Capnia, Inc. (NASDAQ:CAPN), focused on the development and
commercialization of novel therapeutics for the treatment of rare
diseases, today announced financial results for the fourth quarter
and twelve months ended December 31, 2016.
“During the fourth quarter, we embarked on a
bold new strategic direction for our Company by signing a
definitive agreement to merge with Essentialis, creating a dynamic
new organization dedicated to developing therapies for rare
diseases where there is significant unmet need,” said Anish
Bhatnagar, M.D., Chief Executive Officer of Capnia. “With the
merger now complete, we look forward to advancing our lead asset,
diazoxide choline controlled-release (DCCR) into Phase II/III
clinical development for the treatment of Prader-Willi Syndrome
(PWS), a rare and often fatal metabolic condition. DCCR is a
once-daily oral tablet that has shown great potential in addressing
the hallmark symptoms of PWS, most notably hyperphagia. We
are eager to initiate this development program as we work to become
a leader in the rare disease space.”
Fourth Quarter 2016 and Recent
Highlights
Completed Merger with Essentialis to
Create a Rare Disease Therapeutics Company
- Advancing Lead Clinical Development Asset DCCR for
PWS. Through the merger with Essentialis, Capnia acquired
DCCR, currently in clinical development for the treatment of PWS.
In a Phase II clinical study, DCCR demonstrated a significant
reduction of hyperphagia, a symptom of critical concern to the PWS
patient community. Coupled with a well-established safety
profile, DCCR is a promising late-stage asset on track for a Phase
II/III trial initiation later this year.
- Strengthened Balance Sheet. Concurrent
with the closing of the merger in early March, Capnia raised $10.0
million through an offering of Capnia common stock to prior
investors in Essentialis, as well as new investors, which will be
sufficient to fund development of DCCR through key milestones.
Legacy Neonatal and Therapeutic Products
and Product Candidates
- Initiated Review of Strategic Alternatives for Legacy
Businesses. Following the merger announcement,
Capnia initiated a comprehensive review of strategic alternatives
for its legacy products and product candidates, including Serenz®
Allergy Relief, CoSense® ETCO Monitor, and its portfolio of
innovative pulmonary resuscitation solutions for the neonatal
market.
Fourth Quarter 2016 Financial
Results
Total revenue recognized in the three months
ended December 31, 2016 was $0.3 million, compared to $0.2 million
for the same period in 2015.
Research and development expenses in the fourth
quarter of 2016 were $1.0 million, compared to $1.3 million for the
same period in 2015. The decrease was primarily due to a
decrease in compensation expense, as a result of a reduction in
personnel.
Sales and marketing expenses in the fourth
quarter of 2016 were $0.2 million, compared to $0.5 million for the
same period in 2015. The decrease was primarily due to a decrease
of direct sales personnel.
General and administrative expenses in the
fourth quarter of 2016 were $1.5 million, compared to $1.7 million
for the same period in 2015. The decrease was primarily due to a
decrease in compensation expense, as a result of a reduction in
personnel.
The change in fair value of warrants income for
the three months ended December 31, 2016 was $0.3 million, which
represents a decrease in the fair value of the Series A and Series
C Warrants compared to the value of the warrants at September 30,
2016. The change in fair value of warrants income in the fourth
quarter of 2015 was $0.7 million, which represented a decrease in
the fair value of the Series A, Series B and Series C Warrants.
Net loss for the fourth quarter of 2016 was $2.6
million, or a loss of $0.16 per share, compared to a net loss of
$2.8 million, or a loss of $0.29 per share, for the fourth quarter
of 2015.
Full Year 2016 Financial
Results
Total revenue recognized for the year ended
December 31, 2016 was $1.5 million, compared to $0.6 million for
the same period in 2015.
Research and development expenses for the year
ended December 31, 2016 increased 14% to $5.2 million, compared to
$4.5 million for the same period in 2015. The increase was
primarily due to increases of compensation expense of $0.5 million
and consulting expense of $0.1 million.
Sales and marketing expenses for the year ended
December 31, 2016 decreased 6% to $1.6 million versus $1.7 million
for the same period in 2015. The decrease was primarily due to a
decrease of direct sales personnel concurrent with implementation
of a distributor agreement.
General and administrative expenses for the year
ended December 31, 2016 increased 10% to $6.7 million, compared to
$6.1 million for the same period in 2015. The increase was
primarily due to an increase of legal and related expenses of $0.5
million and $0.1 million of compensation expense.
The change in fair value of warrants for the
year ended December 31, 2016 was income of $1.7 million, which
represents a decrease in the fair value of the Series A, Series B
and Series C warrants compared to the value of the warrants at
December 31, 2015. For the year ended December 31, 2015 the change
in fair value of warrants was an expense of $0.5 million.
Net loss for the twelve months ended December
31, 2016 was $12.1 million, or a loss of $1.01 per share, compared
with a net loss of $15.9 million, or a loss of $1.69 per share, for
the same period in 2015.
Cash and cash equivalents at December 31, 2016
totaled $2.7 million, compared to $5.5 million at December 31,
2015.
About PWS
PWS is a rare and complex genetic disorder
affecting appetite, growth, metabolism, cognitive function and
behavior. In both the US, it is estimated that one in 12,000
to 15,000 people has PWS and there are currently no approved
therapies to treat the appetite, metabolic, cognitive function, or
behavioral aspects of the disorder. This disorder is
typically characterized by low muscle tone, short stature (when not
treated with growth hormone), the accumulation of excess body fat,
developmental delays, incomplete sexual development, cognitive
disabilities, behavioral problems and hyperphagia, a chronic
feeling of insatiable hunger. Hyperphagia, in the absence of
effective limitations to access to food, can lead to morbid
obesity. In a global survey conducted by the Foundation for
Prader-Willi Research, 96.5% of respondents (parent and caregivers)
rated hyperphagia as the most important or a very important symptom
to be relieved by a new medicine. DCCR has received Orphan Drug
Designation from the US FDA for the treatment of PWS.
About Diazoxide Choline
Controlled-Release Tablet
Diazoxide choline controlled-release tablet is a
novel, proprietary controlled-release, crystalline salt formulation
of diazoxide, which is administered once-daily. The parent
molecule, diazoxide, as an oral suspension, has been used for
decades in thousands of patients in a range of diseases in
neonates, children and/or adults. DCCR offers a significant
advantage over the 2-3 times a day dosing paradigm, which is not
suitable for patients with PWS. The DCCR development program
is supported by positive data from two completed Phase II clinical
studies and six completed Phase I clinical studies in various
metabolic indications, as well as a pilot study in PWS
patients. In the PWS pilot study, DCCR showed promise in
addressing the hallmark symptoms of PWS, most notably hyperphagia,
which is the unrelenting hunger that severely diminishes the
quality of life for patients and their families.
About Capnia
Capnia is focused on the development and
commercialization of novel therapeutics for the treatment of rare
diseases. The Company is currently advancing its lead
candidate, DCCR, a once-daily oral tablet for the treatment of
Prader-Willi Syndrome (PWS), into Phase II/III clinical development
during 2017. Capnia also markets innovative medical devices,
including the CoSense® End-Tidal Carbon Monoxide (ETCO) monitor,
which measures ETCO and is used by hospitals to detect hemolysis in
newborns, and the NeoForce portfolio of neonatal pulmonary
resuscitation solutions. For more information, please visit
www.capnia.com.
Capnia’s Forward-Looking
Statements
This press release contains forward-looking
statements that are subject to many risks and uncertainties.
Forward-looking statements include statements regarding our
intentions, beliefs, projections, outlook, analyses or current
expectations concerning, among other things, our ability to
initiate the Phase II/III trial in the second half of 2017.
We may use terms such as "believes,"
"estimates," "anticipates," "expects," "plans," "intends," "may,"
"could," "might," "will," "should," "approximately" or other words
that convey uncertainty of future events or outcomes to identify
these forward-looking statements. Although we believe that we have
a reasonable basis for each forward-looking statement contained
herein, we caution you that forward-looking statements are not
guarantees of future performance and that our actual results of
operations, financial condition and liquidity, and the development
of the industry in which we operate may differ materially from the
forward-looking statements contained in this presentation. As a
result of these factors, we cannot assure you that the
forward-looking statements in this presentation will prove to be
accurate. Additional factors that could materially affect actual
results can be found in Capnia's Form 10-K filed with the
Securities and Exchange Commission on March 15, 2017, including
under the caption titled "Risk Factors." Capnia expressly disclaims
any intent or obligation to update these forward-looking
statements, except as required by law.
Capnia, Inc. |
Condensed Consolidated Balance Sheets |
(in thousands, except shares and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, |
|
As of December 31, |
|
|
|
|
|
2016 |
|
2015 |
Assets |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash
& Cash Equivalents |
|
|
$ |
2,726 |
|
|
$ |
5,495 |
|
|
Restricted Cash |
|
|
|
35 |
|
|
|
35 |
|
|
Accounts
Receivable |
|
|
|
133 |
|
|
|
156 |
|
|
Inventory |
|
|
|
660 |
|
|
|
551 |
|
|
Prepaid
expenses and other current assets |
|
|
|
247 |
|
|
|
167 |
|
|
Total
Current Assets |
|
|
|
3,801 |
|
|
|
6,404 |
|
|
Long-term Assets |
|
|
|
|
|
Property
& Equipment, net |
|
|
|
103 |
|
|
|
86 |
|
|
Goodwill |
|
|
|
718 |
|
|
|
718 |
|
|
Other
Assets |
|
|
|
126 |
|
|
|
76 |
|
|
Other
Intangible Assets, net |
|
|
|
817 |
|
|
|
917 |
|
|
Total
Assets |
|
|
$ |
5,565 |
|
|
$ |
8,201 |
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts
Payable |
|
|
$ |
538 |
|
|
$ |
695 |
|
|
Accrued
Compensation and other current liabilities |
|
|
|
1,169 |
|
|
|
1,633 |
|
|
Series B
Warrant Liability |
|
|
|
- |
|
|
|
865 |
|
|
Total
Current Liabilities |
|
|
|
1,707 |
|
|
|
3,193 |
|
|
Long-Term Liabilities |
|
|
|
|
|
|
Series A
Warrant Liability |
|
|
194 |
|
|
|
1,213 |
|
|
Series C
Warrant Liability |
|
|
|
86 |
|
|
|
462 |
|
|
Other
Liabilities |
|
|
|
143 |
|
|
|
109 |
|
|
Total
Long-Term Liabilities |
|
|
|
423 |
|
|
|
1,784 |
|
|
|
Total Liabilities |
|
|
|
2,130 |
|
|
|
4,977 |
|
|
Stockholders' equity |
|
|
|
|
|
Preferred Stock, $.001 par value, 10,000,000 shares
authorized: |
|
|
|
|
|
|
Series A convertible preferred stock, 10,000 shares
designated |
|
|
|
|
|
zero and
4,555 shares issued and outstanding at |
|
|
|
|
|
|
December
31, 2016 and December 31, 2015, respectively |
|
|
- |
|
|
|
- |
|
|
|
Series B convertible preferred stock, 13,780 shares
designated |
|
|
|
|
|
12,780
and zero shares issued and outstanding at |
|
|
|
|
|
|
December
31, 2016 and December 31, 2015, respectively |
|
|
- |
|
|
|
- |
|
|
Common stock, $0.001 par value, 100,000,000 shares |
|
|
|
|
|
authorized, 16,786,952 and 14,017,909 shares issued and |
|
|
|
|
|
|
outstanding at December 31, 2016 and |
|
|
|
|
|
|
December
31, 2015, respectively |
|
|
|
17 |
|
|
|
14 |
|
|
Additional paid-in-capital |
|
|
101,730 |
|
|
|
89,457 |
|
|
Accumulated deficit |
|
|
(98,312 |
) |
|
|
(86,247 |
) |
|
Total
stockholders' equity |
|
|
|
3,435 |
|
|
|
3,224 |
|
|
Total
liabilities and stockholders' equity |
|
|
$ |
5,565 |
|
|
$ |
8,201 |
|
|
|
|
Capnia, Inc. |
Condensed Consolidated Statements of Operations and
Comprehensive Loss |
(in thousands, except shares and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Year Ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
Product
revenue |
|
$ |
284 |
|
|
$ |
242 |
|
|
$ |
1,451 |
|
|
$ |
388 |
|
Government
grant revenue |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
220 |
|
Total
Revenue |
|
|
284 |
|
|
|
242 |
|
|
|
1,451 |
|
|
|
608 |
|
Cost of
product revenue |
|
|
222 |
|
|
|
257 |
|
|
|
1,509 |
|
|
|
353 |
|
|
Gross
Profit |
|
|
62 |
|
|
|
(15 |
) |
|
|
(58 |
) |
|
|
255 |
|
Expenses |
|
|
|
|
|
|
|
|
|
Research
and Development |
|
|
954 |
|
|
|
1,284 |
|
|
|
5,185 |
|
|
|
4,536 |
|
|
Sales and
Marketing |
|
|
174 |
|
|
|
498 |
|
|
|
1,631 |
|
|
|
1,737 |
|
|
General
and Administrative |
|
|
1,890 |
|
|
|
1,709 |
|
|
|
6,736 |
|
|
|
6,141 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses |
|
|
3,018 |
|
|
|
3,491 |
|
|
|
13,552 |
|
|
|
12,414 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating
loss |
|
|
(2,956 |
) |
|
|
(3,506 |
) |
|
|
(13,610 |
) |
|
|
(12,159 |
) |
|
|
|
|
|
|
|
|
|
|
Interest
and other income (expense) |
|
|
|
|
|
|
|
|
|
Other
income (expense) |
|
|
20 |
|
|
|
- |
|
|
|
(7 |
) |
|
|
(184 |
) |
|
Cease-use
expense |
|
|
- |
|
|
|
|
|
(94 |
) |
|
|
- |
|
|
Change in fair value of warrant liabilities |
|
344 |
|
|
|
661 |
|
|
|
1,667 |
|
|
|
(516 |
) |
|
Inducement charge for Series C warrants |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3,049 |
) |
Loss before
provision for income taxes |
|
$ |
(2,592 |
) |
|
$ |
(2,845 |
) |
|
$ |
(12,044 |
) |
|
$ |
(15,908 |
) |
Provision
for deferred taxes |
|
$ |
21 |
|
|
|
|
$ |
21 |
|
|
|
- |
|
Net
loss |
|
$ |
(2,613 |
) |
|
$ |
(2,845 |
) |
|
|
(12,065 |
) |
|
|
(15,908 |
) |
Loss on
extinguishment of convertible preferred stock |
|
- |
|
|
|
- |
|
|
|
3,651 |
|
|
|
- |
|
Net loss
applicable to common stockholders |
$ |
(2,613 |
) |
|
$ |
(2,845 |
) |
|
$ |
(15,716 |
) |
|
$ |
(15,908 |
) |
|
|
|
|
|
|
|
|
|
|
Net loss
per common share |
|
|
|
|
|
|
|
|
basis and
diluted net loss per common share |
$ |
(0.16 |
) |
|
$ |
(0.22 |
) |
|
$ |
(1.00 |
) |
|
$ |
(1.69 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares |
|
|
|
|
|
|
|
|
outstanding
used to calculate |
|
|
|
|
|
|
|
|
basic and
diluted net loss per common share |
|
15,935,865 |
|
|
|
13,112,612 |
|
|
|
15,507,484 |
|
|
|
9,425,880 |
|
|
|
|
|
|
|
|
|
|
|
Investor Relations Contact:
Michelle Carroll
Argot Partners
(212) 600-1902
michelle@argotpartners.com
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