Notes to Condensed Financial Statements

(Unaudited)

The fair value methodology for the warrant liabilities is disclosed in Note 12.

The carrying amounts reported in the financial statements for cash and cash equivalents (Level 1), prepaid expenses and other assets, and accounts payable and accrued expenses approximate fair value because of the short term maturity of these financial instruments.

The following table sets forth a reconciliation of changes in the nine months ended September 30, 2015 and 2014 in the fair value of the liabilities classified as Level 3 in the fair value hierarchy:

	Warrant Liabilities
Balance at January 1, 2015	$	3,768,351
Additions		-
Unrealized gains, net		(2,282,476	)
Transfers out of level 3		(9,378	)
Balance at September 30, 2015	$	1,476,497

	Warrant Liabilities
Balance at January 1, 2014	$	5,034,058
Additions		3,691,429
Unrealized losses, net		6,793,765
Transfers out of level 3		(10,137,243	)
Balance at September 30, 2014	$	5,382,009

Additions consist of the fair value of warrant liabilities upon issuance. Transfers out of Level 3 for warrant liabilities consist of warrant exercises, where the liability is converted to additional paid-in capital upon exercise. The Company’s policy is to recognize transfers in and transfers out as of the actual date of the event or change in circumstance that caused the transfer.

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Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

The following discussion should be read in conjunction with the unaudited condensed financial statements and notes thereto set forth in Item 1 of this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.

Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as “believe,” “estimate,” “expect,” “anticipate,” “may,” “intend” and other similar expressions, are intended to identify forward-looking statements. We caution that forward-looking statements are based largely on our expectations, and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors that are, in many instances, beyond our control. Actual results, performance or achievements may differ materially from those contemplated, expressed, or implied by the forward-looking statements.

Although we believe that the expectations reflected in our forward-looking statements are reasonable as of the date we make them, actual results could differ materially from those currently anticipated due to a number of factors, including risks relating to:

·	our understandings and beliefs regarding the role of certain biological mechanisms and processes in cancer;

·	our drug candidates being in early stages of development, including in pre-clinical development;

·	our ability to initially develop drug candidates for orphan indications to reduce the time-to-market and take advantage of certain incentives provided by the U.S. Food and Drug Administration;

·	our ability to transition from our initial focus on developing drug candidates for orphan indications to candidates for more highly prevalent indications;

·	our ability to successfully and timely complete clinical trials for our drug candidates in clinical development;

·	uncertainties related to the timing, results and analyses related to our drug candidates in pre-clinical development;

·	our ability to obtain the necessary U.S. and international regulatory approvals for our drug candidates;

·	our reliance on third-party contract research organizations and other investigators and collaborators for certain research and development services;

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·	our ability to maintain or engage third-party manufacturers to manufacture, supply, store and distribute supplies of our drug candidates for our clinical trials;

·	our ability to form strategic alliances and partnerships with pharmaceutical companies and other partners for sales and marketing of certain of our product candidates;

·	demand for and market acceptance of our drug candidates;

·	the scope and validity of our intellectual property protection for our drug candidates and our ability to develop our candidates without infringing the intellectual property rights of others;

·	our lack of profitability and the need for additional capital to operate our business; and

·	other risks and uncertainties, including those set forth herein and in our Annual Report on Form 10-K under the caption “Risk Factors” and those detailed from time to time in our filings with the Securities and Exchange Commission.

These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

We are a clinical stage biopharmaceutical company dedicated to the discovery, development and commercialization of innovative new treatments for cancer and other serious medical conditions. Our mission is to discover and develop new medicines for diseases that have significant unmet medical needs and no effective cures, particularly high-mortality cancers. Our pipeline includes one oncology candidate currently in Phase II clinical trials, two oncology candidates currently in Phase I clinical trials, other compounds in preclinical development, and two drug candidates that are not being actively developed. Our strategy is focused on building a significant product pipeline of innovative drug candidates that we will commercialize independently or with partners. We intend to initially develop drug candidates for cancers that are orphan indications and then expand into more highly prevalent cancers.

Since our inception, our efforts and resources have been focused primarily on developing our pharmaceutical technologies, raising capital and recruiting personnel. We have no product sales to date, and we will not generate any product sales until we receive approval from the U.S. Food and Drug Administration (the “FDA”) or equivalent foreign regulatory bodies to begin selling our pharmaceutical candidates. Our major sources of working capital have been proceeds from various private and public financings, and licensing and collaboration agreements with our strategic investors and partners.

Recently Issued Accounting Standards

See Note 2 — Recent Accounting Pronouncements Affecting the Company to the Condensed Financial Statements for a discussion of recent accounting pronouncements.

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Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2015 and September 30, 2014

Total Revenues

We had no revenues for the three and nine months ended September 30, 2015 or 2014.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses for executive, finance and other administrative personnel, recruitment expenses, professional fees and other corporate expenses, including business development, investor relations and general legal activities.

General and administrative expenses increased $237,782, or 18.0%, to $1,554,748 for the three months ended September 30, 2015 from $1,316,966 for the three months ended September 30, 2014. General and administrative expenses increased $45,285, or 1.0%, to $4,664,300 for the nine months ended September 30, 2015 from $4,619,015 for the nine months ended September 30, 2014. The year over year increase is primarily attributable to increases in professional fees, insurance and personnel expenses.

Research and Development Expenses

Research and development expenses consist primarily of salaries and related personnel costs, fees paid to consultants and outside service providers for laboratory development and other expenses relating to the design, development, testing, and enhancement of our drug candidates. We expense our research and development costs as they are incurred.

Research and development expenses increased $1,279,067, or 70.1%, to $3,103,807 for the three months ended September 30, 2015, from $1,824,740 for the three months ended September 30, 2014. Research and development expenses increased $4,434,182, or 92.4%, to $9,231,903 for the nine months ended September 30, 2015, from $4,797,721 for the nine months ended September 30, 2014. The increase is attributable to the advancement of our drug candidates. During the three and nine months ended September 30, 2015, we incurred additional clinical trial and drug manufacturing costs as we have advanced our clinical trials for Archexin, RX-3117 and Supinoxin. The increase is also partially attributable to an increase in personnel expenses.

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The table below summarizes the approximate amounts incurred on each of our research and development projects for the three and nine months ended September 30, 2015 and 2014:

	For the three months ended September 30,				For the nine months ended September 30,
	2015		2014		2015		2014
Clinical Candidates:
Archexin	$	231,300	$	184,800	$	1,312,800	$	772,600
RX-3117		1,149,700		471,100		3,354,600		1,449,300
Supinoxin		851,200		545,300		1,929,200		891,100

Preclinical, Personnel and Overhead:		871,607		623,540		2,635,303		1,684,721

Total	$	3,103,807	$	1,824,740	$	9,231,903	$	4,797,721

Interest Income

Interest income decreased $11,140 or 32.0% to $23,724 for the three months ended September 30, 2015 from $34,864 for the three months ended September 30, 2014. Interest income decreased $23,864 or 22.7% to $81,326 for the nine months ended September 30, 2015 from $105,190 for the nine months ended September 30, 2014. The decrease is primarily attributable to lower aggregate balances of cash, cash equivalents, and marketable securities for the three and nine months ended September 30, 2015 compared to the three and nine months ended September 30, 2014.

Unrealized Gain (Loss) on Fair Value of Warrants

Our warrants are recorded as liabilities at fair value, and the warrants are valued using a lattice model. Changes in the fair value of warrants are recorded as an unrealized gain or loss in our statement of operations. During the three months ended September 30, 2015 and 2014, we recorded unrealized gains on the fair value of our warrants of $608,301 and $1,201,394 respectively. During the nine months ended September 30, 2015 and 2014, we recorded unrealized gains (losses) on the fair value of our warrants of $2,282,476 and $(6,793,765) respectively. Estimating fair values of warrants requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the warrant with related changes to external market factors. The unrealized loss for the nine months ended September 30, 2014 primarily resulted from an increased stock price of the underlying common stock at September 30, 2014 and on the dates during the nine months ended September 30, 2014 when warrant holders exercised their warrants.

Financing Expense

We incurred $206,172 of financing expenses during the nine months ended September 30, 2014 related to our registered direct offering in January 2014. We did not incur financing expenses for the three and nine months ended September 30, 2015, or during the three months ended September 30, 2014.

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Net Loss

As a result of the above, net loss for the three and nine months ended September 30, 2015 was $4,026,530 and $11,532,401 or $0.02 and $0.06 per share, respectively, compared to $1,905,448 and $16,311,483 or $0.01 and $0.09 per share, for the three and nine months ended September 30, 2014, respectively.

Research and Development Projects

Research and development costs are expensed as incurred. These costs consist primarily of salaries and related personnel costs, costs to acquire pharmaceutical products and product rights for development and amounts paid to contract research organizations, hospitals and laboratories for the provision of services and materials for drug development and clinical trials. Costs incurred in obtaining the license rights to technology in the research and development stage that have no alternative future uses are expensed as incurred. Our research and development programs are related to our oncology clinical stage drug candidates, Archexin, RX-3117 and Supinoxin, and our pre-clinical stage drug candidate, RX-21101. As we expand our clinical studies, we will enter into additional development agreements. Significant additional expenditures will be required if we complete our clinical trials, start new trials, apply for regulatory approvals, continue development of our technologies, expand our operations and bring our products to market. The eventual total cost of each clinical trial is dependent on a number of uncertainties such as trial design, the length of the trial, the number of clinical sites and the number of patients. The process of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive and uncertain. Because the successful development of our most advanced drug candidates, Archexin, RX-3117 and Supinoxin, is uncertain, and because RX-21101 is in early-stage development, we are unable to estimate the costs of completing our research and development programs, the timing of bringing such programs to market and, therefore, when material cash inflows could commence from the sale of these drug candidates, if any. If these projects are not completed as planned, our results of operations and financial condition would be negatively affected.

Archexin^®

Archexin is a potential best-in-class, potent inhibitor of the protein kinase phosphorylated Akt-1, which is over-expressed in cancer cells and which we believe plays a critical role in cancer cell proliferation, survival, angiogenesis, metastasis and drug resistance. Archexin has received “orphan drug” designation from the FDA, for renal cell carcinoma (“RCC”), glioblastoma, ovarian cancer, stomach cancer and pancreatic cancer. That designation provides tax incentives for clinical research and a waiver of user fees. In addition, a drug that is approved for its orphan-designated use receives seven years of exclusivity after approval, during which the FDA generally cannot approve another product with the same active moiety for the same indication.

In August 2012, we announced top line results of an open label 2-stage Phase IIa clinical trial for Archexin that was designed to assess the safety and efficacy of Archexin in combination with gemcitabine. Gemcitabine is used to treat pancreatic, breast, ovarian and lung cancers. Gemcitabine is a member of a group of chemotherapy drugs known as anti-metabolites. It prevents cells from making DNA and RNA, which stops cell growth and causes cells to die. Stage 1 was the dose-finding portion of the study, and Stage 2 was the dose-expansion portion of the study using the dose identified in Stage 1 administered with gemcitabine. The study enrolled 31 subjects aged 18 to 65 with metastatic pancreatic cancer at nine centers in the United States and India. The primary endpoint was overall survival following four cycles of therapy with a six month follow-up. For those evaluable patients, the study demonstrated that treatment with Archexin in combination with gemcitabine provided a median survival rate of 9.1 months compared to the historical survival data of 5.65 months for standard single agent gemcitabine therapy. The most frequent reported adverse events were constipation, nausea, abdominal pain and pyrexia, regardless of relatedness.

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We initiated a Phase IIa clinical proof-of-concept clinical trial of Archexin in January 2014 to study its safety and efficacy in patients with metastatic RCC. In the trial, Archexin will be administered in combination with everolimus (Afinitor®), and will be conducted in two stages. The first stage will be dose ranging, with up to three dose groups with three RCC patients each, to determine the maximal tolerated dose (“MTD”) of Archexin in combination with everolimus. Once the MTD has been determined, thirty RCC patients will be randomized to two treatment groups, either Archexin in combination with everolimus or everolimus alone, in a ratio of 2:1. We plan to complete the initial safety component of this study by the end of 2015. Expenses related to Archexin increased for the three and nine months ended September 30, 2015 compared to the same periods in 2014 due to patient enrollment activities.

RX-3117

RX-3117 is a novel, investigational small molecule nucleoside compound. In preclinical models when activated (phosphorylated) by uridine-cytidine kinase 2 (“UCK2”), a protein that is overexpressed in various human cancer cells, RX-3117 is incorporated into DNA or RNA of cells and inhibits both DNA and RNA synthesis, which induces apoptotic cell death of tumor cells. We believe RX-3117 has therapeutic potential in a broad range of cancers including pancreatic, lung, bladder, cervical, non-small cell lung cancer and colon cancer. RX-3117 has received orphan drug designation from the FDA for the treatment of patients with pancreatic cancer. RX-3117 has also been shown in animal models to inhibit the growth of gemcitabine-resistant human cancers and improve overall survival. We completed an exploratory Phase I clinical study of RX-3117 in 2012 that showed a level of oral bioavailability of RX-3117 and no adverse effects reported in the study.

In January 2014, we initiated a Phase Ib clinical trial to study the safety, tolerability, dose-limiting toxicities and MTD of RX-3117 in patients with solid tumors. Secondary endpoints will include characterizing the pharmacokinetic profile of RX-3117 and evaluating the preliminary anti-tumor effects of RX-3117.

Preliminary results from the Phase Ib clinical trial of RX-3117 were presented in September 2015 at the 2015 European Cancer Congress. The results demonstrated that, at the dose levels tested to date, RX-3117 administered orally appeared to be safe and well tolerated with a predictable pharmacokinetic profile. The most frequently reported treatment emergent adverse events were mild to moderate fatigue, gastrointestinal disturbances, anemia, pyrexia, decreased appetite and dehydration.

In addition, preliminary anti-tumor activity was seen in the Phase Ib clinical trial, with evidence of tumor reduction observed in one patient and stable disease observed in five patients persisting from between 112 and 276 days before disease progression occurred.

Patient enrollment has been completed in nine dose groups (30mg, 60mg, 100mg, 150mg, 200mg, 500mg, 1,000mg, 1,500mg and 2,000 mg). Based on the favorable safety and pharmacokinetic profile seen at the highest dose levels, we initiated a dosing schedule modification to increase patients’ daily exposure of RX-3117 in the ongoing Phase Ib clinical trial. All newly enrolled patients are now receiving RX-3117 either five or seven times weekly as opposed to three times weekly. We expect that the new dosing paradigm will increase drug exposure, maximizing potential therapeutic activity and enable more rapid determination of the MTD for further clinical study.

Based on the progress of the RX-3117 clinical development program and the level of interest expressed from a number of oncology-focused pharmaceutical companies, we are continuing discussions with multiple companies to explore collaborative business structures in an effort to maximize the potential value of the program. Expenses related to RX-3117 increased for the three and nine months ended September 30, 2015 as compared to the same periods in 2014 primarily due to additional drug manufacturing costs to support continuing enrollment in the clinical trial.

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Supinoxin (RX-5902)

Supinoxin is a potential first-in-class small molecule that inhibits the phosphorylation of p68, a protein that we believe plays a key role in cancer growth, progression and metastasis. Phosphorylated p68, which is highly expressed in cancer cells, but not in normal cells, results in up-regulation of cancer-related genes and a subsequent proliferation of cancer cells and tumor growth. Supinoxin selectively blocks phosphorylated p68, thereby decreasing the proliferation or growth of cancer cells. In pre-clinical tissue culture models and in-vivo xenograft models, Supinoxin has demonstrated single-agent tumor growth inhibition, potential synergy with cytotoxic agents and activity against drug resistant cancer cells. In particular, in in-vivo xenograft models of human triple negative breast cancer and pancreatic cancer, treatment with Supinoxin on days one to 20 in mouse models produced a survival benefit beyond 65 days.

In July 2012, we submitted an investigational new drug application (“IND”), to the FDA for Supinoxin. We initiated a Phase I clinical trial in August 2013 to study Supinoxin’s safety and efficacy in patients with solid tumors. Patients in nine dose groups (25mg, 50mg, 100mg, 150mg, 225mg, 300mg, 425mg, 575mg, and 775mg) have been enrolled and the MTD of Supinoxin has not yet been reached.

Preliminary results from the Phase I clinical trial of Supinoxin were presented in September 2015 at the 2015 European Cancer Congress.

The results demonstrated that, at the dose levels tested to date, Supinoxin administered orally appeared to be safe and well tolerated with no Grade 3 or Grade 4 adverse events and several unrelated Grade 2 adverse events. The most frequently reported drug related adverse events were mild nausea, vomiting and fatigue. Pharmacokinetic analyses of the current data demonstrate both a predictable and desirable pharmacokinetic profile for an orally-administered route of therapy.

Clinical evidence of single-agent activity of Supinoxin was also observed in 4 patients who showed stable disease persisting from between 255 and 497 days as of September 14, 2015. At that time, three of the four patients exhibiting stable disease remained on active treatment and continue to be followed in the study.

Based on the favorable safety and pharmacokinetic profile seen at the highest dose levels, we initiated a dosing schedule modification to increase patients’ daily exposure of Supinoxin. All newly enrolled patients are now receiving Supinoxin either three or five times weekly as opposed to once weekly earlier in the trial. We anticipate that the new dosing paradigm will increase drug exposure, maximizing potential therapeutic activity and enable more rapid determination of the MTD for further clinical study.

Based on the progress of the Supinoxin clinical development program and the level of interest expressed from a number of oncology-focused pharmaceutical companies, we are continuing our discussions with multiple companies to explore collaborative business structures in an effort to maximize the potential commercial value of the program. Expenses related to Supinoxin increased for the three and nine months ended September 30, 2015 compared to the same periods in 2014 primarily due to continuing enrollment and drug manufacturing costs for the clinical trial.

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Pre-clinical Pipeline

RX-21101 is in a pre-clinical stage of development, and in June 2015, was selected by the National Cancer Institute's Nanotechnology Characterization Laboratory for its preclinical characterization program to facilitate the advancement of RX-21101 towards human clinical trials. Expenses related to our pre-clinical candidates decreased for the three and nine months ended September 30, 2015 compared to the same period in 2014 primarily as a result of the timing of costs incurred for ongoing preclinical studies.

Research and Development Process

We have engaged third-party contract research organizations and other investigators and collaborators, such as universities and medical institutions, to conduct our pre-clinical studies, toxicology studies and clinical trials. Engaging third-party contract research organizations is typical practice in our industry. However, relying on such organizations means that the clinical trials and other studies described above are being conducted at external locations and that the completion of these trials and studies is not within our direct control. Trials and studies may be delayed due to circumstances outside our control, and such delays may result in additional expenses for us.

Liquidity and Capital Resources

Cash Flows

Cash used in operating activities was $12,944,191 for the nine months ended September 30, 2015. The operating cash flows during the nine months ended September 30, 2015 reflect a net loss of $11,532,401, and a net decrease of cash components of working capital and other non-cash charges totaling $1,411,790. Cash used in operating activities was $8,129,391 for the nine months ended September 30, 2014, which reflects a net loss of $16,311,483, including an unrealized loss on fair value of warrants of $6,793,765 and a net increase of cash components of working capital and other non-cash charges totaling $1,388,327.

Cash provided by investing activities was $13,831,676 for the nine months ended September 30, 2015, which consisted of $14,625,000 from the redemption of marketable securities, offset by $740,825 and $52,499 for the purchases of marketable securities and equipment, respectively. Cash used in investing activities for the nine months ended September 30, 2014 was $20,427,450, which consisted of $20,555,926 and $30,154, for the purchases of marketable securities and equipment, respectively, offset by a decrease in restricted cash equivalents of $158,630.

Cash provided by financing activities was $1,736,657 for the nine months ended September 30, 2015 which consisted of $1,005,715 in proceeds from the sale of common stock, and $708,617 and $22,325, in proceeds from the exercise of stock options and warrants, respectively. Cash provided by financing activities was $24,840,470 for the nine months ended September 30, 2014, which consisted of net proceeds of $18,634,247 from our registered direct public offering in January 2014, $258,955 from the exercise of stock options and $5,947,268 from the exercise of warrants.

We will need to raise additional capital through public or private equity or debt offerings or through arrangements with strategic partners or other sources in order to continue to develop our drug candidates. There can be no assurance that additional capital will be available when needed or on terms satisfactory to us, if at all. If we are not able to raise sufficient additional capital, we will have to reduce our research and development activities. We will first reduce research and development activities associated with our pre-clinical compounds. To the extent necessary, we will then reduce our research and development activities related to some or all of our clinical drugs.

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At Market Issuance Sales Agreement

On March 16, 2015, we entered into an at market (“ATM”) issuance sales agreement (the “Sales Agreement”) with MLV & Co. LLC (“MLV”), pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $40 million from time to time, at our option, through MLV as our sales agent, subject to certain terms and conditions. Any shares sold will be sold pursuant to our effective shelf registration statement on Form S-3 (File No. 333-196255), as supplemented by a prospectus supplement dated March 16, 2015. We will pay MLV a commission of 3.0% of the gross proceeds of the sale of any shares sold through MLV. As of September 30, 2015, we have sold 1,407,072 shares of common stock pursuant to the Sales Agreement for gross proceeds of $1,042,573 at a weighted average price of $0.7410 per share. Net proceeds to us were $1,005,715 after deducting commissions and other transaction costs. There were no ATM transactions in the three months ended September 30, 2015. We are not obligated to make any sales under the Sales Agreement and no assurance can be given that we will sell any additional shares under the Sales Agreement, or, if we do, as to the price or amount of shares that we will sell, or the dates on which any such sales will take place.

Contractual Obligations

We have a variety of contractual obligations, as more fully described in our annual report on Form 10-K for the year ended December 31, 2014. These obligations include, but are not limited to, contractual obligations in connection with license agreements (including related milestone payments), lease payments, employee compensation and incentive program expenses, and contracts with various vendors for research and development services. As of September 30, 2015, the total estimated cost to complete our contracts with vendors for research and development services had increased to approximately $10,180,000 under the terms of the applicable agreements. All of these agreements may be terminated by either party upon appropriate notice as stipulated in the respective agreements.

Current and Future Financing Needs

We have incurred negative cash flow from operations since we started our business. We have spent, and expect to continue to spend, substantial amounts in connection with implementing our business strategy, including our planned product development efforts, our clinical trials and our research and development efforts. We will need to raise additional capital through public or private equity or debt offerings or through arrangements with strategic partners or other sources in order to continue to develop our drug candidates. There can be no assurance that additional capital will be available when needed or on terms satisfactory to us, if at all. If we are not able to raise sufficient additional capital, we will have to reduce our research and development activities. We believe that our cash, cash equivalents, and marketable securities will be sufficient to cover our cash flow requirements for our current activities for at least the next 12 months.

The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. These factors include the following:

·	the progress of our product development activities;

·	the number and scope of our product development programs;

·	the progress of our pre-clinical and clinical trial activities;

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·	the progress of the development efforts of parties with whom we have entered into collaboration agreements;

·	our ability to maintain current collaboration programs and to establish new collaboration arrangements;

·	the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

·	the costs and timing of regulatory approvals.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or holdings in variable interest entities.

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Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

For quantitative and qualitative disclosures about market risk, refer to “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2014. Our exposures to market risk have not changed materially since December 31, 2014.

Item 4.

Controls and Procedures.

Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) along with our Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the CEO along with the CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Our management, including the CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting

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PART II.

Other Information

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Pursuant to a consulting agreement, we issued 75,000 shares of common stock on July 1, 2015 to a privately held investor relations firm in consideration for investor relations services. The shares of common stock were not registered under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the exemptions from registration requirements provided by Section 4(a)(2) of the Securities Act, as a transaction not involving a public offering.

Item 6.

Exhibits.

Exhibit No	Description

31.1	Certification of Chief Executive Officer pursuant to Rules 13a-14(a) / 15d-14(a)

31.2	Certification of Chief Financial Officer pursuant to Rules 13a-14(a) / 15d-14(a)

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101	The following materials from Rexahn Pharmaceuticals, Inc.’s Quarterly Report on Form 10-Q, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Balance Sheet; (ii) Condensed Statement of Operations; (iii) Condensed Statement of Comprehensive Loss; (iv) Condensed Statement of Cash Flows; and (v) Notes to the Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		REXAHN PHARMACEUTICALS, INC.
		(Registrant)

	By:	/s/ Peter D. Suzdak
Date: November 2, 2015		Peter D. Suzdak
		Chief Executive Officer
		(principal executive officer)

	By:	/s/ Tae Heum Jeong
Date: November 2, 2015		Tae Heum Jeong
		Chief Financial Officer and Secretary
		(principal financial and accounting officer)

Delaware		11-3516358
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Large Accelerated Filer	☐	Accelerated Filer	☑
Non-Accelerated Filer	☐	Smaller reporting company	☐
(Do not check if a smaller reporting company)

	September 30, 2015			December 31, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	12,450,387		$	9,826,245
Marketable securities		9,006,669			22,872,051
Prepaid expenses and other current assets		1,475,757			730,987
Total Current Assets		22,932,813			33,429,283
Security Deposits		30,785			25,681
Equipment, Net		110,653			78,096
Total Assets	$	23,074,251		$	33,533,060
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	3,238,063		$	2,459,263

Deferred Research and Development Arrangement		543,750			600,000

Other Liabilities		109,732			124,955

Warrant Liabilities		1,476,497			3,768,351

Total Liabilities		5,368,042			6,952,569
Commitments and Contingencies (note 14)
Stockholders’ Equity:
Preferred stock, par value $0.0001, 100,000,000 authorized shares, none issued and outstanding		-			-
Common stock, par value $0.0001, 500,000,000 authorized shares, 180,860,333 and 178,366,533 issued and 180,747,118 and 178,253,318 outstanding		18,086			17,837
Additional paid-in capital		120,674,473			118,057,019
Accumulated other comprehensive income (loss)		6,769			(33,647	)
Accumulated deficit		(102,864,709	)		(91,332,308	)
Treasury stock, 113,215 shares, at cost		(128,410	)		(128,410	)

Total Stockholders’ Equity		17,706,209			26,580,491

Total Liabilities and Stockholders’ Equity	$	23,074,251		$	33,533,060

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
Revenues:	$	-		$	-		$	-		$	-

Expenses:
General and administrative		1,554,748			1,316,966			4,664,300			4,619,015
Research and development		3,103,807			1,824,740			9,231,903			4,797,721

Total Expenses		4,658,555			3,141,706			13,896,203			9,416,736

Loss from Operations		(4,658,555	)		(3,141,706	)		(13,896,203	)		(9,416,736	)

Other Income (Expense)
Interest income		23,724			34,864			81,326			105,190
Unrealized gain (loss) on fair value of warrants		608,301			1,201,394			2,282,476			(6,793,765	)
Financing expense		-			-			-			(206,172	)
Total Other Income (Expense)		632,025			1,236,258			2,363,802			(6,894,747	)

Net Loss Before Provision for Income Taxes		(4,026,530	)		(1,905,448	)		(11,532,401	)		(16,311,483	)
Provision for income taxes		-			-			-			-
Net Loss	$	(4,026,530	)	$	(1,905,448	)	$	(11,532,401	)	$	(16,311,483	)

Net loss per share, basic and diluted	$	(0.02	)	$	(0.01	)	$	(0.06	)	$	(0.09	)

Weighted average number of shares outstanding, basic and diluted		180,701,360			178,219,622			179,888,770			175,383,673

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014

Net Loss	$	(4,026,530	)	$	(1,905,448	)	$	(11,532,401	)	$	(16,311,483	)

Unrealized gain (loss) on available-for-sale securities		1,021			(42,041	)		40,416			(42,041	)

Comprehensive Loss	$	(4,025,509	)	$	(1,947,489	)	$	(11,491,985	)	$	(16,353,524	)

		Page

PART I	FINANCIAL INFORMATION	1
Item 1	Financial Statements (Unaudited)	1
	1) Condensed Balance Sheet as of September 30, 2015 and December 31, 2014	1
	2) Condensed Statement of Operations for the three and nine months ended September 30, 2015 and 2014	2
	3) Condensed Statement of Comprehensive Loss for the three and nine months ended September 30, 2015 and 2014	3
	4) Condensed Statement of Cash Flows for the nine months ended September 30, 2015 and 2014	4
	5) Notes to the Condensed Financial Statements	6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4	Controls and Procedures	35

PART II	OTHER INFORMATION	36
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 6	Exhibits	36

SIGNATURES		37

	September 30, 2015
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Certificates of Deposit	$	6,480,000	$	6,869	$	-		$	6,486,869
Corporate Bonds		2,519,900		282		(382	)		2,519,800
Total Marketable Securities	$	8,999,900	$	7,151	$	(382	)	$	9,006,669

Maturity	Cost Basis		Fair Value
Less than 1 year	$	8,519,900	$	8,525,822
1 to 5 years		480,000		480,847
Total Marketable Securities	$	8,999,900	$	9,006,669

	September 30, 2015		December 31, 2014

Deposits on contracts	$	675,220	$	369,811
Prepaid expenses and other current assets		800,537		361,176

	$	1,475,757	$	730,987

	September 30, 2015			December 31, 2014

Furniture and fixtures	$	78,794		$	70,320
Office and computer equipment		95,463			57,893
Lab equipment		431,650			425,195
Leasehold improvements		133,762			133,762

Total equipment		739,669			687,170
Less: Accumulated depreciation and amortization		(629,016	)		(609,074	)

Net carrying amount	$	110,653		$	78,096

	September 30, 2015		December 31, 2014

Trade payables	$	691,996	$	706,781
Accrued expenses		166,397		56,884
Accrued research and development contract costs		2,209,345		1,078,532
Payroll liabilities		170,325		617,066

	$	3,238,063	$	2,459,263

	September 30, 2015			December 31, 2014

Deferred lease incentive	$	154,660		$	154,660
Less accumulated amortization		(107,997	)		(98,665	)

Balance	$	46,663		$	55,995

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Statement of operations line item:
General and administrative	$	127,203	$	128,945	$	492,908	$	307,461
Research and development		98,113		34,246		276,760		116,598

Total	$	225,316	$	163,191	$	769,668	$	424,059

	Nine Months Ended September 30,
	2015			2014
Black-Scholes assumptions
Expected dividend yield		0	%		0	%
Expected volatility		72-80	%		92-96	%
Risk free interest rate		1.2-1.7	%		1.49-1.75	%
Expected term (in years)	5-6 years			5 years

	2015					2014
	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding at
January 1		11,400,806		$	0.93		9,356,795		$	0.92
Granted		4,201,316			0.69		2,398,499			0.97
Exercised		(889,428	)		0.80		(448,693	)		0.80
Expired		(1,741,879	)		1.19		(35,795	)		0.24
Cancelled		(146,083	)		0.81		-			-

Outstanding at September 30		12,824,732		$	0.83		11,270,806		$	0.93

	Number of Shares indexed as of:
Warrant Issuance	September 30, 2015		December 31, 2014
March 31, 2011 financing:
Warrants to institutional investors		3,333,333		3,333,333
December 4, 2012 financing:
Warrants to institutional investors		174,300		221,600
Warrants to placement agent		40,000		40,000
July 26, 2013 financing:
Warrants to institutional investors		2,000,000		2,000,000
Warrants to placement agent		124,032		124,032
October 16, 2013 financing:
Warrants to institutional investors		2,317,309		2,317,309
Warrants to placement agent		407,692		407,692
January 21, 2014 financing:
Warrants to institutional investors		4,761,905		4,761,905
Total:		13,158,571		13,205,871

	September 30, 2015			December 31, 2014
Trading market prices	$	0.52		$	0.70
Estimated future volatility		106	%		108	%
Dividend		-			-
Estimated future risk-free rate		0.38-1.05	%		0.74-1.90	%
Equivalent volatility		59-66	%		65-78	%
Equivalent risk-free rate		0.06-0.47	%		0.18-0.63	%

	September 30, 2015			December 31, 2014

Net Operating Loss Carryforwards	$	37,053,000		$	31,831,000
Stock Compensation Expense		2,481,000			2,221,000
Book tax differences on assets and liabilities		323,000			416,000
Valuation Allowance		(39,857,000	)		(34,468,000	)

Net Deferred Tax Assets	$	-		$	-

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at September 30, 2015		12,824,732	$	0.83	7.1 years	$	360,000

Exercisable at September 30, 2015		6,788,800	$	0.91	5.2 years	$	305,000

Outstanding at December 31, 2014		11,400,806	$	0.93	5.2 years	$	842,300

Exercisable at December 31, 2014		8,167,307	$	0.97	3.6 years	$	613,550

	2015
	Number of Options			Weighted Average Fair Value at Grant Date
Unvested at January 1, 2015		3,233,499		$	0.60
Granted		4,201,316		$	0.47
Vested		(1,253,050	)	$	0.59
Cancelled		(145,833	)	$	0.57

Unvested at September 30, 2015		6,035,932		$	0.51

	2015					2014
	Number of warrants			Weighted average exercise price		Number of warrants			Weighted average exercise price
Balance, January 1		13,205,871		$	1.07		24,968,868		$	0.86
Issued during the period		-		$	-		4,761,905		$	1.28
Exercised during the period		(47,300	)	$	0.47		(12,058,871	)	$	0.52
Expired during the period		-		$	-		(3,687,698	)	$	1.71

Balance, September 30		13,158,571		$	1.07		13,984,204		$	1.06

	Fair Value as of:
Warrant Issuance:	September 30, 2015		December 31, 2014
March 31, 2011 financing:
Warrants to institutional investors	$	27,430	$	319,277
December 4, 2012 financing:
Warrants to institutional investors		34,653		90,052
Warrants to placement agent		6,981		14,595
July 26, 2013 financing:
Warrants to institutional investors		376,106		788,314
Warrants to placement agent		10,482		30,594
October 16, 2013 financing:
Warrants to institutional investors		477,074		949,756
Warrants to placement agent		31,771		96,563
January 21, 2014 financing:
Warrants to institutional investors		512,000		1,479,200
Total:	$	1,476,497	$	3,768,351

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014		Nine Months Ended September 30, 2015		Nine Months Ended September 30, 2014
Exercised and Expired Warrants	$	-		$	20,943	$	-	$	(288,938	)
March 31, 2011 financing:
Warrants to institutional investors		(13,193	)		325,303		291,847		(422,787	)
December 4, 2012 financing:
Warrants to institutional investors		16,350			17,395		46,021		(4,152,624	)
Warrants to placement agent		2,037			3,131		7,614		(520,760	)
July 26, 2013 financing:
Warrants to institutional investors		147,848			162,082		412,208		(1,537,273	)
Warrants to placement agent		558			10,238		20,112		(254,341	)
October 16, 2013 financing:
Warrants to institutional investors		166,744			192,613		472,682		(1,242,527	)
Warrants to placement agent		695			33,955		64,792		(88,111	)
January 21, 2014 financing:
Warrants to institutional investors		287,262			435,734		967,200		1,713,596
Total:	$	608,301		$	1,201,394	$	2,282,476	$	(6,793,765	)

For the remaining three months ending December 31:	2015	$	66,613
For the year ending December 31:	2016		269,733
	2017		260,217
	2018		233,923
	2019		152,955
	2020		34,468

	Total	$	1,017,909

Fair Value Measurements at September 30, 2015
	Total		Level 1		Level 2		Level 3
Assets:
Certificates of Deposit	$	6,486,869	$	-	$	6,486,869	$	-
Corporate Bonds		2,519,800		-		2,519,800		-
Total Assets:	$	9,006,669	$	-	$	9,006,669	$	-

Liabilities:
Warrant Liabilities	$	1,476,497		-		-	$	1,476,497

	Fair Value Measurements at December 31, 2014
	Total		Level 1		Level 2		Level 3
Assets:
Certificates of Deposit	$	18,838,271	$	-	$	18,838,271	$	-
Commercial Paper		1,997,910		-		1,997,910		-
Corporate Bonds		2,035,870		-		2,035,870		-
Total Assets:	$	22,872,051	$	-	$	22,872,051	$	-

Liabilities:
Warrant Liabilities	$	3,768,351		-		-	$	3,768,351