10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  June 30, 2016

or

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________________ to ____________________

Commission File Number: 0-21214

CAPSTONE THERAPEUTICS CORP.

(Exact name of registrant as specified in its charter)

Delaware	86-0585310
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
1275 W. Washington Street,  Suite 104, Tempe, Arizona	85281
(Address of principal executive offices)	(Zip Code)
(602) 286-5520
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes     ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☒ Yes     ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ____    Accelerated filer ___
Non-accelerated filer ___ (do not check if a smaller reporting company)    Smaller reporting company _X__

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes      ☒ No

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

40,885,411 shares of common stock outstanding as of July 28, 2016

1

CAPSTONE THERAPEUTICS CORP.

INDEX

			Page No.
	Forward Looking Statements		3
Part I	Financial Information
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	4
		Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2016 and 2015	5
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	Item 4.	Controls and Procedures	17
Part II	Other Information
	Item 1.	Legal Proceedings	18
	Item 6.	Exhibits	18
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32
EXHIBIT 101

2

Forward Looking Statements

We may from time to time make written or oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to stockholders. The safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 protects companies from liability for their forward looking statements if they comply with the requirements of that Act. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015, and contains forward-looking statements made pursuant to that safe harbor. These forward-looking statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, levels of activity, performance or achievements. Factors that may cause actual results to differ materially from current expectations, which we describe in more detail in this section titled “Risks,” include, but are not limited to:

•  effect of non-compliance with the Securities and Exchange Commission’s (“SEC”) Rules and Regulations requiring our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 30, 2016, to include an opinion of an Independent Public Accountant, and this Current Report on Form 10-Q to be reviewed by an Independent Public Accountant;

•  failure of the Company, or its joint venture, LipimetiX Development, Inc., to obtain additional funds to continue operations;

•  the impact of the terms or conditions of agreements associated with funds obtained to fund operations;

•  failure to obtain additional funds required to complete clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies approval for product candidates or secure development agreements with pharmaceutical manufacturers;

•  the impact of using a virtual operating model;

•  unfavorable results of product candidate development efforts; 

•  unfavorable results of pre-clinical or clinical testing; 

•  delays in obtaining, or failure to obtain FDA or comparable foreign agencies approvals; 

•  increased regulation by the FDA or comparable foreign agencies; 

•  the introduction of competitive products; 

•  impairment of license, patent or other proprietary rights; 

•  the impact of present and future joint venture, collaborative or partnering agreements or the lack thereof; and

•  failure to successfully implement our drug development strategy for AEM-28 and its analogs.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you read in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, business strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

3

PART I – Financial Information

Item 1.   Financial Statements

CAPSTONE THERAPEUTICS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

	June 30,			December 31,
	2016			2015
ASSETS
Current assets
Cash and cash equivalents	$	692		$	1,011
Other current assets		77			247
Total current assets		769			1,258
Patent license rights, net		431			509
Furniture and equipment, net		-			-
Total assets	$	1,200		$	1,767
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	402		$	254
Other accrued liabilities		29			7
Total current liabilities		431			261
Convertible Promissory Notes Payable		1,000			1,000
Equity
Capstone Therapeutics Corp. Stockholders' Equity
Common Stock  $.0005 par value; 150,000,000 shares authorized; 40,885,411 shares in 2016 and 2015 issued and outstanding		20			20
Additional paid-in capital		189,474			189,442
Accumulated deficit		(189,725	)		(188,956	)
Total Capstone Therapeutics Corp. stockholders' equity		(231	)		506
Noncontrolling interest		-			-
Total equity		(231	)		506
Total liabilities and equity	$	1,200		$	1,767

See notes to unaudited condensed consolidated financial statements 

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CAPSTONE THERAPEUTICS Corp.

CONDENSED CONSOLIDATED Statements of Operations

(in thousands, except per share data)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
OPERATING EXPENSES
General and administrative	$	157		$	552		$	382		$	1,024
Research and development		220			283			377			633
Total operating expenses		377			835			759			1,657
Interest and other (income) expenses, net		25			(47	)		36			9
Loss from continuing operations before taxes		402			788			795			1,666
Income tax benefit		(12	)		(36	)		(26	)		(198	)
NET LOSS		390			752			769			1,468
Less: Net Loss attributable to the noncontrolling interest		-			-			-			-
Net Loss attributable to Capstone
Therapeutics Corp. stockholders	$	390		$	752		$	769		$	1,468
Per Share Information:
Net loss, basic and diluted, attributable to Capstone Therapeutics Corp. stockholders	$	0.01		$	0.02		$	0.02		$	0.04
Basic and diluted shares outstanding		40,885			40,885			40,885			40,885

See notes to unaudited condensed consolidated financial statements  

5

CAPSTONE THERAPEUTICS Corp.

CONDENSED CONSOLIDATED Statements of CASH FLOWS

(in thousands)

(Unaudited)

	Six months ended June 30,
	2016			2015
OPERATING ACTIVITIES
Net loss	$	(769	)	$	(1,468	)
Non cash items:
Depreciation and amortization		89			78
Non-cash stock-based compensation		32			148
Change in other operating items:
Other current assets		159			46
Accounts payable		148			87
Other accrued liabilities		22			(18	)
Cash flows used in operating activities		(319	)		(1,127	)
INVESTING ACTIVITIES
Cash flows provided by investing activities		-			-
FINANCING ACTIVITIES
Cash flows provided by financing activities		-			-
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(319	)		(1,127	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		1,011			2,164
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	692		$	1,037

See notes to unaudited condensed consolidated financial statements   

6

CAPSTONE THERAPEUTICS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2016

Note A.   OVERVIEW OF BUSINESS

Description of the Business

Capstone Therapeutics Corp. (the “Company”, “we”, “our” or “us”) is a biotechnology company committed to developing a pipeline of novel peptides and other molecules aimed at helping patients with under-served medical conditions. Previously, we were focused on the development and commercialization of two product platforms: AZX100 and Chrysalin (TP508). Since March 2012, we no longer have any interest in or rights to Chrysalin. In 2012 we ceased clinical development of AZX100 in dermal scarring, formerly our principal drug candidate, and moved to a more virtual operating model. In 2014, we terminated the License Agreement for AZX100 intellectual property and returned all interest in and rights to the AZX100 intellectual property to the Licensor (AzTE).

On August 3, 2012, we entered into a joint venture, LipimetiX Development, LLC, (now LipimetiX Development, Inc.), (the “JV”), to develop Apo E mimetic peptide molecule AEM-28 and its analogs. The JV has a development plan to pursue regulatory approval of AEM-28, or an analog, as treatment for Homozygous Familial Hypercholesterolemia (granted Orphan Drug Designation by FDA in 2012), Acute Hypertriglyceridemic Pancreatitis (“AP”), diabetic dyslipidemia, and other hyperlipidemic indications. The initial development plan extended through Phase 1a and 1b/2a clinical trials and was completed in the fourth quarter of 2014. The clinical trials had a safety primary endpoint and an efficacy endpoint targeting reduction of cholesterol and triglycerides.

The JV received allowance from regulatory authorities in Australia permitting the JV to proceed with the planned clinical trials. The Phase 1a clinical trial commenced in Australia in April 2014 and the Phase 1b/2a clinical trial commenced in Australia in June 2014. The clinical trials for AEM-28 were randomized, double-blinded, placebo-controlled studies to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of six escalating single doses (Phase 1a in healthy patients with elevated cholesterol) and multiple ascending doses of the three highest doses from Phase 1a (Phase 1b/2a in patients with hypercholesterolemia and healthy volunteers with elevated cholesterol and high Body Mass Index). The Phase 1a clinical trial consisted of 36 patients and the Phase 1b/2a consisted of 15 patients. Both clinical trials were completed in 2014 and the Medical Safety Committee, reviewing all safety-related aspects of the clinical trials, observed a generally acceptable safety profile. As first-in-man studies, the primary endpoint was safety; yet efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints.

Concurrent with the clinical development activities of AEM-28, the JV has performed pre-clinical studies that have identified an analog of AEM-28, referred to as AEM-28-14, and a new formulation, that has the potential of increased efficacy, higher human dose toleration and an extended composition of matter patent life (application filed with the U.S. Patent and Trademark Office in 2015). The JV’s current intent is to prioritize the development of AEM-28-14.

The JV and the Company are exploring fundraising, partnering or licensing, to obtain additional funding to continue development activities of AEM-28 and its analogs, including AEM-28-14, and operations.

The JV and the Company do not have sufficient funding at this time to continue additional material development activities of AEM-28 and its analogs, including AEM-28-14. The JV may conduct future clinical trials in Australia, the USA, and other regulatory jurisdictions if regulatory approvals, additional funding, and other conditions permit.

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The Company, funding permitting, intends to continue limiting its internal operations to a virtual operating model while monitoring and participating in the management of JV’s AEM-28 and analogs development activities.

Description of Current Peptide Drug Candidates.

Chimeric Apo E Mimetic Peptide Molecule – AEM-28 and its analogs

Apolipoprotein E is a 299 amino acid protein that plays an important role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28 and its analogs, including AEM-28-14 is a 28 amino acid mimetic of Apo E (with an aminohexanoic acid group and a phospholipid), and both contain a domain that anchors into a lipoprotein surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate proteoglycan (HSPG) receptors (Syndecan-1) in the liver. AEM-28 and its analogs, including AEM-28-14, as Apo E mimetics, have the potential to restore the ability of these atherogenic lipoproteins to be cleared from the plasma, completing the reverse cholesterol transport pathway, and thereby reducing cardiovascular risk. This is an important mechanism of action for AEM-28 and its analogs, including AEM-28-14. For patients that lack LDL receptors (Homozygous Familial Hypercholesterolemia-HoFH), have acute pancreatitis, or have hypercholesterolemia, AEM-28 and its analogs may provide a therapeutic solution. Our joint venture has an Exclusive License Agreement with the University of Alabama at Birmingham Research Foundation for AEM-28 and certain of its analogs.

Company History

Prior to November 26, 2003, we developed, manufactured and marketed proprietary, technologically advanced orthopedic products designed to promote the healing of musculoskeletal bone and tissue, with particular emphasis on fracture healing and spine repair. Our product lines, which included bone growth stimulation and fracture fixation devices, are referred to as our “Bone Device Business.” In November 2003, we sold our Bone Device Business.

In August 2004, we purchased substantially all of the assets and intellectual property of Chrysalis Biotechnology, Inc., including its exclusive worldwide license for Chrysalin, a peptide, for all medical indications. Subsequently, our efforts were focused on research and development of Chrysalin with the goal of commercializing our products in fresh fracture healing. (In March 2012, we returned all rights to the Chrysalin intellectual property and no longer have any interest in, or rights to Chrysalin.)

In February 2006, we purchased certain assets and assumed certain liabilities of AzERx, Inc. Under the terms of the transaction, we acquired an exclusive license for the core intellectual property relating to AZX100, an anti-fibrotic peptide. In 2014, we terminated the License Agreement with AzTE (Licensor) for the core intellectual property relating to AZX100 and returned all interest in and rights to the AZX100 intellectual property to the Licensor.

On August 3, 2012, we entered into a joint venture (see Note B below), to develop Chimeric Apo E mimetic peptide molecule AEM-28 and its analogs.

Our development activities represent a single operating segment as they shared the same product development path and utilized the same Company resources. As a result, we determined that it is appropriate to reflect our operations as one reportable segment.

8

OrthoLogic Corp. commenced doing business under the trade name of Capstone Therapeutics on October 1, 2008, and we formally changed our name from OrthoLogic Corp. to Capstone Therapeutics Corp. on May 21, 2010.

In these notes, references to “we”, “our”, “us”, the “Company”, “Capstone Therapeutics”, “Capstone”, and “OrthoLogic” refer to Capstone Therapeutics Corp. References to our joint venture or “JV”, refer to LipimetiX Development, Inc. (formerly LipimetiX Development, LLC).

Financial Statement Presentation and Management’s Plan

The accompanying financials statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The report from our Independent Registered Public Accounting Firm on our consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K expressed substantial doubt about the Company’s ability to continue as a going concern. The Company did not engage an Independent Registered Public Accounting Firm to audit and express an opinion on our consolidated financial statements for the year ended December 31, 2015, or to review this Current Report on form 10-Q.

Management has determined that the Company and our JV will require additional capital above its current cash and working capital balances to further develop AEM-28 and its analogs or continue operations. Accordingly, the Company has reduced its development activities. The Company’s corporate strategy is to raise funds by possibly engaging in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital. These financial statements do not include any adjustments that might result from the outcome of the uncertainty of the Company successfully implementing its corporate strategy.

In the opinion of management, the unaudited condensed interim financial statements include all adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows, and all adjustments were of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the complete fiscal year. The financial statements include the consolidated results of Capstone Therapeutics Corp. and our 64% owned subsidiary, LipimetiX Development, Inc. Intercompany transactions have been eliminated.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations, although we believe that the disclosures herein are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, and expenses in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s assumptions regarding current events and actions that may impact us in the future, actual results may differ from these estimates and assumptions.

9

Legal and Other Contingencies

The Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to loss contingencies.

Joint Venture Accounting

The Company entered into a joint venture in which it has contributed $6,000,000, and the noncontrolling interests have contributed certain patent license rights. Neither the Company nor the noncontrolling interests have an obligation to contribute additional funds to the joint venture or to assume any joint venture liabilities or to provide a guarantee of either joint venture performance or any joint venture liability. The financial position and results of operations of the joint venture are presented on a consolidated basis with the financial position and results of operations of the Company. Intercompany transactions have been eliminated. Joint venture losses were recorded on the basis of common ownership equity interests until common ownership equity was reduced to $0. Subsequent joint venture losses are being allocated to the preferred ownership equity (100% Company). Subsequent to March 31, 2013, all joint venture losses are being allocated to the Company. The Company has a revolving loan agreement with the joint venture to advance the joint venture funds for operations in an amount not to exceed a net (net of expected tax credits or other funds obtained) of $1,500,000, with the net amount due December 31, 2016. Losses incurred by the joint venture in excess of the capital accounts of the joint venture will be allocated to the Company to the extent of net outstanding advances.

Cash and Cash Equivalents

At June 30, 2016, cash and cash equivalents included money market accounts.

Recent Accounting Pronouncements

 In August 2014, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(“Update”): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, providing a requirement under U.S. GAAP for an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued; and if those conditions exist, to disclose that fact, the conditions and the potential effects on the entity’s ability to meet its obligations. The Update will be effective for an annual period ending after December 15, 2016, with early application permitted. We have not elected early application. However, if additional funds are not obtained to continue the development of AEM-28 or its analogs, or operations, it will impair our ability to continue as a going concern. If we do not continue as a going concern, the Company may incur additional losses, up to, and possibly exceeding our net joint venture investment and revolving loan balance.

10

Note B.   JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS

On August 3, 2012, we entered into a Contribution Agreement with LipimetiX, LLC to form a joint venture, LipimetiX Development, LLC (“JV”), to develop Apo E mimetic molecules, including AEM-28 and its analogs. In June 2015, the JV converted from a limited liability company to a corporation, LipimetiX Development, Inc. The Company contributed $6 million, which included $1 million for 600,000 voting common ownership units (now common stock), representing 60% ownership in the JV, and $5 million for 5,000,000 non-voting preferred ownership units (now preferred stock), which have preferential distribution rights. On March 31, 2016, the Company converted 1,500,000 shares of its preferred stock into 120,000 shares of common stock, increasing its common stock ownership from 60% to 64%.

LipimetiX, LLC contributed all intellectual property rights for Apo E mimetic molecules it owned and assigned its Exclusive License Agreement between The University of Alabama at Birmingham Research Foundation (“UABRF”) and LipimetiX, LLC, for the UABRF intellectual property related to Apo E mimetic molecules AEM-28 and its analogs to the JV, in return for 400,000 voting common ownership units (now common stock) representing 40% ownership (effective March 31, 2016, 36%) in JV, and $378,000 in cash (for certain initial patent-related costs and legal expenses).

LipimetiX, LLC was formed by the principals of Benu BioPharma, Inc. (“Benu”) and UABRF to commercialize UABRF’s intellectual property related to Apo E mimetic molecules, including AEM-28 and analogs. Benu is composed of Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D. and Eric M. Morrel, Ph.D. The Exclusive License Agreement, as amended, calls for payment of patent filing, maintenance and other related patent fees, as well as a royalty of 3% on Net Sales of Licensed Products during the Term of the Agreement. The Agreement terminates upon the expiration of all Valid Patent Claims within the Licensed Patents, which are currently estimated to expire between 2019 and 2035. The Agreement, as amended, also calls for annual maintenance payments of $25,000, various milestone payments of $50,000 to $500,000 and minimum royalty payments of $500,000 to $1,000,000 per year commencing on January 1 of the first calendar year following the year in which the First Commercial Sale occurs. UABRF will also be paid 5% of Non Royalty Income received.

Concurrent with entering into the Contribution Agreement and the First Amendment and Consent to Assignment of Exclusive License Agreement between LipimetiX, LLC, UABRF and the Company, the Company and LipimetiX, LLC entered into a Limited Liability Company Agreement for JV which established a Joint Development Committee (“JDC”) to manage JV development activities. Upon conversion by the JV from a limited liability company to a corporation, the parties entered into a Stockholders Agreement for the JV, and the JDC was replaced by a Board of Directors (JV Board). The JV Board is composed of three members appointed by the non-Company ownership group and two members appointed by the Company. Non-development JV decisions, including the issuance of new equity, incurrence of debt, entry into strategic transactions, licenses or development agreements, sales of assets and liquidation, and approval of annual budgets, will be decided by a majority vote of the common stockholders.

The JV, on August 3, 2012, entered into a Management Agreement with Benu to manage JV development activities for a monthly fee of approximately $63,000 during the twenty-seven month development period, and an Accounting Services Agreement with the Company to manage JV accounting and administrative functions. The services related to these agreements have been completed and new Management and Accounting Services Agreements were entered into effective June 1, 2016.The new monthly management fee is $80,000 and the new monthly accounting services fee is $10,000. However, no Management or Accounting Services fees are due or payable except to the extent funding is available, as unanimously approved by members of the JV Board of Directors and as reflected in the approved operating budget in effect at that time. No management fee is owed as of June 30, 2016.

11

The joint venture formation was as follows ($000’s):

Patent license rights	$	1,045
Noncontrolling interests		(667	)
Cash paid at formation	$	378

Patent license rights were recorded at their estimated fair value and are being amortized on a straight-line basis over the key patent life of eighty months.

The financial position and results of operations of the joint venture are presented on a consolidated basis with the financial position and results of operations of the Company. Intercompany transactions have been eliminated. The joint venture agreement requires profits and losses to be allocated on the basis of common ownership equity interests (60% Company / 40% noncontrolling interests originally, now 64% Company / 36% noncontrolling interests). However, for the Company’s consolidated financial statement, joint venture losses were recorded on the basis of common ownership equity interests until common ownership equity was reduced to $0. Subsequent joint venture losses have been allocated to the preferred ownership equity (100% Company). Subsequent to March 31, 2013, all joint venture losses have been allocated to the Company. The Company has a revolving loan agreement with the joint venture to advance the joint venture funds for operations in an amount not to exceed a net (net of expected tax credits or other funds obtained) of $1,500,000, with the net amount due December 31, 2016. Losses incurred by the joint venture in excess of the capital accounts of the joint venture will be allocated to the Company to the extent of net outstanding advances. At June 30, 2016, outstanding advances on the revolving loan agreement totaled $1,553,000.

The joint venture incurred net operating expenses, prior to the elimination of intercompany transactions, of $392,000 in the six-month period ended June 30, 2016 and $7,782,000 for the period from August 3, 2012 (inception) to June 30, 2016, of which $392,000 and $7,115,000, respectively, have been recorded by the Company. The joint venture operating expenses are included in research and development expenses in the condensed consolidated statements of operations.

Neither the Company nor the noncontrolling interests have an obligation to contribute additional funds to the joint venture or to assume any joint venture liabilities or to provide a guarantee of either joint venture performance or any joint venture liability. Losses allocated to the noncontrolling interests represent an additional potential loss for the Company as the noncontrolling interests are not obligated to contribute assets to the joint venture to the extent they have a negative capital account, and depending on the ultimate outcome of the joint venture, the Company could potentially absorb all losses associated with the joint venture. From formation of the joint venture, August 3, 2012, through June 30, 2016, losses totaling $667,000 have been allocated to the noncontrolling interests. If the joint venture or Company is unable to obtain additional funding, the ability of the joint venture to continue development of AEM-28 and its analogs, including AEM-28-14, would be impaired as would the joint venture’s ability to continue operations. If the joint venture does not continue as a going concern, at June 30, 2016 the Company would incur an additional loss of $667,000 for the joint venture losses allocated to the noncontrolling interests.

Note C.   NOTE PAYABLE – FUNDRAISING ACTIVITIES

As disclosed above, management has determined that the Company will require additional capital above its current cash and working capital balances to further develop AEM-28 and its analogs and to continue operations.  Accordingly, the Company has reduced its development activities.  The Company’s corporate strategy is to raise funds either by the Company, or directly in its joint venture, by possibly engaging in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital.    In connection with these efforts, we filed a Registration Statement on Form S-1 with the Securities and Exchange Commission on June 26, 2015, as amended, in connection with our contemplated public offering of shares of our Common Stock. The Registration Statement was not effective as of December 31, 2015 and was withdrawn in January 2016. All costs relating to these fundraising activities were expensed in 2015.

12

On December 11, 2015, we entered into a Securities Purchase Agreement (the “Agreement”) with Biotechnology Value Fund affiliated entities Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P., Investment 10, LLC, and MSI BVF SPV, LLC (the "Lenders"), to provide short-term funding for our operations. A portion of the funds have been advanced to JV, to initiate preclinical development activities for our lead commercial drug candidate, AEM-28-14. The Lenders, at June 30, 2016 and December 31, 2015, owned in the aggregate, approximately 19% of our outstanding Common Stock.

Pursuant to the Agreement, the Lenders funded an aggregate of $1,000,000 of loans to us, evidenced by Convertible Promissory Notes (the “Notes”) dated December 11, 2015 and due April 30, 2017. The Notes bear interest at 5% per annum and are secured by a security interest in all of our assets.

The unpaid principal amount of the Notes will convert automatically upon the closing of a Qualified Equity Financing, which is defined in the Agreement as an offering of equity securities with aggregate gross proceeds of at least $5,000,000 including the principal of any converted Notes. Such conversion will be into the same securities and on the same terms as provided for the other investors in the Qualified Equity Financing.

As a Qualified Equity Financing was not consummated by March 31, 2016, the unpaid principal amount of the Notes may be converted, at the election of the Lenders, into shares of Common Stock, at a conversion price (the "Optional Conversion Price") equal to the trailing 10-day weighted average trading price of the Common Stock, but not be less than $.135 or more than $.18 per share. Upon a change in control of the Company, the Lenders may elect to accelerate the Notes or convert them into Common Stock at a conversion price equal to the Optional Conversion Price.

Under the Agreement, the Lenders have the right to elect to acquire, upon conversion of the Notes, convertible preferred stock rather than Common Stock, such preferred stock to vote with the Common Stock and to be convertible into the equivalent number of shares of Common Stock as would have been originally issued if the Notes conversion had been into Common Stock. Such preferred shares would have no preferential liquidation or distribution rights and would not have any dividend or preferred return rights.

Note D.   Australian Refundable Research & Development Credit

In March 2014, LipimetiX Development LLC, (see Note B) formed a wholly-owned Australian subsidiary, Lipimetix Australia Pty Ltd, to conduct Phase 1a and Phase1b/2a clinical trials in Australia. Currently Australian tax regulations provide for a refundable research and development tax credit equal to 45% of qualified expenditures. Subsequent to the end of its Australian tax years, Lipimetix Australia Pty, Ltd intends to submit claims for a refundable research and development tax credit. The transitional Australian tax periods/years granted for Lipimetix Australia Pty, Ltd end on June 30, 2014, December 31, 2014 and thereafter December 31 of each succeeding year. For the tax year ended June 30, 2014, Lipimetix Australia Pty, Ltd received a refundable research and development tax credit of AUD$227,000. For the tax year ended December 31, 2014 Lipimetix Australia Pty, Ltd, received a refundable research and development tax credit of AUD$301,000. At December 31, 2015, a refundable research and development tax credit of AUD$189,000 was recorded and the refund was received in June 2016. At June 30, 2016, an additional AUD$36,000 (USA $ 27,000) was recorded and at June 30, 2016, the refundable research and development tax credit is included in other current assets.

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Note E:   Contingency – Non-Compliance with Securities and Exchange Commission Reporting Requirements and OTCQB Market Requirements

Our current level of funds available for operation has led to additional cost cutting, which included the decision to not engage an independent public accountant to audit and express an opinion on our December 31, 2015 financial statements included in our Annual Report on Form 10-K filed with the SEC on March 30, 2016, or to review this Current Report on Form 10-Q, as required by current SEC rules and regulations, and as required to be listed on the OTCQB Market. We cannot currently predict the response to these actions by the SEC or the OTCQB Market, nor the effects of their actions, including the possible effect on the trading of our common stock. The decision to not engage an independent public accountant to audit and express an opinion on our December 31, 2015 financial statements or review this Current Report on Form 10-Q could have a material adverse effect on the Company and its Stockholders.

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is management’s discussion of significant events in the three and six month periods ended June 30, 2016 and factors that affected our interim financial condition and results of operations. This should be read in conjunction with our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Overview of the Business

Capstone Therapeutics Corp. is a biotechnology company committed to developing a pipeline of novel peptides and other molecules aimed at helping patients with under-served medical conditions. Previously, we were focused on the development and commercialization of two product platforms: AZX100 and Chrysalin (TP508). Since March 2012, we no longer have any interest in or rights to Chrysalin. In 2012 we ceased clinical development of AZX100 in dermal scarring, formerly our principal drug candidate, and moved to a more virtual operating model. In 2014, we terminated the License Agreement for AZX100 intellectual property and returned all interest in and rights to the AZX100 intellectual property to the Licensor (AzTE).

On August 3, 2012, we entered into a joint venture, LipimetiX Development, LLC, (now LipimetiX Development, Inc.) (the “JV”) to develop Apo E mimetic peptide molecule AEM-28 and its analogs. The JV has a development plan to pursue regulatory approval of AEM-28, or an analog, as treatment for Homozygous Familial Hypercholesterolemia (granted Orphan Drug Designation by FDA in 2012), Acute Hypertriglyceridemic Pancreatitis, diabetic dyslipidemia and other hyperlipidemic indications. The initial development plan extended through Phase 1a and 1b/2a clinical trials and was completed in the fourth quarter of 2014. The clinical trials have a safety primary endpoint and an efficacy endpoint targeting reduction of cholesterol and triglycerides.

The JV received allowance from regulatory authorities in Australia permitting the JV to proceed with the planned clinical trials. The Phase 1a clinical trial commenced in Australia in April 2014 and the Phase 1b/2a clinical trial commenced in Australia in June 2014. The clinical trials for AEM-28 are randomized, double-blinded, placebo-controlled studies to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of six escalating single doses (Phase 1a in healthy patients with elevated cholesterol) and multiple ascending doses of the three highest doses from Phase 1a (Phase 1b/2a in patients with Hypercholesterolemia and normal healthy volunteers with elevated cholesterol and high Body Mass Index). The Phase 1a clinical trial consisted of 36 patients and the Phase 1b/2a consisted of 15 patients. Both clinical trials were completed in 2014 and the Medical Safety Committee, reviewing all safety-related aspects of the clinical trials, observed a generally acceptable safety profile. As first-in-man studies, the primary endpoint was safety; yet efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints.

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Concurrent with the clinical development activities of AEM-28, the JV has performed pre-clinical studies that have identified an analog of AEM-28, referred to as AEM-28-14, and a new formulation, that has the potential of increased efficacy, higher human dose toleration and an extended patent life (application filed in 2015). The JV’s current intent is to prioritize the development of AEM-28-14.

The JV and Company are exploring fundraising, partnering or licensing to obtain additional funding to continue development activities of AEM-28 and its analogs, including AEM-28-14, and operations.

The JV and the Company do not have sufficient funding at this time to continue additional material development activities of AEM-28 and its analogs, including AEM-28-14. The JV may conduct future clinical trials in Australia, the USA, and other regulatory jurisdictions if regulatory approvals, additional funding, and other conditions permit. The JV may also fund research or studies to investigate AEM-28-14 for treatment of acute coronary syndrome and other indications.

The Company, funding permitting, intends to limit its internal operations to a virtual operating model while continuing monitoring and participating in the management of JV’s AEM-28 and analogs development activities.

Description of Our Peptide Drug Candidate.

Chimeric Apo E Mimetic Peptide Molecule – AEM-28 and its analogs

Apolipoprotein E is a 299 amino acid protein that plays an important role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28-14 (an analog of AEM-28) is a 28 amino acid mimetic of Apo E (with an aminohexanoic acid group and a phospholipid) and both contain a domain that anchors into a lipoprotein surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate proteoglycan (HSPG) receptors (Syndecan-1) in the liver. AEM-28 and AEM-28-14, as Apo E mimetics, have the potential to restore the ability of these atherogenic lipoproteins to be cleared from the plasma, completing the reverse cholesterol transport pathway, and thereby reducing cardiovascular risk. This is an important mechanism of action for AEM-28 and AEM-28-14. For patients that lack LDL receptors (Homozygous Familial Hypercholesterolemia-HoFH), have acute pancreatitis, or have hypercholesterolemia, AEM-28 or AEM-28-14 may provide a therapeutic solution. Our joint venture has an Exclusive License Agreement with the University of Alabama at Birmingham Research Foundation for AEM-28 and certain of its analogs.

Critical Accounting Policies

Our critical accounting policies are those that affect, or could affect our financial statements materially and involve a significant level of judgment by management. The accounting policies and related risks described in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2016, for the year ended December 31, 2015 are those that depend most heavily on these judgments and estimates. As of June 30, 2016, there have been no material changes to any of the critical accounting policies contained in our Annual Report for the year ended December 31, 2015.

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Results of Operations Comparing Three-Month Period Ended June 30, 2016 to the Corresponding Period in 2015.

General and Administrative (“G&A”) Expenses: G&A expenses related to our ongoing operations were $157,000 in the second quarter of 2016 compared to $552,000 in the second quarter of 2015. Administration expenses decreased primarily due to a 50% reduction in salaries and consulting fee rates taken by all staff and consultants in March 2016, reduced professional fees and insurance costs from our decision to not engage an Independent Public Accountant to audit our December 31, 2015 financial statements or review out March 31, 2016 or June 30, 2016 financial statements, and reduction of our insurance coverage, as part of our cost cutting efforts.

Research and Development Expenses: Research and development expenses were $220,000 for the second quarter of 2016 compared to $283,000 for the second quarter of 2015. Our research and development expenses in the second quarter of 2016 included the purchase of $125,000 of drug material for future preclinical testing, but otherwise, we have significantly reduced our development activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.

Net Loss attributable to Capstone Therapeutics stockholders: We incurred a net loss in the second quarter of 2016 of $.4 million compared to a net loss of $.8 million in the second quarter of 2015. Net loss would have declined more, had we not purchased the previously mentioned drug material, as we have significantly reduced our operations and the development activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.

Results of Operations Comparing Six-Month Period Ended June 30, 2016 to the Corresponding Period in 2015.

General and Administrative (“G&A”) Expenses: G&A expenses related to our ongoing operations were $382,000 in the first half of 2016 compared to $1,024,000 in the first half of 2015. Administration expenses decreased primarily due to a 50% reduction in salaries and consulting fee rates taken by all staff and consultants in March 2016, reduced fundraising expenses, reduced professional fees and insurance costs from our decision to not engage an Independent Public Accountant to audit our December 31, 2015 financial statements or review out March 31, 2016 or June 30, 2016 financial statements, and reduction of our insurance coverage, as part of our cost cutting efforts.

Research and Development Expenses: Research and development expenses were $377,000 for the first half of 2016 compared to $633,000 for the first half of 2015. Our research and development expenses declined as we have significantly reduced our development activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.

Net Loss attributable to Capstone Therapeutics stockholders: We incurred a net loss in the first half of 2016 of $0.8 million compared to a net loss of $1.5 million in the first half of 2015. Net loss has declined as we have significantly reduced our operations and the development activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.

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Liquidity and Capital Resources

With the sale of our Bone Device Business in November 2003, we sold all of our revenue producing operations. Since that time, we have primarily relied on our cash and investments to finance all our operations, the focus of which has been research and development of our product candidates.

On August 3, 2012, we entered into a joint venture, to develop Apo E mimetic peptide molecule AEM-28 and its analogs. We contributed $6.0 million and through June 30, 2016 we have loaned an additional $1,553,000 to the JV. At June 30, 2016, we had cash and cash equivalents of $692,000.

We intend to continue limiting our internal operations to a virtual operating model in 2016, however, without additional funding, we will not continue development of AEM-28 and its analogs, including AEM-28-14, past completion of the limited projects currently under way. Lack of additional funding within the next 12 months, would impair our ability to continue our current operations and our ability to continue as a going concern.

Funding permitting, our planned operations in 2016 consist of continuing monitoring and participating in the management of the JV’s AEM-28 and its analogs, including AEM-28-14, development activities.

Our future research and development and other expenses will vary significantly from prior periods and depend on the Company’s decisions on future JV operations and obtaining additional funding.

We will require additional funds if we chose to extend the development of AEM-28 and its analogs past the initial Phase 1a and Phase1b/2a clinical trials or to continue operations. We cannot currently predict the amount of funds that will be required if we chose to extend the development activities of AEM-28 and its analogs and to continue operations. In any event, to complete the clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies’ approval for product candidates would require us to obtain additional capital. New sources of funds, including raising capital through the sales of our debt or equity securities, joint venture or other forms of joint development arrangements, sales of development rights, or licensing agreements, may not be available or may only be available on terms that would have a material adverse impact on our existing stockholders’ interests.

As discussed in Note C to the Financial Statement included in this Quarterly Report on Form 10-Q, the Company received loans totaling $1,000,000 from entities that currently own approximately 19% of the Company’s common stock. If not converted into shares of the Company’s common stock, the loans would be due April 30, 2017.

Item 4.   Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial and accounting officer, has reviewed and evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Form 10-Q. Based on that evaluation, our management, including our principal executive officer and principal financial and accounting officer, has concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosure.

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Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information

Item 1.   Legal Proceedings

None

Item 6.   Exhibits

See the Exhibit Index following this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CAPSTONE THERAPEUTICS CORP.
(Registrant)
Signature	Title	Date
/s/ John M. Holliman, III	Chairman and Chief Executive Officer	July 29, 2016
John M. Holliman, III	(Principal Executive Officer)
/s/ Les M. Taeger	Senior Vice President and Chief	July 29, 2016
Les M. Taeger	Financial Officer
	(Principal Financial and Accounting Officer)

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Capstone Therapeutics Corp.

(the “Company”)

Exhibit Index to Quarterly Report on Form 10-Q

For the Quarterly Period Ended June 30, 2016

No.	Description	Incorporated by Reference To:	Filed Herewith
10.1	Management Agreement by and among LipimetiX Development, Inc., Benu BioPharma, Inc., Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D., and Eric M. Morrel, Ph.D., effective as of June 1, 2016.		X
10.2	Accounting Services Agreement by and among  LipimetiX Development, Inc. and Capstone Therapeutics Corp., effective as of June 1, 2016.		X
31.1	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as amended.		X
31.2	Certification of Principal Financial and Accounting Officer Pursuant to Securities Exchange Act Rule 13a-14(a), as amended.		X
32	Certification of Principal Executive Officer and Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350.*
101	The following financial information from our Quarterly Report on Form 10-Q for the second quarter of fiscal year 2016, filed with the SEC on  July 29, 2016 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015, (ii) the Condensed Consolidated  Statements of Operations for the three and six months ended June 30, 2016 and 2015 (iii) the Condensed  Consolidated Statements of Cash Flows for the  six months ended  June 30, 2016 and 2015, and (iv) Notes to Unaudited Condensed Consolidated  Financial Statements.		X
	* Furnished herewith

EX-10.1

EXECUTION

Exhibit 10.1

Management Agreement

THIS MANAGEMENT AGREEMENT ("Agreement"), effective as of June 1, 2016 (the "Effective Date"), is made by and among LipimetiX Development, Inc., a Delaware corporation (the "Company"), Benu BioPharma, Inc., a Massachusetts corporation (the "Management Company"), and Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D, and Eric M. Morrel, Ph.D., all affiliates of the Management Company (collectively, the "Principals").

RECITALS:

WHEREAS, the Company desires to retain the Management Company to provide certain services for the Company as provided herein;

WHEREAS, the Management Company desires to provide such services to the Company as provided herein; and

WHEREAS, as inducement to the Company to enter into this Agreement, the Principals have agreed to be bound by the terms of certain restrictive covenant, confidentiality and intellectual property ownership provisions set forth herein;

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

AGREEMENT:

1. Engagement. The Company hereby engages the Management Company to provide the services set forth in Section 2 hereof to the Company, and the Management Company hereby accepts such engagement, on the terms and conditions set forth in this Agreement.

2. Services. The Management Company agrees to provide all management and operational personnel to perform the day-to-day management of the Company, including business development, research and development, regulatory affairs, product development, technical operations, assisting the Company's Board of Directors (“Board”) in intellectual property strategy and management, and developing and managing clinical trials undertaken by the Company from time to time relating to or involving the research, development, manufacturing, distribution, licensing or sale of technology, products or services relating to the development of Apo E mimetics for the treatment of hypercholesterolemia and other diseases (collectively, the "Management Services"); provided, that the Management Services shall not include those accounting and finance services to be performed by Capstone Therapeutics Corp. (“Capstone”) pursuant to the Accounting Services Agreement between the Company and Capstone. During the Term of this Agreement, the Management Company will diligently and faithfully perform, to the best of its ability, the duties and activities assigned to it by the Company pursuant to this Agreement. The Management Company shall cause the Principals to devote their full business time and effort, as needed, to the performance of this Agreement in the roles specified on Exhibit A attached hereto. The Management Company and the Principals shall report to the Board of the Company and shall render the Management Services in a manner that is consistent with the operating budgets for the Company approved from time to time by the Board. All Management Services rendered by the Management Company hereunder shall be rendered by or under the direction of Dennis I. Goldberg, Ph.D.

3. Term; Subsequent Agreement.

a. Term. Subject to earlier termination pursuant to Section 5 hereof, the term of the Management Company’s engagement hereunder shall commence on the Effective Date and shall continue until the completion and public presentation of the final, statistically validated results of a AEM 28-14 Phase 1b/2a clinical trial, as outlined in the budget and development program approved by the Board (the "Term").

	b.	Subsequent Agreement. If, after expiration of the Term, the Company wishes the Management Company to continue to provide any or all of the services contemplated in this Agreement, the Company and the Management Company shall negotiate in good faith a new agreement regarding the duration of and compensation for the services that the Company wishes the Management Company to provide.
4.	Compensation.

a. Management Fee. In consideration of the Management Services, the Management Company shall be paid a management fee during the Term at the rates listed on Exhibit B hereto, payable monthly in advance (the "Management Fee"), beginning with the payment for the month of June 2016 and ending with the payment for the month of December 2018 (31 months). However, Management Fees will only be due and payable to the extent funding is available, as unanimously approved by the members of the Board, and as reflected in the approved operating budget in effect at that time.

	b.	Reimbursement for Expenses. The Management Company shall be reimbursed for out-of-pocket travel expenses and meeting registration costs and for other out-of-pocket expenses approved in advance by the Company’s Joint Development Committee and consistent with the approved development budget. All such expenses shall be documented and submitted in accordance with the reimbursement policies of the Company in effect from time to time.
5.	Termination.

a. Termination by Company. The Company may terminate this Agreement immediately upon written notice for any of the following reasons:

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i. the Management Company refuses or fails to perform the Management Services in accordance with this Agreement, or otherwise violates or fails to perform any term, covenant or provision of this Agreement; or

ii. a breach of Sections 6, 7, or 8 of this Agreement by any of the Principals; or

iii. the Management Company shall voluntarily or involuntarily be dissolved; apply for or consent to the appointment of a receiver, trustee or liquidator of all or a substantial part of its assets; file a voluntary petition in bankruptcy or otherwise voluntarily avail itself of any federal or state laws for the relief of debtors; admit in writing its inability to pay its debts as they become due; make a general assignment for the benefit of creditors; file a petition or an answer seeking reorganization or arrangement with creditors or to take advantage of any insolvency law or file an answer admitting the material allegations of any petition filed against it in any bankruptcy, reorganization or insolvency proceeding; suffer the filing of an involuntary petition in bankruptcy or similar proceeding under state law which is not dismissed within ninety (90) days of such filing; if an order, judgment or decree shall be entered by any court of competent jurisdiction on the application of any one or more creditors of such defaulting party adjudicating it a bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee or liquidator of all or a substantial part of its assets, and such order, judgment or decree shall become final; or

iv. The Company makes a decision to cease development activities.

v. The Company sub-licenses, or assigns/conveys or otherwise transfers its AEM 28 and analogs intellectual property, including its License with UABRF, and associated development rights, to a pharmaceutical company.

b. Termination upon Change of Control. This agreement shall terminate immediately upon a Change of Control of the Company. As used herein, a "Change of Control" shall mean a change in the power to direct or cause the direction of the management and policies of the Company, which change arises from (i) any "person" (including a "person" as defined by Section 13(d)(3) and 14(d) of the Exchange Act) becoming the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding equity securities or (ii) more than fifty percent (50%) of the assets of the Company being disposed of by the Company pursuant to a partial or complete liquidation of the Company, a sale of assets (including securities of a subsidiary or subsidiaries) of the Company or otherwise; provided, however that no Change of Control shall be deemed to occur by reason of the acquisition of additional securities of the Company by any current holder of the Company’s securities or any affiliate thereof.

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	c.	Severance. In the event of a termination of this Agreement upon a Change of Control or pursuant to Section 5(a)(iv) above, the Company shall provide the Management Company with either: (i) an offer for a Management Agreement by the Company on terms and conditions reasonably equivalent to this Agreement (a "Management Offer") or (ii) a severance payment equal to three (3) months of Management Fees, or, if the Company shall experience the Change of Control within one (1) year of the Effective Date of this Agreement, a severance payment equal to six (6) months of Management Fees (the "Severance Payment"). The Company shall pay the entire balance of the Severance Payment owed to the Management Company in cash within 30 days after the effective date of the Change of Control. If the Management Company receives and fails to accept a Management Offer from the Company provided in accordance with the terms of this Section 5(c), it shall not be entitled to receive the Severance Payment or any other payment or benefit of any kind from the Company.
6.	Non-Disclosure and Non-Competition.

a. Non-Disclosure. The Management Company and the Principals acknowledge that, in the course of performing services for the Company, they may obtain knowledge of the Company’s business plans, products, research, results, processes, software, know-how, trade secrets, formulas, methods, models, prototypes, discoveries, inventions, materials, improvements, disclosures, customer, contractor and supplier lists, names and positions of employees and/or other proprietary or confidential information or any copies or modifications or derivative works thereof or other works based thereon (collectively, the "Confidential Information"). The Management Company and the Principals shall maintain the confidentiality of the Confidential Information and shall not publish, disclose or divulge any Confidential Information to any other person, or use any Confidential Information for the benefit of the Management Company or any third party, to the detriment of the Company or for any purpose other than in connection with the performance of the Management Services, whether or not such Confidential Information is or was discovered or developed by the Management Company or any of its agents or employees. The Management Company and the Principals shall not divulge, publish or use any proprietary or confidential information of any third parties that the Company maintains, or is obligated to maintain, in confidence.

b. Employee Non-Disclosure Agreements. The Management Company shall take all actions necessary to ensure that each of its affiliates, employees and agents who may perform services for or on behalf of the Company or may have any access to the Company’s Confidential Information sign a Non-Disclosure and Invention Assignment Agreement in a form acceptable to the Company containing agreements and undertakings substantially identical to those set forth in Sections 6(a) and 7 hereof.

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c. Non-Competition. The Management Company and the Principals agree that during the Term of the Management Company’s engagement by the Company hereunder and for a period of one (1) year from and after the termination of this Agreement, that neither they nor any corporation or other entity in which the Management Company or the Principals may be interested as a member, partner, trustee, director, officer, employee, agent, shareholder or other equity participant, lender of money or guarantor, or for which the Management Company or the Principals perform services in any capacity (including as a consultant or independent contractor) shall, at any time: (i) be engaged, directly or indirectly, in any Competitive Business (as herein defined) or (ii) solicit, hire, contract for services or otherwise employ, directly or indirectly, any of the employees of the Company; provided, however, that nothing herein contained shall be deemed to prevent the Management Company or the Principals from investing in or acquiring, collectively, one percent (1%) or less of any class of securities of any company if such class of securities is listed on a national securities exchange. For purposes of this Section 6(c) the term "Competitive Business" shall mean a business that engages in any respect in the research, development, manufacturing, distribution, licensing or sale of technology, products or services relating to Apoliprotein E mimetics for the treatment of hypercholesterolemia and other diseases, and/or any other product that the Company develops or is in the process of developing during the Term of this Agreement.

7. Inventions, Discoveries and Ownership.

a. Disclosure. The Management Company and the Principals shall promptly and fully disclose to the Company, with all necessary detail, all developments, know-how, discoveries, (whether registered or unregistered, copyrightable, patentable or otherwise and including any applications for copyright registration or patent rights) made, received, conceived, acquired or written by the Management Company (whether or not at the request or upon the suggestion of the Company), solely or jointly with others, during the Term hereof that (i) specifically relate to Apoliprotein E mimetics for the treatment of hypercholesterolemia and other diseases and/or any other technology with respect to which the Management Company renders research and development services or oversight to the Company, or (ii) are otherwise made through the use of the Company’s time, facilities or materials (collectively, the "Inventions.")

b. Assignment and Transfer. The Management Company and the Principals shall assign and transfer to the Company all of the Management Company’s and each Principal's rights, title and interest in and to each of the Inventions, and the Management Company and the Principals shall further deliver to the Company any and all drawings, notes, specifications and data relating to each of the Inventions, and to sign, acknowledge and deliver all such further papers, including applications for and assignments of copyrights and parents, and all renewals thereof, as may be necessary to obtain copyrights and patents for any and all of the Inventions in any and all countries and to vest title thereto in the Company and its successors and assigns and to otherwise protect the Company’s right, title and interests therein.

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c. Ownership. The Company shall own all right, title and interest in all Confidential Information, Inventions and Company Documentation (as defined in Section 8(a)) and all other intellectual property, or tangible property or equipment, developed or purchased by or on behalf of the Company (collectively, the "Company Property"). Nothing in this Agreement or in the course of the performance of the Management Services hereunder, including, but not limited to the delivery or maintenance of such Company Property at premises owned or controlled by the Management Company or any third party, shall be construed to grant any right, title or interest in any Company Property unless expressly granted in writing by the Company. The Management Company shall clearly label or otherwise designate all Company Property as such, and, upon request by the Company, shall permit the Company to enter onto any premises owned or controlled by the Management Company and to access or remove any Company Property present thereon. Management Company shall maintain all Company Property in accordance with at least the same level of care and security as the Management Company applies to its own property.

	d.	Records. The Management Company agrees that, in connection with any research, development or other services performed for the Company, it will maintain careful, adequate and contemporaneous written records of all Inventions, which records shall be the property of the Company and shall be returned to the Company promptly upon any termination of this Agreement.
8.	Company Documentation.

a. Company Documentation. The Management Company and the Principals shall hold in a fiduciary capacity for the benefit of the Company all documentation, programs, data, records, research materials, drawings, manuals, disks, reports, sketches, blueprints, letters, notes, notebooks and all other writings, electronic data, graphics and tangible information and materials of a secret, confidential or proprietary information nature relating to the Company or the Company’s business (the "Company Documentation") that are, at any time, in the possession or under the control of the Management Company or any of its agents or employees.

9. Injunctive Relief. The Management Company and the Principals acknowledge that their compliance with the agreements in Sections 6, 7, and 8 hereof is necessary to protect the good will and other proprietary interests of the Company and that they have been and will be entrusted with highly confidential information regarding the Company and its technology and are conversant with the Company’s affairs, its trade secrets and other proprietary information. The Management Company and the Principals acknowledge that a breach of their agreements in Sections 6, 7, and 8 hereof will result in irreparable and continuing damage to the Company for which there will be no adequate remedy at law; and the Management Company and the Principals agree that, in the event of any breach of the aforesaid agreements, the Company and its successors and assigns shall be entitled to injunctive relief, to recover all costs and attorneys fees and to such other and further relief as may be proper.

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10.

Compliance with the Laws. The Management Company shall at all times in performance of the Management Services and any other obligations of the Management Company in connection with this Agreement comply with all applicable federal, state or local laws, rules, regulations and orders of any court, tribunal or administrative agency having jurisdiction over the Management Company, the Company or the Management Services (collectively, the "Laws"). The Management Company shall, in connection with the Management Services, make all commercially reasonable efforts to remain aware of all existing Laws and any new developments under the Laws, and the requirements for compliance with such Laws, that are applicable to the Management Company, the Company or the Management Services.

11.

Representations and Warranties.

a. Representations of the Company. As an inducement to the Management Company to enter into this Agreement, the Company represents and warrants to the Management Company as follows:

i. The Company is a corporation duly organized and validly existing under the laws of the State of Delaware and has all requisite power to enter into this Agreement.

ii. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein or therein nor compliance by the Company with any of the provisions hereof or thereof will (A) violate any order, writ, injunction, decree, law statute, rule or regulation applicable to it or (B) require the consent, approval, permission or other authorization of or qualification or filing without notice to, any court, arbitrator or other tribunal or any governmental, administrative, regulatory or self-regulatory agency or any other third party.

iii. This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company enforceable in accordance with its terms.

b. Representations of the Management Company. As an inducement to the Company to enter into this Agreement, the Management Company hereby represents and warrants to the Company as follows:

i. The Management Company is an S corporation duly organized, validly existing and in good standing under the laws of the State of Massachusetts, and the Management Company has all requisite power and authority to enter into this Agreement.

7

ii. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein nor compliance by the Management Company with any of the provisions hereof will: (a) violate any order, writ injunction, decree, law, statute, rule or regulation applicable in any respect to the Management Company or with respect to the services to be rendered by the Management Company hereunder or the assignment of the Inventions contemplated hereby or (b) require the consent, approval, permission or other authorization of, or qualification or filing with or notice to, any court, arbitrator or other tribunal or any governmental, administrative, regulatory or self-regulatory agency or any other third party.

iii. This Agreement has been duly executed and delivered by the Management Company and constitutes a legal, valid and binding agreement of the Management Company enforceable in accordance with its terms.

iv. The Management Company is not a party to or otherwise subject to any agreements or restrictions that would prohibit the Management Company from entering into this Agreement and carrying out the transactions contemplated by this Agreement in accordance with the terms hereof, and this Agreement and the transactions contemplated hereby will not infringe or conflict with, and are not inconsistent with, the rights of any other person or entity.

c. Representations of the Principals. As an inducement to the Company to enter into this Agreement, each Principal hereby represents and warrants to the Company as follows:

i. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated herein nor compliance by the Principal with any of the provisions hereof will: (a) violate any order, writ injunction, decree, law, statute, rule or regulation applicable in any respect to such Principal or with respect to the services to be rendered by such Principal hereunder or the assignment of the Inventions contemplated hereby or (b) require the consent, approval, permission or other authorization of, or qualification or filing with or notice to, any court, arbitrator or other tribunal or any governmental, administrative, regulatory or self-regulatory agency or any other third party.

ii. Such Principal is not a party to or otherwise subject to any agreements or restrictions that would prohibit such Principal from entering into this Agreement and carrying out the transactions contemplated by this Agreement in accordance with the terms hereof, and this Agreement and the transactions contemplated hereby will not infringe or conflict with, and are not inconsistent with, the rights of any other person or entity.

8

12. Insurance. The Management Company shall at all times maintain insurance policies in the name of the Management Company, in such amounts and having such terms as are reasonably required by the Company.

13. Survival of Representations, Warranties and Covenants. The provisions of Sections 6, 7, 8, 9, 10, and 11 hereof shall survive the termination of this Agreement.

14. Independent Contractor. The parties intend that the Management Company shall render services hereunder as an independent contractor, and nothing herein shall be construed to be inconsistent with this relationship or status. The Management Company shall not be entitled to any benefits paid by the Company to its employees. The Management Company shall be solely responsible for any tax consequences applicable to the Management Company by reason of this Agreement and the relationship established hereunder, and the Company shall not be responsible for the payment of any federal, state or local taxes or contributions imposed under any employment insurance, social security, income tax or other tax law or regulation with respect to the Management Company’s performance of services hereunder. The Management Company shall promptly pay its employees all amounts owed to such employees. The Management Company shall comply with all applicable state, federal and local laws, including laws and regulations covering wages and payroll withholding.

15. Amendments. Any amendments to this Agreement shall be made in writing and signed by all parties hereto.

16. Enforceability; Remedies. If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law as if such provision had been originally incorporated herein as so modified or restricted or as if such provision had not been originally incorporated herein, as the case may be. The Management Company shall reimburse the Company reasonable attorney's fees incurred by the Company in connection with the collection or attempt to collect, any damages arising from the Management Company's failure to fulfill any provisions or responsibility provided herein. The remedies set forth in this Agreement shall be cumulative and no one shall be construed as exclusive of any other or of any remedy provided by law, and failure of any party to exercise any remedy at any time shall not operate as a waiver of the right of such party to exercise any remedy for the same or subsequent default at any time thereafter.

17. Governing Law, Venue and Jurisdiction. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Massachusetts without giving effect to principles of conflicts of laws thereunder.

9

18. Assignment.

a. By the Company. The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.

b. By the Management Company. This Agreement and the obligations created hereunder may not be assigned by the Management Company, and any such purported assignment shall be null and void ab initio.

19. Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by certified mail, postage prepaid, by an overnight delivery service, charges prepaid, or by confirmed telecopy, in each case addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:

If to the Company:	LipimetiX Development, Inc.
	5 Commonwealth Road
	Natick, MA 01770
	Attention: Dennis I. Goldberg, Ph.D.
	Facsimile: 978-443-2364
with a copy to:	Capstone Therapeutics Corp.
	1275 West Washington Street,
	Tempe, Arizona 85281
	Attention: John M. Holliman, III,
	Executive Chairman
	Facsimile: 602-682-7018
If to the Management Company:	Benu BioPharma, Inc
	c/o Dr. Dennis I. Goldberg, President
	50 Lands End Lane
	Sudbury, MA 01776
	Facsimile: (978) 443-2364

Any party may from time to time change its address for the purpose of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually received by the party sought to be charged with its contents.

20. Waivers. No claim or right arising out of a breach or default under this Agreement shall be discharged in whole or in part by a waiver of that claim or right unless the waiver is supported by consideration and is in writing and executed by the aggrieved party hereto or its duly authorized agent. A waiver by any party hereto of a breach or default by the other party hereto of any provision of this Agreement shall not be deemed a waiver of future compliance therewith, and such provisions shall remain in full force and effect.

[Signature Page Follows.]

10

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered effective as of the Effective Date.

"COMPANY"

LipimetiX Development, Inc.

By:  /s/ John M. Holliman, III

Name: John M. Holliman, III

Title: Chairman

"MANAGEMENT COMPANY"

Benu BioPharma, Inc.

By: /s/ Dennis I. Goldberg

Name: Dennis I. Goldberg, Ph.D.

Title: President

The following parties are executing this Agreement with respect to, and intend to be bound by, Sections 6 (Non-Disclosure and Non-Competition), 7 (Inventions, Discoveries and Ownership), 8 (Company Documentation), 9 (Injunctive Relief) and 11 (Representations and Warranties) only.

/s/ Dennis I. Goldberg

Dennis I. Goldberg, Ph.D.

/s/ Phillip M. Friden

Phillip M. Friden, Ph.D.

/s/ Eric M. Morrel

Eric M. Morrel, Ph.D.

Signature Page - Management Agreement

EXHIBIT A

MANAGEMENT SERVICES

The following representatives of the Management Company shall be appointed and shall serve in the designated roles and perform all duties associated with these roles, as described below.

Dennis I. Goldberg, Ph.D. – President

Phillip M. Friden, Ph.D. – Vice President, Product Development

Eric M. Morrel, Ph.D. – Vice President, Clinical Research

A-1

EXHIBIT B

MANAGEMENT FEE PAYMENT SCHEDULE

$80,000 per month

B-1

EX-10.2

EXECUTION

Exhibit 10.2

ACCOUNTING SERVICES Agreement

THIS ACCOUNTING SERVICES AGREEMENT ("Agreement"), effective as of June 1, 2016 (the "Effective Date"), is made by and among LipimetiX Development, Inc., a Delaware corporation (the "Company") and Capstone Therapeutics Corp., a Delaware corporation ("Capstone").

RECITALS:

WHEREAS, the Company desires to retain Capstone to provide certain services for the Company as provided herein;

WHEREAS, Capstone desires to provide such services to the Company as provided herein; and

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

AGREEMENT:

1. Engagement. The Company hereby engages Capstone to provide the services set forth in Section 2 hereof to the Company, and Capstone hereby accepts such engagement, on the terms and conditions set forth in this Agreement.

2. Services. Capstone agrees to provide all accounting, treasury, funds management and finance functions for the Company, including without limitation, maintaining the Company's books and records, managing the Company's funds, including receipts and disbursements, overseeing the preparation of tax returns, and preparing financial statements (collectively, the "Accounting Services"). Capstone shall report to the Board of Directors (“Board”) of the Company.

3. Term. The term of Capstone's engagement hereunder shall commence on the Effective Date and shall continue until the earlier to occur of (in either case, the "Term"):

a. Mutual termination upon 60 days prior written agreement; or

b. Termination by either party to the other party upon 60 days written notice; provided, that a termination by the Company is subject to the provisions of Section 4.1 of the Stockholders’ Agreement.

4. Compensation.

a. Accounting Services Fee. In consideration of the Accounting Services, Capstone shall be paid a service fee during the Term at the rate of $10,000 per month, payable in advance (the "Accounting Services Fee"). However, Accounting Fees will only be due and payable to the extent funding is available, as unanimously approved by the members of the Board, and as reflected in the approved operation budget in effect at that time.

b. Reimbursement for Expenses. Capstone shall be reimbursed for out-of-pocket travel expenses and for other out-of-pocket expenses approved in advance by the Company’s Board. All such expenses shall be documented and submitted in accordance with the reimbursement policies of the Company in effect from time to time.

5. Compliance with the Laws. Capstone shall at all times in performance of the Accounting Services and any other obligations of Capstone in connection with this Agreement comply with all applicable federal, state or local laws, rules, regulations and orders of any court, tribunal or administrative agency having jurisdiction over Capstone, the Company or the Accounting Services (collectively, the "Laws"). Capstone shall, in connection with the Accounting Services, make all commercially reasonable efforts to remain aware of all existing Laws and any new developments under the Laws, and the requirements for compliance with such Laws, that are applicable to Capstone, the Company or the Accounting Services.

6. Independent Contractor. The parties intend that Capstone shall render services hereunder as an independent contractor, and nothing herein shall be construed to be inconsistent with this relationship or status. Capstone shall not be entitled to any benefits paid by the Company to its employees. Capstone shall be solely responsible for any tax consequences applicable to Capstone by reason of this Agreement and the relationship established hereunder, and the Company shall not be responsible for the payment of any federal, state or local taxes or contributions imposed under any employment insurance, social security, income tax or other tax law or regulation with respect to Capstone’s performance of services hereunder. Capstone shall promptly pay its employees all amounts owed to such employees. Capstone shall comply with all applicable state, federal and local laws, including laws and regulations covering wages and payroll withholding.

7. Amendments. Any amendments to this Agreement shall be made in writing and signed by all parties hereto.

8. Enforceability; Remedies. If any provision of this Agreement shall be invalid or unenforceable, in whole or in part, then such provision shall be deemed to be modified or restricted to the extent and in the manner necessary to render the same valid and enforceable, or shall be deemed excised from this Agreement, as the case may require, and this Agreement shall be construed and enforced to the maximum extent permitted by law as if such provision had been originally incorporated herein as so modified or restricted or as if such provision had not been originally incorporated herein, as the case may be. Capstone shall reimburse the Company reasonable attorney's fees incurred by the Company in connection with the collection or attempt to collect, any damages arising from Capstone's failure to fulfill any provisions or responsibility provided herein. The remedies set forth in this Agreement shall be cumulative and no one shall be construed as exclusive of any other or of any remedy provided by law, and failure of any party to exercise any remedy at any time shall not operate as a waiver of the right of such party to exercise any remedy for the same or subsequent default at any time thereafter.

2

9. Governing Law, Venue and Jurisdiction. This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without giving effect to principles of conflicts of laws thereunder.

10. Assignment. This Agreement and the obligations created hereunder may not be assigned by either party hereto, and any such purported assignment shall be null and void ab initio.

11. Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by certified mail, postage prepaid, by an overnight delivery service, charges prepaid, or by confirmed telecopy, in each case addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:

If to the Company:	LipimetiX Development, Inc.
	5 Commonwealth Road
	Natick, MA 01770
	Attention: Dennis I. Goldberg, Ph.D.
	Facsimile: 978-443-2364
If to Capstone:	Capstone Therapeutics Corp.
	1275 West Washington Street,
	Tempe, Arizona 85281
	Attention: John M. Holliman, III,
	Executive Chairman
	Facsimile: 602-682-7018

Any party may from time to time change its address for the purpose of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given until it is actually received by the party sought to be charged with its contents.

12. Waivers. No claim or right arising out of a breach or default under this Agreement shall be discharged in whole or in part by a waiver of that claim or right unless the waiver is supported by consideration and is in writing and executed by the aggrieved party hereto or its duly authorized agent. A waiver by any party hereto of a breach or default by the other party hereto of any provision of this Agreement shall not be deemed a waiver of future compliance therewith, and such provisions shall remain in full force and effect.

[Signature Page Follows.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered effective as of the Effective Date.

LipimetiX Development, Inc.

By: /s/ Dennis I. Goldberg

Name: Dennis I. Goldberg, Ph.D

Title: Manager

Capstone Therapeutics Corp.

By:  /s/ John M. Holliman, III

Name: John M. Holliman, III

Title: Executive Chairman

Signature Page - Accounting Services Agreement

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John M. Holliman, III certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Capstone Therapeutics Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2016

By: /s/ John M. Holliman, III

John M. Holliman, III
Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Les M. Taeger, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Capstone Therapeutics Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2016

By: /s/ Les M. Taeger

Les M. Taeger
Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Capstone Therapeutics Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of John M. Holliman, III, Executive Chairman and Principal Executive Officer of the Company, and Les M. Taeger, Senior Vice President and Chief Financial Officer, and Principal Financial and Accounting Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 29, 2016

/s/ John M. Holliman, III

John M. Holliman, III

Chairman and Chief Executive Officer

(Principal Executive Officer)

/s/ Les M. Taeger

Les M. Taeger

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Capstone Therapeutics Corp. and will be retained by Capstone Therapeutics Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 28, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Entity Registrant Name	Capstone Therapeutics Corp.
Entity Central Index Key	0000887151
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	CAPS
Entity Common Stock, Shares Outstanding		40,885,411

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 692	$ 1,011
Other current assets	77	247
Total current assets	769	1,258
Patent license rights, net	431	509
Furniture and equipment, net	0	0
Total assets	1,200	1,767
Current liabilities
Accounts payable	402	254
Other accrued liabilities	29	7
Total current liabilities	431	261
Convertible Promissory Notes Payable	1,000	1,000
Capstone Therapeutics Corp. Stockholders' Equity
Common Stock $.0005 par value; 150,000,000 shares authorized; 40,885,411 shares in 2016 and 2015 issued and outstanding	20	20
Additional paid-in capital	189,474	189,442
Accumulated deficit	(189,725)	(188,956)
Total Capstone Therapeutics Corp. stockholders' equity	(231)	506
Noncontrolling interest	0	0
Total equity	(231)	506
Total liabilities and equity	$ 1,200	$ 1,767

XML

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Common stock, par value (in dollars per share)	$ 0.0005	$ 0.0005
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	40,885,411	40,885,411
Common stock, shares outstanding	40,885,411	40,885,411

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
OPERATING EXPENSES
General and administrative	$ 157	$ 552	$ 382	$ 1,024
Research and development	220	283	377	633
Total operating expenses	377	835	759	1,657
Interest and other (income) expenses, net	25	(47)	36	9
Loss from continuing operations before taxes	402	788	795	1,666
Income tax benefit	(12)	(36)	(26)	(198)
NET LOSS	390	752	769	1,468
Less: Net Loss attributable to the noncontrolling interest	0	0	0	0
Net Loss attributable to Capstone Therapeutics Corp. stockholders	$ 390	$ 752	$ 769	$ 1,468
Per Share Information:
Net loss, basic and diluted, attributable to Capstone Therapeutic Corp. stockholders (in dollars per share)	$ 0.01	$ 0.02	$ 0.02	$ 0.04
Basic and diluted shares outstanding (in shares)	40,885	40,885	40,885	40,885

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES
Net loss	$ (769)	$ (1,468)
Non cash items:
Depreciation and amortization	89	78
Non-cash stock-based compensation	32	148
Change in other operating items:
Other current assets	159	46
Accounts payable	148	87
Other accrued liabilities	22	(18)
Cash flows used in operating activities	(319)	(1,127)
INVESTING ACTIVITIES
Cash flows provided by investing activities	0	0
FINANCING ACTIVITIES
Cash flows provided by financing activities	0	0
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(319)	(1,127)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	1,011	2,164
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 692	$ 1,037

XML

OVERVIEW OF BUSINESS

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Business Description and Accounting Policies [Text Block]

Note A. OVERVIEW OF BUSINESS

Description of the Business

Capstone Therapeutics Corp. (the “Company”, “we”, “our” or “us”) is a biotechnology company committed to developing a pipeline of novel peptides and other molecules aimed at helping patients with under-served medical conditions. Previously, we were focused on the development and commercialization of two product platforms: AZX100 and Chrysalin (TP508). Since March 2012, we no longer have any interest in or rights to Chrysalin. In 2012 we ceased clinical development of AZX100 in dermal scarring, formerly our principal drug candidate, and moved to a more virtual operating model. In 2014, we terminated the License Agreement for AZX100 intellectual property and returned all interest in and rights to the AZX100 intellectual property to the Licensor (AzTE).

On August 3, 2012, we entered into a joint venture, LipimetiX Development, LLC, (now LipimetiX Development, Inc.), (the “JV”), to develop Apo E mimetic peptide molecule AEM-28 and its analogs. The JV has a development plan to pursue regulatory approval of AEM-28, or an analog, as treatment for Homozygous Familial Hypercholesterolemia (granted Orphan Drug Designation by FDA in 2012), Acute Hypertriglyceridemic Pancreatitis (“AP”), diabetic dyslipidemia, and other hyperlipidemic indications. The initial development plan extended through Phase 1a and 1b/2a clinical trials and was completed in the fourth quarter of 2014. The clinical trials had a safety primary endpoint and an efficacy endpoint targeting reduction of cholesterol and triglycerides.

The JV received allowance from regulatory authorities in Australia permitting the JV to proceed with the planned clinical trials. The Phase 1a clinical trial commenced in Australia in April 2014 and the Phase 1b/2a clinical trial commenced in Australia in June 2014. The clinical trials for AEM-28 were randomized, double-blinded, placebo-controlled studies to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of six escalating single doses (Phase 1a in healthy patients with elevated cholesterol) and multiple ascending doses of the three highest doses from Phase 1a (Phase 1b/2a in patients with hypercholesterolemia and healthy volunteers with elevated cholesterol and high Body Mass Index). The Phase 1a clinical trial consisted of 36 patients and the Phase 1b/2a consisted of 15 patients. Both clinical trials were completed in 2014 and the Medical Safety Committee, reviewing all safety-related aspects of the clinical trials, observed a generally acceptable safety profile. As first-in-man studies, the primary endpoint was safety; yet efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints.

Concurrent with the clinical development activities of AEM-28, the JV has performed pre-clinical studies that have identified an analog of AEM-28, referred to as AEM-28-14, and a new formulation, that has the potential of increased efficacy, higher human dose toleration and an extended composition of matter patent life (application filed with the U.S. Patent and Trademark Office in 2015). The JV’s current intent is to prioritize the development of AEM-28-14.

The JV and the Company are exploring fundraising, partnering or licensing, to obtain additional funding to continue development activities of AEM-28 and its analogs, including AEM-28-14, and operations.

The JV and the Company do not have sufficient funding at this time to continue additional material development activities of AEM-28 and its analogs, including AEM-28-14. The JV may conduct future clinical trials in Australia, the USA, and other regulatory jurisdictions if regulatory approvals, additional funding, and other conditions permit.

 

The Company, funding permitting, intends to continue limiting its internal operations to a virtual operating model while monitoring and participating in the management of JV’s AEM-28 and analogs development activities.

Description of Current Peptide Drug Candidates.

Chimeric Apo E Mimetic Peptide Molecule – AEM-28 and its analogs

Apolipoprotein E is a 299 amino acid protein that plays an important role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28 and its analogs, including AEM-28-14 is a 28 amino acid mimetic of Apo E (with an aminohexanoic acid group and a phospholipid), and both contain a domain that anchors into a lipoprotein surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate proteoglycan (HSPG) receptors (Syndecan-1) in the liver. AEM-28 and its analogs, including AEM-28-14, as Apo E mimetics, have the potential to restore the ability of these atherogenic lipoproteins to be cleared from the plasma, completing the reverse cholesterol transport pathway, and thereby reducing cardiovascular risk. This is an important mechanism of action for AEM-28 and its analogs, including AEM-28-14. For patients that lack LDL receptors (Homozygous Familial Hypercholesterolemia-HoFH), have acute pancreatitis, or have hypercholesterolemia, AEM-28 and its analogs may provide a therapeutic solution. Our joint venture has an Exclusive License Agreement with the University of Alabama at Birmingham Research Foundation for AEM-28 and certain of its analogs.

Company History

Prior to November 26, 2003, we developed, manufactured and marketed proprietary, technologically advanced orthopedic products designed to promote the healing of musculoskeletal bone and tissue, with particular emphasis on fracture healing and spine repair. Our product lines, which included bone growth stimulation and fracture fixation devices, are referred to as our “Bone Device Business.” In November 2003, we sold our Bone Device Business.

In August 2004, we purchased substantially all of the assets and intellectual property of Chrysalis Biotechnology, Inc., including its exclusive worldwide license for Chrysalin, a peptide, for all medical indications. Subsequently, our efforts were focused on research and development of Chrysalin with the goal of commercializing our products in fresh fracture healing. (In March 2012, we returned all rights to the Chrysalin intellectual property and no longer have any interest in, or rights to Chrysalin.)

In February 2006, we purchased certain assets and assumed certain liabilities of AzERx, Inc. Under the terms of the transaction, we acquired an exclusive license for the core intellectual property relating to AZX100, an anti-fibrotic peptide. In 2014, we terminated the License Agreement with AzTE (Licensor) for the core intellectual property relating to AZX100 and returned all interest in and rights to the AZX100 intellectual property to the Licensor.

On August 3, 2012, we entered into a joint venture (see Note B below), to develop Chimeric Apo E mimetic peptide molecule AEM-28 and its analogs.

Our development activities represent a single operating segment as they shared the same product development path and utilized the same Company resources. As a result, we determined that it is appropriate to reflect our operations as one reportable segment.

 

OrthoLogic Corp. commenced doing business under the trade name of Capstone Therapeutics on October 1, 2008, and we formally changed our name from OrthoLogic Corp. to Capstone Therapeutics Corp. on May 21, 2010.

In these notes, references to “we”, “our”, “us”, the “Company”, “Capstone Therapeutics”, “Capstone”, and “OrthoLogic” refer to Capstone Therapeutics Corp. References to our joint venture or “JV”, refer to LipimetiX Development, Inc. (formerly LipimetiX Development, LLC).

Financial Statement Presentation and Management’s Plan

The accompanying financials statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The report from our Independent Registered Public Accounting Firm on our consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K expressed substantial doubt about the Company’s ability to continue as a going concern. The Company did not engage an Independent Registered Public Accounting Firm to audit and express an opinion on our consolidated financial statements for the year ended December 31, 2015, or to review this Current Report on form 10-Q.

Management has determined that the Company and our JV will require additional capital above its current cash and working capital balances to further develop AEM-28 and its analogs or continue operations. Accordingly, the Company has reduced its development activities. The Company’s corporate strategy is to raise funds by possibly engaging in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital. These financial statements do not include any adjustments that might result from the outcome of the uncertainty of the Company successfully implementing its corporate strategy.

In the opinion of management, the unaudited condensed interim financial statements include all adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows, and all adjustments were of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the complete fiscal year. The financial statements include the consolidated results of Capstone Therapeutics Corp. and our 64% owned subsidiary, LipimetiX Development, Inc. Intercompany transactions have been eliminated.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations, although we believe that the disclosures herein are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, and expenses in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s assumptions regarding current events and actions that may impact us in the future, actual results may differ from these estimates and assumptions.

 

Legal and Other Contingencies

The Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to loss contingencies.

Joint Venture Accounting

The Company entered into a joint venture in which it has contributed $6,000,000, and the noncontrolling interests have contributed certain patent license rights. Neither the Company nor the noncontrolling interests have an obligation to contribute additional funds to the joint venture or to assume any joint venture liabilities or to provide a guarantee of either joint venture performance or any joint venture liability. The financial position and results of operations of the joint venture are presented on a consolidated basis with the financial position and results of operations of the Company. Intercompany transactions have been eliminated. Joint venture losses were recorded on the basis of common ownership equity interests until common ownership equity was reduced to $0. Subsequent joint venture losses are being allocated to the preferred ownership equity (100% Company). Subsequent to March 31, 2013, all joint venture losses are being allocated to the Company. The Company has a revolving loan agreement with the joint venture to advance the joint venture funds for operations in an amount not to exceed a net (net of expected tax credits or other funds obtained) of $1,500,000, with the net amount due December 31, 2016. Losses incurred by the joint venture in excess of the capital accounts of the joint venture will be allocated to the Company to the extent of net outstanding advances.

Cash and Cash Equivalents

At June 30, 2016, cash and cash equivalents included money market accounts.

Recent Accounting Pronouncements

 In August 2014, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(“Update”): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, providing a requirement under U.S. GAAP for an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued; and if those conditions exist, to disclose that fact, the conditions and the potential effects on the entity’s ability to meet its obligations. The Update will be effective for an annual period ending after December 15, 2016, with early application permitted. We have not elected early application. However, if additional funds are not obtained to continue the development of AEM-28 or its analogs, or operations, it will impair our ability to continue as a going concern. If we do not continue as a going concern, the Company may incur additional losses, up to, and possibly exceeding our net joint venture investment and revolving loan balance.

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JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

Note B. JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS

On August 3, 2012, we entered into a Contribution Agreement with LipimetiX, LLC to form a joint venture, LipimetiX Development, LLC (“JV”), to develop Apo E mimetic molecules, including AEM-28 and its analogs. In June 2015, the JV converted from a limited liability company to a corporation, LipimetiX Development, Inc. The Company contributed $6 million, which included $1 million for 600,000 voting common ownership units (now common stock), representing 60% ownership in the JV, and $5 million for 5,000,000 non-voting preferred ownership units (now preferred stock), which have preferential distribution rights. On March 31, 2016, the Company converted 1,500,000 shares of its preferred stock into 120,000 shares of common stock, increasing its common stock ownership from 60% to 64%.

LipimetiX, LLC contributed all intellectual property rights for Apo E mimetic molecules it owned and assigned its Exclusive License Agreement between The University of Alabama at Birmingham Research Foundation (“UABRF”) and LipimetiX, LLC, for the UABRF intellectual property related to Apo E mimetic molecules AEM-28 and its analogs to the JV, in return for 400,000 voting common ownership units (now common stock) representing 40% ownership (effective March 31, 2016, 36%) in JV, and $378,000 in cash (for certain initial patent-related costs and legal expenses).

LipimetiX, LLC was formed by the principals of Benu BioPharma, Inc. (“Benu”) and UABRF to commercialize UABRF’s intellectual property related to Apo E mimetic molecules, including AEM-28 and analogs. Benu is composed of Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D. and Eric M. Morrel, Ph.D. The Exclusive License Agreement, as amended, calls for payment of patent filing, maintenance and other related patent fees, as well as a royalty of 3% on Net Sales of Licensed Products during the Term of the Agreement. The Agreement terminates upon the expiration of all Valid Patent Claims within the Licensed Patents, which are currently estimated to expire between 2019 and 2035. The Agreement, as amended, also calls for annual maintenance payments of $25,000, various milestone payments of $50,000 to $500,000 and minimum royalty payments of $500,000 to $1,000,000 per year commencing on January 1 of the first calendar year following the year in which the First Commercial Sale occurs. UABRF will also be paid 5% of Non Royalty Income received.

Concurrent with entering into the Contribution Agreement and the First Amendment and Consent to Assignment of Exclusive License Agreement between LipimetiX, LLC, UABRF and the Company, the Company and LipimetiX, LLC entered into a Limited Liability Company Agreement for JV which established a Joint Development Committee (“JDC”) to manage JV development activities. Upon conversion by the JV from a limited liability company to a corporation, the parties entered into a Stockholders Agreement for the JV, and the JDC was replaced by a Board of Directors (JV Board). The JV Board is composed of three members appointed by the non-Company ownership group and two members appointed by the Company. Non-development JV decisions, including the issuance of new equity, incurrence of debt, entry into strategic transactions, licenses or development agreements, sales of assets and liquidation, and approval of annual budgets, will be decided by a majority vote of the common stockholders.

The JV, on August 3, 2012, entered into a Management Agreement with Benu to manage JV development activities for a monthly fee of approximately $63,000 during the twenty-seven month development period, and an Accounting Services Agreement with the Company to manage JV accounting and administrative functions. The services related to these agreements have been completed and new Management and Accounting Services Agreements were entered into effective June 1, 2016.The new monthly management fee is $80,000 and the new monthly accounting services fee is $10,000. However, no Management or Accounting Services fees are due or payable except to the extent funding is available, as unanimously approved by members of the JV Board of Directors and as reflected in the approved operating budget in effect at that time. No management fee is owed as of June 30, 2016.

 

The joint venture formation was as follows ($000’s):

Patent license rights	$	1,045
Noncontrolling interests		(667)
Cash paid at formation	$	378

Patent license rights were recorded at their estimated fair value and are being amortized on a straight-line basis over the key patent life of eighty months.

The financial position and results of operations of the joint venture are presented on a consolidated basis with the financial position and results of operations of the Company. Intercompany transactions have been eliminated. The joint venture agreement requires profits and losses to be allocated on the basis of common ownership equity interests (60% Company / 40% noncontrolling interests originally, now 64% Company / 36% noncontrolling interests). However, for the Company’s consolidated financial statement, joint venture losses were recorded on the basis of common ownership equity interests until common ownership equity was reduced to $0. Subsequent joint venture losses have been allocated to the preferred ownership equity (100% Company). Subsequent to March 31, 2013, all joint venture losses have been allocated to the Company. The Company has a revolving loan agreement with the joint venture to advance the joint venture funds for operations in an amount not to exceed a net (net of expected tax credits or other funds obtained) of $1,500,000, with the net amount due December 31, 2016. Losses incurred by the joint venture in excess of the capital accounts of the joint venture will be allocated to the Company to the extent of net outstanding advances. At June 30, 2016, outstanding advances on the revolving loan agreement totaled $1,553,000.

The joint venture incurred net operating expenses, prior to the elimination of intercompany transactions, of $392,000 in the six-month period ended June 30, 2016 and $7,782,000 for the period from August 3, 2012 (inception) to June 30, 2016, of which $392,000 and $7,115,000, respectively, have been recorded by the Company. The joint venture operating expenses are included in research and development expenses in the condensed consolidated statements of operations.

Neither the Company nor the noncontrolling interests have an obligation to contribute additional funds to the joint venture or to assume any joint venture liabilities or to provide a guarantee of either joint venture performance or any joint venture liability. Losses allocated to the noncontrolling interests represent an additional potential loss for the Company as the noncontrolling interests are not obligated to contribute assets to the joint venture to the extent they have a negative capital account, and depending on the ultimate outcome of the joint venture, the Company could potentially absorb all losses associated with the joint venture. From formation of the joint venture, August 3, 2012, through June 30, 2016, losses totaling $667,000 have been allocated to the noncontrolling interests. If the joint venture or Company is unable to obtain additional funding, the ability of the joint venture to continue development of AEM-28 and its analogs, including AEM-28-14, would be impaired as would the joint venture’s ability to continue operations. If the joint venture does not continue as a going concern, at June 30, 2016 the Company would incur an additional loss of $667,000 for the joint venture losses allocated to the noncontrolling interests.

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NOTE PAYABLE - FUNDRAISING ACTIVITIES

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note C. NOTE PAYABLE – FUNDRAISING ACTIVITIES

As disclosed above, management has determined that the Company will require additional capital above its current cash and working capital balances to further develop AEM-28 and its analogs and to continue operations.  Accordingly, the Company has reduced its development activities.  The Company’s corporate strategy is to raise funds either by the Company, or directly in its joint venture, by possibly engaging in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital.    In connection with these efforts, we filed a Registration Statement on Form S-1 with the Securities and Exchange Commission on June 26, 2015, as amended, in connection with our contemplated public offering of shares of our Common Stock. The Registration Statement was not effective as of December 31, 2015 and was withdrawn in January 2016. All costs relating to these fundraising activities were expensed in 2015.

 

On December 11, 2015, we entered into a Securities Purchase Agreement (the “Agreement”) with Biotechnology Value Fund affiliated entities Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P., Investment 10, LLC, and MSI BVF SPV, LLC (the "Lenders"), to provide short-term funding for our operations. A portion of the funds have been advanced to JV, to initiate preclinical development activities for our lead commercial drug candidate, AEM-28-14. The Lenders, at June 30, 2016 and December 31, 2015, owned in the aggregate, approximately 19% of our outstanding Common Stock.

Pursuant to the Agreement, the Lenders funded an aggregate of $1,000,000 of loans to us, evidenced by Convertible Promissory Notes (the “Notes”) dated December 11, 2015 and due April 30, 2017. The Notes bear interest at 5% per annum and are secured by a security interest in all of our assets.

The unpaid principal amount of the Notes will convert automatically upon the closing of a Qualified Equity Financing, which is defined in the Agreement as an offering of equity securities with aggregate gross proceeds of at least $5,000,000 including the principal of any converted Notes. Such conversion will be into the same securities and on the same terms as provided for the other investors in the Qualified Equity Financing.

As a Qualified Equity Financing was not consummated by March 31, 2016, the unpaid principal amount of the Notes may be converted, at the election of the Lenders, into shares of Common Stock, at a conversion price (the "Optional Conversion Price") equal to the trailing 10-day weighted average trading price of the Common Stock, but not be less than $.135 or more than $.18 per share. Upon a change in control of the Company, the Lenders may elect to accelerate the Notes or convert them into Common Stock at a conversion price equal to the Optional Conversion Price.

Under the Agreement, the Lenders have the right to elect to acquire, upon conversion of the Notes, convertible preferred stock rather than Common Stock, such preferred stock to vote with the Common Stock and to be convertible into the equivalent number of shares of Common Stock as would have been originally issued if the Notes conversion had been into Common Stock. Such preferred shares would have no preferential liquidation or distribution rights and would not have any dividend or preferred return rights.

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AUSTRALIAN REFUNDABLE RESEARCH & DEVELOPMENT CREDIT

6 Months Ended

Jun. 30, 2016

Research and Development Expense [Abstract]

Refundable Research And Development Credit [Text Block]

Note D. Australian Refundable Research & Development Credit

In March 2014, LipimetiX Development LLC, (see Note B) formed a wholly-owned Australian subsidiary, Lipimetix Australia Pty Ltd, to conduct Phase 1a and Phase1b/2a clinical trials in Australia. Currently Australian tax regulations provide for a refundable research and development tax credit equal to 45% of qualified expenditures. Subsequent to the end of its Australian tax years, Lipimetix Australia Pty, Ltd intends to submit claims for a refundable research and development tax credit. The transitional Australian tax periods/years granted for Lipimetix Australia Pty, Ltd end on June 30, 2014, December 31, 2014 and thereafter December 31 of each succeeding year. For the tax year ended June 30, 2014, Lipimetix Australia Pty, Ltd received a refundable research and development tax credit of AUD$227,000. For the tax year ended December 31, 2014 Lipimetix Australia Pty, Ltd, received a refundable research and development tax credit of AUD$301,000. At December 31, 2015, a refundable research and development tax credit of AUD$189,000 was recorded and the refund was received in June 2016. At June 30, 2016, an additional AUD$36,000 (USA $ 27,000) was recorded and at June 30, 2016, the refundable research and development tax credit is included in other current assets.

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CONTINGENCY - NON-COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION REPORTING REQUIREMENTS AND OTCQB MARKET REQUIREMENTS

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note E: Contingency – Non-Compliance with Securities and Exchange Commission Reporting Requirements and OTCQB Market Requirements

Our current level of funds available for operation has led to additional cost cutting, which included the decision to not engage an independent public accountant to audit and express an opinion on our December 31, 2015 financial statements included in our Annual Report on Form 10-K filed with the SEC on March 30, 2016, or to review this Current Report on Form 10-Q, as required by current SEC rules and regulations, and as required to be listed on the OTCQB Market. We cannot currently predict the response to these actions by the SEC or the OTCQB Market, nor the effects of their actions, including the possible effect on the trading of our common stock. The decision to not engage an independent public accountant to audit and express an opinion on our December 31, 2015 financial statements or review this Current Report on Form 10-Q could have a material adverse effect on the Company and its Stockholders.

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OVERVIEW OF BUSINESS (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Description Of Business [Policy Text Block]

Description of the Business

Capstone Therapeutics Corp. (the “Company”, “we”, “our” or “us”) is a biotechnology company committed to developing a pipeline of novel peptides and other molecules aimed at helping patients with under-served medical conditions. Previously, we were focused on the development and commercialization of two product platforms: AZX100 and Chrysalin (TP508). Since March 2012, we no longer have any interest in or rights to Chrysalin. In 2012 we ceased clinical development of AZX100 in dermal scarring, formerly our principal drug candidate, and moved to a more virtual operating model. In 2014, we terminated the License Agreement for AZX100 intellectual property and returned all interest in and rights to the AZX100 intellectual property to the Licensor (AzTE).

On August 3, 2012, we entered into a joint venture, LipimetiX Development, LLC, (now LipimetiX Development, Inc.), (the “JV”), to develop Apo E mimetic peptide molecule AEM-28 and its analogs. The JV has a development plan to pursue regulatory approval of AEM-28, or an analog, as treatment for Homozygous Familial Hypercholesterolemia (granted Orphan Drug Designation by FDA in 2012), Acute Hypertriglyceridemic Pancreatitis (“AP”), diabetic dyslipidemia, and other hyperlipidemic indications. The initial development plan extended through Phase 1a and 1b/2a clinical trials and was completed in the fourth quarter of 2014. The clinical trials had a safety primary endpoint and an efficacy endpoint targeting reduction of cholesterol and triglycerides.

The JV received allowance from regulatory authorities in Australia permitting the JV to proceed with the planned clinical trials. The Phase 1a clinical trial commenced in Australia in April 2014 and the Phase 1b/2a clinical trial commenced in Australia in June 2014. The clinical trials for AEM-28 were randomized, double-blinded, placebo-controlled studies to evaluate the safety, tolerability, pharmacokinetics and pharmacodynamics of six escalating single doses (Phase 1a in healthy patients with elevated cholesterol) and multiple ascending doses of the three highest doses from Phase 1a (Phase 1b/2a in patients with hypercholesterolemia and healthy volunteers with elevated cholesterol and high Body Mass Index). The Phase 1a clinical trial consisted of 36 patients and the Phase 1b/2a consisted of 15 patients. Both clinical trials were completed in 2014 and the Medical Safety Committee, reviewing all safety-related aspects of the clinical trials, observed a generally acceptable safety profile. As first-in-man studies, the primary endpoint was safety; yet efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints.

Concurrent with the clinical development activities of AEM-28, the JV has performed pre-clinical studies that have identified an analog of AEM-28, referred to as AEM-28-14, and a new formulation, that has the potential of increased efficacy, higher human dose toleration and an extended composition of matter patent life (application filed with the U.S. Patent and Trademark Office in 2015). The JV’s current intent is to prioritize the development of AEM-28-14.

The JV and the Company are exploring fundraising, partnering or licensing, to obtain additional funding to continue development activities of AEM-28 and its analogs, including AEM-28-14, and operations.

The JV and the Company do not have sufficient funding at this time to continue additional material development activities of AEM-28 and its analogs, including AEM-28-14. The JV may conduct future clinical trials in Australia, the USA, and other regulatory jurisdictions if regulatory approvals, additional funding, and other conditions permit.

 

The Company, funding permitting, intends to continue limiting its internal operations to a virtual operating model while monitoring and participating in the management of JV’s AEM-28 and analogs development activities.

Description of Current Peptide Drug Candidates.

Chimeric Apo E Mimetic Peptide Molecule – AEM-28 and its analogs

Apolipoprotein E is a 299 amino acid protein that plays an important role in lipoprotein metabolism. AEM-28 is a 28 amino acid mimetic of Apo E and AEM-28 and its analogs, including AEM-28-14 is a 28 amino acid mimetic of Apo E (with an aminohexanoic acid group and a phospholipid), and both contain a domain that anchors into a lipoprotein surface while also providing the Apo E receptor binding domain, which allows clearance through the heparan sulfate proteoglycan (HSPG) receptors (Syndecan-1) in the liver. AEM-28 and its analogs, including AEM-28-14, as Apo E mimetics, have the potential to restore the ability of these atherogenic lipoproteins to be cleared from the plasma, completing the reverse cholesterol transport pathway, and thereby reducing cardiovascular risk. This is an important mechanism of action for AEM-28 and its analogs, including AEM-28-14. For patients that lack LDL receptors (Homozygous Familial Hypercholesterolemia-HoFH), have acute pancreatitis, or have hypercholesterolemia, AEM-28 and its analogs may provide a therapeutic solution. Our joint venture has an Exclusive License Agreement with the University of Alabama at Birmingham Research Foundation for AEM-28 and certain of its analogs.

Company History [Policy Text Block]

Company History

Prior to November 26, 2003, we developed, manufactured and marketed proprietary, technologically advanced orthopedic products designed to promote the healing of musculoskeletal bone and tissue, with particular emphasis on fracture healing and spine repair. Our product lines, which included bone growth stimulation and fracture fixation devices, are referred to as our “Bone Device Business.” In November 2003, we sold our Bone Device Business.

In August 2004, we purchased substantially all of the assets and intellectual property of Chrysalis Biotechnology, Inc., including its exclusive worldwide license for Chrysalin, a peptide, for all medical indications. Subsequently, our efforts were focused on research and development of Chrysalin with the goal of commercializing our products in fresh fracture healing. (In March 2012, we returned all rights to the Chrysalin intellectual property and no longer have any interest in, or rights to Chrysalin.)

In February 2006, we purchased certain assets and assumed certain liabilities of AzERx, Inc. Under the terms of the transaction, we acquired an exclusive license for the core intellectual property relating to AZX100, an anti-fibrotic peptide. In 2014, we terminated the License Agreement with AzTE (Licensor) for the core intellectual property relating to AZX100 and returned all interest in and rights to the AZX100 intellectual property to the Licensor.

On August 3, 2012, we entered into a joint venture (see Note B below), to develop Chimeric Apo E mimetic peptide molecule AEM-28 and its analogs.

Our development activities represent a single operating segment as they shared the same product development path and utilized the same Company resources. As a result, we determined that it is appropriate to reflect our operations as one reportable segment.

 

OrthoLogic Corp. commenced doing business under the trade name of Capstone Therapeutics on October 1, 2008, and we formally changed our name from OrthoLogic Corp. to Capstone Therapeutics Corp. on May 21, 2010.

In these notes, references to “we”, “our”, “us”, the “Company”, “Capstone Therapeutics”, “Capstone”, and “OrthoLogic” refer to Capstone Therapeutics Corp. References to our joint venture or “JV”, refer to LipimetiX Development, Inc. (formerly LipimetiX Development, LLC).

Basis Of Presentation and Management Plan [Policy Text Block]

Financial Statement Presentation and Management’s Plan

The accompanying financials statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The report from our Independent Registered Public Accounting Firm on our consolidated financial statements for the year ended December 31, 2014 included in our Annual Report on Form 10-K expressed substantial doubt about the Company’s ability to continue as a going concern. The Company did not engage an Independent Registered Public Accounting Firm to audit and express an opinion on our consolidated financial statements for the year ended December 31, 2015, or to review this Current Report on form 10-Q.

Management has determined that the Company and our JV will require additional capital above its current cash and working capital balances to further develop AEM-28 and its analogs or continue operations. Accordingly, the Company has reduced its development activities. The Company’s corporate strategy is to raise funds by possibly engaging in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital. These financial statements do not include any adjustments that might result from the outcome of the uncertainty of the Company successfully implementing its corporate strategy.

In the opinion of management, the unaudited condensed interim financial statements include all adjustments necessary for the fair presentation of our financial position, results of operations, and cash flows, and all adjustments were of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the complete fiscal year. The financial statements include the consolidated results of Capstone Therapeutics Corp. and our 64% owned subsidiary, LipimetiX Development, Inc. Intercompany transactions have been eliminated.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to Securities and Exchange Commission rules and regulations, although we believe that the disclosures herein are adequate to make the information presented not misleading. These unaudited condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires that management make a number of assumptions and estimates that affect the reported amounts of assets, liabilities, and expenses in our financial statements and accompanying notes. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Although these estimates are based on management’s assumptions regarding current events and actions that may impact us in the future, actual results may differ from these estimates and assumptions.

Commitments and Contingencies, Policy [Policy Text Block]

Legal and Other Contingencies

The Company is subject to legal proceedings and claims that arise in the ordinary course of business. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. There is significant judgment required in both the probability determination and as to whether an exposure can be reasonably estimated. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to loss contingencies.

Interest in Unincorporated Joint Ventures or Partnerships, Policy [Policy Text Block]

Joint Venture Accounting

The Company entered into a joint venture in which it has contributed $6,000,000, and the noncontrolling interests have contributed certain patent license rights. Neither the Company nor the noncontrolling interests have an obligation to contribute additional funds to the joint venture or to assume any joint venture liabilities or to provide a guarantee of either joint venture performance or any joint venture liability. The financial position and results of operations of the joint venture are presented on a consolidated basis with the financial position and results of operations of the Company. Intercompany transactions have been eliminated. Joint venture losses were recorded on the basis of common ownership equity interests until common ownership equity was reduced to $0. Subsequent joint venture losses are being allocated to the preferred ownership equity (100% Company). Subsequent to March 31, 2013, all joint venture losses are being allocated to the Company. The Company has a revolving loan agreement with the joint venture to advance the joint venture funds for operations in an amount not to exceed a net (net of expected tax credits or other funds obtained) of $1,500,000, with the net amount due December 31, 2016. Losses incurred by the joint venture in excess of the capital accounts of the joint venture will be allocated to the Company to the extent of net outstanding advances.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

At June 30, 2016, cash and cash equivalents included money market accounts.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

 In August 2014, the Financial Accounting Standards Board issued Accounting Standard Update (“ASU”) No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(“Update”): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, providing a requirement under U.S. GAAP for an entity’s management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued; and if those conditions exist, to disclose that fact, the conditions and the potential effects on the entity’s ability to meet its obligations. The Update will be effective for an annual period ending after December 15, 2016, with early application permitted. We have not elected early application. However, if additional funds are not obtained to continue the development of AEM-28 or its analogs, or operations, it will impair our ability to continue as a going concern. If we do not continue as a going concern, the Company may incur additional losses, up to, and possibly exceeding our net joint venture investment and revolving loan balance.

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JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS (Tables)

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Schedule Of Joint Venture Payments [Table Text Block]

The joint venture formation was as follows ($000’s):

Patent license rights	$	1,045
Noncontrolling interests		(667)
Cash paid at formation	$	378

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OVERVIEW OF BUSINESS (Details Textual) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Aug. 03, 2012
Accounting Policies [Line Items]
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 6,000,000		$ 6,000,000
Revolving Credit Facility [Member]
Accounting Policies [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 1,500,000
Lipimetix [Member]
Accounting Policies [Line Items]
Equity Method Investment, Ownership Percentage	64.00%
Common Stock [Member]
Accounting Policies [Line Items]
Joint Venture Losses Recognition Criteria, Common Ownership Equity	$ 0
Noncontrolling Interest, Ownership Percentage by Parent	64.00%	60.00%
Preferred Stock [Member]
Accounting Policies [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent	100.00%

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JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS (Details) - Lipimetix [Member] - USD ($)		6 Months Ended
	Aug. 03, 2012	Jun. 30, 2016
Related Party Transaction [Line Items]
Patent license rights		$ 1,045,000
Noncontrolling interests		(667,000)
Cash paid at formation	$ 378,000	$ 378,000

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JOINT VENTURE FOR DEVELOPMENT OF APO E MIMETIC PEPTIDE MOLECULE AEM-28 AND ANALOGS (Details Textual) - USD ($)		1 Months Ended		3 Months Ended	6 Months Ended	47 Months Ended
	Aug. 03, 2012	Jun. 30, 2016	Mar. 31, 2016	Mar. 31, 2016	Jun. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Related Party Transaction [Line Items]
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 6,000,000	$ 6,000,000			$ 6,000,000	$ 6,000,000
Joint Venture Investments In Voting Common Ownership Units (in shares)	600,000
Joint Venture Method Investment Ownership Percentage	60.00%
Joint Venture Investments In Non Voting Preferred Ownership Units	5,000,000
Joint Venture Investments Common Ownership Units, Co-venture (in shares)	400,000
Ownership Percentage Co-venture	40.00%		36.00%
Percentage Of Royalty Payment	3.00%
Development Activities Monthly Fee	$ 63,000
Joint Venture, Operating Expenses, Inter Company Transactions					392,000	7,782,000
Joint Venture, Operating Expenses Allocated To Company					392,000	7,115,000
Percentage Of Non Royalty Income	5.00%
Conversion of Stock, Shares Converted				1,500,000
Conversion of Stock, Shares Issued				120,000
Management Fees		80,000
Professional Fees		10,000
Revolving Credit Facility [Member]
Related Party Transaction [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		1,500,000			1,500,000	1,500,000
Long-term Line of Credit		1,553,000			1,553,000	1,553,000
Common Stock [Member]
Related Party Transaction [Line Items]
Joint Venture Losses Recognition Criteria, Common Ownership Equity		$ 0			$ 0	$ 0
Noncontrolling Interest, Ownership Percentage by Parent		64.00%			64.00%	64.00%	60.00%
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners		36.00%			36.00%	36.00%	40.00%
Preferred Stock [Member]
Related Party Transaction [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent		100.00%			100.00%	100.00%
Noncontrolling Interest [Member]
Related Party Transaction [Line Items]
Noncash or Part Noncash Acquisition, Other Liabilities Assumed						$ 667,000
Maximum [Member]
Related Party Transaction [Line Items]
Joint Venture Method Investment Ownership Percentage					64.00%
Minimum [Member]
Related Party Transaction [Line Items]
Joint Venture Method Investment Ownership Percentage					60.00%
Exclusive License Agreement [Member]
Related Party Transaction [Line Items]
Annual Maintenance Payments	$ 25,000
Exclusive License Agreement [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Milestone Payments	500,000
Royalty Expense	1,000,000
Exclusive License Agreement [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Milestone Payments	50,000
Royalty Expense	500,000
Lipimetix [Member]
Related Party Transaction [Line Items]
Noncash or Part Noncash Acquisition, Other Liabilities Assumed					$ 667,000
Noncash or Part Noncash Acquisition, Net Nonmonetary Assets Acquired (Liabilities Assumed), Total	378,000				$ 378,000
Voting Common Ownership Units [Member]
Related Party Transaction [Line Items]
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	1,000,000
Non Voting Preferred Ownership Units [Member]
Related Party Transaction [Line Items]
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures	$ 5,000,000

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NOTE PAYABLE - FUNDRAISING ACTIVITIES (Details Textual) - USD ($)	1 Months Ended	6 Months Ended
	Dec. 11, 2015	Jun. 30, 2016	Dec. 31, 2015
Fundraising Activities [Line Items]
Convertible Notes Payable, Noncurrent		$ 1,000,000	$ 1,000,000
Convertible Notes Payable [Member]
Fundraising Activities [Line Items]
Convertible Notes Payable, Noncurrent	$ 1,000,000
Debt Instrument, Interest Rate, Effective Percentage	5.00%
Proceeds from Convertible Debt		$ 5,000,000
Debt Conversion, Converted Instrument, Expiration or Due Date	Apr. 30, 2017
Convertible Notes Payable [Member] | Maximum [Member]
Fundraising Activities [Line Items]
Debt Instrument, Convertible, Conversion Price		$ 0.18
Convertible Notes Payable [Member] | Minimum [Member]
Fundraising Activities [Line Items]
Debt Instrument, Convertible, Conversion Price		$ 0.135
Lenders [Member]
Fundraising Activities [Line Items]
Equity Method Investment, Ownership Percentage		19.00%	19.00%

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AUSTRALIAN REFUNDABLE RESEARCH & DEVELOPMENT CREDIT (Details Textual)	1 Months Ended	6 Months Ended		12 Months Ended
	Mar. 31, 2014	Jun. 30, 2016 AUD	Jun. 30, 2014 AUD	Dec. 31, 2015 AUD	Dec. 31, 2014 AUD	Jun. 30, 2016 USD ($)
Other Current Assets [Member] | Research Tax Credit Carryforward [Member]
Research And Development Disclosure [Line Items]
Tax Credit Carryforward, Amount | $						$ 27,000
Lipimetix Australia Pty Ltd [Member]
Research And Development Disclosure [Line Items]
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Research and Development, Percent	45.00%
Research and Development Expense, Total | AUD		AUD 36,000	AUD 227,000	AUD 189,000	AUD 301,000