About Capstone Therapeutics Corp.

Capstone Therapeutics Corp. (the “Company” or “we”), is traded on the OTCQB under the ticker symbol “CAPS”.  The Company has two assets that are being utilized in efforts to create shareholder value: (1) a majority ownership position in LipimetiX Development, Inc., a biotechnology company that is developing a peptide drug for severe orphan cholesterol/ triglyceride conditions; and (2) a  Net Operating Loss (“NOL”) that may be utilized for tax benefit in the event of the acquisition of a profitable operating company.

LipimetiX:  Our primary asset is ownership in a joint venture development company, called LipimetiX Development, Inc. (“LipimetiX” or “JV”).  In 2012, Capstone invested $6 million in the joint venture.  Our partners in the venture include three PhD drug developers, The University of Alabama at Birmingham Research Foundation (“UABRF”) and scientists at The University of Alabama at Birmingham (“UAB”).  Both Capstone (with two full-time consultants) and the joint venture (managed under consulting contract by Benu Biopharma) operate virtual business models to maintain capital efficiency for our shareholders.

Through funding provided by Capstone, LipimetiX developed its first candidate peptide molecule, AEM-28, through pre-clinical and human clinical Phase 1a and 1b/2a studies.  51 patients were enrolled in double-blinded, placebo-controlled studies at a clinical site in Perth, Australia.  AEM-28 was delivered in single ascending dose and multiple ascending dose formats to test safety, tolerability and efficacy.  The Medical Safety Committee, reviewing all safety-related aspects of the clinical trial, observed a generally acceptable safety profile.  Of the first-in-man study, the primary endpoint was safety; yet, efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled data set favoring AEM-28 vs. placebo in multiple lipid biomarker endpoints, especially VLDL cholesterol and triglycerides.  Please see www.LipimetiX.com

Concurrent with the clinical development activities of AEM-28, the JV has performed pre-clinical studies that have identified analogs of AEM-28, and a new formulation, that have 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 2014).  One of these analogs, AEM-28-08, is now the leading commercial candidate.  Formal preclinical toxicity and pharmacokinetic studies are being completed in Fall 2019 in anticipation of qualifying for human clinical studies, funding permitting. LipimetiX has been engaged in fundraising for an extended period and without additional funding or a transaction that provides funding for development activities, LipimetiX will not be able to continue development activities.

Based upon AEM-28’s clinically proven ability to rapidly reduce triglycerides and other lipoproteins, we are targeting orphan Homozygous Familial Hypercholesterolemia, other orphan lipid diseases and atherosclerosis regression for Acute Coronary Syndrome as primary clinical indications.

Net Operating Loss:  The Company has accumulated a net operating loss, primarily from prior peptide drug development efforts, in excess of $140 million at the federal tax level.  In 2017, Brookstone Partners, a New York-based private equity firm, purchased equity and funded debt through an affiliate into Capstone.  Presently, Brookstone owns approximately 34.1% of Capstone’s outstanding stock and holds two of five seats on the Company’s board.  Brookstone and the Company are seeking an acquisition of a profitable operating company in a consumer or basic industry.  Under certain conditions, the subsidiary may file a consolidated tax return with Capstone and utilize benefits from Capstone’s NOL.

Other Business:  Previously, we were focused on the development and commercialization of two pharmaceutical product platforms:  AZX100 and Chrysalin (TP508).  Since March 2012, we no longer have any interest in or rights to Chrysalin.  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).

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

Shareholder Matters

On August 22, 2019, the Company conducted an annual meeting of Shareholders and our Shareholders approved a certification of Amendment of the Company’s Restated Certificate of Incorporation to effect a 1-for-1000 reverse stock split to bring total shareholders of record below 300 to allow the Company to no longer be subject to reporting requirements of the Securities and Exchange Commission.  Being a non-reporting company under SEC guidelines will save Capstone money and management time and should provide more operating and transaction flexibility.  (The Company intends to file quarterly financial statements and conduct an annual independent audit, the results of which will be posted on the OTCQB website.  The Company intends to follow the Alternative Reporting Format outlined by the OTCQB in order to remain eligible to continue trading on that exchange.

Effective August 23, 2019 the Company adopted the Contingent Value Rights Agreement that assigns the net proceeds received by the Company from its investment in LipimetiX Development, Inc to Shareholders of record on July 10, 2019. Shareholders who acquired their stock after July 10, 2019 will not share in the value of the Company’s investment in LipimetiX Development, Inc. See our Current Report filed on Form 8-K filed with the Securities and Exchange Commission on August 26, 2019.