

Acer cannot be sure that coverage or adequate reimbursement will be available for any of its product candidates. Also, Acer cannot be sure that reimbursement amounts will not reduce the demand for, or the price of, its products. If reimbursement is not available or is available only to limited levels, Acer may not be able to commercialize certain of its products. In the United States, third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement of new drugs. Third-party payors are increasingly challenging the prices charged for medical products and services, examining the medical necessity and reviewing the cost-effectiveness of drug products and medical services and questioning safety and efficacy. As a result, significant uncertainty exists as to whether and how much third-party payors will reimburse patients for their use of newly approved drugs, which in turn will put pressure on the pricing of drugs. Additionally, emphasis on managed care in the United States has increased and Acer expects will continue to increase the pressure on drug pricing. If third-party payors do not consider Acer’s products to be cost-effective compared to other available therapies, they may not cover the products for which Acer receives FDA approval or, if they do, the level of payment may not be sufficient to allow Acer to sell its products at a profit.

The U.S. government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs and drug prices in general, including for therapies for rare diseases. These measures include price controls, transparency requirements triggered by the introduction of new, high-cost drugs onto the market, drug re-importation, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs. Some laws

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and regulations have already been enacted in these areas, and additional measures have been introduced or are under consideration at both the federal and state levels. Additionally, at the request of U.S. Senators, the Government Accountability Office is currently investigating abuses of the Orphan Drug Act, which could potentially lead to legislation or regulation that affects reimbursement for drugs with small patient populations. Other governmental funding restrictions, legislative proposals and interpretations of policy may negatively impact amounts available through reimbursement, including by restricting payment increases to hospitals and other providers through reimbursement systems. Acer is not able to predict whether changes will be made in the rates prescribed by governmental programs, whether other controls will be imposed on drug prices, or, if such measures do go into effect, what impact they could have on Acer’s business. However, adoption of such controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals such as Acer’s drug product candidates and could adversely affect Acer’s net revenue and results.

In addition, in the United States, the Affordable Care Act contains provisions that have the potential to substantially change healthcare delivery and financing, including impacting the profitability of drugs. For example, the Affordable Care Act revised the methodology by which rebates owed by manufacturers for covered outpatient drugs are calculated under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of covered drugs dispensed to individuals enrolled in Medicaid managed care organizations and subjected manufacturers to new annual fees for certain branded prescription drugs. On May 4, 2017, the House of Representatives passed the American Health Care Act (H.R. 1628), which would repeal large parts of the Affordable Care Act, including the annual fees for branded prescription drugs, and would significantly reduce spending on Medicaid. The Senate is currently considering this legislation, and any repeal of the Affordable Care Act could impact the profitability of Acer’s drug product candidates.

Pricing and reimbursement methodologies vary widely from country to country. Some countries require that drug products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies. For example, the European Union provides options for its member states to restrict the range of drug products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. European Union member states may approve a specific price for a drug product or they may instead adopt a system of direct or indirect controls on Acer’s profitability in placing the drug product on the market. Other member states allow companies to fix their own prices for drug products, but monitor and control company profits. The downward pressure on healthcare costs in general, particularly prescription drugs, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. In addition, in some countries, cross-border imports from low-priced markets exert competitive pressure that may reduce pricing within a country. Any country that has price controls or reimbursement limitations for drug products may not allow favorable reimbursement and pricing arrangements for any of Acer’s products.

Coverage policies, third-party reimbursement rates and drug pricing regulation may change at any time, and there is the potential for significant movement in these areas in the foreseeable future. Even if favorable coverage and reimbursement status is attained for one or more products for which Acer receives marketing approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Acer faces substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully, than Acer does.

The life sciences industry is highly competitive, and Acer faces significant competition from many pharmaceutical, biopharmaceutical and biotechnology companies that are generally developing and marketing therapeutic products. Such competition may include large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic companies and medical technology companies. Acer’s future success depends on its ability to demonstrate and maintain a competitive advantage with respect to the design,

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development and commercialization of its product candidates for the treatment of orphan and ultraorphan diseases for which there is a small patient population in the United States. A drug designated an orphan drug may receive up to seven years of exclusive marketing in the United States for that indication. Acer’s objective is to design, develop and commercialize product candidates by repurposing or reformulating existing drugs for orphan diseases with significant unmet medical need.

Many of Acer’s potential competitors have significantly greater financial, manufacturing, marketing, development, technical and human resources than Acer does. Large pharmaceutical and biotechnology companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, recruiting patients and in manufacturing clinical products. These companies also have significantly greater research and marketing capabilities than Acer does and may also have products that have been approved or are in late stages of development, and have collaborative arrangements in Acer’s target markets with leading companies and research institutions. Established companies may also invest heavily to accelerate discovery and development of compounds that could make the product candidates that Acer develops obsolete. As a result of all of these factors, the obtaining of orphan drug designation for Acer’s product candidates is essential to its viability since its competitors may, among other things:

Should any of these events occur, Acer’s business, financial condition, results of operations, and prospects could be materially adversely affected. If Acer is not able to compete effectively against potential competitors, its business will not grow and its financial condition and operations will suffer.

Acer believes that its ability to successfully compete will depend on its ability to obtain orphan drug designation as well as:

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If Acer’s competitors are able to obtain orphan drug exclusivity for their products that are the same drug as Acer’s product candidates, Acer may not be able to have competing products approved by the applicable regulatory authority for a significant period of time.

Acer expects to seek orphan drug designation from the FDA and the European Medicines Agency, or the EMA, for EDSIVO and ACER-001, and there can be no assurance that Acer will be successful. If Acer is unable to secure orphan status in either Europe or the United States, it may have a material negative effect on Acer’s business.

Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, that product is entitled to a period of marketing exclusivity, which precludes the applicable regulatory authority from approving another marketing application for the same drug for the same indication for that time period. The applicable period is seven years in the United States and ten years in the European Union. The exclusivity period in the European Union can be reduced to six years if the product no longer meets the criteria for orphan drug designation or if its commercialization is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or the EMA determines that the request for designation was materially defective or if the manufacturer is unable to ensure sufficient quantity of the product to meet the needs of patients with the rare disease or condition. Obtaining orphan drug exclusivity for EDSIVO and ACER-001 may be important to the product candidate’s success. Even if Acer obtains orphan drug exclusivity for EDSIVO for vEDS and ACER-001 for UCD and MSUD, Acer may not be able to maintain it. For example, if a competitive product that treats the same disease as Acer’s product candidate is shown to be clinically superior to Acer’s product candidate, any orphan drug exclusivity Acer has obtained will not block the approval of such competitive product and Acer may effectively lose what had previously been orphan drug exclusivity. Orphan drug exclusivity for EDSIVO or ACER-001 also will not bar the FDA from approving another celiprolol drug product or a sodium phenylbutyrate, or NaPB product, for another indication. In the U.S., reforms to the Orphan Drug Act, if enacted, could also materially affect Acer’s ability to maintain orphan drug exclusivity for EDSIVO for vEDS and ACER-001 for UCD and MSUD.

Price controls may be imposed in foreign markets, which may adversely affect Acer’s future profitability.

In some countries, particularly member states of the European Union, the pricing of prescription drugs is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, Acer may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of its product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. If reimbursement of Acer’s products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, Acer’s business could be adversely affected.

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Risks Related to Third Parties

Acer relies on third-party suppliers and other third parties for production of its product candidates and Acer’s dependence on these third parties may impair the advancement of its research and development programs and the development of its product candidates.

Acer does not currently own or operate manufacturing facilities for clinical or commercial production of its product candidates. Acer lacks the resources and the capability to manufacture any of its product candidates on a clinical or commercial scale. Instead, Acer relies on, and expects to continue to rely on, third parties for the supply of raw materials and manufacture of drug supplies necessary to conduct its preclinical studies and clinical trials. Acer’s reliance on third parties may expose Acer to more risk than if Acer was to manufacture its current product candidates or other products itself. Delays in production by third parties could delay Acer’s clinical trials or have an adverse impact on any commercial activities. In addition, the fact that Acer is dependent on third parties for the manufacture of and formulation of its product candidates means that Acer is subject to the risk that the products may have manufacturing defects that Acer has limited ability to prevent or control. Although Acer oversees these activities to ensure compliance with its quality standards, budgets and timelines, Acer has had and will continue to have less control over the manufacturing of its product candidates than potentially would be the case if it was to manufacture its product candidates. Further, the third parties Acer deals with could have staffing difficulties, might undergo changes in priorities or may become financially distressed, which would adversely affect the manufacturing and production of Acer’s product candidates. In addition, a third party could be acquired by, or enter into an exclusive arrangement with, one of Acer’s competitors, which would adversely affect Acer’s ability to access the formulations it requires.

The facilities used by Acer’s current contract manufacturers and any future manufacturers to manufacture Acer’s product candidates must be inspected by the FDA after Acer submits its NDA. Acer does not control the manufacturing process of, and is completely dependent on, its contract manufacturers for compliance with the regulatory requirements, known as cGMPs, for manufacture of both active drug substances and finished drug products. If Acer’s contract manufacturers cannot successfully manufacture material that conforms to Acer’s specifications and the strict regulatory requirements of the FDA or others, the FDA may refuse to approve Acer’s NDA. If the FDA or a comparable foreign regulatory authority does not approve Acer’s NDA because of concerns about the manufacture of its product candidates or if significant manufacturing issues arise in the future, Acer may need to find alternative manufacturing facilities, which would significantly impact its ability to develop its product candidates, obtain marketing approval of its NDA or to continue to market its product candidates, if approved. Although Acer is ultimately responsible for ensuring compliance with these regulatory requirements, Acer does not have day-to-day control over a contract manufacturing organization, or CMO, or other third-party manufacturer’s compliance with applicable laws and regulations, including cGMPs and other laws and regulations, such as those related to environmental health and safety matters. Any failure to achieve and maintain compliance with these laws, regulations and standards could subject Acer to the risk that Acer may have to suspend the manufacturing of its product candidates or that obtained approvals could be revoked, which would adversely affect Acer’s business and reputation. In addition, third-party contractors, such as Acer’s CMOs, may elect not to continue to work with Acer due to factors beyond Acer’s control. They may also refuse to work with Acer because of their own financial difficulties, business priorities or other reasons, at a time that is costly or otherwise inconvenient for Acer. If Acer was unable to find adequate replacement or another acceptable solution in time, Acer’s clinical trials could be delayed or its commercial activities could be harmed.

Problems with the quality of the work of third parties, may lead Acer to seek to terminate its working relationships and use alternative service providers. However, making this change may be costly and may delay clinical trials. In addition, it may be very challenging, and in some cases impossible, to find replacement service providers that can develop and manufacture Acer’s drug candidates in an acceptable manner and at an acceptable cost and on a timely basis. The sale of products containing any defects or any delays in the supply of necessary services could adversely affect Acer’s business, financial condition, results of operations, and prospects.

Growth in the costs and expenses of components or raw materials may also adversely affect Acer’s business, financial condition, results of operations, and prospects. Supply sources could be interrupted from time to time

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and, if interrupted, supplies may not be resumed (whether in part or in whole) within a reasonable timeframe and at an acceptable cost or at all.

Acer plans to rely on third parties to conduct clinical trials for its product candidates. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, it may cause delays in commencing and completing clinical trials of Acer’s product candidates or Acer may be unable to obtain marketing approval for or commercialize its product candidates.

Clinical trials must meet applicable FDA and foreign regulatory requirements. Acer does not have the ability to independently conduct Phase 2 or Phase 3 clinical trials for any of its product candidates. Acer expects to rely on third parties, such as CROs, medical institutions, clinical investigators and contract laboratories, to conduct all of its clinical trials of its product candidates; however, Acer remains responsible for ensuring that each of its clinical trials is conducted in accordance with its investigational plan and protocol. Moreover, the FDA and other foreign regulatory authorities require Acer to comply with IND and human subject protection regulations and current good clinical practice standards, commonly referred to as GCPs, for conducting, monitoring, recording, and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials. Acer’s reliance on third parties does not relieve Acer of these responsibilities and requirements. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If Acer or any of its third-party contractors fail to comply with applicable GCPs, the clinical data generated in Acer’s clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require Acer to perform additional clinical trials before approving its marketing applications. There is no assurance that upon inspection by a given regulatory authority, such regulatory authority will determine that any of Acer’s clinical trials comply with GCPs. Acer’s failure to comply with these regulations may require Acer to repeat clinical trials, which would delay the marketing approval process.

There are significant requirements imposed on Acer and on clinical investigators who conduct clinical trials that Acer sponsors. Although Acer is responsible for selecting qualified CROs or clinical investigators, providing them with the information they need to conduct the clinical trials properly, ensuring proper monitoring of the clinical trials, and ensuring that the clinical trials are conducted in accordance with the general investigational plan and protocols contained in the IND, Acer cannot ensure that the CROs or clinical investigators will maintain compliance with all regulatory requirements at all times. The pharmaceutical industry has experienced cases where clinical investigators have been found to incorrectly record data, omit data, or even falsify data. Acer cannot ensure that the CROs or clinical investigators in Acer’s trials will not make mistakes or otherwise compromise the integrity or validity of data, any of which would have a significant negative effect on Acer’s ability to obtain marketing approval, its business, and its financial condition.

Acer or the third parties it relies on may encounter problems in clinical trials that may cause Acer or the FDA or foreign regulatory agencies to delay, suspend or terminate Acer’s clinical trials at any phase. These problems could include the possibility that Acer may not be able to manufacture sufficient quantities of materials for use in its clinical trials, conduct clinical trials at its preferred sites, enroll a sufficient number of patients for its clinical trials at one or more sites, or begin or successfully complete clinical trials in a timely fashion, if at all. Furthermore, Acer, the FDA or foreign regulatory agencies may suspend clinical trials of Acer’s product candidates at any time if Acer or they believe the subjects participating in the trials are being exposed to unacceptable health risks, whether as a result of adverse events occurring in Acer’s trials or otherwise, or if Acer or they find deficiencies in the clinical trial process or conduct of the investigation.

The FDA and foreign regulatory agencies could also require additional clinical trials before or after granting of marketing approval for any products, which would result in increased costs and significant delays in the development and commercialization of such products and could result in the withdrawal of such products from the market after obtaining marketing approval. Acer’s failure to adequately demonstrate the safety and efficacy of a product candidate in clinical development could delay or prevent obtaining marketing approval of the

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product candidate and, after obtaining marketing approval, data from post-approval studies could result in the product being withdrawn from the market, either of which would likely have a material adverse effect on Acer’s business.

Acer may be unable to realize the potential benefits of any collaboration.

Even if Acer is successful in entering into a collaboration with respect to the development and/or commercialization of one or more product candidates, there is no guarantee that the collaboration will be successful. Collaborations may pose a number of risks, including:

As a result, a collaboration may not result in the successful development or commercialization of Acer’s product candidates.

Acer enters into various contracts in the normal course of its business in which Acer indemnifies the other party to the contract. In the event Acer has to perform under these indemnification provisions, it could have a material adverse effect on its business, financial condition and results of operations.

In the normal course of business, Acer periodically enters into academic, commercial, service, collaboration, licensing, consulting and other agreements that contain indemnification provisions. With respect to Acer’s academic and other research agreements, Acer typically indemnifies the institution and related parties from losses arising from claims relating to the products, processes or services made, used, sold or performed pursuant to the agreements for which Acer has secured licenses, and from claims arising from Acer’s or its sublicensees’ exercise of rights under the agreement.

Should Acer’s obligation under an indemnification provision exceed applicable insurance coverage or if Acer were denied insurance coverage, Acer’s business, financial condition and results of operations could be adversely

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affected. Similarly, if Acer is relying on a collaborator to indemnify Acer and the collaborator is denied insurance coverage or the indemnification obligation exceeds the applicable insurance coverage, and if the collaborator does not have other assets available to indemnify Acer, its business, financial condition and results of operations could be adversely affected.

If Acer’s contractors fail to comply with continuing regulations, Acer or they may be subject to enforcement action that could adversely affect Acer.

If any of Acer’s contractors fail to comply with the requirements of the FDA and other applicable U.S. or foreign governmental or regulatory authorities or previously unknown problems with Acer’s products, manufacturers or manufacturing processes are discovered, Acer or the contractor could be subject to administrative or judicially imposed sanctions, including: restrictions on the products, the manufacturers or manufacturing processes Acer uses, warning letters, civil or criminal penalties, fines, injunctions, product seizures or detentions, import bans, voluntary or mandatory product recalls and publicity requirements, suspension or withdrawal of regulatory approvals, total or partial suspension of production, and refusal to approve pending applications for marketing approval of new products to approved applications.

Risks Related to Acer’s Intellectual Property

Acer’s proprietary rights may not adequately protect its technologies and product candidates.

Acer’s commercial success will depend in part on its ability to obtain additional patents and protect its existing patent position as well as its ability to maintain adequate protection of other intellectual property for its technologies, product candidates, and any future products in the United States and other countries. If Acer does not adequately protect its intellectual property, competitors may be able to use Acer’s technologies and erode or negate any competitive advantage Acer may have, which could harm Acer’s business and ability to achieve profitability. The laws of some foreign countries do not protect Acer’s proprietary rights to the same extent or in the same manner as U.S. laws, and Acer may encounter significant problems in protecting and defending its proprietary rights in these countries. Acer will be able to protect its proprietary rights from unauthorized use by third parties only to the extent that Acer’s proprietary technologies, product candidates and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets.

Acer applies for patents covering both its technologies and product candidates, as it deems appropriate. However, Acer may fail to apply for patents on important technologies or product candidates in a timely fashion, or at all. Acer’s existing patents and any future patents it obtains may not be sufficiently broad to prevent others from practicing its technologies or from developing competing products and technologies. Acer cannot be certain that its patent applications will be approved or that any patents issued will adequately protect Acer’s intellectual property.

While Acer is responsible for and has control over the filing and prosecuting of patent applications and maintaining patents which cover making, using or selling EDSIVO and ACER-001 Acer may lose such rights if it decides to allow any licensed patent to lapse. If Acer fails to appropriately prosecute and maintain patent protection for any of its product candidates, Acer’s ability to develop and commercialize those product candidates may be adversely affected and Acer may not be able to prevent competitors from making, using and selling competing products.

Moreover, the patent positions of pharmaceutical companies are highly uncertain and involve complex legal and factual questions for which important legal principles are evolving and remain unresolved. As a result, the validity and enforceability of patents cannot be predicted with certainty. In addition, Acer does not know whether:

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