Capnia Reports Third Quarter 2014 Financial Results

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Dec 18, 2014, 04:05 ET

REDWOOD CITY, Calif., Dec. 18, 2014 /PRNewswire/ -- Capnia, Inc. (NASDAQ: CAPN), focused on the development of medical diagnostics based on its proprietary Sensalyze™ Technology Platform for precision metering of gas flow, today announced financial results for the third quarter and nine months ended September 30, 2014.

Capnia logo

"Following the completion of our initial public offering (IPO), we are now well positioned to maximize the recently initiated CoSense® commercial launch," said Anish Bhatnagar, M.D., Chief Executive Officer of Capnia. "The measurement of end-tidal carbon monoxide (ETCO) is the gold standard marker for hemolysis. CoSense is the only device available for accurate assessment of ETCO in the newborn setting, our initial target market, and the American Academy of Pediatrics recommends its use in newborns with jaundice. It enables physicians to optimally evaluate and treat newborns with jaundice, and provides them with important clinical information to help avoid the associated risks which include a wide range of neurodevelopmental disorders."

Third Quarter 2014 and Recent Highlights

Presented CoSense Data at the 2014 American Society of Hematology. In December, Capnia presented proof-of-concept data for the Company's CoSense® ETCO Monitor in patients with sickle cell anemia (SCA) at the 2014 American Society of Hematology (ASH) Annual Meeting and Exposition in San Francisco. The Company believes CoSense has potential applications in the monitoring of a range of diseases involving hemolysis and altered bilirubin metabolism, and data from this study support the potential of CoSense as a screening tool for babies at risk for SCA.
Completion of Initial Public Offering. In November, Capnia completed its IPO of 1,650,000 units, each unit consisting of one share of common stock, one Series A warrant (which is exercisable into one share of common stock) and one Series B warrant (which is exercisable into one share of common stock) resulting in aggregate net proceeds of approximately $8.2 million. Proceeds from the IPO will be used to fund the ongoing commercial launch of CoSense, and related costs, and for working capital, capital expenditures, and other corporate purposes.
Strengthened Management Team. In July, Capnia announced the appointment of David O'Toole as Chief Financial Officer and Gina Phelps as Vice President of Sales. Mr. O'Toole brings nearly 20 years of financial and operations expertise in public and private life sciences companies to Capnia, and Ms. Phelps brings over 25 years of sales experience in the medical devices and diagnostics industry.

Third Quarter 2014 Financial Results

No revenue was recognized in the three months ended September 30, 2014 or 2013.

Research and development expenses in the third quarter of 2014 and 2013 were constant at $0.7 million.

Sales and marketing expenses in the third quarter of 2014 increased 100% to $0.1 million, compared to zero in the third quarter of 2013. The increase was primarily due to the addition of the Vice President of Sales in June 2014 and commercial launch activities for CoSense.

General and administrative expenses in the third quarter of 2014 increased 100% to $0.5 million, compared to $0.25 million in the third quarter of 2013. The increase was primarily due to an increase in consulting costs and employee related costs due to increased executive headcount in 2014 versus 2013.

Net loss for the third quarter of 2014 was $2.4 million, or a loss of $4.47 per share, compared with a net loss of $1.6 million, or a loss of $2.97 per share, for the third quarter of 2013.

Cash, cash equivalents, and marketable securities at September 30, 2014 totaled $0.1 million. This compared to $1.3 million at December 31, 2013.

Nine-Month Financial Results

No revenue was recognized in the nine months ended September 30, 2014. $3.0 million of revenue was recognized for the same period in 2013, consisting of a non-refundable up-front payment pursuant to our license agreement with GSK.

Research and development expenses for the nine months ended September 30, 2014 decreased 20% to $1.6 million, compared to $2.0 million for the same period in 2013. The decrease was primarily due to employee related costs due to lower headcount in 2014 versus 2013.

Sales and marketing expenses for the nine months ended September 30, 2014 increased 100% to $0.1 million, compared to zero for the same period in 2013. The increase was primarily due to the addition of the Vice President of Sales in June 2014 and commercial launch activities for CoSense.

General and administrative expenses for the nine months ended September 30, 2014 increased 23% to $1.6 million, compared to $1.3 million for the same period in 2013. The increase was primarily due to employee related costs due to increased executive headcount in 2014 versus 2013.

Net loss for the nine months ended September 30, 2014 was $6.0 million, or a loss of $11.24 per share, compared with a net loss of $2.7 million, or a loss of $5.10 per share, for the same period in 2013.

About Capnia

Capnia, Inc. develops and commercializes diagnostics based on its proprietary Sensalyze™ Technology Platform for precision metering of gas flow. Capnia's lead product is CoSense®, which aids in the diagnosis of hemolysis, a dangerous condition in which red blood cells degrade rapidly. CoSense is a portable, non-invasive device that rapidly and accurately measures carbon monoxide in exhaled breath. CoSense has 510(k) clearance from the FDA and was launched in the U.S. in October 2014. CoSense has also received CE Mark approval for sale in the E.U.

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 development and clinical trials; the timing of, and our ability to make, regulatory filings and obtain and maintain regulatory approvals for our product candidates; our intellectual property position; the degree of clinical utility of our products, particularly in specific patient populations; our ability to develop commercial functions; expectations regarding product launch and revenue; our results of operations, cash needs, and spending of the proceeds from this offering; financial condition, liquidity, prospects, growth and strategies; the industry in which we operate; and the trends that may affect the industry or us.

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 S-1 filed with the Securities and Exchange Commission on November 14, 2014, 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 Contact:
David O'Toole
Chief Financial Officer
Capnia, Inc.
(650) 353-5146
[email protected]

Investor Relations Contact:
Michelle Carroll/Susie Kim
Argot Partners
(212) 600-1902
[email protected]
[email protected]

		Capnia, Inc.
		Condensed Statements of Operations and Comprehensive Loss
		(In thousands, except share and per share amounts)

			Three Months Ended		Nine Months Ended
			September 30,		September 30,
			2014	2013	2014	2013

Revenue			-	-	-	$ 3,000
Expenses
	Research and Development		717	745	1,633	2,020
	Sales and Marketing		84	-	96	-
	General and Administrative		522	248	1,585	1,267

	Total expenses		1,323	993	3,314	3,287

	Operating income (loss)		(1,323)	(993)	(3,314)	(287)

Interest and other income (expense)
	Interest income		-	-	1	1
	Interest expense		(752)	(571)	(1,811)	(2,550)
	Other income (expense), net		(318)	(26)	(895)	103

Net loss and comprehensive loss			$ (2,393)	$ (1,590)	$ (6,019)	$ (2,733)

Basic and diluted net loss per common
	share		$ (4.47)	$ (2.97)	$ (11.24)	$ (5.10)

Weighted-average common shares
	outstanding used to calculate
	basic and diluted net loss per
	common share		535,685	535,685	535,685	535,611

			Capnia, Inc.
			Condensed Balance Sheets
			(In thousands, except per share amounts)

			As of September 30,	As of December 31,
			2014	2013
Assets
	Current Assets
		Cash & Cash Equivalents	$ 64	$ 1,269
		Restricted Cash	20	20
		Accounts Receivable	37	150
		Prepaid expenses and other current assets	186	85
		Total Current Assets	307	1,524
	Long-term Assets
		Deferred IPO Costs	1,353	-
		Property & Equipment, net	36	63
		Total Assets	$ 1,696	$ 1,587

Liabilities, convertible preferred stock and
stockholders' deficit
	Current Liabilities
		Accounts Payable	$ 1,238	$ 58
		Accrued expenses and other Current Liabilities	358	129
		Convertible promissory notes and accrued interest	-	13,992
		Total Current Liabilities	1,596	14,179
	Long-Term Liabilities
		Convertible promissory notes and accrued interest	15,604	-
		Convertible preferred stock warrant liability	3,066	1,464

	Commitments and Contingencies
	Convertible Preferred Stock
		Series A convertible preferred stock, $0.001 par value, 40,000 shares authorized, 31,250 shares issued and outstanding at December 31, 2013 and September 30, 2014; (aggregate liquidation preference of $1,500)	1,500	1,500
		Series B convertible preferred stock, $0.001 par value, 320,000 shares authorized, 119,140 shares issued and outstanding at December 31, 2013 and September 30, 2014; (aggregate liquidation preference of $6,863)	6,863	6,863
		Series C convertible preferred stock, $0.001 par value, 1,500,000 shares authorized, 715,039 shares issued and outstanding at December 31, 2013 and September 30, 2014; (aggregate liquidation preference of $15,445)	15,445	15,445
	Stockholder's deficit
	Common stock, $0.001 par value, 10,000,000 shares
		authorized at September 30, 2014 and December 31, 2013
		535,685 shares issued and oustanding at Septmeber 30, 2014
		and December 31, 2013	1	1
	Additional paid-in-capital		20,741	19,235
	Accumulated deficit		(63,120)	(57,100)
		Total stockholders' deficit	(42,378)	(37,864)
		Total liabilities and stockholders' deficit	$ 1,696	$ 1,587