December 27, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Capnia , located in Redwood City, Calif., and privately-held Essentialis, headquartered in Carlsbad, Calif., agreed to merge to form a rare disease drug company.
The newly merged company will advance diazoxide choline controlled release tablet (DCCR) to treat patients with Prader-Willi syndrome (PWS). PWS is a complicated genetic disease that is marked by insatiable hunger (hyperphagia), as well as metabolic, endocrine, cognitive and behavioral complications. It is caused by a deletion on chromosome 15, and marked by genetic imprinting, when genes are turned on or off. In about a quarter of cases, the patient has two copies of chromosome 15 received from the mother and none from the father (uniparental disomy). In about 70 percent of cases, the disease is caused by the deletion of the father’s chromosome 15. If the deleted 15 is inherited from the mother, the child has Angelman syndrome, which is a markedly different disease.
Once the merger is completed, Capnia plans to issue shares of common stock at $0.96 per share to a syndicate made up of current and new investors for up to $8 million. They will be used to launch a planned Phase II/III clinical trial to evaluate the efficacy and safety of DCCR. The trial is expected to begin in the second half of 2017.
“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,” said Anish Bhatnagar, Capnia’s chief executive officer, in a statement. “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 $8.0 million in financing, will be well-positioned to maximize long-term value for all its stakeholders.”
The companies identified four key strategic benefits, including being able to accelerate the clinical trials, it will be well capitalized, it has a proprietary, high-value, orphan product, and “as a combined entity, there is potential to create additional, long-term shareholder value through the development of DCCR in PWS, and other orphan indications.”
Capnia is acquiring all outstanding shares of Essentialis. The new company’s chief executive officer will be Anish Bhatnagar, currently Capnia’s chief executive. Neil Cowen, Essentialis’ president and chief scientific officer, will act as senior vice president of drug development. David O’Toole, Capnia’s senior vice president and chief financial officer, will continue as chief financial officer of the combined company. The new company’s board of directors will be made up of six current Capnia directors and three current Essentialis directors.
Essentialis conducted a clinical trial of DCCR that showed about a 32 percent decrease in hyperphagia. The effect on hyperphagia lasted for over three months. Statistically significant improvements were also observed in other endpoints, such as aggressive behaviors, body fat, lean body mass and cardiovascular risk factors. The study was conducted at the University of California, Irvine by Virginia Kimonis, a well-known PWS expert.
DCCR is a proprietary controlled-release, crystalline salt formulation of diazoxide that is given one a day as a tablet. Its parent molecule is diazoxide, which has been used for decades as first-line therapy in a number of rare diseases such as hyperinsulinemic hypoglycemia in neonates, children and adults. The U.S. Food and Drug Administration (FDA) granted DCCR Orphan Drug Designation on May 13, 2014.
