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Capnia Reports Second Quarter 2016 Financial Results

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REDWOOD CITY, Calif., Aug. 12, 2016 (GLOBE NEWSWIRE) -- Capnia, Inc. (NASDAQ: CAPN), a diversified healthcare company that develops and commercializes innovative diagnostics, devices and therapeutics addressing unmet medical needs, today announced financial results for the second quarter ended June 30, 2016.

"We had a strong first half of 2016, highlighted by the commencement of pilot sales of Serenz® Allergy Relief in pharmacies across the United Kingdom," said Anish Bhatnagar, M.D., Chief Executive Officer of Capnia. "Consumer feedback on Serenz has been strong, and we are working toward a full commercial launch across the EU in 2017. We also expanded our global neonatology franchise by signing an exclusive distribution agreement for our CoSense® End-Tidal Carbon Monoxide (ETCO) Monitor in India, building upon prior agreements in the U.S. and China. In the US, we continue to ramp up our distribution efforts, and there are a number of leading hospitals currently evaluating CoSense for their neonatology programs. Finally, we continued to advance our therapeutics pipeline, with ongoing enrollment in our Phase 2 trigeminal neuralgia and cluster headache trials."

Second Quarter 2016 and Recent Highlights

Serenz and Therapeutics Pipeline

  • Initiated European Commercial Launch of Serenz. Serenz is now available over the counter at more than 150 retail pharmacy locations as well as online across the UK. As part of a launch tracking initiative, Capnia is assessing customer feedback for Serenz.  Preliminary feedback shows:
    • 95% of survey participants report that Serenz met or exceeded their expectations,
    • 85% report that they are very likely or likely to recommend Serenz to a family member or friend, and
    • 82% are very likely or likely to purchase the product again in the future. 

Survey participants state that rapid relief from allergy symptoms is the most important purchase consideration.  Market research commissioned by Capnia indicates that the market for seasonal allergy relief across Europe is in excess of $600 million. The Company will continue to assess product feedback ahead of a potential full commercial launch in Europe in 2017.

  • New Nasal, Non-inhaled CO2 Patent Issued by USPTO. The patent, titled "Gas Dispenser for Dispensing Accurate Doses of Therapeutic Gas from a Reservoir Containing Highly Compressed Therapeutic Gas," was assigned U.S. Patent No. 9,364,620. This patent strengthens Capnia's IP portfolio and enhances the commercial value and potential of its nasal CO2 technology. Capnia is currently evaluating the technology in two Phase 2 clinical trials to assess its effectiveness in treating patients suffering from cluster headache and trigeminal neuralgia.

CoSense and Neonatology-Focused Commercial Product Line

  • Early Influential Adopters. CoSense units placed at a number of leading hospitals driving recurring sales and growth of revenue from Precision Sample Sets.
     
  • Exclusive Distribution Arrangements. Capnia has secured CoSense distribution agreements in China, India, and the United States.  Capnia is also finalizing distribution agreements in Singapore and Saudi Arabia and is in advanced negotiations with distributors in several other countries.
     
  • CoSense and Other Pipeline Candidate Data Presented at the PAS 2016. Capnia, in collaboration with academic researchers, presented five posters and one oral presentation at the 2016 Pediatric Academic Societies Annual Meeting highlighting scientific data for its CoSense® ETCO Monitor and other pipeline candidates.

Financial/Corporate

  • Private Placement of Convertible Preferred Stock. The transaction, which will take place in two separate closings, will result in gross proceeds to Capnia of $13.8 million. Approximately $7.8 million of the proceeds from the offering will be used to redeem 7,780 shares of Series A Convertible Preferred Stock held by the same investor, with the remaining balance of $6 million available for working capital purposes.  The first closing, which occurred on July 5, 2016, raised $3,151,000 in gross proceeds. Capnia also repurchased certain shares of Convertible Preferred Stock for an aggregate cost of $1,779,012.
     
  • Rajen Dalal appointed to the Board of Directors. Mr. Dalal brings to Capnia extensive leadership experience, having served as a senior executive and board member for various medical device and point-of-care diagnostic companies.

Second Quarter 2016 Financial Results

Total revenue recognized in the three and six months ended June 30, 2016 was $391,000 and $838,000, respectively, compared to $97,000 and $119,000 for the same periods in 2015.

Research and development expenses in the three and six months ended June 30, 2016 were $1.3 million and $3.1 million, respectively, compared to $1.2 million and $2.1 million for the same periods in 2015.  For the six months ended June 30, 2016 versus the same period in 2015, the increase was primarily due to expenses incurred for the launch of Serenz in the UK and employee-related expenses, including stock based compensation expense, as a result of increased headcount.

Sales and marketing expenses in the three and six months ended June 30, 2016 were $0.6 million and $1.1 million, respectively, compared to $0.5 and $0.8 for the same periods in 2015. The increase was primarily due to an increase in the number of sales and marketing personnel to support the commercial efforts related to CoSense, as well as the launch of Serenz in the UK.

General and administrative expenses in the three and six months ended June 30, 2016 were $1.5 million and $3.5 million, respectively, compared to $1.4 million and $2.7 million for the same periods in 2015. For the six months ended June 30, 2016 versus the same period in 2015, the $0.8 million increase was primarily due to higher legal fees and consulting costs, increased headcount, costs associated with the operations of Capnia's wholly-owned subsidiary, NeoForce, Inc., the Company's expanded corporate headquarters space in Redwood City and an increase in stock based compensation expense in 2016 versus 2015.

The change in fair value of warrants for the three months ended June 30, 2016 resulted in $47,000 of expense, which represents an increase in the fair value of the Series A and Series C Warrants compared to the value of the warrants at March 31, 2016. For the six months ended June 30, 2016 the change in value of warrants expense was $1.1 million of income, which represents a decrease in the value of the Series A, Series B and Series C Warrants compared to the value of the warrants at December 31, 2015.

Net loss for the three months ended June 30, 2016 was $3.5 million, or a loss of $0.23 per share, compared to net income of $1.9 million, or $0.25 per share, for the same period in 2015. Net income for the three months ended June 30, 2015 was primarily the result of $4.9 million due to the change in fair value of the Series A, Series B and Series C Warrants compared to the value of the warrants at March 31, 2016. Net loss for the six months ended June 30, 2016 was $6.7 million, or a loss of $0.44 per share, compared to a net loss of $9.8 million, or a loss of $1.35 per share, for the same period in 2015.

Cash and cash equivalents at June 30, 2016 totaled $2.5 million, compared to $5.5 million at December 31, 2015.

About Capnia

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.

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 ongoing and planned product commercialization and development and our ability to successfully launch Serenz in the EU.

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 May 12, 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.


Capnia, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
(unaudited)
    
 As of June 30, As of December 31,
  2016   2015 
Assets   
 Current Assets   
 Cash & Cash Equivalents $  2,502  $  5,495 
 Accounts Receivable    288     156 
 Restricted Cash    35     35 
 Inventory    774     551 
 Prepaid expenses and other current assets   157     167 
   Total Current Assets    3,756     6,404 
 Long-term Assets    
 Property & Equipment, net    118     86 
 Goodwill    718     718 
 Other intangible assets, net    867     917 
 Other Assets    76     76 
   Total Assets $  5,535  $  8,201 
      
Liabilities and stockholders' equity   
 Current Liabilities   
 Accounts Payable $  957  $  695 
 Accrued compensation and other current liabilities   944     1,634 
 Series B Warrant Liability   -      865 
   Total Current Liabilities    1,901     3,194 
 Long-Term Liabilities    
  Series A Warrant Liability    631     1,213 
 Series C Warrant Liability    193     462 
 Other liabilities    200     109 
   Total Long-Term Liabilities   1,024     1,784 
    Total Liabilities    2,925     4,978 
 Stockholder's equity    
 Series A convertible preferred stock, $0.001 par value,  
  40,000 shares authorized, 7,880 and 4,555 shares issued and 
  outstanding at June 30, 2016 and December 31, 2015, respectively  -     -  
 Common stock, $0.001 par value, 100,000,000 shares  
 authorized, 15,761,530 and 14,017,909 shares issued and  
 outstanding at June 30, 2016 and December 31, 2015, respectively   15     14 
 Additional paid-in-capital    95,543     89,456 
 Accumulated deficit    (92,948)    (86,247)
 Total stockholders' equity    2,610     3,223 
   Total liabilities and stockholders' equity$  5,535  $  8,201 
   

 

Capnia, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(unaudited)
          
   Three Months Ended Six Months Ended
   June 30, June 30,
    2016   2015   2016   2015 
          
Product revenue    391     97     838     119 
Cost of product revenue    428     22     889     40 
 Gross profit (loss)    (37)    75     (51)    79 
Expenses        
 Research and Development    1,327     1,181     3,098     2,059 
 Sales and Marketing    577     506     1,115     772 
 General and Administrative    1,509     1,432     3,449     2,718 
 Total expenses    3,413     3,119     7,662     5,549 
 Operating income (loss)    (3,450)    (3,044)    (7,713)    (5,470)
Interest and other income (expense)        
 Interest expense, net          (1)
 Change in fair value of warrant liabilities (expense)   (47)    4,925     1,123     (1,249)
 Cease-use expense   -     -      (94)   -  
 Other expense    (16)   -      (18)   -  
 Inducement charge for Series C warrants  -     -     -      (3,050)
 Interest and other income (expense), net   (63)    4,925     1,011     (4,300)
Net income (loss) $  (3,513) $  1,881  $  (6,702) $  (9,770)
          
Net income (loss) per common share:        
 Basic $  (0.23) $  0.25  $  (0.44) $  (1.35)
          
 Diluted $  (0.23) $  0.25  $  (0.44) $  (1.35)
          
Weighted-average common shares outstanding used       
 to calculate net income (loss) per common share:       
          
 Basic   15,528,922    7,517,794    15,162,520    7,243,164 
          
 Diluted   15,528,922    7,630,644    15,162,520    7,243,164 
          
Investor Relations Contact: Michelle Carroll/Susie Kim Argot Partners (212) 600-1902 michelle@argotpartners.com susan@argotpartners.com

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