Form 8-K MEDGENICS, INC. For: Oct 22

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________________

 

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

October 22, 2015
Date of Report (Date of earliest event reported)

 

MEDGENICS, INC.
(Exact name of registrant as specified in its charter)

 

Delaware	1-35112	98-0217544
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

 

435 Devon Park Drive, Building 700

Wayne, Pennsylvania 19087

(Address of principal executive offices, zip code)

 

(610) 254-4201
(Registrant’s telephone number, including area code)

 

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02.

Results of Operations and Financial Condition.

 

On October 22, 2015, Medgenics, Inc., a Delaware corporation (the “Company”), issued a press release regarding its financial results for the three months ended September 30, 2015. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information furnished in this report under this Item 2.02, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

 

 

Item 7.01.

Regulation FD Disclosure.

 

As previously announced, the Company will host a conference call and live audio webcast on Thursday, October 22, 2015 at 8:30 a.m. ET to discuss third quarter 2015 financial results. The Company intends to refer to the slide presentation, attached as Exhibit 99.2 and incorporated by reference herein, on the conference call.

 

The slide presentation, together with an archive of the webcast, will also be available for 30 days after the date of the conference call in the Investor section of the Company’s website at www.medgenics.com.

 

The information furnished in this report under this Item 7.01, including Exhibit 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.

 

This Current Report on Form 8-K, including the exhibits attached hereto, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Securities Litigation Reform Act of 1995, which include all statements other than statements of historical fact, including (without limitation) those regarding the Company’s financial position, its development and business strategy, its product candidates and the plans and objectives of management for future operations. The Company intends that such forward-looking statements be subject to the safe harbors created by such laws. Forward-looking statements are sometimes identified by their use of the terms and phrases such as “estimate,” “project,” “intend,” “forecast,” “anticipate,” “plan,” “planning, “expect,” “believe,” “will,” “will likely,” “should,” “could,” “would,” “may” or the negative of such terms and other comparable terminology. All such forward-looking statements are based on current expectations and are subject to risks and uncertainties. These risks and uncertainties include, but are not limited to, those discussed in the section titled “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and any updates to those risk factors included in the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2015. Should any of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results may differ materially from those included within these forward-looking statements. Accordingly, no undue reliance should be placed on these forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements contained in this Current Report on Form 8-K, including the exhibits attached hereto, may not occur.

 

 

Item 9.01.

Financial Statements and Exhibits.

 

(d) Exhibits. The following exhibits are furnished herewith:

 

Exhibit No.	Description
99.1	Medgenics, Inc. Press Release dated October 22, 2015 (furnished pursuant to Item 2.02).
99.2	Slide Presentation dated October 22, 2015 (furnished pursuant to Item 7.01).

 

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 hereunto duly authorized.

 

 

	MEDGENICS, INC.
	By:	/s/ John Leaman
		Name:  John Leaman
		Title: Chief Financial Officer

 

 

Date: October 22, 2015

 

 

 

 

 

 

Exhibit 99.1

 

 

 

News Release 

 

 

Medgenics Reports Third Quarter 2015 Financial Results

 

·

Acquired Phase 2-Ready CNS asset, NFC-1

o

First of pipeline of potential programs from CHOP collaboration

o

Results of Phase 1 GREAT trial to be presented at American Academy of Child and Adolescent Psychiatry (AACAP) meeting

·

Completed Successful Public Offering for $46M in gross proceeds

 

 

Philadelphia, PA (October 22, 2015) – Medgenics, Inc. (NYSE: MDGN) (the Company) today announced financial results for the three and nine months ended September 30, 2015.

 

Management Commentary

 

“We are very pleased with the acquisition this quarter of our Phase 2-ready CNS asset, NFC-1. This represents the first of what we hope to be many programs to come from our ongoing collaboration with the Center for Applied Genomics at Children’s Hospital of Philadelphia, ” stated Mike Cola, Chief Executive Officer of Medgenics. “Following the successful completion of our recent equity offering, we look forward to advancing the clinical development of NFC-1 in mGluR mutation positive ADHD and 22Q Deletion Syndrome patients.”

 

A recent study of NFC-1, the GREAT trial, a 30 patient Phase 1b study in adolescents with ADHD and disruptions in the metabotropic glutamate receptor (mGluR) gene network, was recently completed. The objectives of the study were to evaluate the safety, tolerability, and pharmacokinetics of NFC-1 and to evaluate the effect of NFC-1 on ADHD during four weeks of continuous treatment following one week of placebo therapy in several validated ADHD scales in mGluR+ adolescents with ADHD symptoms. The treatment effect of NFC-1 appeared more robust over time and at higher doses. NFC-1 was well tolerated, with no treatment-related serious adverse events reported. Additionally, 20 of the 30 enrolled patients elected to continue in a long-term safety trial in order to maintain access to therapy.

 

Results from the GREAT trial will be presented at the upcoming 62^nd Annual Meeting of the American Academy of Child and Adolescent Psychiatry (AACAP) meeting on Saturday, October 31^st at 10:00AM in San Antonio, TX.

 

“We look forward to the results of the GREAT study being presented at the upcoming AACAP meeting, and our entire team is excited to further the development of NFC-1 for the treatment of patients with serious CNS disease,” stated Dr. Garry Neil, CSO of Medgenics.

  

Conference Call and Webcast

 

Medgenics will host a conference call and live audio webcast on Thursday, October 22, 2015 at 8:30 a.m. ET to discuss third quarter 2015 financial results.

 

In order to participate in the conference call, please dial (844) 466-4113 (domestic) or (765) 507-2652 (international). The conference ID number is 61872467.

 

 

The live webcast can be accessed under “Events” in the Investors section of the Company’s website at www.medgenics.com or you may use the link: http://edge.media-server.com/m/p/xayvu6t7/lan/en.

 

A replay of the call will be available two hours after the end of the conference on October 22, 2015 through October 29, 2015. To access the replay, please dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and reference the conference ID number.

 

The archived webcast will be available for 30 days in the Investor section of Medgenics’ website at www.medgenics.com.

 

 

Third Quarter Financial Results

 

The Company reported financial results for the three and nine months ended September 30, 2015 and the filing with the U.S. Securities and Exchange Commission (SEC) of the Company’s Quarterly Report on Form 10-Q. The Form 10-Q includes unaudited interim consolidated financial statements containing the information presented below, as well as additional information regarding the Company. The Form 10-Q is available at www.sec.gov and at www.medgenics.com.

 

For the quarter ended September 30, 2015 the Company reported a loss of $16.52 million or $0.66 per share, compared with a loss of $3.04 million or $0.16 per share for the comparative quarter in 2014 primarily due to non-recurring R&D charges related to the acquisition of NFC-1 of $8.17 million. Included in the net loss of $16.52 million is $1.80 million of non-cash stock based compensation, non-cash warrant valuation of $1.12 million, and a $3.2 million non-cash equity payment related to the acquisition of NFC-1.

 

Gross research and development (R&D) expenses for the three months ended September 30, 2015 increased to $4.57 million from $2.28 million for the same period in 2014. This increase was due mainly to increased sub-contractor and consulting costs. Net R&D expenses for the three months ended September 30, 2015 increased to $4.20 million from $1.57 million for the same period in 2014 due to the increase in gross research and development expenses as detailed above and a decrease of $0.35 million in the participation by the OCS.

 

Non-recurring R&D expenses, including acquisition, milestone and reimbursed R&D costs of $8.17 million, resulted from the acquisition of NFC-1. Included in the $8.17 million expense is $2.0 million in an upfront payment, $6.0 million in a corporate milestone payment, and $0.17 million in reimbursed R&D costs. The $6.0 million milestone payment was paid in October and consisted of a cash payment of $2.8 million and $3.2 million in a non-cash equity payment.

 

General and administrative expenses for the three months ended September 30, 2015 were $3.00 million, increasing from $2.31 million for the same period in 2014 primarily due to increased stock-based compensation expenses related to options granted to directors and general and administrative personnel and an increase in consulting fees and personnel.

 

Financial expenses for the quarter ended September 30, 2015 were $1.19 million, increasing from $0.06 million for the same period in 2014. This increase was mainly due to the change in valuation of the warrant liability.

 

Financial income for the quarter ended September 30, 2015 was $0.04 million, decreasing from $0.90 million for the same period in 2014. This decrease was mainly due to the change in valuation of the warrant liability.

 

 

Nine Months Financial Results

 

 

For the first nine months of 2015, the Company reported a loss of $31.53 million or $1.27 per share, compared with a loss of $12.24 million or $0.65 per share for the comparative period in 2014 primarily due to non-recurring R&D charges related to the acquisition of NFC-1 of $8.17 million. Included in the net loss of $31.53 million is $7.64 million of non-cash stock based compensation, non-cash warrant valuation of $1.37 million, and a $3.2 million non-cash equity payment related to the acquisition of NFC-1.

 

Gross R&D expenses for the nine months ended September 30, 2015 increased to $12.93 million from $6.38 million for the same period in 2014. This increase was due mainly to increased sub-contractor and consulting costs and increased stock-based compensation expenses related to options granted to R&D personnel. Net R&D expenses for the nine months ended September 30, 2015 increased to $11.13 million from $4.48 million for the same period in 2014 due to the increase in gross research and development expenses as detailed above and a decrease of $0.10 million in the participation by the OCS.

 

Non-recurring R&D expenses, including acquisition, milestone, and reimbursed R&D costs of $8.17 million, resulted from the acquisition of NFC-1. Included in the $8.17 million expense is $2.0 million in an upfront cash payment, $6.0 million in a corporate milestone payment, and $0.17 million in reimbursed R&D costs. The $6.0 million milestone payment was paid in October and consisted of a cash payment of $2.8 million and $3.2 million in a non-cash equity payment.

 

General and administrative expenses for the nine months ended September 30, 2015 were $10.83 million, increasing from $8.26 million for the same period in 2014 primarily due to increased stock-based compensation expenses related to options granted to directors and general and administrative personnel and an increase in consulting fees and personnel, offset in part by a decrease in professional fees.

 

Financial expenses for the nine months ended September 30, 2015 were $1.43 million, increasing from $0.09 million for the same period in 2014. This increase was mainly due to the change in valuation of the warrant liability.

 

Financial income for the nine months ended September 30, 2015 was $0.05 million, decreasing from $0.61 million for the same period in 2014. This decrease was mainly due to the change in valuation of the warrant liability.

 

 

The Company reported cash and cash equivalents of $17.73 million as of September 30, 2015. Subsequent to the end of the third quarter, the company completed a registered public offering of 7,078,250 shares, including the Underwriters option, at $6.50 per share. The net proceeds from the Offering, after deducting the Underwriters’ discount and other Offering expenses, was approximately $42.87 million.

 

 

 

MEDGENICS, INC. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
U.S dollars in thousands (except share and per share data)
		September 30,				December 31,
		2015				2014
		Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	17,725			$	33,288
Accounts receivable and prepaid expenses			1,095				315
Total current assets			18,820				33,603
LONG-TERM ASSETS:
Restricted lease deposits			83				83
Severance pay fund			-				99
Property and equipment, net			409				495
Deferred issuance costs			278				-
			770				677
Total assets		$	19,590			$	34,280
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Trade payables		$	1,431			$	1,076
Other accounts payable and accrued  expenses			8,812				2,562
Total current liabilities			10,243				3,638
LONG-TERM LIABILITIES:
Accrued severance pay			166				368
Liability in respect of warrants			-				612
Total long-term liabilities			166				980
Total liabilities			10,409				4,618
STOCKHOLDERS' EQUITY:
Common stock-$0.0001 par value; 100,000,000 shares authorized; 25,331,197 shares issued and 25,322,697 shares outstanding at September 30, 2015; 24,851,075 shares issued and 24,818,075 shares outstanding at December 31, 2014			3				3
Additional paid-in capital			140,845				129,797
Accumulated  Deficit			(131,667	)			(100,138	)
Total stockholders' equity			9,181				29,662
Total liabilities and stockholders' equity		$	19,590			$	34,280

 

 

 

MEDGENICS, INC. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
US Dollars in thousands (except share and per share data)
		Nine months ended September 30,								Three months ended September 30,
			2015				2014				2015				2014
							Unaudited
Research and development expenses		$	12,927			$	6,378			$	4,568			$	2,281
Less:
Participation by the Office of the Chief Scientist			(1,797	)			(1,898	)			(367	)			(716	)
Research and development expenses, net			11,130				4,480				4,201				1,565
Non-recurring research and development expenses resulting from acquisition			8,170				-				8,170				-
General and administrative expenses			10,832				8,262				2,996				2,305
Operating loss			(30,132	)			(12,742	)			(15,367	)			(3,870	)
Financial expenses			(1,431	)			(92	)			(1,192	)			(64	)
Financial income			45				605				44				896
Loss before taxes on income			(31,518	)			(12,229	)			(16,515	)			(3,038	)
Taxes on income			11				8				6				2
Loss		$	(31,529	)		$	(12,237	)		$	(16,521	)		$	(3,040	)
Basic loss per share		$	(1.27	)		$	(0.65	)		$	(0.66	)		$	(0.16	)
Diluted loss per share		$	(1.30	)		$	(0.68	)		$	(0.66	)		$	(0.21	)
Weighted average number of common stock used in computing
basic loss per share			24,911,481				18,716,109				24,982,577				18,817,557
Weighted average number of common stock used in computing
diluted loss per share			24,974,128				18,863,403				24,982,577				18,938,723

 

 

 

About Medgenics

 

Medgenics is dedicated to unlocking the potential of genomic medicine to identify and treat patients with life-altering conditions. Its efforts, including its internal research and development and ongoing sponsored research and licensing agreements with a well-respected pediatric academic medical center, give Medgenics the ability to focus on the underlying genetic pathway of pediatric diseases with the goal of finding therapeutic solutions for subpopulations of both children and adults living with rare and other difficult-to-treat diseases. For more information, visit the Company's website at www.medgenics.com.

 

About the NFC-1 GREAT trial

The NFC-1 GREAT trial was a 30 patient Phase 1b study in adolescents with ADHD and disruptions in the metabotropic glutamate receptor (mGluR) gene network. The objectives of the study were to evaluate the safety, tolerability, and pharmacokinetics of NFC-1 and to evaluate the effect of NFC-1 on ADHD during four weeks of continuous treatment following one week of placebo therapy. The study was conducted at Jefferson University Hospital in Philadelphia, PA.

 

Subjects were stratified by mGluR mutations. In addition to several exploratory measures, efficacy was assessed using the Clinical Global Impressions of Severity (CGI-S) and Improvement (CGI-I) scales, and the Vanderbilt Parent Assessment Score. Clinical improvement based on CGI-S, CGI-I scores and Vanderbilt scores was demonstrated in analyses of all patients. Mean declines in scores after four weeks of active treatment were as follows: CGI-S declined from 3.97 to 3.00 (p<0.001), CGI-I scores declined from 3.83 to 2.24 (P<0.001) and the Vanderbilt score declined from 29.1 to 22.5 (p<0.001). Improvement was greatest in the Tier-1/Tier-2 mGluR mutation positive patients (P<0.001). In this group 80% were deemed to be responders.

 

NFC-1 was well tolerated, with no treatment-related serious adverse events reported.

 

 

 

Forward-looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Securities Litigation Reform Act of 1995, which include all statements other than statements of historical fact, including (without limitation) those regarding the Company's financial position, its development and business strategy, its product candidates and the plans and objectives of management for future operations. The Company intends that such forward-looking statements be subject to the safe harbors created by such laws. Forward-looking statements are sometimes identified by their use of the terms and phrases such as "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning, "expect," "believe," "will," "will likely," "should," "could," "would," "may" or the negative of such terms and other comparable terminology. All such forward-looking statements are based on current expectations and are subject to risks and uncertainties. Should any of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may differ materially from those included within these forward-looking statements. Accordingly, no undue reliance should be placed on these forward-looking statements, which speak only as of the date made. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, the events described in the forward-looking statements contained in this release may not occur.

 

 

Contacts:

 

Medgenics, Inc.
John Leaman
[email protected]

 

Medgenics, Inc.
Brian Piper

240-899-5554

[email protected]

Stern Investor Relations

Beth DelGiacco

212-362-1200

[email protected]

 

 

 

 

 

 

 

 

Exhibit 99.2

Q3 2015 Results October 22, 2015

Forward Looking Statement This presentation includes certain estimates and other forward - looking statements within the meaning of Section 21 E of the Securities Exchange Act of 1934 , as amended, including statements with respect to anticipated operating and financial performance, clinical results, potential partnerships, licensing opportunities and other statements of expectation . Words such as “ expects, ” “ anticipates, ” “ intends, ” “ plans, ” “ believes, ” “ assumes, ” “ seeks, ” “ estimates, ” “ should ” and variations of these words and similar expressions, are intended to identify these forward - looking statements . While we believe these statements are accurate, forward - looking statements are inherently uncertain and we cannot assure you that these expectations will occur and our actual results may be significantly different . These statements by the Company and its management are based on estimates, projections, beliefs and assumptions of management and are not guarantees of future performance . Important factors that could cause actual results to differ from those in the forward - looking statements include the factors described in the Company ’ s filings with the U . S . Securities and Exchange Commission . The Company disclaims any obligation to update or revise any forward - looking statement based on the occurrence of future events, the receipt of new information, or otherwise . 2

Agenda 3 • Q3 Operational Update • Q3 Financial Update • 2015 Milestones

Business Model Evolution: Gene Therapy to Genomic Medicine 4 Diverse Limited Medgenics capabilities Ex vivo Gene Therapy • TARGT EPO • TARGT GLP - 2 Time Genomic Medicine • C ommercial capabilities • Further pipeline diversification Genomic Drug Development • World - class biobank and analytics • G enetically defined pediatric biosamples MDGN growth and diversification enhanced by CAG collaboration TM

Q3 Operational Update 5 • Acquired neuroFix , providing access to a Phase 2 - ready program, NFC - 1 – First program to be announced from ongoing collaboration with Center for Applied Genomics (CAG ) at The Children’s Hospital of Philadelphia (CHOP) – Breakthrough discovery: mGluR mutations cause ~20% of ADHD – Data to be presented at AACAP meeting in San Antonio, TX (October 31, 2015) • Completed successful equity offering for $46M in gross proceeds – Provides cash runway through at least mid - 2017 – Funds proof - of - concept data for NFC - 1 in mGluR+ ADHD and 22Q Deletion Syndrome

NFC - 1 Summary • First program from the collaboration – Phase 2 ready program via neuroFix acquisition • P rogram in mGluR + ADHD is highly de - risked – Extensive safety database – Compelling Phase 1b efficacy signal in mGluR+ ADHD • Potential rapid path to approval in 22q11.2 DS – Potentially large orphan indication – Compelling genetic hypothesis and positive signal in one patient – Potential for rapid development path with single pivotal trial • Opportunity in additional mGluR+ CNS/psych diseases 6

NFC - 1 GREAT Study Summary • Strong efficacy signal detected in several validated ADHD scales • Improvement in multiple symptoms noted by caregivers – I nattention, hyperactivity, anxiety, mood disorders • Treatment effect more robust over time & higher doses • Genetic biomarker predictive of response to NFC - 1 (Tier 1 & 2) • Confirmation of PK profile – C omparable to previous PK study; BID dosing • W ell tolerated, no treatment related serious adverse events • 20 of the 30 patients chose to continue in a long - term safety trial – Study began August 2015 7

Next Steps: mGluR+ ADHD Phase 2/3 trial in Tier 1/2 mGluR + ADHD • Objective: Identify optimal dose and confirm enhanced response in mGluR network mutation positive patients – Primary endpoints: ADHD RS, CGI - I – Powered to serve as pivotal trial – Top - line data anticipated H216 • Additional study for approval: – Confirmatory Phase 3 trial in target population (ages 6 – 19) 8

Next Steps: 22q11.2 Deletion Syndrome • Phase 1/2 indication & dose finding study – File IND 4Q15 – Explore major neuropsychiatric disorders: ADHD, Anxiety, Mood – Initial data expected mid - 2016 – Transition to pivotal trial in one or more disorders – Rapid path to approval based on potential of Orphan Designation 9

Financial Update 10

Q3 2015 Financial Update (3 months) • For the quarter ended Sept. 30, 2015, the company reported a net loss of $16.5MM increasing from $3.0MM for the same period in 2014 due mainly to a non - recurring R&D charges related to the acquisition of NFC - 1 of $8.2MM. Included in the net loss of $16.5MM is $1.8MM in non - cash stock based compensation, $1.1MM in non - cash warrant valuation, and a $3.2MM non - cash equity payment related to the acquisition of NFC - 1. • Net R&D expenses for the 3 rd Quarter were $4.2MM increasing from $1.6MM for the same period in 2014 due mainly to increased sub - contractor and consulting costs and decreased reimbursement from the Israeli OCS. – As previously mentioned, a non - recurring R&D expense of $8.2MM for acquisition, milestone, and reimbursed R&D costs resulted from the acquisition of NFC - 1. Included in the non - recurring $8.2MM expense were a cash upfront payment of $2MM, a corporate milestone payment of $ 6MM, and $0.2MM in reimbursed R&D expenses . The $ 6.0MM milestone payment was paid in October and consisted of a cash payment of $ 2.8MM and $ 3.2MM in a non - cash equity payment. • G&A expenses for the 3 rd Quarter were $3.0MM increasing from $2.3MM for the same period in 2014 primarily due to increased stock - based compensation expenses related to options granted to directors and general and administrative personnel and increased consulting and personnel costs. 11

Q3 2015 Financial Update (9 months) • For the first nine months of 2015, the company reported a net loss of $31.5MM increasing from $12.2MM for the same period in 2014 due mainly to a non - recurring R&D charges related to the acquisition of NFC - 1 of $8.2MM. Included in the net loss of $31.5MM is $7.6MM in non - cash stock based compensation,$1.4MM in non - cash warrant valuation, and a $3.2MM non - cash equity payment related to the acquisition of NFC - 1. • Net R&D expenses for the first nine months of 2015 were $11.1MM increasing from $4.5MM for the same period in 2014 due mainly to increased sub - contractor and consulting costs and increased stock based compensation expenses for options granted to R&D personnel. – As previously mentioned, a non - recurring R&D expense of $8.2MM for acquisition, milestone, and reimbursed R&D costs resulted from the acquisition of NFC - 1. Included in the non - recurring $8.2MM expense were a cash upfront payment of $2MM, a corporate milestone payment of $6MM, and $0.2MM in reimbursed R&D expenses . The $ 6.0MM milestone payment was paid in October and consisted of a cash payment of $ 2.8MM and $ 3.2MM in a non - cash equity payment. • G&A expenses for the first nine months of 2015 were $10.8MM increasing from $8.3MM for the same period in 2014 primarily due to increased stock - based compensation expenses related to options granted to directors and general and administrative personnel and increased consulting and personnel costs offset in part by a decrease in professional fees. 12

Q3 2015 Financial Update (Cash Balance) • Company’s cash balance as of Sept. 30, 2015 was $17.7MM • Subsequent to the end of the quarter the company completed a registered public offering of 7,078,250 shares at $6.50/share • Net proceeds from the transaction were $42.9MM • Current cash balance of >$60MM 13

NFC - 1 Near - term Milestones 14 PROGRAM TIMING mGluR + ADHD GREAT Study Data presented at AACAP Oct 31 Request type “C” meeting with the FDA Q4 15 Initiate Phase 2/3 dose finding pivotal trial Q1 16 Initial data readout H2 16 22q11.2 Deletion Syndrome Submit IND for 22q11.2 DS Q4 15 Initiate exploratory study of psychiatric symptoms Q1 16 Initial data readout Mid 16

Summary • Transformative quarter for the Company – Acquisition of NFC - 1 program – Successful equity offering • Accelerates the Company’s transition to genomic m edicine approach to drug development • NFC - 1 acquisition is the first of multiple potential deals from Medgenics/CHOP collaboration 15

 

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