Capnia shares rose nearly 8% after the company said it has signed a merger agreement with Essentials, Inc, a privately held company, to create a rare-disease therapeutics company.
The company said it will issue shares at $0.96 each to a mix of current and new investors, bringing in proceeds upwards of $8 million. Capnia will acquire all of the outstanding shares from Essentials through the merger, which is expected to close in Q1 2017. The stock recently traded at $0.87, closer to the bottom of a 52-week range of $0.70 – $2.04.
The company said the combined company will be better positioned to develop a diazoxide choline controlled release tablet, which aims to treat Prader-Willi syndrome, a rate neurobehavioral and metabolic disease. The funds raised are expects to be used for a 2017-planned phase 2 and 3 study to develop the drug.