UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[ X ] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended |
June 30, 2015 |
or
[ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________________________ to
____________________
Commission File Number: 0-21214
CAPSTONE THERAPEUTICS CORP. |
(Exact name of registrant as specified in its charter) |
Delaware |
86-0585310 |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification
No.) |
1275 W. Washington Street, Suite 104, Tempe, Arizona |
85281 |
(Address of principal executive offices) |
(Zip Code) |
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. [X]Yes [_]No
Indicate by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
[X] Yes [_] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated
filer ___
Non-accelerated filer ___ (do not check if a smaller reporting company) Smaller reporting company _X__
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [_]Yes [X]No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock,
as of the latest practicable date.
40,885,411 shares of common stock outstanding as of July 31, 2015
CAPSTONE THERAPEUTICS CORP.
INDEX
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32
EXHIBIT 101
Forward Looking Statements
We may from time to time make written or oral forward-looking statements, including statements contained
in our filings with the Securities and Exchange Commission and our reports to stockholders. The safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 protects companies from liability for their forward
looking statements if they comply with the requirements of that Act. This Quarterly Report on Form 10-Q should be read in conjunction
with our Annual Report on Form 10-K for the year ended December 31, 2014, and contains forward-looking statements made pursuant
to that safe harbor. These forward-looking statements relate to future events or to our future financial performance, and involve
known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied
by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,”
“could,” “expect,” “intend,” “plan,” “seek,” “anticipate,”
“believe,” “estimate,” “predict,” “potential,” “continue,” or the negative
of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially
affect actual results, levels of activity, performance or achievements. Factors that may cause actual results to differ materially
from current expectations, which we describe in more detail in our Form 10-K for the year ended December 31, 2014, and our Form
S-1 filed with the Securities and Exchange Commission on June 26, 2015, as amended, include, but are not limited to:
- the impact of our actions to preserve cash including implementation of a virtual operating model;
- unfavorable results of product candidate development efforts, including through our joint
venture;
- unfavorable results of pre-clinical or clinical testing, including through our joint venture;
- delays in obtaining, or failure to obtain FDA approvals;
- increased regulation by the FDA and other agencies;
- the introduction of competitive products;
- impairment of license, patent or other proprietary rights;
- the impact of present and future joint venture, collaborative or partnering agreements or
the lack thereof;
- failure to successfully implement our drug development strategy for AEM-28 and its analogs;
and
- failure to obtain additional funds required to complete clinical trials and supporting research
and production efforts necessary to obtain FDA, or comparable foreign agency, approval for product candidates or secure development
agreements with pharmaceutical manufacturers;
- failure to obtain additional funds to continue operations.
If one or more of these or other risks or uncertainties materialize,
or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. The forward-looking
statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events and are subject to these
and other risks, uncertainties and assumptions relating to our operations, results of operations, business strategy and liquidity.
We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons
actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes
available in the future.
PART I – Financial Information
Item 1. Financial Statements
CAPSTONE THERAPEUTICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
| |
(unaudited) | |
|
ASSETS | |
| | | |
| | |
Current assets | |
| | | |
| | |
Cash and cash equivalents | |
$ | 1,037 | | |
$ | 2,164 | |
Other current assets | |
| 509 | | |
| 555 | |
Total current assets | |
| 1,546 | | |
| 2,719 | |
| |
| | | |
| | |
Patent license rights, net | |
| 588 | | |
| 666 | |
Furniture and equipment, net | |
| - | | |
| - | |
Total assets | |
$ | 2,134 | | |
$ | 3,385 | |
| |
| | | |
| | |
LIABILITIES AND EQUITY | |
| | | |
| | |
Current liabilities | |
| | | |
| | |
Accounts payable | |
| 211 | | |
| 124 | |
Other accrued liabilities | |
| 140 | | |
| 158 | |
Total current liabilities | |
| 351 | | |
| 282 | |
| |
| | | |
| | |
Equity | |
| | | |
| | |
Capstone Therapeutics Corp. Stockholders' Equity | |
| | | |
| | |
Common Stock $.0005 par value; 150,000,000 shares authorized; 40,885,411 shares in 2015 and 2014 issued and outstanding | |
| 20 | | |
| 20 | |
Additional paid-in capital | |
| 189,416 | | |
| 189,268 | |
Accumulated deficit | |
| (187,653 | ) | |
| (186,185 | ) |
Total Capstone Therapeutics Corp. stockholders' equity | |
| 1,783 | | |
| 3,103 | |
Noncontrolling interest | |
| - | | |
| - | |
Total equity | |
| 1,783 | | |
| 3,103 | |
| |
| | | |
| | |
Total liabilities and equity | |
$ | 2,134 | | |
$ | 3,385 | |
See notes to unaudited condensed consolidated financial statements
CAPSTONE THERAPEUTICS Corp.
CONDENSED CONSOLIDATED Statements
of Operations
(in thousands, except per share data)
(Unaudited)
| |
Three months ended June 30, | |
Six months ended June 30, |
| |
2015 | |
2014 | |
2015 | |
2014 |
OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
General and administrative | |
$ | 552 | | |
$ | 222 | | |
$ | 1,024 | | |
$ | 674 | |
Research and development | |
| 283 | | |
| 1,172 | | |
| 633 | | |
| 1,802 | |
Total operating expenses | |
| 835 | | |
| 1,394 | | |
| 1,657 | | |
| 2,476 | |
| |
| | | |
| | | |
| | | |
| | |
Interest and other expenses (income), net | |
| (47 | ) | |
| (3 | ) | |
| 9 | | |
| (63 | ) |
Loss from operations before taxes | |
| 788 | | |
| 1,391 | | |
| 1,666 | | |
| 2,413 | |
Income tax benefit | |
| (36 | ) | |
| - | | |
| (198 | ) | |
| - | |
NET LOSS | |
| 752 | | |
| 1,391 | | |
| 1,468 | | |
| 2,413 | |
Less: Net Loss attributable to the noncontrolling interest | |
| - | | |
| - | | |
| - | | |
| - | |
Net Loss attributable to Capstone | |
| | | |
| | | |
| | | |
| | |
Therapeutics Corp. stockholders | |
$ | 752 | | |
$ | 1,391 | | |
$ | 1,468 | | |
$ | 2,413 | |
Per Share Information: | |
| | | |
| | | |
| | | |
| | |
Net loss, basic and diluted, attributable to | |
| | | |
| | | |
| | | |
| | |
Capstone Therapeutic Corp. stockholders | |
$ | 0.02 | | |
$ | 0.03 | | |
$ | 0.04 | | |
$ | 0.06 | |
Basic and diluted shares outstanding | |
| 40,885 | | |
| 40,885 | | |
| 40,885 | | |
| 40,885 | |
See notes to unaudited condensed consolidated financial statements
CAPSTONE THERAPEUTICS Corp.
CONDENSED CONSOLIDATED Statements
of CASH FLOWS
(in thousands)
(Unaudited)
| |
Six months ended
June 30, |
| |
2015 | |
2014 |
OPERATING ACTIVITIES | |
| | | |
| | |
Net loss | |
$ | (1,468 | ) | |
$ | (2,413 | ) |
Non cash items: | |
| | | |
| | |
Depreciation and amortization | |
| 78 | | |
| 81 | |
Non-cash stock compensation | |
| 148 | | |
| 49 | |
Change in other operating items: | |
| | | |
| | |
Other current assets | |
| 46 | | |
| (112 | ) |
Accounts payable | |
| 87 | | |
| 24 | |
Other accrued liabilities | |
| (18 | ) | |
| 306 | |
Cash flows used in operating activities | |
| (1,127 | ) | |
| (2,065 | ) |
INVESTING ACTIVITIES | |
| | | |
| | |
Cash flows provided by investing activities | |
| - | | |
| - | |
FINANCING ACTIVITIES | |
| - | | |
| | |
Cash flows provided by financing activities | |
| - | | |
| | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | |
| (1,127 | ) | |
| (2,065 | ) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | |
| 2,164 | | |
| 6,258 | |
CASH AND CASH EQUIVALENTS, END OF PERIOD | |
$ | 1,037 | | |
$ | 4,193 | |
See notes to unaudited condensed consolidated financial statements
CAPSTONE THERAPEUTICS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
June 30, 2015
Note A. OVERVIEW OF BUSINESS
Description
of the Business
Capstone Therapeutics Corp. (the “Company”, “we”,
“our” or “us”) is a biotechnology company committed to developing a pipeline of novel peptides and other
molecules aimed at helping patients with under-served medical conditions. Previously, we were focused on the development and commercialization
of two product platforms: AZX100 and Chrysalin (TP508). Since March 2012, we no longer have any interest in or rights to Chrysalin.
In 2012 we wound down internal operations, ceased clinical development of AZX100 in dermal scarring, formerly our principal drug
candidate, and moved to a more virtual operating model. In 2014, we terminated the License Agreement for AZX100 intellectual property
and returned all interest in and rights to the AZX100 intellectual property to the Licensor (AzTE).
On August 3, 2012, we entered into a joint venture, LipimetiX Development,
LLC, (now LipimetiX Development, Inc.), (the “JV”), to develop Apo E mimetic peptide molecule AEM-28 and its analogs.
The JV has a development plan to pursue regulatory approval of AEM-28, or an analog, as treatment for Homozygous Familial Hypercholesterolemia
(granted Orphan Drug Designation by FDA in 2012), Acute Hypertriglyceridemic Pancreatitis, and other hyperlipidemic indications.
The initial development plan extended through Phase 1a and 1b/2a clinical trials and was completed in the fourth quarter of 2014.
The JV received allowance from regulatory authorities in Australia permitting
the JV to proceed with the planned clinical trials. The Phase 1a clinical trial commenced in Australia in April 2014 and the Phase
1b/2a clinical trial commenced in Australia in June 2014. The clinical trials for AEM-28 were randomized, double-blinded, placebo-controlled
studies to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of six escalating single doses (Phase 1a in
healthy patients with elevated cholesterol) and multiple ascending doses of the three highest doses from Phase 1a (Phase 1b/2a
in patients with hypercholesterolemia and healthy volunteers with elevated cholesterol and high Body Mass Index). The Phase 1a
clinical trial consisted of 36 patients and the Phase 1b/2a consisted of 15 patients. Both clinical trials were completed in 2014
and the Medical Safety Committee, reviewing all safety-related aspects of the clinical trials, observed a generally acceptable
safety profile. As first-in-man studies, the primary endpoint was safety; yet efficacy measurements analyzing pharmacodynamics
yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints.
Concurrent with the clinical development activities with AEM-28, the
JV has performed pre-clinical studies that have identified an analog of AEM-28, referred to as AEM-28-14, and a new phospholipid
formulation, that has the potential of equivalent efficacy, higher human dose toleration and an extended composition of matter
patent life (application filed with the U.S. Patent and Trademark Office in 2015).
The JV and the Company are exploring fundraising, partnering or licensing,
to obtain additional funding to continue development activities of AEM-28 and its analogs, including AEM-28-14 and operations.
The JV and the Company do not have sufficient funding at this time to
continue additional material development activities of AEM-28 and its analogs, including AEM-28-14. The JV may conduct future clinical
trials in Australia, the USA, and other regulatory jurisdictions if regulatory approvals, additional funding, and other conditions
permit.
The Company, funding permitting, intends to continue limiting its internal
operations to a virtual operating model while monitoring and participating in the management of JV’s AEM-28 and analogs development
activities and maintaining the required level of corporate governance and reporting required to comply with Securities and Exchange
Commission rules and regulations.
Description of Current Peptide Drug Candidates.
Apo E Mimetic Peptide Molecule – AEM-28 and its analogs
Apolipoprotein E is a 299 amino acid protein that plays an important
role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28 and its analogs, including AEM-28-14 is a
28 amino acid mimetic of Apo E (with an aminohexanoic acid group and a phospholipid), and both contain a domain that anchors into
a lipoprotein surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate
proteoglycan (HSPG) receptors (Syndecan-1) in the liver. AEM-28 and its analogs, including AEM-28-14, as Apo E mimetics, have the
potential to restore the ability of these atherogenic lipoproteins to be cleared from the plasma, completing the reverse cholesterol
transport pathway, and thereby reducing cardiovascular risk. This is an important mechanism of action for AEM-28 and its analogs,
including AEM-28-14. For patients that lack LDL receptors (Homozygous Familial Hypercholesterolemia-HoFH), have acute pancreatitis,
or have hypercholesterolemia, AEM-28 and its analogs may provide a therapeutic solution. Our joint venture has an Exclusive License
Agreement with the University of Alabama at Birmingham Research Foundation for AEM-28 and certain of its analogs.
Company History
Prior to November 26, 2003, we developed, manufactured and marketed proprietary,
technologically advanced orthopedic products designed to promote the healing of musculoskeletal bone and tissue, with particular
emphasis on fracture healing and spine repair. Our product lines, which included bone growth stimulation and fracture fixation
devices, are referred to as our “Bone Device Business.” In November 2003, we sold our Bone Device Business.
In August 2004, we purchased substantially all of the assets and intellectual
property of Chrysalis Biotechnology, Inc., including its exclusive worldwide license for Chrysalin, a peptide, for all medical
indications. Subsequently, our efforts were focused on research and development of Chrysalin with the goal of commercializing our
products in fresh fracture healing. (In March 2012, we returned all rights to the Chrysalin intellectual property and no longer
have any interest in, or rights to Chrysalin.)
In February 2006, we purchased certain assets and assumed certain liabilities
of AzERx, Inc. Under the terms of the transaction, we acquired an exclusive license for the core intellectual property relating
to AZX100, an anti-fibrotic peptide. In 2014, we terminated the License Agreement with AzTE (Licensor) for the core intellectual
property relating to AZX100 and returned all interest in and rights to the AZX100 intellectual property to the Licensor.
On August 3, 2012, we entered into a joint venture (see Note B below),
to develop Apo E mimetic peptide molecule AEM-28 and its analogs.
Our development activities represent a single operating segment as they
shared the same product development path and utilized the same Company resources. As a result, we determined that it is appropriate
to reflect our operations as one reportable segment.
OrthoLogic Corp. commenced doing business under the trade name of Capstone
Therapeutics on October 1, 2008, and we formally changed our name from OrthoLogic Corp. to Capstone Therapeutics Corp. on May 21,
2010.
In these notes, references to “we”, “our”, “us”,
the “Company”, “Capstone Therapeutics”, “Capstone”, and “OrthoLogic” refer to Capstone
Therapeutics Corp. References to our joint venture or “JV”, refer to LipimetiX Development, Inc. (formerly LipimetiX
Development, LLC).
Financial Statement Presentation and Management’s Plan
The accompanying financials statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal
course of business.
The report from our Independent Registered Public Accounting Firm on
our consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K expressed
substantial doubt about the Company’s ability to continue as a going concern.
Management has determined that the Company will require additional capital
above its current cash and working capital balances to further develop AEM-28 and its analogs or continue operations. Accordingly,
the Company has reduced its development activities. The Company’s corporate strategy is to raise funds by possibly engaging
in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital. These financial
statements do not include any adjustments that might result from the outcome of the uncertainty of the Company successfully implementing
its corporate strategy.
In the opinion of management, the unaudited condensed interim financial
statements include all adjustments necessary for the fair presentation of our financial position, results of operations, and cash
flows, and all adjustments were of a normal recurring nature. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the complete fiscal year. The financial statements include the consolidated results
of Capstone Therapeutics Corp. and our 60% owned subsidiary, LipimetiX Development, Inc. Intercompany transactions have been eliminated.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities
and Exchange Commission rules and regulations, although we believe that the disclosures herein are adequate to make the information
presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements
and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. Information presented as
of December 31, 2014 is derived from audited financial statements.
Use of Estimates
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States requires that management make a number of assumptions and estimates that affect
the reported amounts of assets, liabilities, and expenses in our financial statements and accompanying notes. Management bases
its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based
on management’s assumptions regarding current events and actions that may impact us in the future, actual results may differ
from these estimates and assumptions.
Legal and Other Contingencies
The Company is subject to legal proceedings and claims that arise in
the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount
is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure
can be reasonably estimated. In the opinion of management, there was not at least a reasonable possibility the Company may have
incurred a material loss with respect to loss contingencies.
Joint Venture Accounting
The Company entered into a joint venture in which it has contributed
$6,000,000, and the noncontrolling interests have contributed certain patent license rights. Neither the Company nor the noncontrolling
interests have an obligation to contribute additional funds to the joint venture or to assume any joint venture liabilities or
to provide a guarantee of either joint venture performance or any joint venture liability. The financial position and results of
operations of the joint venture are presented on a consolidated basis with the financial position and results of operations of
the Company. Intercompany transactions have been eliminated. Joint venture losses were recorded on the basis of common ownership
equity interests (60% Company / 40% noncontrolling interests) until common ownership equity was reduced to $0. Subsequent joint
venture losses are being allocated to the preferred ownership equity (100% Company). Subsequent to March 31, 2013, all joint venture
losses are being allocated to the Company. The Company has a revolving loan agreement with the joint venture to advance the joint
venture funds for operations in an amount not to exceed a net (net of expected tax credits or other funds obtained) of $700,000,
with the net amount due September 30, 2015. Losses incurred by the joint venture in excess of the capital accounts of the joint
venture will be allocated to the Company to the extent of net outstanding advances.
Cash and Cash Equivalents
At June 30, 2015, cash and cash equivalents included money market accounts.
Recent Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board issued
Accounting Standard Update (“ASU”) No. 2014-15, Presentation of Financial Statements – Going Concern
(Subtopic 205-40)(“Update”): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,
providing a requirement under U.S. GAAP for an entity’s management to evaluate whether there are conditions or events, considered
in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year
after the date the financial statements are issued; and if those conditions exist, to disclose that fact, the conditions and the
potential effects on the entity’s ability to meet its obligations. The Update will be effective for an annual period ending
after December 15, 2016, with early application permitted. We have not elected early application. However, if additional funds
are not obtained to continue the development of AEM-28 or its analogs, or operations, it will impair our ability to continue as
a going concern. If we do not continue as a going concern, the Company may incur additional losses, up to, and possibly exceeding
our net joint venture investment and revolving loan balance.
Note B. |
|
JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS |
On August 3, 2012, we entered into a Contribution Agreement with LipimetiX,
LLC to form a joint venture, LipimetiX Development, LLC (“JV”), to develop Apo E mimetic molecules, including AEM-28
and its analogs. In June 2015, the JV converted from a limited liability company to a corporation, LipimetiX Development, Inc.
The Company contributed $6 million, which included $1 million for 600,000 voting common ownership units (now common stock), representing
60% ownership in the JV, and $5 million for 5,000,000 non-voting preferred ownership units (now preferred stock), which have preferential
distribution rights.
LipimetiX, LLC contributed all intellectual property rights for Apo E
mimetic molecules it owned and assigned its Exclusive License Agreement between The University of Alabama at Birmingham Research
Foundation (“UABRF”) and LipimetiX, LLC, for the UABRF intellectual property related to Apo E mimetic molecules AEM-28
and its analogs to the JV, in return for 400,000 voting common ownership units (now common stock) representing 40% ownership in
JV, and $378,000 in cash (for certain initial patent-related costs and legal expenses).
LipimetiX, LLC was formed by the principals of Benu BioPharma, Inc. (“Benu”)
and UABRF to commercialize UABRF’s intellectual property related to Apo E mimetic molecules, including AEM-28 and analogs.
Benu is composed of Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D. and Eric M. Morrel, Ph.D. The Exclusive License Agreement,
as amended, calls for payment of patent filing, maintenance and other related patent fees, as well as a royalty of 3% on Net Sales
of Licensed Products during the Term of the Agreement. The Agreement terminates upon the expiration of all Valid Patent Claims
within the Licensed Patents, which are currently estimated to expire between 2019 and 2035. The Agreement, as amended, also calls
for annual maintenance payments of $25,000, various milestone payments of $50,000 to $500,000 and minimum royalty payments of $500,000
to $1,000,000 per year commencing on January 1 of the first calendar year following the year in which the First Commercial Sale
occurs. UABRF will also be paid 5% of Non Royalty Income received.
Concurrent with entering into the Contribution Agreement and the First
Amendment and Consent to Assignment of Exclusive License Agreement between LipimetiX, LLC, UABRF and the Company, the Company and
LipimetiX, LLC entered into a Limited Liability Company Agreement for JV which established a Joint Development Committee (“JDC”)
to manage JV development activities. Upon conversion by the JV from a limited liability company to a corporation, the parties entered
into a Stockholders Agreement for the JV, and the JDC was replaced by a Board of Directors (JV Board). The JV Board is composed
of three members appointed by the non-Company ownership group and two members appointed by the Company. Non-development JV decisions,
including the issuance of new equity, incurrence of debt, entry into strategic transactions, licenses or development agreements,
sales of assets and liquidation, and approval of annual budgets, will be decided by a majority vote of the common stockholders.
The JV, on August 3, 2012, entered into a Management Agreement with Benu
to manage JV development activities for a monthly fee of approximately $63,000 during the twenty-seven month development period,
and an Accounting Services Agreement with the Company to manage JV accounting and administrative functions. The current accounting
services fee is $1,000 a month. Commencing in November 2014, and ending in March 2015, Benu received a reduced monthly management
fee in the amount of $35,000. Subsequent to March 2015, no management fee has been paid to Benu for their services.
The joint venture formation was as follows ($000’s):
Patent license rights | |
$ | 1,045 | |
Noncontrolling interests | |
| (667 | ) |
Cash paid at formation | |
$ | 378 | |
Patent license rights were recorded at their estimated fair value and
are being amortized on a straight-line basis over the key patent life of eighty months.
The financial position and results of operations of the joint venture
are presented on a consolidated basis with the financial position and results of operations of the Company. Intercompany transactions
have been eliminated. The joint venture agreement requires profits and losses to be allocated on the basis of common ownership
equity interests (60% Company / 40% noncontrolling interests). However, for the Company’s consolidated financial statement,
joint venture losses were recorded on the basis of common ownership equity interests (60% Company / 40% noncontrolling interests)
until common ownership equity was reduced to $0. Subsequent joint venture losses have been allocated to the preferred ownership
equity (100% Company). Subsequent to March 31, 2013, all joint venture losses have been allocated to the Company. The Company has
a revolving loan agreement with the joint venture to advance the joint venture funds for operations in an amount not to exceed
a net (net of expected tax credits or other funds obtained) of $700,000, with the net amount due September 30, 2015. Losses incurred
by the joint venture in excess of the capital accounts of the joint venture will be allocated to the Company to the extent of net
outstanding advances. At June 30, 2015, outstanding advances on the revolving loan agreement totaled $739,000.
The joint venture incurred net operating expenses, prior to the elimination
of intercompany transactions, of $351,000 in the six month period ended June 30, 2015 and $6,586,000 for the period from August
3, 2012 (inception) to June 30, 2015, of which $351,000 and $5,919,000, respectively, have been recorded by the Company. The joint
venture operating expenses are included in research and development expenses in the condensed consolidated statements of operations.
Neither the Company nor the noncontrolling interests have an obligation
to contribute additional funds to the joint venture or to assume any joint venture liabilities or to provide a guarantee of either
joint venture performance or any joint venture liability. Losses allocated to the noncontrolling interests represent an additional
potential loss for the Company as the noncontrolling interests are not obligated to contribute assets to the joint venture to the
extent they have a negative capital account, and depending on the ultimate outcome of the joint venture, the Company could potentially
absorb all losses associated with the joint venture. From formation of the joint venture, August 3, 2012, through June 30, 2015,
losses totaling $667,000 have been allocated to the noncontrolling interests. If the joint venture or Company is unable to obtain
additional funding, the ability of the joint venture to continue development of AEM-28 and its analogs, including AEM-28-14, would
be impaired as would the joint venture’s ability to continue operations. If the joint venture does not continue as a going
concern, at June 30, 2015 the Company would incur an additional loss of $667,000 for the joint venture losses allocated to the
noncontrolling interests.
Note C. CONTINGENCY – LEGAL PROCEEDINGS
In April 2009, we became aware of a qui tam complaint that was filed under seal by Jeffrey J. Bierman as Relator/Plaintiff
on March 28, 2005 in the United States District Court for the District of Massachusetts (the “Court”) against OrthoLogic
and other companies that manufactured bone growth stimulation devices, including Orthofix International N.V., Orthofix, Inc., DJO
Incorporated, Reable Therapeutics, Inc., the Blackstone Group, L.P., Biomet, Inc., EBI, L.P., EBI Holdings, Inc., EBI Medical Systems,
Inc., Bioelectron, Inc., LBV Acquisition, Inc., and Smith & Nephew, Inc. By order entered on March 24, 2009, the court unsealed
the amended complaint. The amended complaint alleges various causes of action under the federal False Claims Act and state and
city false claims acts premised on the contention that the defendants improperly promoted the sale, as opposed to the rental, of
bone growth stimulation devices. The amended complaint also includes claims against the defendants for, among other things, allegedly
misleading physicians and purportedly causing them to file false claims and (except for OrthoLogic) for allegedly violating the
Anti-kickback Act by providing free products to physicians, waiving patients’ insurance co-payments, and providing inducements
to independent sales agents to generate business. The Relator/Plaintiff is seeking civil penalties under various state and federal
laws, as well as treble damages, which, in the aggregate could exceed the financial resources of the Company.
The United States Government declined to intervene or participate in
the case. On September 4, 2009, the Relator/Plaintiff served the amended complaint on the Company. We sold our bone growth stimulation
business in November 2003 and have had no further activity in the bone growth stimulation business since that date. We have, in
conjunction with the other defendants, defended this matter vigorously and believe that at all times our billing practices in our
bone growth stimulation business complied with applicable laws. On December 4, 2009, the Company, in conjunction with the other
defendants, moved to dismiss the amended complaint with prejudice. In response to that motion, Relator/Plaintiff filed a second
amended complaint. On August 17, 2010, the Company, in conjunction with the other defendants, moved to dismiss the second amended
complaint with prejudice. That motion was denied by the court on December 8, 2010. On January 28, 2011, we, in conjunction with
the other defendants, filed our answer to the second amended complaint. No trial date was set. Discovery in the case is closed.
In May 2015, the Company and Relator/Plaintiff entered into an agreement
to settle the qui tam action against the Company for a one-time payment of $50,000. The Court approved the parties’
Settlement Agreement in June 2015 by signing an Order of Dismissal and this matter is now closed.
Note D. Australian Refundable Research & Development Credit
In March 2014, LipimetiX Development LLC, (see Note B) formed a wholly-owned
Australian subsidiary, Lipimetix Australia Pty Ltd, to conduct Phase 1a and Phase1b/2a clinical trials in Australia. Currently
Australian tax regulations provide for a refundable research and development tax credit equal to 45% of qualified expenditures.
Subsequent to the end of its Australian tax years, Lipimetix Australia Pty, Ltd intends to submit claims for a refundable research
and development tax credit. The transitional Australian tax periods/years granted for Lipimetix Australia Pty, Ltd end on June
30, 2014, December 31, 2014 and thereafter December 31 of each succeeding year. For the tax year ended June 30, 2014, Lipimetix
Australia Pty, Ltd received a refundable research and development tax credit of AUD$227,000. At December 31, 2014 a AUD$242,000
development tax credit was recorded by Lipimetix Australia Pty, Ltd, and at June 30, 2015, an additional AUD$251,000 has been accrued,
as it is more likely than not that the recorded refundable research and development tax credit will be approved and received. At
June 30, 2015, and December 31, 2014, AUD$493,000 (US$ 380,000), and AUD$242,000 (US$196,000), respectively, have been accrued
and are included in other current assets in our condensed consolidated balance sheets.
Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
The following is management’s discussion of significant events
in the three month period ended June 30, 2015 and factors that affected our interim financial condition and results of operations.
This should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31,
2014.
Overview of the Business
Capstone Therapeutics Corp. is a biotechnology company committed to developing
a pipeline of novel peptides and other molecules aimed at helping patients with under-served medical conditions. Previously, we
were focused on the development and commercialization of two product platforms: AZX100 and Chrysalin (TP508). Since March 2012,
we no longer have any interest in or rights to Chrysalin. In 2012 we wound down internal operations, ceased clinical development
of AZX100 in dermal scarring, formerly our principal drug candidate, and moved to a more virtual operating model. In 2014, we terminated
the License Agreement for AZX100 intellectual property and returned all interest in and rights to the AZX100 intellectual property
to the Licensor (AzTE).
On August 3, 2012, we entered into a joint venture, LipimetiX Development,
LLC, (now LipimetiX Development, Inc.) (the “JV”) to develop Apo E mimetic peptide molecule AEM-28 and its analogs.
The JV has a development plan to pursue regulatory approval of AEM-28, or an analog, as treatment for Homozygous Familial Hypercholesterolemia
(granted Orphan Drug Designation by FDA in 2012), Acute Hypertriglyceridemic Pancreatitis, and other hyperlipidemic indications.
The initial development plan extended through Phase 1a and 1b/2a clinical trials and was completed in the fourth quarter of 2014.
The clinical trials have a safety primary endpoint and an efficacy endpoint targeting reduction of cholesterol and triglycerides.
The JV received allowance from regulatory authorities in Australia permitting
the JV to proceed with the planned clinical trials. The Phase 1a clinical trial commenced in Australia in April 2014 and the Phase
1b/2a clinical trial commenced in Australia in June 2014. The clinical trials for AEM-28 are randomized, double-blinded, placebo-controlled
studies to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of six escalating single doses (Phase 1a in
healthy patients with elevated cholesterol) and multiple ascending doses of the three highest doses from Phase 1a (Phase 1b/2a
in patients with Hypercholesterolemia and normal healthy volunteers with elevated cholesterol and high Body Mass Index). The Phase
1a clinical trial consisted of 36 patients and the Phase 1b/2a consisted of 15 patients. Both clinical trials were completed in
2014 and the Medical Safety Committee, reviewing all safety-related aspects of the clinical trials, observed a generally acceptable
safety profile. As first-in-man studies, the primary endpoint was safety; yet efficacy measurements analyzing pharmacodynamics
yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints.
Concurrent with the clinical development activities of AEM-28, the JV
has performed pre-clinical studies that have identified an analog of AEM-28, referred to as AEM-28-14, and a new phospholipid formulation,
that has the potential of equivalent efficacy, higher human dose toleration and an extended patent life (application filed in 2015).
The JV and Company are exploring fundraising, partnering or licensing
to obtain additional funding to continue development activities of AEM-28 and its analogs, including AEM-28-14 and operations.
The JV and the Company do not have sufficient funding at this time to
continue additional material development activities of AEM-28 and its analogs, including AEM-28-14. The JV may conduct future clinical
trials in Australia, the USA, and other regulatory jurisdictions if regulatory approvals, additional funding, and other conditions
permit. The JV may also fund research or studies to investigate AEM-28-14 for treatment of acute coronary syndrome and other indications.
The Company, funding permitting, intends to limit its internal operations
to a virtual operating model while continuing monitoring and participating in the management of JV’s AEM-28 and analogs development
activities and maintaining the required level of corporate governance and reporting required to comply with Securities and Exchange
Commission rules and regulations.
Description of Our Peptide Drug Candidate.
Apo E Mimetic Peptide Molecule – AEM-28 and its analogs
Apolipoprotein E is a 299 amino acid protein that plays an important
role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28-14 (an analog of AEM-28) is a 28 amino acid
mimetic of Apo E (with an aminohexanoic acid group and a phospholipid) and both contain a domain that anchors into a lipoprotein
surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate proteoglycan
(HSPG) receptors (Syndecan-1) in the liver. AEM-28 and AEM-28-14, as Apo E mimetics, have the potential to restore the ability
of these atherogenic lipoproteins to be cleared from the plasma, completing the reverse cholesterol transport pathway, and thereby
reducing cardiovascular risk. This is an important mechanism of action for AEM-28 and AEM-28-14. For patients that lack LDL receptors
(Homozygous Familial Hypercholesterolemia-HoFH), have acute pancreatitis, or have hypercholesterolemia, AEM-28 or AEM-28-14 may
provide a therapeutic solution. Our joint venture has an Exclusive License Agreement with the University of Alabama at Birmingham
Research Foundation for AEM-28 and certain of its analogs.
Critical Accounting Policies
Our critical accounting policies are those that affect, or could affect our financial statements materially and involve a significant
level of judgment by management. The accounting policies and related risks described in our Annual Report on Form 10-K, filed with
the Securities and Exchange Commission on March 16, 2015, for the year ended December 31, 2014 are those that depend most heavily
on these judgments and estimates. As of June 30, 2015, there have been no material changes to any of the critical accounting policies
contained in our Annual Report for the year ended December 31, 2014.
Results of Operations Comparing Three-Month Period Ended June 30, 2015 to the Corresponding
Period in 2014.
General and Administrative (“G&A”) Expenses: G&A
expenses related to our ongoing operations were $552,000 in the second quarter of 2015 compared to $222,000 in the second quarter
of 2014. Administration expenses increased primarily due to costs related to the qui tam litigation, filing of a Form S-1,
and investor relations activities. We expect that we may have elevated general and administrative costs, compared to 2014 levels,
while we continue fund raising activities.
Research and Development Expenses: Research and development expenses
were $283,000 for the second quarter of 2015 compared to $1,172,000 for the second quarter of 2014. Our research and development
expenses varied in the second quarter of 2015 compared to the same period in 2014 primarily due to the inclusion and fluctuation
of operating expenses of the JV, which totaled (net of intercompany transactions) $150,000 for the three months ended June 30,
2015, and $987,000 for the three months ended June 30, 2104. As discussed above, we have significantly reduced our development
activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.
Income Tax Benefit: Income tax benefit in 2015 consisted of a
refundable Australian research and development tax credit, as described in Note D to the financial statements included in this
Quarterly Report on Form 10-Q, related to our joint venture’s Australian clinical trial activities.
Net Loss attributable to Capstone Therapeutics stockholders: We
incurred a net loss in the second quarter of 2015 of $0.8 million compared to a net loss of $1.4 million in the second quarter
of 2014. Net loss is affected by the items discussed above in General and Administrative Expenses, Income Tax Benefit, and the
inclusion of the operating expenses of JV, which totaled (net of intercompany transactions) $150,000 for the three months ended
June 30, 2015 and $987,000 for the three months ended June 30, 2014. As discussed above, we have significantly reduced our development
activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.
Results of Operations Comparing Six-Month Period Ended June 30, 2015 to the Corresponding
Period in 2014.
General and Administrative (“G&A”) Expenses: G&A
expenses related to our ongoing operations were $1,024,000 in 2015 compared to $674,000 in 2014. Administration expenses increased
primarily due to costs related to the qui tam litigation, filing of a Form S-1 and investor relations activities. We expect
that we may have elevated general and administrative costs, compared to 2014 levels, while we continue fund raising activities.
Research and Development Expenses: Research and development expenses
were $633,000 for 2015 compared to $1,802,000 for 2014. Our research and development expenses varied in the first six months of
2015 compared to the same period in 2014 primarily due to the inclusion and fluctuation of operating expenses of the JV, which
totaled (net of intercompany transactions) $347,000 for the six months ended June 30, 2015, and $1,405,000 for the six months ended
June 30, 2104. As discussed above, we have significantly reduced our development activities of AEM-28 and its analogs, including
AEM-28-14, as we attempt to obtain additional funding.
Interest and Other Expenses (Income), Net: Interest and Other
Expenses (Income), Net, decreased from $63,000 of Income in 2014 to $9,000 of Expense in 2015 due to the receipt of $60,000 in
2014 from the conversion of an insurance company, in which we were a policyholder, from mutual to private ownership, while in 2015
the Company incurred a foreign exchange loss of $12,000 related to our joint venture’s Australian activities.
Income Tax Benefit: Income tax benefit in 2015 consisted of a
refundable Australian research and development tax credit, as described in Note D to the financial statements included in this
Quarterly Report on Form 10-Q, related to our joint venture’s Australian clinical trial activities.
Net Loss attributable to Capstone Therapeutics stockholders: We
incurred a net loss in the first six months of 2015 of $1.5 million compared to a net loss of $2.4 million in the first six months
of 2014. Net loss is affected by the items discussed above and the inclusion of the operating expenses of JV, which totaled (net
of intercompany transactions) $347,000 for the six months ended June 30, 2015 and $1,405,000 for the six months ended June 30,
2014. As discussed above, we have significantly reduced our development activities of AEM-28 and its analogs, including AEM-28-14,
as we attempt to obtain additional funding.
Liquidity and Capital Resources
With the sale of our Bone Device Business in November 2003, we sold all
of our revenue producing operations. Since that time, we have primarily relied on our cash and investments to finance all our operations,
the focus of which has been research and development of our product candidates.
On August 3, 2012, we entered into a joint venture, to develop Apo E
mimetic peptide molecule AEM-28 and its analogs. We contributed $6.0 million and through June 30, 2015 we have loaned an additional
$739,000 to the JV. At June 30, 2015, we had cash and cash equivalents of $1.0 million.
We intend to continue limiting our internal operations to a virtual operating
model in 2015, however, without additional funding, we will not continue development of AEM-28 and its analogs, including AEM-28-14,
past completion of the limited projects currently under way. We are exploring strategic options for both the Company and our joint
venture. Lack of additional funding within the next 12 months, would impair our ability to continue our current operations and
our ability to continue as a going concern.
Funding permitting, our planned operations in 2015 consist of continuing
monitoring and participating in the management of the JV’s AEM-28 and its analogs, including AEM-28-14, development activities,
and maintaining the required level of corporate governance and reporting required to comply with Securities and Exchange Commission
rules and regulations.
Our future research and development and other expenses will vary significantly
from prior periods and depend on the Company’s decisions on future JV operations and obtaining additional funding.
We will require additional funds if we chose to extend the development
of AEM-28 and its analogs past the initial Phase 1a and Phase1b/2a clinical trials or to continue operations. We cannot currently
predict the amount of funds that will be required if we chose to extend the development activities of AEM-28 and its analogs and
to continue operations. In any event, to complete the clinical trials and supporting research and production efforts necessary
to obtain FDA or comparable foreign agencies’ approval for product candidates would require us to obtain additional capital.
New sources of funds, including raising capital through the sales of our debt or equity securities, joint venture or other forms
of joint development arrangements, sales of development rights, or licensing agreements, may not be available or may only be available
on terms that would have a material adverse impact on our existing stockholders’ interests.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation
of our principal executive officer and principal financial and accounting officer, has reviewed and evaluated our disclosure controls
and procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Form
10-Q. Based on that evaluation, our management, including our principal executive officer and principal financial and accounting
officer, has concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form
10-Q in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s
rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial
and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting
during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Part II – Other Information
Item 1. Legal Proceedings
In June 2015, we settled our long-pending
qui tam lawsuit for a one-time payment of $50,000. The lawsuit had been filed under seal by Jeffrey J. Bierman, as Relator/Plaintiff,
on March 28, 2005 in the United States District Court for the District of Massachusetts against us and substantially all sellers
of bone growth stimulation devices during the period 1998-2003. The complaint asserted a variety of claims, including False Claims
Act violations. We sold our bone growth stimulation device business in 2003 and first learned of this lawsuit in September 2009.
Item 6. Exhibits
See the Exhibit Index following
this report.
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.
|
CAPSTONE THERAPEUTICS CORP. |
|
|
(Registrant) |
|
|
|
|
|
|
|
Signature |
Title |
Date |
|
|
|
|
|
/s/ John M. Holliman, III
John M. Holliman, III
|
Chairman and Chief Executive Officer
(Principal Executive Officer) |
August 13, 2015 |
|
/s/ Les M. Taeger
Les M. Taeger |
Senior Vice President and Chief
Financial Officer
(Principal Financial and Accounting Officer) |
August 13, 2015 |
|
|
|
|
Capstone Therapeutics Corp.
(the “Company”)
Exhibit Index to Quarterly Report on Form 10-Q
For the Quarterly Period Ended June 30, 2015
No. |
Description |
Incorporated by Reference To: |
Filed
Herewith |
31.1 |
Certification of Principal Executive
Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as amended.
|
|
X |
31.2 |
Certification of Principal Financial
and Accounting Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as amended.
|
|
X |
32 |
Certification of Principal Executive Officer and Principal Financial and Accounting Officer
Pursuant to 18 U.S.C. Section 1350.*
|
|
|
101 |
The following financial information from our Quarterly Report on Form 10-Q for the second
quarter of fiscal year 2015, filed with the SEC on August 13, 2015 formatted in Extensible Business Reporting Language (XBRL):
(i) the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) the Condensed Consolidated Statements
of Operations for the three and six months ended June 30, 2015 and 2014, (iii) the Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 2015 and 2014, and (iv) Notes to Unaudited Condensed Consolidated Financial Statements.
* Furnished herewith |
|
X |
Exhibit 31.1
CERTIFICATION
I, John M. Holliman, III certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Capstone Therapeutics Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Date: August 13, 2015
By: /s/ John M. Holliman, III
John M. Holliman, III
Chairman and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION
I, Les M. Taeger, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Capstone Therapeutics Corp.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors
(or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
Date: August 13, 2015
By: /s/ Les M. Taeger
Les M. Taeger
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Capstone Therapeutics
Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2015 as filed with the Securities and Exchange Commission
on the date hereof (the “Report”), each of John M. Holliman, III, Executive Chairman and Principal Executive Officer
of the Company, and Les M. Taeger, Senior Vice President and Chief Financial Officer, and Principal Financial and Accounting Officer
of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002,
that to the best of his knowledge:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the Company.
Date: August 13, 2015
/s/ John M. Holliman, III
John M. Holliman, III
Chairman and Chief Executive Officer
(Principal Executive Officer)
/s/ Les M. Taeger
Les M. Taeger
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
A signed original of this written statement required by Section 906, or other document
authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of
this written statement required by Section 906, has been provided to Capstone Therapeutics Corp. and will be retained by Capstone
Therapeutics Corp. and furnished to the Securities and Exchange Commission or its staff upon request.
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