Full Press Release Details
Capnia and Essentialis Announce Merger to Create
Rare Disease Therapeutics Company
Combined Company to Focus on Advancing Novel, Late-Stage Asset for the Treatment of Prader-Willi Syndrome, a Devastating, Orphan Disease
Enrollment in a Phase II/III Clinical Trial Expected to Begin in Second Half of 2017
$8 Million Concurrent Financing; Sufficient to Fund Development Plan Through Key Value-Creating Milestones
REDWOOD CITY, CA and CARLSBAD, CA December 27, 2017 Capnia, Inc. (NASDAQ: CAPN) and privately-held Essentialis, Inc. today announced
their entry into a definitive merger agreement to create a rare disease therapeutics company. The combined company will be well-positioned to advance diazoxide choline controlled release tablet (DCCR), a once-daily oral tablet for the treatment of
patients with Prader-Willi syndrome (PWS). PWS is a rare complex genetic neurobehavioral/metabolic disease. The clinical features of the disease include hyperphagia (unrelenting hunger), as well as metabolic, endocrine, cognitive and behavioral
complications resulting in significant morbidity and premature death.
Upon closing of the merger, Capnia expects to issue shares of common stock at $0.96
per share to a syndicate comprised of current and new investors for gross proceeds of $8.0 million. These funds would be used to execute a planned Phase II/III clinical study evaluating the efficacy and safety of DCCR for the treatment of patients
with PWS. This study is expected to commence in the second half of 2017.
Anish Bhatnagar, MD, Chief Executive Officer of Capnia, stated, We are
excited to combine the strengths of these two dynamic organizations to create a leading rare disease therapeutics company that has the potential to bring a novel drug candidate to patients suffering with PWS, a devastating, often life-threatening
disorder. While this transaction represents a new strategic direction for Capnia, it offers the potential of a highly-promising, late-stage clinical asset for a metabolic disorder for which no effective treatments currently exist. The new company,
together with the $8.0 million in financing, will be well-positioned to maximize long-term value for all its stakeholders.
syndrome is a rare, genetic neurobehavioral/metabolic disorder, which results in diminished quality of life, as well as a risk of premature death for the patient and substantial caregiver burden, said Neil M. Cowen, PhD, MBA, President and
Chief Scientific Officer of Essentialis. DCCR has a long and established safety record and has been shown in a Phase II trial to positively impact hyperphagia, which is perhaps the biggest obstacle to PWS patients and their families being able
to lead normal lives. Statistically significant benefits were also observed in body composition and aggressive, threatening and destructive behaviors. Importantly, DCCR s safety has been extensively addressed in multiple clinical trials and its
parent molecule has a decades-long track record of safety and tolerability. We are eager to advance DCCR through its next phase of development, with the goal of addressing the highest priority unmet medical needs of PWS and improving the quality of
life of PWS patients and their families.
Key strategic benefits of the merger include:
Key Terms of the Merger
Under the terms of the merger
agreement, upon the completion of the transaction, Capnia will acquire all outstanding shares of Essentialis. The merger transaction has been approved by the boards of directors of both companies and is expected to close during the first quarter of
2017, subject to customary closing conditions, including Capnia shareholder approval. The combined company will be led by Anish Bhatnagar, MD, Capnia s Chief Executive Officer. Dr. Cowen will join the combined company as Senior Vice
President of Drug Development. David O Toole, Capnia s Senior Vice President and Chief Financial Officer, will continue as CFO of the combined company. The Board of Directors of the combined company is expected to consist of nine
directors, with six current Capnia directors and three current Essentialis directors.
Capnia intends to evaluate alternatives for its legacy products and
product candidates, including CoSense ETCO Monitor, Serenz Allergy Relief, and its portfolio of innovative pulmonary resuscitation
solutions for the neonatal market.
Clinical Data for DCCR in PWS
In a recently completed, open-label study with a randomized placebo-controlled withdrawal phase (clinical study PC025; n=13), DCCR demonstrated an
approximately 32% reduction in hyperphagia (p=0.003), a highly significant and clinically relevant improvement on the highest priority symptom of
the disorder. The mean effect on hyperphagia persisted for over 3 months for DCCR-treated individuals who continued on study through the double-blind treatment phase, and regressed back towards
baseline in those randomized to placebo. In addition, statistically significant improvements were seen in other endpoints such as aggressive behaviors, body fat, lean body mass and cardiovascular risk factors. There were no new safety findings
in this study and the adverse events profile (consisting mostly of mild to moderate AEs) was consistent with the known profile of diazoxide, DCCR s parent molecule. These results were presented at the recent International Prader-Willi Syndrome
Organization (IPWSO) meeting.
This single-center study was conducted at the University of California, Irvine under the direction of
Dr. Virginia Kimonis, a nationally-renowned expert in PWS and other serious and complicated pediatric genetic disorders.
PWS is a rare and complex genetic disorder affecting appetite, growth, metabolism, cognitive function and behavior. In the US, it is estimated that one in
12,000 to 15,000 people has PWS. This disorder is typically characterized by low muscle tone, short stature (when not treated with growth hormone), incomplete sexual development, cognitive disabilities, behavioral problems, and hyperphagia, a
chronic feeling of insatiable hunger. Combined with a reduced metabolism, PWS can lead to excessive eating and without effective limitations on access to food, can result in morbid obesity. In a global survey conducted by the Foundation of
Prader-Willi Syndrome, 96.5% of respondents (parent and caregivers) rated hyperphagia as the most important unmet need.
About Diazoxide Choline
Diazoxide Choline Controlled Release (DCCR) is a novel, proprietary controlled-release, crystalline salt formulation of diazoxide
which is administered as a once-daily tablet. The parent molecule, diazoxide, as an oral suspension, has been effective and used safely for decades as a first line therapy in a range of rare conditions such as hyperinsulinemic hypoglycemia in
neonates, children and adults. 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. DCCR was granted Orphan Drug
Designation for the treatment of PWS by the FDA on May 13, 2014.
Capnia is a leading provider and developer of innovative healthcare products to be used for the screening, detection and treatment of medical conditions.
Capnia s flagship products are based on its proprietary technologies, which utilize precision metering of gas flow. Capnia currently markets Serenz Allergy Relief in the UK. The CoSense ETCO Monitor measures ETCO, which can be used to detect hemolysis and the Infant Solutions product line, including innovative pulmonary resuscitation devices for neonates and infants, are
marketed globally. Capnia is also clinically evaluating its nasal, non-inhaled CO2 technology to treat trigeminally-mediated pain conditions such as cluster headache and trigeminal neuralgia.
For more information, please visit www.capnia.com.
Essentialis is a privately-held clinical-stage pharmaceutical company focused on the development of breakthrough medicines for the treatment of rare metabolic
diseases where there is increased mortality and risk of cardiovascular and endocrine complications.
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 complete the merger and 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-Q filed with the Securities and Exchange Commission on
November 14, 2016, 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.
Investor Relations Contact:
Michelle Carroll/Glenn