Capstone Therapeutics: securities offering (amended)

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FORM S-1 (AMENDMENT NO. 1)

As filed with the Securities and Exchange Commission on June 26, 2015 September

Registration No. _______________ 333-205261

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CAPSTONE THERAPEUTICS CORP.

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Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.

From time to time after the effective date of this registration statement.

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If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  _______________

If this Form is a post-effective amendment filed pursuant to Rule 462(d) 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ _______________

If this Form is a post-effective amendment filed pursuant to Rule

462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐ _______________

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Large accelerated filer: ☐ Accelerated filer: Non-accelerated filer: Smaller reporting company: X

☐ Non-accelerated filer ☐ Smaller reporting company: X

CALCULATION OF REGISTRATION FEE

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No fee required pursuant to Rule 457 under the Securities Act of 1933, as amended. See "Plan of Distribution".

(1) Any additional shares of common stock to be issued as a result of stock splits, stock dividends, or similar transactions shall be covered by this registration statement as provided in Rule 416.

(2) Calculated pursuant to Rule 457(o) of the Securities Act of 1933, as amended, based upon estimate of proposed maximum offering price.

(3) Pursuant to the Tax Benefit Preservation Plan ("Benefit Plan"), dated as of June 24, 2014, between the Company and Computershare Inc., each share of common stock has an attached right that entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Preferred Stock, par value $0.0005 per share (the "Preferred Shares"), of the Company at an exercise price of $5.00 per one-hundredth of a Preferred Share, subject to adjustment, on the terms set forth in the Benefit Plan. At June 24, 2015, the rights are not exercisable and trade only with shares of the Company's common stock.

Shares"), of the Company at an exercise price of $5.00 per one-hundredth of a Preferred Share, subject to adjustment, on the terms set forth in the Benefit Plan. At September 14, 2015, the rights are not exercisable and trade only with shares of the (4) No fee required pursuant to Rule 457 under the Securities Act of 1933, as amended. See "Plan of Distribution".

(5) Estimated pursuant to Rule 457(g) of the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee.

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The information in this prospectus is not complete

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities or the solicitation of an offer to buy these securities in any state in which such offer, solicitation, or sale is not permitted.

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DATED SEPTEMBER 16, 2015

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Units, each consisting of one share of Common Stock and one-half one Warrant to purchase one one-half of a share of Common Stock

We are offering up to

We are offering up to Units (the "Units"), each consisting of one share of common stock and one-half of a one warrant to purchase one one-half of a share of common stock. The shares of common stock and warrants will immediately separate after purchase and will be issued separately. The warrants are exercisable for a five-year period at an exercise price of $ , which is 150% of the offering price for each Unit. Our common stock currently is quoted on the OTCQB Market under the symbol "CAPS." The last reported sale price of our common stock on the OTCQB Market on June 24 was $.23 per share.

The warrants are exercisable for a five-year period at an exercise price of $ , which is % of the offering price for each Unit. Our common stock currently is quoted on the OTCQB Market under the symbol "CAPS."

The last reported sale price of our common stock on the OTCQB Market on September 10, 2015 was $.21 per share.

Investing in our securities involves risks. See "Risk Factors" beginning on Page 7 of this prospectus.

beginning on Page 7 of this prospectus.

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(1) We have also agreed to issue to Wainwright warrants to purchase up to a number of shares of common stock equal to 5% of the aggregate number of shares included in the units sold in this offering (or 2.5% of the aggregate number of shares included in the units sold to the reduced fee investors in this offering) and to reimburse Wainwright for its out-of-pocket non-accountable expenses in an amount equal to the greater of 1% of the aggregate gross proceeds raised in this offering or $50,000. See the "Plan of Distribution" section of this prospectus for more information on the placement agent arrangements.

section of this prospectus for more information on the placement agent arrangements.

H.C. Wainwright & Co., LLC ("Wainwright")

H.C. Wainwright & Co., LLC ("Wainwright") is acting as the exclusive placement agent for this offering. The placement agent will not purchase or sell any Units in this offering, nor will it be required to arrange for the purchase and sale of any specific number or dollar amount of Units, other than to use its "reasonable best efforts" to arrange for the sale of Units by us. We have agreed to pay Wainwright a cash fee equal to 7.25% of the aggregate gross proceeds from this offering, provided that such fee will equal to 4% of the aggregate gross proceeds from sales to certain specified insiders and current stockholders of the company (the "reduced fee investors") in this offering. Wainwright may engage one or more sub-agents or selected dealers in connection with this offering. There is no minimum number of Units required to be purchased in this offering. There is no arrangement to place the funds from this offering in an escrow, trust or similar account, which means these funds will be immediately available for use by us. We currently expect the offering to end not later than , 2015.

We have also agreed to indemnify Wainwright

We have also agreed to indemnify Wainwright for any claim related to or resulting from the activities on our behalf, except for any claim finally judicially determined to have resulted from the indemnitee's gross negligence or willful misconduct.

Investing in the Units involves a high degree

Investing in the Units involves a high degree of risk and should be purchased only by persons who can afford to lose their entire investment. Before buying any Units, you should carefully read the discussion of material risks of investing in our securities under the heading "Risk Factors and Forward-Looking Statements" beginning on page 7 of this prospectus.

Statements" beginning on page 7 of this prospectus.

Neither the Securities and Exchange Commission

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of the disclosures in this prospectus. Any representation to the contrary is a criminal offense.

We expect to deliver the Units to investors against payment therefor from time to time, commencing on or about , 2015.

against payment therefor from time to time, commencing on or about ,

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The date of this prospectus is , 2015.

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About this prospectus 4 changes

You should rely only on the information contained in this prospectus.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. No one is making offers to sell or seeking offers to buy these securities in any jurisdiction where the offer, solicitation or sale is not permitted. You should assume that the information contained in this prospectus is accurate as of the date on the front of this prospectus only, regardless of the time of delivery of this prospectus or any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

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When used in this prospectus, the terms "Capstone," OrthoLogic,"

When used in this prospectus, the terms "Capstone," OrthoLogic," "we," "our," "us" and the "Company" refer to Capstone Therapeutics Corp. References to our joint venture or "JV" or "LipimetiX" refer to LipimetiX Development, Inc. The address and telephone number of our principal executive offices are 1275 West Washington Street, Suite 104, Tempe, Arizona 85281; telephone (602) 286-5520.

Prospectus summary 60 changes

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We are a biopharmaceutical company primarily focused

We are a biopharmaceutical company primarily focused on the development of a family of Apolipoprotein E ("ApoE") mimetic peptides to serve a variety of therapeutic indications in reducing plasma cholesterol and triglycerides. We embrace the capital-efficient business model of virtual pharmaceutical development pursuant to which we have minimized the number of full-time employees and outsource various aspects of pre-clinical, regulatory and clinical development.

All of our current development activities are conducted

All of our current development activities are conducted through our majority-owned joint venture, LipimetiX Development, Inc., which was formed to develop an Apo E mimetic peptide molecule, AEM-28 ("AEM-28"), and its analogs. We own 60% of the outstanding common shares of the JV and all of the outstanding preferred shares. We have entered into a Stockholders Agreement pursuant to which certain of our JV partners have the right to appoint a majority of the JV's board of directors unless certain triggering events occur, and pursuant to which we have consent rights over a broad spectrum of business decisions including annual budgets. Our JV is managed under contract by Benu BioPharma Inc., which is composed of three individuals who are the principal minority stockholders in our JV. For additional information, see the "Ownership, Management and Governance of our JV" section of this prospectus.

Concurrent with the development activities for

Concurrent with the development activities for AEM-28, the JV has performed limited pre-clinical studies that have identified analogs of AEM-28, including one referred to as AEM-28-02, AEM-28-14, that have the potential of equivalent increased efficacy, higher human dose toleration and an extended composition of matter patent life. The JV has a development plan to pursue regulatory approval and commercialization of AEM-28, or one or more of its analogs, as treatment in orphan (rare disease) indications, including acute pancreatitis ("AP") and homozygous familial hypercholesterolemia ("HoFH"), and potentially in acute coronary syndrome, peripheral artery disease and metabolic syndrome. HoFH has been designated by the FDA as an orphan indication. We believe that AP should also qualify for orphan indication designation.

Most of the proceeds of this offering will be made

Most of the proceeds of this offering will be made available to our JV to fund the continued development of AEM-28 and its analogs and the remainder will be used to fund our continuing operations. We have not agreed with our JV regarding the manner in which offering proceeds will be made available to the JV. Proceeds from the offering could be made available through loans or equity contributions by us to the JV, or in some combination of debt and equity. If all of the Units offered hereby are sold, we believe that we will have sufficient funds for our JV to complete the preclinical development and possibly Phase 1a and Phase1b/2a clinical trials as well for AEM 28-02, 28-14, but we cannot predict the total cost of these efforts which depends on, among other things, successful and timely outcomes in our preclinical and clinical studies. In any event, our JV will require substantial additional capital, and/or a development partner, to complete the clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies' approval, if any, for our JV's product candidates. We may seek to obtain the necessary additional funding through the issuance of debt and/or equity securities by us or our JV in one or more private or public offerings in the future (which could include bridge financing from certain of our significant existing stockholders), through a strategic partner arrangement or otherwise. In addition, our JV currently is exploring potential sub-licensing of AEM-28 and/or its analogs for development in indications not being actively pursued by the joint venture.

In any event, our JV will require substantial additional capital, and/or a development partner, to complete the clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies' approval, if any, for our JV's product candidates. We may seek to obtain the necessary additional funding through the issuance of debt and/or equity securities by us or our JV in one or more private or public offerings in the future (which could include bridge financing from certain of our significant existing stockholders), through a strategic partner arrangement or otherwise. In addition, our JV currently is exploring potential sub-licensing of AEM-28 and/or its analogs for development in indications not being actively pursued by the joint venture.

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Description of Current Peptide Product Candidates

Apo E is in a class of protein, called an apolipoprotein,

Apo E is in a class of protein, called an apolipoprotein, that occurs throughout the body. Apo E is essential for the normal metabolism of cholesterol and triglycerides. After a meal, especially high fat meals, like pizza with beer, the postprandial (or post-meal) lipid load is packaged in lipoproteins and secreted into the blood stream. The apolipoproteins, including Apo E, function to help transport the lipids and cholesterol to various organs in the body and assist in the conversion of these lipids to various fats, sugars and cholesterol that serve as key component of all cell membranes and as the basis of all steroid hormones. Specific receptors on the liver help clear the excess cholesterol and lipid rich lipoproteins from the blood. A certain amount of cholesterol content is essential for human life, but too much lipid content decreases the liver's ability to clear lipoproteins, which can lead to atherosclerosis, the buildup of cholesterol rich lesions and plaques in the arteries. Atherosclerosis is the major cause of cardiovascular disease, peripheral artery disease and cerebral artery disease, and can cause heart attack, loss of limbs and stroke. Defective lipid metabolism plays an important role in the development of adult onset diabetes mellitus (Type 2 diabetes), and diabetics are particularly vulnerable to atherosclerosis, heart and peripheral artery diseases. Apo E is naturally occurring and is a public domain molecule that has been extensively researched since the 1980's. The importance of Apo E as a key mediator of lipid and cholesterol metabolism is illustrated by the fact that the liver has a specific class of receptors that bind only Apo E. More recent research has demonstrated that Apo E has unique protective effects on the artery wall. One of the leading lipid/atherosclerosis laboratories in the U.S. is at the University of Alabama at Birmingham ("UAB"). In 2010, our JV's founding scientist, Dr. Dennis Goldberg, licensed a group of Apo E molecules for commercial development from UAB. Specifically, these molecules are classed as Apo E mimetic peptides. The UAB scientists engineered the 299 amino acid native Apo E into a smaller 28 amino acid molecule that can be delivered therapeutically. Our lead peptide, AEM-28, contains an amino acid sequence that anchors into a lipoprotein surface while also providing the human binding domain to the Apo E receptor in the liver. In effect, AEM-28 acts like a docking system, attaching itself to lipids in the blood stream while its other binding domain seeks heparan sulfate proteoglycan (Apo E) receptors in the liver. The liver then processes these excess lipids and excretes them from the body. This sequence is part of a process called "reverse cholesterol transport" and is the body's natural mechanism for reducing cardiovascular risk.

Our lead peptide, AEM-28, contains an amino acid sequence that anchors into a lipoprotein surface while also providing the human binding domain to the Apo E receptor in the liver. In effect, AEM-28 acts like a docking system, attaching itself to lipids in the blood stream while its other binding domain seeks heparan sulfate proteoglycan (Apo E) receptors in the liver. The liver then processes these excess lipids and excretes them from the body. This sequence is part of a process called "reverse cholesterol transport" and is the body's natural mechanism for reducing cardiovascular risk.

Description of Drug Candidates, Clinical Results and Target Markets

In December 2014, we announced the completion and

In December 2014, we announced the completion and results of the investigational Phase 1b/2a human clinical trial for AEM-28 in cholesterol and triglyceride reduction. The top-line data from the Phase 1a (reported on September 2, 2014) and Phase 1b/2a blended protocol was statistically analyzed. The Medical Safety Committee, in reviewing safety-related aspects of the clinical trial, observed a generally acceptable safety profile. Analysis of biomarker data from the human studies showed what we believe is a statistically significant reduction of Very Low Density Lipiprotein ("VLDL") cholesterol and triglycerides of approximately 70% each in fasted patients at one hour post-treatment. In particular, efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints, which included:

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VLDL and Triglycerides. The combination

VLDL and Triglycerides. The combination of Low Density Lipoprotein ("LDL") and VLDL cholesterol are termed Non- High Density Lipoprotein ("Non-HDL") cholesterol. These Non-HDL lipoproteins are a combination of proteins and lipids which allow fat and cholesterol to move around the body so they may be taken up by target cells. Triglycerides ("TGs") are found in VLDL and chylomicron remnants in blood plasma. TGs play an important role in metabolism as energy sources while VLDL and chylomicron remnants serve as transporters of dietary fat. When the amount of VLDL and TGs is properly regulated by the body's natural systems, the vascular and metabolic systems are in sync and functioning well. However, problems develop when these lipoproteins and lipids get out of balance, often leading to severe cardiovascular and endocrinal diseases. When in overabundance in blood plasma, these large, buoyant molecules are a primary contributor to atherosclerosis, or arterial plaque, which can unpredictably create an arterial occlusion and cause a heart attack .

Acute Pancreatitis with High Triglycerides.

Acute Pancreatitis with High Triglycerides. In 2015, we retained a consultancy to conduct a market assessment study for AEM-28 in acute pancreatitis ("AP") with high triglycerides. The consultancy's report concluded that the AP indication represents a significant unmet clinical need for a therapeutic that could rapidly reduce TGs. The schedule that follows below discusses the epidemiology and etiology of AP. There are an estimated 74,000 hospitalizations for all types of AP in the U.S. each year with approximately 45,000 presenting with severe levels of TG equal to or greater than 1,000 mg/dL. This patient population is possibly an ideal fit for AEM-28 as a therapeutic agent.

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(1) JOP.J. Pancreas, 11/9/2011, "Controversies in Etiology of Acute Pancreatitis, A. Khan et al.

(2) Fletcher Spaght, 3/17/2015, "Market Assessment for Acute Pancreatitis", M. Hoult et al.

Whereas we anticipate that AP with high TGs will

Whereas we anticipate that AP with high TGs will qualify as an orphan indication (since the patient population is below 200,000 in the U.S.), we believe that it is nonetheless a sizable orphan market. Clinicians often treat these patients with fibrates or fish oil to reduce TGs, but fibrates and fish oil take weeks if not longer to have an effect in reducing TGs. A drug that rapidly reduces TGs could diminish the severity of AP (especially if administered at early onset) and could offer a significant economic savings to the healthcare system from faster discharge. If clinical trials are successful and regulatory approval is granted, we believe that AEM-28 could potentially be added to the AP treatment protocol in the emergency room for patients with elevated TGs.

If clinical trials are successful and regulatory approval is granted, we believe that AEM-28 could potentially be added to the AP treatment protocol in the emergency room for patients with elevated TGs.

Based on our consultant's report, we also

Based on our consultant's report, we also believe that a market of 110,000 refractory hypertriglyceridemics exists in the U.S. These patients are at high risk for AP and other TG-related indications and could be candidates for a weekly infusion of a TG-reducing therapeutic such as AEM-28. We believe that this chronic market, at a projected 5.7 million doses annually, represents another significant market opportunity, albeit requiring successful clinical outcomes studies.

Given the above, we plan to prioritize AP with

Given the above, we plan to prioritize AP with high TGs as our JV's indication of choice for AEM-28 (and analogs) commercialization. Because AEM-28 has previously received orphan drug designation (see below), we believe that the new analogs will also be so designated by the FDA for AP. As a result, the clinical/regulatory pathway for AP should require less expensive clinical trials according to orphan regulatory precedent.

Homozygous Familial Hypercholesterolemia (HoFH) .

Homozygous Familial Hypercholesterolemia (HoFH) . In 2012, AEM-28 received orphan designation from FDA for a rare disease indication, called homozygous familial hypercholesterolemia ("HoFH"). This is a very small global population of individuals who are born with no LDL receptors in the liver and are unable to clear LDL (the "bad" cholesterol) through a natural pathway. Historically, these patients have experienced cardiovascular complications in their teens and twenties often leading to early death. Standard of care therapy was a process called apheresis, which is a mechanical filtering of the lipid fat from the patient's entire blood volume, akin to the kidney dialysis process. In 2013, two pharmaceutical therapies were approved in the U.S., Aegerion's Juxtapid and Sanofi-Genzyme's Kynamro. Juxtapid has proven the market with an impressive revenue ramp while revenue data for Kynamro is not publicly available. We believe that AEM-28, or the new analogs, if approved, could compete favorably with these other drugs due to potentially equivalent efficacy and fewer and less severe side effects.

We believe that AEM-28, or the new analogs, if approved, could compete favorably with these other drugs due to potentially increased efficacy and fewer and less severe side effects.

AEM-28-02 AEM-28-14 and Analogs

Although AEM-28 is well researched by scientists

Although AEM-28 is well researched by scientists at our academic research partner, The University of Alabama at Birmingham Research Foundation ("UABRF"), it has a relatively short remaining patent life (to 2020). If AEM-28 were approved by the FDA as an orphan drug in the U.S., it would have seven years of marketing exclusivity after registration. Accordingly, AEM-28 remains a potentially valuable commercial asset, but only in orphan indications.

Collaboration with UABRF under an exclusive license

Collaboration with UABRF under an exclusive license agreement (see "Patents, Licenses and Proprietary Rights", below) has resulted in the discovery of new Apo E mimetic peptides. Recently, our joint venture has been testing an analog of AEM-28, which we refer to as AEM-28-02. AEM-28-14. Early preclinical testing has yielded encouraging results suggesting that AEM-28-02 AEM-28-14 may be more tolerable and more efficacious than AEM-28. In July 2014, 2015, our joint venture filed a announced the conversion of its provisional patent application for AEM-28-02 AEM-28-14 seeking 21 years of composition of matter patent protection.

AEM-28-14 and the other analogs are significant

AEM-28-02 and the other analogs are significant in that their potential 21-year patent life could allow our joint venture and/or its potential future strategic partners to develop AEM-28-02 AEM-28-14 for "clinical outcomes" indications that typically require very large, lengthy clinical trials. These markets include acute coronary syndrome, peripheral artery disease and metabolic syndrome, each of which currently represents a multi-billion dollar annual market for drug therapies. Now, with AEM-28-02, AEM-28-14, we believe that our JV has a product candidate that not only may has the potential to serve sizable orphan markets, but also may has the potential to serve much larger markets for chronic indications.

The JV filed for additional patent protection in

The JV filed for additional patent protection in October 2014 for a new and proprietary formulation to increase safe delivery of AEM-28 AEM-28-02 and its analogs to humans. In the Australia clinical trials, at the highest tested dose of 3.54 mg/kg, some cases of mild venous irritation and infusion site reaction were observed. The JV has tested the new formulation with an analog of AEM, which we refer to as AEM-28-02, in multiple animal models, resulting in an approximate 6X increase in maximum tolerated dose (MTD) and what appears to be an improved tolerability profile. AEM-28-02 was the first of the new generation chimeric Apo E peptides discovered. AEM-28-14 is the most potent of the newly-discovered chimeric Apo E mimetic peptides, and a single 50 ug injection of AEM-28-14 decreased cholesterol 98% in Apo E null mice with no observed adverse effects. AEM-28-14 (or analogs) combined with the new formulation may allow safe delivery at higher doses than those previously tested in humans.

Legal. In June 2015, we settled our long-pending

Legal. In June 2015, we settled our long-pending qui tam lawsuit for a one-time payment of $50,000. The lawsuit had been filed under seal in March 2005 in the U.S. District Court for the District of Massachusetts against us and substantially all other companies that sold bone growth stimulation devices during the period 1998-2003. The complaint asserted a variety of claims, including False Claims Act violations. We sold our bone growth stimulation device business in 2003 and first learned of this lawsuit in September 2009.

Net Operating Loss. We have accumulated

Net Operating Loss. We have accumulated approximately $146 million in federal and $33 million in state net operating loss carry forwards as of December 31, 2014, which are presently eligible to offset some future tax liability. At the maximum U.S. corporate income tax rate, the potential tax benefit could be as high as $51 million, or $1.25 per share (based on 40,885,411 shares outstanding at June 24, September 14, 2015), provided we generate income in sufficient amounts prior to the expiration of these carry forwards, which expire beginning in 2023 for federal and 2015 for state net operating loss carry forwards. We view our net operating losses loss carryforwards and other tax attributes to reduce our future taxable income, if any (collectively, "Tax Benefits"), as potentially valuable assets. However, if we experience an "ownership change," as defined in Section 382 of the Internal Revenue Code (the "Code"), whether as a result of this offering or otherwise, our ability to use the Tax Benefits could be severely limited, and the timing of the usage of the Tax Benefits could be substantially delayed, which could significantly impair the value of the Tax Benefits even if we subsequently generate taxable income. In June 2014, our Board adopted a Tax Benefit Preservation Plan intended to act as a deterrent to any person effecting persons acquiring our common stock in certain transactions that would constitute or contribute to such an "ownership change" without the approval of our Board. See, "Description of Our Capital Stock" below, for a description of the Tax Benefit Preservation Plan.

For additional discussion regarding this offering,

please see the Joint Development Venture September 2015 Supplemental Information attached hereto as Exhibit A, which should be read in conjunction with the "Risk Factors" section in this prospectus.

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Up to Units. Each Unit will consist of one share of common stock and one-half of a one warrant to purchase one one-half of a share of common stock. The shares of common stock and warrants will immediately separate after purchase and will be issued separately.

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The warrants are exercisable for a five-year period at an exercise price of $ , which is 150% % of the offering price for each Unit.

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- Options to purchase 1,245,000 shares at exercise prices

of $.16 to $.22 per share

- Options to purchase 1,245,000 shares at exercise prices of $.16 to $.22 per share - Options to purchase 598,000 shares at exercise prices of $.24 to $.45 per share - Options to purchase 620,000 shares at an exercise price of $.25 per share - Options to purchase 504,000 shares at exercise prices of $.58 to $.82 per share - Options to purchase 914,706 shares at exercise prices of $1.02 to $1.75 per share - Options to purchase 181,000 shares at exercise prices of $4.90 to $5.39 per share • Warrants outstanding to purchase 46,706 shares of our common stock with an exercise price of $6.39 per share, and warrants outstanding to purchase 117,423 shares of our common stock with an exercise price of $1.91 per share.

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Shares of common stock issuable upon exercise of the

• Shares of common stock issuable upon exercise of the warrants included in the Units ( shares if all of the Units offered in this prospectus are purchased, and shares if one-half of the Units offered in this prospectus are purchased).

Shares of common stock issuable upon exercise of the

• Shares of common stock issuable upon exercise of the warrants issued to H.C. Wainwright in conjunction with this sale of securities ( shares if all of the Units offered in this prospectus are purchased, and shares if one-half of the Units offered in this prospectus are purchased) • 4,226,835 shares of common stock issuable upon the exercise of the outstanding stock options and warrants described above.

In addition, we have reserved 1,000,000 shares of our common stock for issuance pursuant to our 2015 Equity Incentive Plan, for which options to purchase 620,000 shares are outstanding as of June 24, September 14, 2015. As of June 24, September 14, 2015, we have 3,442,706 shares of our common stock reserved for issuance under our 2005 Equity Incentive Plan, which expired in April 2015.

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• $ from the sale of the Units; and

• Up to $ from the future exercise of warrants included in the Units.

exercise of warrants included in the Units.

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Risk factors and forward looking statements 144 changes

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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.

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 prospectus 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.

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The audit opinion from our independent accounting

firm, Moss Adams, LLC, on our December 31, 2014 financial statements, included in our Form 10-K filed with the SEC on March 16, 2015 includes an explanatory paragraph as to an uncertainty with respect to the our ability to continue as a going concern.

We had accumulated deficit balances of $186.2 million

and $187.7 million as of December 31, 2014 and June 30, 2015, respectively. Our net loss for the year ended December 31, 2014 was $4.2 million, and our net loss for the three and six months ended June 30, 2015 was $0.8 million and $1.5 million, respectively.

Our current level of funds is not sufficient to support continued research to develop our JV's product candidates, and the proceeds of this offering will not be sufficient to fund all the research expenses necessary to achieve commercialization of any of our JV's product candidates. We currently have no pharmaceutical products being sold or ready for sale and do not expect to be able to introduce any pharmaceutical products or generate any revenue for at least several years. We expect to incur losses for at least the next several years. Our cash reserves are the primary source of our working capital. These circumstances raise substantial doubt about the Company's ability to continue as a going concern.

We are a biopharmaceutical company with no

We are a biopharmaceutical company with no revenue generating operations and high investment costs. Therefore, we will require additional funding to realize revenue from any of our JV's product candidates, and we may never realize any revenue if our JV's product candidates cannot be commercialized.

Our current level of funds is not sufficient to

support continued research to develop our JV's product candidates, and the proceeds of this offering will not be sufficient to fund all the research expenses necessary to achieve commercialization of any of our JV's product candidates. We will require substantial additional capital, and/or a development partner, to complete the clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies' approval, if any, for our JV's product candidates. Our cash reserves are the primary source of our working capital. These circumstances raise substantial doubt about the Company's ability to continue as a going concern.

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This offering is a best efforts offering and there

This offering is a best efforts offering and there is no minimum offering amount. Accordingly, we may sell all, some or none of the Units offered. We can give no assurances regarding the amount of proceeds that will be generated from this offering or how much further development of our JV's product candidates the proceeds will fund before more funding is necessary. To the extent we sell less than all of the Units in this offering, we will need to seek additional funding sooner than otherwise would be the case. There is no assurance that we can obtain needed funding from third parties on terms acceptable to us, or at all. 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.

We caution that our future cash expenditure levels

We caution that our future cash expenditure levels are difficult to forecast because the forecast is based on assumptions about the level of future operations, including the number of research projects we pursue, the pace at which we pursue them, the quality of the data collected and the requests of the FDA or comparable foreign agencies to expand, narrow or conduct additional clinical trials and analyze data. Changes in any of these assumptions can change significantly our estimated cash expenditure levels.

Our JV partners have significant rights as

Our JV partners have significant rights as minority-interest stockholders of our JV. Although we own 60% of the outstanding shares of our JV's common stock, the minority stockholders of the JV have the right to appoint a majority of the JV's board of directors.

Pursuant to a Stockholders Agreement among all

Pursuant to a Stockholders Agreement among all the stockholders of our JV, we have agreed that the board of directors of the JV will be composed of three individuals designated by the minority stockholders and two individuals designated by us. Consequently, our JV partners' designees, and not our designees, control the JV's board of directors. If the JV fails to operate substantially in accordance with its annual budget, including the milestones specified therein, or fails to comply with its obligations under the Stockholders Agreement, we will thereafter have the right to appoint a majority of the members of the JV's board of directors.

Under the Stockholders Agreement, the consent of

Under the stockholders Agreement, the consent of stockholders acting by a majority in interest is required for a broad range of actions, including annual budgets and operational milestones. Because we are the majority stockholder, these consent rights protect our interests in the JV. However, there is a risk that these consent rights may be insufficient to protect our interests or may result in impasses with respect to the JV's management and operation, the resolution of which might result in actions, agreements or consequences that we might view as suboptimal. There is no assurance that the minority stockholders of the JV will share the same economic, business or legal interests or goals that we have for the JV's business. See "Ownership, Management and Governance of our JV" below.

There is no assurance that the minority stockholders of the JV will share the same economic, business or legal interests or goals that we have for the JV's business. See "Ownership, Management and Governance of our JV" below.

Our business is subject to stringent regulation,

Our business is subject to stringent regulation, and if we do not obtain regulatory approval for our JV's product candidates, we will not be able to generate revenue.

Our JV's research, development, pre-clinical

Our JV's research, development, pre-clinical and clinical trial activities and the manufacture and marketing of any products that it may successfully develop are subject to an extensive regulatory approval process by the FDA and other regulatory agencies in the United States and abroad. The process of obtaining required regulatory approvals for pharmaceutical products is lengthy, expensive and uncertain, and any such regulatory approvals may entail limitations on the indicated usage of a product, which may reduce the product's market potential.

None of our JV's product candidates has been approved

None of our JV's product candidates has been approved for sale. In order to obtain FDA or comparable foreign agency approval to commercialize any product candidate, a New Drug Application (NDA) (or comparable foreign agency form) must be submitted demonstrating, among other things, that the product candidate is safe and effective for use in humans for each target indication. Our or our JV's regulatory submissions may be delayed, or we or our JV may cancel plans to make submissions for product candidates for many reasons, including unfavorable results from or delays in preclinical or clinical trials and lack of sufficient available funding.

If we experience delays in our JV's clinical

If we experience delays in our JV's clinical trials, we will incur additional costs and our opportunities to monetize product candidates will be deferred. Delays could occur for many reasons, including the following:

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Consequently, we cannot assure that we or our JV

Consequently, we cannot assure that we or our JV will make submissions to the FDA or comparable foreign agencies in the timeframe that we have planned, or at all, or that our and our JV's submissions will be approved by the FDA or comparable foreign agencies. Even if regulatory clearance is obtained, post-market evaluation of our JV's future products, if required, could result in restrictions on a product's marketing or withdrawal of a product from the market as well as possible civil and criminal sanctions.

If our JV's product candidates do not

If our JV's product candidates do not gain market acceptance or our competitors develop and market products that are more effective than our JV's product candidates, our commercial opportunities will be reduced or eliminated.

Even if our JV brings one or more products to market,

Even if our JV brings one or more products to market, there is no assurance that our JV will be able to successfully manufacture or market the products or that potential customers will buy them. Market acceptance will depend on our ability to demonstrate to physicians and patients the benefits of the future products in terms of safety, efficacy, and convenience, ease of administration and cost effectiveness, as well as on our JV's ability to continue to develop product candidates to respond to competitive and technological changes. In addition, we believe that market acceptance depends on the effectiveness of our marketing strategy, the pricing of our JV's future products and the reimbursement policies of government and third-party payors. Physicians may not prescribe our JV's future products, and patients may determine, for any reason, that our JV's product is not useful to them. Insurance companies and other third party payors may determine not to reimburse for the cost of the product.

Competition in the pharmaceutical and biotechnology

Competition in the pharmaceutical and biotechnology industries is intense and is expected to increase. Several biotechnology and pharmaceutical companies, as well as academic laboratories, universities and other research institutions, are involved in research and/or product development for indications targeted for use by AEM-28 and its analogs. Most of our competitors have significantly greater research and development capabilities, experience in obtaining regulatory approvals and manufacturing, marketing, financial and managerial resources than we have.

Our competitors may succeed in developing products

Our competitors may succeed in developing products that are more effective than the ones we have under development or that render our proposed products or technologies noncompetitive or obsolete. In addition, certain of our competitors may achieve product commercialization before we do. If any of our competitors develops a product that is more effective than one that our JV is developing or plans to develop, or is able to obtain FDA or comparable foreign agencies' approval for commercialization before we do, we may not be able to achieve significant market acceptance for certain of our JV's products, which would have a material adverse effect on our JV's business.

For a summary of the competitive conditions relating

For a summary of the competitive conditions relating to indications which we are currently considering for AEM-28 and its analogs, see "Competition" in this prospectus.

If we cannot protect our joint venture's

If we cannot protect our joint venture's AEM-28 and other patents, or our JV's intellectual property generally, our JV's ability to develop and commercialize its future products will be severely limited.

Our success will depend in part on our joint venture's

Our success will depend in part on our joint venture's ability to maintain and enforce patent protection for AEM-28 and its analogs and each resulting product. Without patent protection, other companies could offer substantially identical products for sale without incurring the sizable discovery, development and licensing costs that our joint venture has incurred. Our JV's ability to recover these expenditures and realize profits upon the sale of products would then be diminished.

AEM-28 is patented and patent applications for

AEM-28 is patented and patent applications for the AEM-28 analogs have be filed. There have been no successful challenges to the patents. However, if there were to be a challenge to these patents or any of the patents for product candidates, a court may determine that the patents are invalid or unenforceable. Even if the validity or enforceability of a patent is upheld by a court, a court may not prevent alleged infringement on the grounds that such activity is not covered by the patent claims. Any litigation to enforce our JV's rights to use its or its licensors' patents will be costly, time consuming and may distract management from other important tasks.

Even if the validity or enforceability of a patent is upheld by a court, a court may not prevent alleged infringement on the grounds that such activity is not covered by the patent claims. Any litigation to enforce our JV's rights to use its or its licensors' patents will be costly, time consuming and may distract management from other important tasks.

As is commonplace in the biotechnology and pharmaceutical

As is commonplace in the biotechnology and pharmaceutical industries, we employ, or engage as consultants, individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. To the extent our employees are involved in research areas which are similar to those areas in which they were involved at their former employers, we may be subject to claims that such employees and/or we have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of the former employers. Litigation may be necessary to defend against such claims, which could result in substantial costs and be a distraction to management and which may have a material adverse effect on us, even if we are successful in defending such claims.

We also rely on trade secrets, know-how and other

We also rely on trade secrets, know-how and other proprietary information. We seek to protect this information, in part, through the use of confidentiality agreements with employees, consultants, advisors and others. Nonetheless, we cannot assure that those agreements will provide adequate protection for our trade secrets, know-how or other proprietary information and prevent their unauthorized use or disclosure. The risk that other parties may breach confidentiality agreements or that our trade secrets become known or independently discovered by competitors, could adversely affect us by enabling our competitors, who may have greater experience and financial resources, to copy or use our trade secrets and other proprietary information in the advancement of their products, methods or technologies.

Our success also depends on our JV's ability to operate and commercialize products without infringing on the patents or proprietary rights of others.

ability to operate and commercialize products without infringing on the patents or proprietary rights of others.

Third parties may claim that our JV or its licensors

Third parties may claim that our JV or its licensors or suppliers are infringing their patents or are misappropriating their proprietary information. In the event of a successful claim against our JV or its licensors or suppliers for infringement of the patents or proprietary rights of others, our JV may be required to, among other things:

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Our reliance on third party clinical research

Our reliance on third party clinical research organizations and other consultants could have a material effect on our JV's ability to conduct clinical trials and perform research and development. Product development costs to our JV and our JV's potential collaborators will increase, and our JV's business may be negatively impacted, if we experience delays in testing or approvals or if our JV needs to perform more or larger clinical trials than planned.

To obtain regulatory approvals for new products,

To obtain regulatory approvals for new products, our JV must, among other things, initiate and successfully complete multiple clinical trials demonstrating to the satisfaction of the FDA or other regulatory authority that our JV's product candidates are sufficiently safe and effective for a particular indication. We currently rely on third party clinical research organizations and other consultants to assist our JV in designing, administering and assessing the results of those trials and to perform research and development with respect to product candidates. In relying on those third parties, we are dependent upon them to timely and accurately perform their services. If third party organizations do not accurately collect and assess the trial data, our JV may discontinue development of viable product candidates or continue allocating resources to the development and marketing of product candidates that are not efficacious. Either outcome could result in significant financial harm to us.

In relying on those third parties, we are dependent upon them to timely and accurately perform their services. If third party organizations do not accurately collect and assess the trial data, our JV may discontinue development of viable product candidates or continue allocating resources to the development and marketing of product candidates that are not efficacious. Either outcome could result in significant financial harm to us.

The loss of key management and scientific personnel may hinder our JV's ability to execute our business plan.

personnel may hinder our JV's ability to execute our business plan.

As a small company our success depends on the continuing

As a small company our success depends on the continuing contributions of our management team and scientific consultants, and maintaining relationships with the network of medical and academic centers in the United States and centers that conduct our clinical trials. We have reduced our staff to two administrative employees and utilize consultants to perform a variety of administrative, regulatory or research tasks. We have entered into consulting agreements with various former key employees, but there is no assurance that these persons will be available in the future to the extent their services may be needed.

If we are not successful in retaining the services

If we are not successful in retaining the services of former key employees it could materially adversely affect our business prospects, including our ability to explore partnering or development activities.

Our joint venture is managed under contract by

Our joint venture is managed under contract by Benu BioPharma Inc., which is comprised of three individuals (Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D., and Eric M. Morrel, Ph.D.). These individuals are minority stockholders in our JV.

Morrel, Ph.D.). These individuals are minority stockholders in our JV.

Although there is a services contract with Benu

Although there is a services contract with Benu BioPharma Inc., there is no direct agreement with these individuals for continued services and they are under no legal obligation to remain with Benu BioPharma Inc. We can give no assurance that all or any of these individuals will continue to provide services to our joint venture. Should any of these individuals not continue to provide services to our joint venture, it could have a material adverse effect on our joint venture's ability or cost to develop AEM-28 and its analogs.

Possible side effects of our JV's product

Possible side effects of our JV's product candidates may be serious and life threatening. If one of our JV's product candidates reveals safety or fundamental efficacy issues in clinical trials, it could adversely impact the development path for our JV's other current product candidates for that peptide. We face an inherent risk of liability in the event that the use or misuse of our JV's future products results in personal injury or death.

The occurrence of any unacceptable side effects

The occurrence of any unacceptable side effects during or after pre-clinical and clinical testing of our JV's product candidates, or the perception or possibility that our JV's product candidates cause or could cause such side effects, could delay or prevent approval of our JV's products and negatively impact its business. The use of our JV's product candidates in clinical trials may expose us and our JV to product liability claims, which could result in financial losses. Our clinical liability insurance coverage may not be sufficient to cover claims that may be made against us or our JV. In addition, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts or scope to protect us and our JV against losses. Any claims against us or our JV, regardless of their merit, could severely harm our financial condition, strain our management and other resources and adversely impact or eliminate the prospects for commercialization of the product which is the subject of any such claim.

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The trading volume in our common stock is

The trading volume in our common stock is limited and our stock price is volatile, and therefore stockholders may not be able to sell their shares in desired amounts at the reported trading prices.

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and 64 more changes in the filing

Plan of distribution 15 changes

We are offering up to

We are offering up to Units, each consisting of one share of common stock and one-half of a one warrant to purchase one one-half of a share of common stock, for an offering price of $ per Unit. Pursuant to an engagement letter agreement, dated as of June 16, 2015, we have engaged H.C. Wainwright & Co., LLC ("Wainwright" or the "placement agent") as our placement agent for this offering. Wainwright is not purchasing or selling any Units in this offering, nor are they required to arrange for the purchase and sale of any specific number or dollar amount of Units, other than to use its "reasonable best efforts" to arrange for the sale of Units by us. Therefore, we may not sell the entire amount of Units being offered. Wainwright may retain one or more sub-agents or selected dealers in connection with the offering.

Wainwright may retain one or more sub-agents or selected dealers in connection with the offering.

Upon the closing of this offering, we will pay

Upon the closing of this offering, we will pay Wainwright a cash fee equal to seven and one-quarter percent (7.25%) of the aggregate gross proceeds to us from the sale of the Units in the offering, provided that such cash fee will be four percent (4%) of aggregate gross proceeds on any sales of Units to certain specified insiders and current stockholders of the company (the "reduced fee investors") in this offering. In addition, we will pay Wainwright a cash fee of 7.25%, which fee will be 4% in connection with exercises by the reduced fee investors, of the aggregate gross proceeds to us from the exercise of warrants issued to the investors in this offering We will also reimburse Wainwright for its non-accountable expenses in an amount equal to the greater of one percent (1%) of the aggregate gross proceeds in the offering or $50,000.

We will also reimburse Wainwright for its non-accountable expenses in an amount equal to the greater of one percent (1%) of the aggregate gross proceeds in the offering or $50,000.

As additional compensation, we will issue to

Wainwright warrants to purchase a number of shares of common stock equal to five percent (5%) (or two and one half percent (2.5%) of the number of shares of common stock included in the Units sold to the reduced fee investors) of the number of shares of common stock included in the Units sold in this offering (excluding the shares of common stock that may be issued upon exercise of the warrants included in the Units) (the "placement agent warrants"). The placement agent warrants will have the same terms as the warrants issued to purchasers in the offering, provided that the placement agent warrants will not have anti-dilution protection pursuant to FINRA Rule 5110(f)(2)(G)(vi) and the placement agent warrants shall have an exercise price equal to the greater of the exercise price of the warrants issued to the purchasers in the offering or 125% of the public offering per share in the offering.

As additional compensation, we will issue to Wainwright warrants to purchase a number of shares of common stock equal to five percent (5%) (or two and one half percent (2.5%) of the number of shares of common stock included in the Units sold to the reduced fee investors) of the number of shares of common stock included in the Units sold in this offering (excluding the shares of common stock that may be issued upon exercise of the warrants included in the Units) (the "placement agent warrants"). The placement agent warrants will have the same terms as the warrants issued to purchasers in the offering, provided that the placement agent warrants will not have anti-dilution protection pursuant to FINRA Rule 5110(f)(2)(G)(vi). Pursuant to FINRA Rule 5110(g)(1), neither the placement agent warrants nor any shares of common stock issued upon exercise of the placement agent warrants may be sold, transferred, assigned, pledged, or hypothecated, or be subject to any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of such securities by any person for a period of 180 days immediately following the date of effectiveness or commencement of sales of this offering, except the transfer of any security (i) by operation of law or by reason of reorganization, (ii) to any FINRA member firm participating in the offering and the officers and partners thereof, if all securities so transferred remain subject to the lock-up restriction described above for the remainder of the time period, (iii) if the aggregate amount of our securities held by the holder of the placement agent warrants or related person does not exceed 1% of the securities being offered, (iv) that is beneficially owned on a pro-rata basis by all equity owners of an investment fund, provided that no participating member manages or otherwise directs investments by the fund, and participating members in the aggregate do not own more than 10% of the equity in the fund, or (v) the exercise or conversion of any security, if all securities received remain subject to the lock-up restriction set forth above for the remainder of the time period.

Subject to certain exceptions, until twelve

Subject to certain exceptions, until twelve months after the consummation of this offering, the placement agent has a right of first refusal to act as lead underwriter, placement agent, manager, or agent for any public or private equity or debt offerings in which we may engage during that period. The foregoing right will not apply to any offering of equity or debt securities by Lipimetix Development, Inc. The placement agent may be deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended (the "Securities Act"), and any commissions received by it and any profit realized on the sale of the securities by it while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. The placement agent will be required to comply with the requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of shares of common stock and warrants to purchase shares of common stock by the placement agent. Under these rules and regulations, the placement agent may not (i) engage in any stabilization activity in connection with our securities; and (ii) bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until they have completed their participation in the distribution.

The engagement letter agreement provides that

The engagement letter agreement provides that we will indemnify the placement agent for any claim (including claims under the Securities Act) related to or resulting from the activities on our behalf, except for any claim finally judicially determined to have resulted from the indemnitee's gross negligence or willful misconduct. We have been advised that, in the opinion of the SEC, indemnification for liabilities under the Securities Act is against public policy as expressed in the Securities Act and is therefore unenforceable.

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We intend to offer and sell the securities offered

We intend to offer and sell the securities offered hereby to institutional investors in certain states. However, we will not make any offer of these securities in any jurisdiction where the offer is not permitted or exempted.

Information with respect to the company 58 changes

We are a biopharmaceutical company primarily focused

We are a biopharmaceutical company primarily focused on the development of a family of ApoE mimetic peptides to serve a variety of therapeutic indications in reducing plasma cholesterol and triglycerides. We embrace the capital-efficient business model of virtual pharmaceutical development pursuant to which we have minimized the number of full-time employees and outsource various aspects of pre-clinical, regulatory and clinical development.

All of our current development activities are conducted

All of our current development activities are conducted through our majority-owned joint venture, LipimetiX Development, Inc., which was formed to develop an Apo E mimetic peptide molecule, AEM-28, and its analogs. We own 60% of the outstanding common shares of the JV and all of the outstanding preferred shares. We have entered into a Stockholders Agreement pursuant to which certain of our JV partners have the right to appoint a majority of the JV's board of directors unless certain triggering events occur, and pursuant to which we have consent rights over a broad spectrum of business decisions including annual budgets. Our JV is managed under contract by Benu BioPharma Inc., which is comprised of three individuals (Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D., and Eric M. Morrel, Ph.D.) who are principal minority stockholders in our JV. For additional information, see the "Ownership, Management and Governance of our JV" section of this prospectus.

Concurrent with the development activities for

Concurrent with the development activities for AEM-28, the JV has performed limited pre-clinical studies that have identified analogs of AEM-28, including one referred to as AEM-28-02, AEM-28-14, that have the potential of equivalent increased efficacy, higher human dose toleration and an extended composition of matter patent life. The JV has a development plan to pursue regulatory approval and commercialization of AEM-28, or one or more of its analogs, as treatment in orphan (rare disease) indications, including AP and HoFH, and potentially in acute coronary syndrome, peripheral artery disease and metabolic syndrome. HoFH has been designated by the FDA as an orphan indication. We believe that AP should also qualify for orphan indication designation.

Our JV received allowance from regulatory authorities

Our JV received allowance from regulatory authorities in Australia permitting our JV to proceed with the recently completed 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 subjects 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.

We and our JV do not have sufficient funding as of June 24, 2015 to continue additional material development activities of AEM-28 and its analogs.

of September 14, 2015 to continue additional material development activities of AEM-28 and its analogs.

Most of the proceeds of this offering will be made

Most of the proceeds of this offering will be made available to our JV to fund the continued development of AEM-28 and its analogs and the remainder will be used to fund our continuing operations. If all of the Units offered hereby are sold, we believe that we will have sufficient funds for our JV to complete the preclinical development and possibly Phase 1a and Phase1b/2a clinical trials as well for AEM 28-02, 28-14, but we cannot predict the total cost of these efforts which depends on, among other things, successful and timely outcomes in our preclinical and clinical studies. In any event, our JV will require substantial additional capital, and/or a development partner, to complete the clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies' approval, if any, for our JV's product candidates. We may seek to obtain the necessary additional funding through the issuance of debt and/or equity securities by us or our JV in one or more private or public offerings in the future (which could include bridge financing from certain of our significant existing stockholders), through a strategic partner arrangement or otherwise. In addition, our JV currently is exploring potential sub-licensing of AEM-28 and/or its analogs for development in indications not being actively pursued by the joint venture.

In any event, our JV will require substantial additional capital, and/or a development partner, to complete the clinical trials and supporting research and production efforts necessary to obtain FDA or comparable foreign agencies' approval, if any, for our JV's product candidates. We may seek to obtain the necessary additional funding through the issuance of debt and/or equity securities by us or our JV in one or more private or public offerings in the future (which could include bridge financing from certain of our significant existing stockholders), through a strategic partner arrangement or otherwise. In addition, our JV currently is exploring potential sub-licensing of AEM-28 and/or its analogs for development in indications not being actively pursued by the joint venture.

We intend to continue limiting our internal operations

We intend to continue limiting our internal operations to a virtual operating model while monitoring and participating in the management of our JV's AEM-28 and analogs development activities.

Prior to November 26, 2003, we developed, manufactured

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

In August 2004, we purchased substantially all of the assets and intellectual property of Chrysalis Biotechnology, Inc., including its exclusive worldwide license for Chrysalin 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

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 for the core intellectual property relating to AZX100 and returned all interest in and rights to the AZX100 intellectual property to the licensor.

In August 2012, we entered into our joint venture

In August 2012, we entered into our joint venture with LipimetiX, LLC to develop the Apo E mimetic molecule AEM-28 and its analogs. We have contributed $6 million to our JV. and We also have loaned up a revolving loan agreement with the JV to $700,000 advance the JV funds for operations in an amount not to exceed a revolving line net (net of credit. expected tax credits or other funds obtained) of $700,000, with the net amount due December 31, 2015. At June 30, 2015, outstanding advances on the revolving loan agreement totaled $739,000. Our cash contribution to our joint venture represents a substantial proportion of our available cash.

We were incorporated as a Delaware corporation

We were incorporated as a Delaware corporation in July 1987 as IatroMed, Inc. We changed our name to OrthoLogic Corp. in July 1991. Effective October 1, 2008, OrthoLogic Corp. commenced doing business under the trade name of Capstone Therapeutics, and we formally changed our name to Capstone Therapeutics Corp. on May 21, 2010.

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Our JV was formed in August 2012 as a Delaware

Our JV was formed in August 2012 as a Delaware limited liability company under the name LipimetiX Development, LLC. In June 2015, the JV converted to a Delaware corporation and changed its name to LipimetiX Development, Inc. Ownership of our JV The authorized shares of our JV's capital stock consist of (i) 2,000,000 shares of common stock, which is designated as either Class A-1 Common Stock or Class A-2 Common Stock (collectively, the "JV Common Stock"), of which 1,000,000 shares are currently outstanding, and (ii) 10,000,000 shares of preferred stock, all of which is designated as Series A Preferred Stock (the "JV Preferred Stock"), of which 5,000,000 shares are currently outstanding.

The rights and preferences of the Class A-1 Common

The rights and preferences of the Class A-1 Common Stock and the Class A-2 Common Stock are identical, except that the amount of dividends and distributions, if any, that would otherwise be payable to UABRF as the sole holder of Class A-2 Common, is reduced by any amounts paid to UABRF in excess of $100,000 pursuant to certain provisions of the Exclusive License Agreement with UABRF.

The Series A Preferred Stock is non-voting, non-convertible

The Series A Preferred Stock is non-voting, non-convertible and non-participating. There are no mandatory dividends payable in respect of the Series A Preferred Stock. Prior to our JV declaring or paying dividends on the JV Common Stock, or making any liquidating distributions to the holders of the JV Common Stock, the holders of the Series A Preferred Stock are entitled to receive an amount per share of Series A Preferred Stock at least equal to the original issue price of the Series A Preferred Stock, which is $1 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock). Once the original issue price has been paid in full, the holders of the Series A Preferred Stock are not entitled to receive any further dividends or liquidating distributions from the JV.

Once the original issue price has been paid in full, the holders of the Series A Preferred Stock are not entitled to receive any further dividends or liquidating distributions from the JV.

The following table sets forth the percentages

The following table sets forth the percentages of the outstanding shares of JV Common Stock and JV Preferred Stock held by us and the other stockholders. The other stockholders of our JV are sometimes referred to as our "JV partners" in this prospectus. The minority stockholders of the JV other than UABRF are sometimes referred to as the "LX Minority Stockholders" in this prospectus.

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(1) All of the JV Common Stock held by us and by the LX Minority Stockholders is Class A-1 Common Stock. All of the JV Common Stock held by UABRF is Class A-2 Common Stock.

All of the JV Common Stock held by UABRF is Class A-2 Common Stock.

(2) Consists of all stockholders of the JV other than Capstone and UABRF.

The LX Minority Stockholders include Dennis I.

The LX Minority Stockholders include Dennis I. Goldberg, Ph.D., Phillip M. Friden, Ph.D. and Eric M. Morrel, Ph.D. (the "Benu Principals"), who are the principals of Benu BioPharma Inc. ("Benu"), which manages the JV pursuant to the management contract described below. The Benu Principals collectively own 24% of the outstanding JV Common Stock, which represents 75% of all shares held by the LX Minority Stockholders.

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Our JV is managed by Benu pursuant to a Management

Our JV is managed by Benu pursuant to a Management Agreement among the JV, Benu and the Benu Principals. Pursuant to the Management Agreement, Benu provides all management and operational personnel to perform the day-to-day management of the JV (other than certain accounting and finance services that we provide pursuant to an Accounting Services Agreement between us and the JV). These management services include business development, research and development, regulatory affairs, product development, technical operations, assisting in intellectual property strategy and management, and developing and managing clinical trials. Pursuant to the Management Agreement, all services provided by Benu are rendered by or under the direction of Dr. Goldberg. The Benu Principals are also the officers of the JV (Dr. Goldberg is President, Dr. Friden is Vice President, Product Development and Dr. Morrel is Vice President, Clinical Research).

Pursuant to the Management Agreement, Benu is required

Pursuant to the Management Agreement, Benu is required to cause the Benu Principals to devote their full business time and effort, as needed, to the performance of the services under the Management Agreement. However, there is no direct agreement with the individual Benu Principals for continued services and they are under no legal obligation to remain with Benu. For additional discussion regarding risks related to the loss of the Benu Principals, see the risk factor " The loss of key management and scientific personnel may hinder our JV's ability to execute our business plan" in the "Risk Factors" section in this prospectus.

The JV paid to Benu a management fee of approximately

The JV paid to Benu a management fee of approximately $63,000 per month during the initial 27 months of the term ending in October 2014. Commencing in November 2014 and ending in March 2015, Benu received a reduced management fee in the amount of $35,000 per month. We currently receive an accounting services fee from the JV of $1,000 per month pursuant to the Accounting Services Agreement.

Pursuant to a Stockholders Agreement among all

Pursuant to a Stockholders Agreement among all the stockholders of the JV, we have agreed that the board of directors of the JV will be composed of three individuals designated by the LX Minority Stockholders, acting by a majority in interest, and two individuals designated by us. Consequently, the LX Minority Stockholders' designees, and not our designees, control the JV's board of directors. Because the Benu Principals collectively own 75% of the outstanding JV Common Shares held by the LX Minority Stockholders, the Benu Principals have the power to control the JV's board of directors. The JV board of directors currently is composed of the following persons:

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John M. Holliman, III (our Executive Chairman and Principal Executive Officer) (2) Randolph C. Steer, MD, Ph.D. (our Chief Medical Officer) (2) ___________________________ (1) Designee of LX Minority Stockholders.

John M. Holliman, III (our Executive Chairman

and Principal Executive Officer) (2)

Randolph C. Steer, MD, Ph.D. (our Chief Medical

(1) Designee of LX Minority Stockholders.

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If the JV fails to operate substantially in accordance

If the JV fails to operate substantially in accordance with its annual budget (which must be approved by stockholders holding at least a majority of the outstanding shares of the JV's voting stock), including the milestones in the budget, or fails to comply with any of its obligations under the Stockholders Agreement, the stockholders of the JV, acting by a majority in interest, thereafter would be entitled to appoint a majority of the members of the board of directors.

The Stockholders Agreement provides that certain

The Stockholders Agreement provides that certain actions require the consent of stockholders, acting by a majority in interest. These actions include:

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Additionally, pursuant to the Stockholders Agreement,

Additionally, pursuant to the Stockholders Agreement, the JV may not be liquidated or dissolved without the consent of stockholders holding at least 75% of the outstanding shares of JV Common Stock. The JV's annual budget, including the operational and other milestones contained therein, also must be approved by stockholders holding at least a majority of the outstanding shares of the JV's voting stock. Because we do not have the right to appoint a majority of the members of the JV's board of directors, these stockholder consent rights are necessary to protect our interests in the JV. However, there is a risk that these consent rights may be insufficient to protect our interests or may result in impasses with respect to the JV's management and operation, the resolution of which might result in actions, agreements or consequences that we might view as suboptimal.

Competition 50 changes

Description of Current Peptide Product Candidates.

The biopharmaceutical industry is characterized

The biopharmaceutical industry is characterized by intense competition and confidentiality. Well known cardiovascular drug classes include the statins and PCSK9s (currently in regulatory approval process). Our drug candidates, if approved, would not compete directly for the same patient population as statins and PCSK9s. In the orphan indication of HoFH, two drugs received FDA approval in 2013 and are currently being marketed: Juxtapid from Aegerion and Kynamro from Sanofi/Genzyme. In the AP indication, the standard of care drugs for reducing triglycerides include fish oil and fibrates, both of which usually take weeks to show an effect. We are currently unaware of any other drugs approved or in development for reducing triglycerides in AP. We may not be aware of the other biotechnology, pharmaceutical companies or public institutions that are developing pharmaceuticals or devices that may compete with our potential products. We also may not be aware of all the other competing products our known competitors are pursuing. In addition, these biotechnology companies and public institutions compete with us in recruiting for research personnel and subjects, which may affect our ability to complete our research studies. For additional discussion regarding the risks associated with our competition, see the risk factor "If our JV's product candidates do not gain market acceptance or our competitors develop and market products that are more effective than our JV's product candidates, our commercial opportunities will be reduced or eliminated" in the "Risk Factors" section in this prospectus.

Description of Drug Candidates, Clinical Results and Target Markets.

Apo E is a 299 amino acid protein that plays an

Apo 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-28-02 AEM-28-14 (an analog of AEM-28) is a 28 amino acid mimetic of Apo E (with an aminohexanoic acid group) 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.

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The combination of Low Density Lipoprotein ("LDL")

The combination of Low Density Lipoprotein ("LDL") and Very Low Density Lipoprotein ("VLDL") cholesterol are termed Non- High Density Lipoprotein ("Non-HDL") cholesterol. These Non-HDL lipoproteins are a combination of proteins and lipids which allow fat and cholesterol to move around the body so they may be taken up by target cells. Triglycerides (TGs) are found in VLDL and chylomicron remnants in blood plasma. TGs play an important role in metabolism as energy sources while VLDL and chylomicron remnants serve as transporters of dietary fat. When the amount of VLDL and TGs is properly regulated by the body's natural systems, the vascular and metabolic systems are in sync and functioning well. However, problems develop when these lipoproteins and lipids get out of balance, often leading to severe cardiovascular and endocrinal diseases. When in overabundance in blood plasma, these large, buoyant molecules are a primary contributor to atherosclerosis, or arterial plaque, which can unpredictably create an arterial occlusion and cause a heart attack .

TGs play an important role in metabolism as energy sources while VLDL and chylomicron remnants serve as transporters of dietary fat. When the amount of VLDL and TGs is properly regulated by the body's natural systems, the vascular and metabolic systems are in sync and functioning well. However, problems develop when these lipoproteins and lipids get out of balance, often leading to severe cardiovascular and endocrinal diseases. When in overabundance in blood plasma, these large, buoyant molecules are a primary contributor to atherosclerosis, or arterial plaque, which can unpredictably create an arterial occlusion and cause a heart attack .

In December 2014, we and our joint venture, LipimetiX

In December 2014, we and our joint venture, LipimetiX Development, Inc., announced the completion and results of the investigational Phase 1b/2a human clinical trial for its lead Apo E mimetic peptide molecule, AEM-28, in cholesterol and triglyceride reduction. The top-line data from the Phase 1a (reported on September 2, 2014) and Phase 1b/2a blended protocol was statistically analyzed. The Medical Safety Committee, in reviewing safety-related aspects of the clinical trial, observed a generally acceptable safety profile. Analysis of biomarker data from the human studies showed what we believe is a statistically significant reduction of VLDL cholesterol and triglycerides of approximately 70% each in fasted patients at one hour post-treatment. In particular, efficacy measurements analyzing pharmacodynamics yielded statistical significance in the pooled dataset favoring AEM-28 versus placebo in multiple lipid biomarker endpoints, which included:

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In 2015, our JV retained a consultancy to conduct

In 2015, our JV retained a consultancy to conduct a market assessment study for AEM-28 in acute pancreatitis ("AP") with high triglycerides. The consultancy's report concluded that the AP indication represents a significant unmet clinical need for a therapeutic that could rapidly reduce triglycerides. The schedule that follows below discusses the epidemiology and etiology of AP. There are an estimated 74,000 hospitalizations for all types of AP in the U.S. each year with approximately 45,000 presenting with severe TGs equal to or greater than 1,000 mg/dL. This patient population is possibly an ideal fit for AEM-28 as a therapeutic agent.

This patient population is possibly an ideal fit for AEM-28 as a therapeutic agent.

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(1) JOP.J. Pancreas, 11/9/2011, "Controversies in Etiology of Acute Pancreatitis, A. Khan et al.

Etiology of Acute Pancreatitis, A. Khan et al.

(2) Fletcher Spaght, 3/17/2015, "Market Assessment for Acute Pancreatitis", M. Hoult et al.

for Acute Pancreatitis", M. Hoult et al.

Whereas we anticipate that AP with high TGs will

Whereas we anticipate that AP with high TGs will qualify as an orphan indication (since the patient population is below 200,000 in the U.S.), we believe that it is nonetheless a sizable orphan market. Clinicians often treat these patients with fibrates or fish oil to reduce TGs, but fibrates and fish oil take weeks if not longer to have an effect in reducing TGs. A drug that rapidly reduces TGs could diminish the severity of AP (especially if administered at early onset) and could offer a significant economic savings to the healthcare system from faster discharge. If clinical trials are successful and regulatory approval is granted, we believe that AEM-28 could potentially be added to the AP treatment protocol in the emergency room for patients with elevated TGs.

If clinical trials are successful and regulatory approval is granted, we believe that AEM-28 could potentially be added to the AP treatment protocol in the emergency room for patients with elevated TGs.

Based on our consultant's report, we also

Based on our consultant's report, we also believe that a market of 110,000 refractory hypertriglyceridemics exists in the U.S. These patients are at high risk for AP and other TG-related indications and could be candidates for a weekly infusion of a TG-reducing therapeutic such as AEM-28. We believe that this chronic market, at a projected 5.7 million doses annually, represents another significant market opportunity, albeit requiring successful clinical outcomes studies.

Given the above, we plan to prioritize AP with

Given the above, we plan to prioritize AP with high TGs as our JV's indication of choice for AEM-28-02 AEM-28-14 commercialization. Because AEM-28 has previously received orphan drug designation (see below), we believe that the new analogs will also be so designated by the FDA for AP. As a result, the clinical/regulatory pathway for AP should require shorter, less expensive clinical trials according to orphan regulatory precedent.

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In 2012, AEM-28 received orphan designation from

In 2012, AEM-28 received orphan designation from FDA for a rare disease indication, called homozygous familial hypercholesterolemia ("HoFH"). This is a very small global population of individuals who are born with no LDL receptors in the liver and are unable to clear LDL (the "bad" cholesterol) through a natural pathway. Historically, these patients have experienced cardiovascular complications in their teens and twenties often leading to early death. Standard of care therapy was a process called apheresis, which is a mechanical filtering of the lipid fat from the patient's entire blood volume, akin to the kidney dialysis process. In 2013, two pharmaceutical therapies were approved in the U.S., Aegerion's Juxtapid and Sanofi-Genzyme's Kynamro. Juxtapid has proven the market with an impressive revenue ramp while revenue data for Kynamro is not publicly available. We believe that AEM-28, or the new analogs, if approved, could compete favorably with these other drugs due to potentially equivalent increased efficacy and fewer and less severe side effects.

AEM-28-02 AEM-28-14 and Analogs

Although AEM-28 is well researched and characterized

Although AEM-28 is well researched and characterized by scientists at our academic research partner, The University of Alabama at Birmingham Research Foundation, it has a relatively short remaining patent life (to 2020). If AEM-28 were approved by the FDA, as an orphan drug in the U.S., it would have seven years of marketing exclusivity after registration. Accordingly, AEM-28 remains a potentially valuable commercial asset, but only in orphan indications.

Our joint venture has an exclusive license agreement

Our joint venture has an exclusive license agreement with UABRF (see "Patents, Licenses and Proprietary Rights", below) that provides for new technology developments and which has resulted in the discovery of new Apo E mimetic peptides. Recently, our joint venture has been testing an analog of AEM-28, which we refer to as AEM-28-02. AEM-28-14. In preclinical testing, AEM-28-02 AEM-28-14 is showing itself to be potentially more tolerable and more efficacious than AEM-28. In July 2014, 2015, our joint venture filed a announced the conversion of its provisional patent application on AEM-28-02 for AEM-28-14 as a unique and novel molecule seeking 21 years of composition of matter patent protection.

AEM-28-14 and the other analogs are significant

AEM-28-02 and the other analogs are significant in that their potential 21-year patent life could allow our joint venture and/or its potential future strategic partners to develop AEM-28-02 AEM-28-14 and the other analogs for "clinical outcomes" indications that typically require very large, lengthy clinical trials. These markets include acute coronary syndrome (which we estimate to be $10 billion in annual market size), peripheral artery disease (which we estimate to be $3 billion in annual market size) and metabolic syndrome (which we estimate to be an approximate $35 billion annual market for all drug therapies). Now, with AEM-28-02, AEM-28-14, we believe that our JV has a product candidate that not only serves sizable orphan markets, but also serves much larger indications potentially representing several billion dollars in annual product revenue.

AEM-28 and its analogs are not currently available

AEM-28 and its analogs are not currently available for sale and we do not expect them to be available for sale for some time into the future, if ever. Thus, neither we nor our JV currently have any marketing or sales staff.

Currently, third parties certified under Good

Currently, third parties certified under Good Manufacturing Practices manufacture AEM-28 and its analogs for our JV in limited amounts for its clinical and pre-clinical studies. Our JV uses a primary manufacturer for the peptides used in its human clinical trials, but secondary manufacturers are available as needed.

Our JV uses a primary manufacturer for the peptides used in its human clinical trials, but secondary manufacturers are available as needed.

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Our JV has an Exclusive License Agreement (the

Our JV has an Exclusive License Agreement (the "License Agreement") with the UABRF that grants an exclusive worldwide license to practice, commercialize and exploit the licensed patents and the exclusive license to make, have made, research, develop, use, lease, offer to sell, sell, import and export products, which would (without the license infringe one of more of the Licensed Patents). The License rights may be sublicensed by our JV with some restrictions. All products, as well as any ideas, inventions, developments, improvements, works of authorship, know-how, research, techniques, processes, methods, materials, results, data and other information and work product arising out of the JV's practice of the licensed patents is owned by the JV, and UABRF does not have any right or license to use the same.

Under the License Agreement, the JV is required

Under the License Agreement, the JV is required to pay patent filing, maintenance and other related patent fees, annual maintenance fees of $25,000 until the first commercial sale of a licensed product and various milestone payments of $50,000 to $500,000 as each licensed product is developed and obtains FDA approval. Once the first commercial sale of a licensed product occurs, the JV is required to pay a royalty of 3% on net sales of licensed products during the term of the License Agreement as well as 30% of royalty payments received by the JV from sales of licensed products by sublicensees, provided that the aggregate royalty does not exceed 3% of the sales of licensed products by the sublicensees in the applicable jurisdiction. The License Agreement provides for a minimum royalty payment 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 receive 5% of non-royalty income received. The License Agreement terminates upon the expiration of all valid patent claims within the licensed patents.

UABRF will also receive 5% of non-royalty income received. The License Agreement terminates upon the expiration of all valid patent claims within the licensed patents.

Capstone Therapeutics is a registered United

States domestic trademark of Capstone Therapeutics Corp.

Our business entails the risk of product liability

Capstone Therapeutics is a registered United States domestic trademark of Capstone Therapeutics Corp. Insurance Our business entails the risk of product liability claims. We maintain a product liability and general liability insurance policy and an umbrella excess liability policy. There can be no assurance that liability claims will not exceed the coverage limit of such policies or that such insurance will continue to be available on commercially reasonable terms or at all. Consequently, product liability claims or claims arising from our clinical trials could have a material adverse effect on our business, financial condition and results of operations. We have not experienced any material liability claims to date resulting from our clinical trials.

As of September 14, 2015, we had two full time

As of June 24, 2015, we had two full time administrative employees in our operations and utilize consultants to perform a variety of administrative, regulatory or research tasks. We have entered into consulting agreements with various former key employees, but there is no assurance that these persons will be available in the future to the extent their services may be needed. As a research and development business, we believe that the success of our business will depend in part on our ability to identify, attract and retain qualified research personnel, both as employees and as consultants. We face competition from private companies and public institutions for qualified research personnel. None of our employees are represented by a union and we consider our relationship with our employees to be good.

Description of property 2 changes

We lease 2,845 square feet of office space in

We lease 2,845 square feet of office space in a facility in Tempe, Arizona, which is an approximately 100,000 square foot facility designed and constructed for industrial purposes and is located in an industrial district. In July 2007, we entered into a five-year lease for 17,000 square feet of space in this Tempe facility, which became effective March 1, 2008. We amended this lease, effective March 1, 2013, to extend the lease for two additional years and reduce the square feet rented to 2,845. On October 1, 2014 we amended this lease to extend the term to February 29, 2016. We believe the facility is well-maintained and adequate for use through the end of our lease term.

Legal proceedings 2 changes

In June 2015, we settled our long-pending qui

In June 2015, we settled our long-pending qui tam lawsuit for a one-time payment of $50,000. The lawsuit had been filed under seal by Jeffrey J. Bierman, as Relator/Plaintiff, on March 28, 2005 in the United States District Court for the District of Massachusetts against us and substantially all sellers of bone growth stimulation devices during the period 1998-2003. The complaint asserted a variety of claims, including False Claims Act violations. We sold our bone growth stimulation device business in 2003 and first learned of this lawsuit in September 2009.

Our common equity and related stockholder matters 8 changes

Our common stock commenced trading on Nasdaq on

Our common stock commenced trading on Nasdaq on January 28, 1993 and was delisted by Nasdaq on July 21, 2011. Our common stock is currently traded on the OTCQB under the symbol "CAPS." The following table sets forth, for the fiscal periods indicated, the range of high and low sales prices of our common stock. The OTCQB prices set forth below reflect inter-dealer prices, without adjustment for retail mark-up, markdown or commission, and may not necessarily represent the prices of actual transactions.

As of September 14, 2015, 40,885,411 shares of

As of June 24, 2015, 40,885,411 shares of our common stock were outstanding and held by approximately 779 stockholders of record. The last reported sale price of our common stock on the OTCQB Market on June 24, September 10, 2015 was $.23 $.21 per share.

We have never paid a cash dividend on our common stock. We do not intend to pay any cash dividends on our common stock in the foreseeable future.

stock. We do not intend to pay any cash dividends on our common stock in the foreseeable future.

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The following provides tabular disclosure of the

The following provides tabular disclosure of the number of securities to be issued upon the exercise of outstanding options, the weighted average exercise price of outstanding options, and the number of securities remaining available for future issuance under equity compensation plans as of December 31, 2014, aggregated into two categories - plans that have been approved by stockholders and plans that have not. See Note 5 to the Financial Statements included in our Annual Report on Form 10-K, filed with the SEC on March 16, 2015, and Form S-8 filed with the SEC on June 22, 2015, for additional information on our equity compensation plans.

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MD&A 109 changes

The following is management's discussion

The following is management's discussion of significant events in the year ended December 31, 2014 and the three-month three- and six-month period ended March 31, June 30, 2015 and factors that affected our financial condition and results of operations for those periods. This should be read in conjunction with our financial statements and related notes that appear in this prospectus and the "Risk Factors" section in this prospectus.

Most of the proceeds of this offering will be made

Most of the proceeds of this offering will be made available to our JV to fund the continued development of AEM-28 and its analogs. Some development may relate to applications that are different from the applications on which our JV's previous clinical trials focused. Our financial condition and results of operations for historic periods are not necessarily indicative of future results or performance.

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We are a biopharmaceutical company primarily focused

We are a biopharmaceutical company primarily focused on the development of a family of ApoE mimetic peptides to serve a variety of therapeutic indications in reducing plasma cholesterol and triglycerides. 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 wound down internal operations, ceased clinical development of AZX100 in dermal scarring, formerly our principal product candidate, and moved to a more virtual operating model. In 2014, we terminated the license agreement with AzTE for the core intellectual property relating to AZX100 and returned all interest in and rights to the AZX100 intellectual property to the licensor.

Concurrent with the development activities for

Concurrent with the development activities for AEM-28, the JV has performed limited pre-clinical studies that have identified analogs of AEM-28, including one referred to as AEM-28-02, AEM-28-14, that have the potential of equivalent increased efficacy, higher human dose toleration and an extended composition of matter patent life. The JV has a development plan to pursue regulatory approval and commercialization of AEM-28, or one or more of its analogs, as treatment in orphan (rare disease) indications, including AP and HoFH, and potentially in acute coronary syndrome, peripheral artery disease and metabolic syndrome. HoFH as been designated by the FDA as an orphan indication. We believe that AP should also qualify for orphan indication designation.

For additional discussion regarding our and our

For additional discussion regarding our and our JV's business, including a description of our JV's current peptide product candidates, see "Information with respect to the Company" in this prospectus.

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The preparation of financial statements in accordance

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 best knowledge of current events and actions that may impact us in the future, actual results may differ from these estimates and assumptions. Our critical accounting policies are those that affect, or could affect our financial statements materially and involve a significant level of judgment by management.

Below are the accounting policies and related risks

Below are the accounting policies and related risks described in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 16, 2015, for the year ended December 31, 2014, which are those that depend most heavily on management's judgments and estimates. As of June 24, September 14, 2015, there have been no material changes to any of these critical accounting policies.

Income Taxes : Accounting Standards Codification

Income Taxes : Accounting Standards Codification Topic 740 "Income Taxes" requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in the tax provision in the period of change. In determining whether a valuation allowance is required, we take into account all evidence with regard to the utilization of a deferred tax asset, including past earnings history, expected future earnings, the character and jurisdiction of such earnings, unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of a deferred tax asset, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of realization of a deferred asset. We have evaluated the available evidence about future taxable income and other possible sources of realization of deferred tax assets and have established a valuation allowance for all of our deferred tax assets of approximately $57 million at December 31, 2014.

In March 2014, LipimetiX Development, LLC (for

more information, see Note 9 in the Financial Statements for the year ended December 31, 2014 included in this prospectus) 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.

In March 2014, LipimetiX Development, LLC (for more information, see Note 9 in the Financial Statements for the year ended December 31, 2014 included in this prospectus) 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 has submitted, or 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 period ended June 30, 2014, LipimetiX Australia Pty Ltd received a refundable research and development tax credit of AUD$227,000. For the tax period ended December 31, 2014 a AUD$242,000 refundable tax credit, for research and development expenditures has been recorded by LipimetiX Australia Pty Ltd, as it is more likely than not, that the recorded refundable research and development tax credit at December 31, 2014 will be approved and received.

Patents : Patent license rights at December

Patents : Patent license rights at December 31, 2014 were recorded at $1,045,000, their estimated fair value on the date they were acquired, August 3, 2012. Their cost is amortized on a straight-line basis over the key patent life of eighty months. At December 31, 2014, accumulated amortization totaled $379,000. If a change in conditions occurs, that indicates a material change in the future utility of the patent license rights, an evaluation will be performed to determine if impairment of the asset has occurred, and if so, the impairment will be recorded. Future utility of the patent license rights is dependent upon our ability to raise additional funding to continue development of AEM-28 and its analogs or to complete a sale, licensing or other transactions.

Future utility of the patent license rights is dependent upon our ability to raise additional funding to continue development of AEM-28 and its analogs or to complete a sale, licensing or other transactions.

Our Joint Venture : As discussed in Note

Our Joint Venture : As discussed in Note 9 "Joint Venture for Development of Apo E Mimetic Peptide Molecule AEM-28 and Analogs" in Notes to Financial Statements for the year ended December 31, 2014 included in this prospectus, we entered into a joint venture in which it has contributed $6,000,000, and the noncontrolling interests have contributed certain patent license rights. Neither we nor the noncontrolling interests have an obligation to contribute additional funds to our JV 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 our JV are presented on a consolidated basis with our financial position and results of operations. Intercompany transactions have been eliminated. Joint venture losses will be recorded on the basis of common ownership equity interests (currently 60% us / 40% noncontrolling interests) until common ownership equity is reduced to $0. Subsequent joint venture losses will be allocated to the preferred ownership equity (100% us). Subsequent to March 31, 2013, all joint venture losses are being allocated to us. We have a revolving loan agreement with our JV 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 $700,000, with the net amount due June 30, 2015. Losses incurred by our JV in excess of the capital accounts of our JV will be allocated to us to the extent of net outstanding advances. At December 31, 2014, outstanding advances on the revolving loan agreement totaled $500,000.

Joint venture Accounting : As discussed in Note 9 to Financial Statements for the year ended December 31, 2014 included in this prospectus, "Joint Venture for Development of Apo E Mimetic Peptide Molecule AEM-28 and Analogs", 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 will be recorded on the basis of common ownership equity interests (currently 60% Company us / 40% noncontrolling interests) until common ownership equity is reduced to $0. Subsequent joint venture losses will be allocated to the preferred ownership equity (100% Company). us). Subsequent to March 31, 2013, all joint venture losses are being allocated to the Company. The Company has us. We have a revolving loan agreement with the joint venture our JV 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 $700,000, with the net amount due December 31, 2015. At June 30, 2015, 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 on the revolving loan agreement totaled $739,000.

Losses incurred by our JV in excess of the capital

accounts of our JV will be allocated to us to the extent of net outstanding advances. At December 31, 2014, outstanding advances on the revolving loan agreement totaled $500,000.

Losses allocated to the noncontrolling interests

Losses allocated to the noncontrolling interests represent an additional potential loss for us as the noncontrolling interests are not obligated to contribute assets to our JV to the extent they have a negative capital account and depending on the ultimate outcome of our JV, we could potentially absorb all losses associated with our JV. At December 31, 2014, losses totaling $667,000 have been allocated to the noncontrolling interests. We record a contingent loss 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 that we may have incurred a material loss with respect to this loss contingency.

We record a contingent loss 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 that we may have incurred a material loss with respect to this loss contingency.

Fair value measurements : We determine the

fair value measurements : We determine the fair value measurements of our applicable assets and liabilities based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted market prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Stock based compensation : Effective January

Stock based compensation : Effective January 1, 2006, we adopted SFAS No. 123 (revised 2004), "Share-Based Payment", now Accounting Standards Codification Topic 718 "Stock Compensation" ("ASC 718"). ASC 718 requires all share-based payments, including grants of stock options, restricted stock units and employee stock purchase rights, to be recognized in our financial statements based on their respective grant date fair values. Under this standard, the fair value of each employee stock option and employee stock purchase right is estimated on the date of grant using an option pricing model that meets certain requirements. We currently use the Black-Scholes option pricing model to estimate the fair value of our share-based payments. The determination of the fair value of share-based payment awards utilizing the Black-Scholes model is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends. We use the historical volatility adjusted for future expectations. The expected life of the stock options is based on historical data and future expectations. The risk-free interest rate assumption is based on observed interest rates appropriate for the terms of our stock options and stock purchase rights. The dividend yield assumption is based on our history and expectation of dividend payouts. The fair value of our restricted stock units is based on the fair market value of our common stock on the date of grant. Stock-based compensation expense recognized in our financial statements in 2006 and thereafter is based on awards that are ultimately expected to vest. We recognize compensation cost for an award with only service conditions that has a graded vesting schedule on a straight line basis over the requisite service period as if the award was, in-substance, a multiple award. However, the amount of compensation cost recognized at any date must at least equal the portion of grant-date fair value of the award that is vested at that date. For non-employees, this expense is recognized as the service is provided in accordance with ASC Topic 505-550 "Equity-Based Payments to Non-Employees." The amount of stock-based compensation expense in 2006 and thereafter is reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We evaluate the assumptions used to value stock awards on a quarterly basis. If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past.

The amount of stock-based compensation expense in 2006 and thereafter is reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

We evaluate the assumptions used to value stock awards on a quarterly basis. If factors change and we employ different assumptions, stock-based compensation expense may differ significantly from what we have recorded in the past.

ASC 718 requires the benefits associated with tax

ASC 718 requires the benefits associated with tax deductions that are realized in excess of recognized compensation cost to be reported as a financing cash flow rather than as an operating cash flow as previously required. Subsequent to the adoption of ASC 718 on January 1, 2006, we have not recorded any excess tax benefit generated from option exercises, due to our net operating loss carryforwards, which cause such excess to be unrealized.

Recent Accounting Pronouncements: In June

Recent Accounting Pronouncements: In June 2014, the Financial Accounting Standards Board issued Accounting Standard Update ("ASU") No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation removes the definition of a development stage entity and all incremental financial reporting requirements from U.S. GAAP for development stage entities. Topic 915 Development Stage Entities will be removed from the FASB Accounting Standards Codification . The elimination of the development stage entity financial reporting requirements is effective for annual reporting periods beginning after December 15, 2014. A public business entity may adopt this guidance early for any annual reporting period or interim period for which financial statements have not been issued. The adoption of this accounting standard update had no impact on our condensed consolidated financial statements. We had previously presented our financial statements with development stage entity disclosures. We adopted this accounting standard update in our third quarter ending September 30, 2014, and accordingly, have omitted development stage information and disclosures from our presentation.

Joint Venture Accounting : As discussed in

Note 9 to Financial Statements for the year ended December 31, 2014 included in this prospectus, "Joint Venture for Development of Apo E Mimetic Peptide Molecule AEM-28 and Analogs", 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 will be recorded on the basis of common ownership equity interests (60% Company / 40% noncontrolling interests) until common ownership equity is reduced to $0. Subsequent joint venture losses will be 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 $700,000, with the net amount due December 31, 2015. At June 30, 2015, outstanding advances on the revolving loan agreement totaled $739,000.

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.

In August 2014, the Financial Accounting Standards

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, we may incur additional losses, up to, and possibly exceeding, our net joint venture investment and revolving loan balance.

Results of Operations Comparing Year Ended December 31, 2014 and 2013

General and Administrative ("G&A")

General and Administrative ("G&A") Expenses : G&A expenses related to our ongoing operations were $1,453,000 in 2014 compared to $1,169,000 in 2013. Administration expenses increased primarily due to costs related to the qui tam litigation, and investor relations activities.

Research and Development Expenses : Research

Research and Development Expenses : Research and development expenses were $3,071,000 for 2014 compared to $3,124,000 for 2013. Our research and development expenses in 2014 and 2013 included the operating expenses of LipimetiX Development, Inc., which totaled (net of intercompany transactions) $2,354,000 for 2014, and $2,652,000 for 2013. The joint ventures' initial planned research activities have been substantially completed as of December 31, 2014.

Interest and Other Expenses (Income), Net :

Interest and Other Expenses (Income), Net, : Interest and Other Expenses (Income), Net, decreased from $158,000 of Income in 2013 to $43,000 of Expense in 2014 due to the receipt of $152,000 in the first quarter of 2013 from the conversion of an insurance company, in which we were a policyholder, from mutual to private ownership versus $60,000 in 2014. In 2014 this income was offset by a foreign exchange loss of $120,000 related to our joint ventures' Australian activities.

Income Tax Benefit : Income tax benefit in

Income Tax Benefit : Income tax benefit in 2014 consisted of a $400,000 refundable Australian research and development tax credit, as described in Notes 4 and 7 to the December 31, 2014 financial statements included in this Prospectus, related to our joint ventures' Australian clinical trial activities.

Net Loss attributable to Capstone Therapeutics

Net Loss attributable to Capstone Therapeutics stockholders : We incurred a net loss in 2014 of $4.2 million compared to a net loss of $3.9 million in 2013. Net loss includes operations of LipimetiX Development, Inc., which totaled (net of intercompany transactions) $2,354,000 for 2014, and $2,652,000 for 2013, net of net loss allocated to noncontrolling interests of $0 for 2014 and $193,000 for 2013. The joint ventures' initial planned research activities have been substantially completed as of December 31, 2014.

Results of Operations Comparing Year Ended December 31, 2013 and 2012

General and Administrative ("G&A")

General and Administrative ("G&A") Expenses : G&A expenses related to our ongoing operations were $1,169,000 in 2013 compared to $1,764,000 in 2012. Administration expenses declined primarily due to a decrease in our lease expenses caused by a reduction in office space occupied, effective March 1, 2013, and the reduction from four employees to two employees in the second quarter of 2012.

Research and Development Expenses : Research

Research and Development Expenses : Research and development expenses were $3,124,000 for 2013 compared to $2,385,000 for 2012. Our research and development expenses increased in 2013 compared to 2012 primarily due to the operating expenses of LipimetiX Development, Inc., which totaled (net of intercompany transactions) $2,652,000 for 2013, and $1,133,000 for 2012, partially offset by a decline of AZX100 research activity.

Interest and Other Income, Net : Interest

Interest and Other Income, Net : Interest and Other Income, Net, increased from $96,000 in 2012 to $158,000 in 2013 due to the receipt of $152,000 in the first quarter of 2013 from the conversion of an insurance company, in which we were a policyholder, from mutual to private ownership, while 2012 included a gain of $80,000 from the sale of lab equipment.

Net Loss attributable to Capstone Therapeutics

Net Loss attributable to Capstone Therapeutics stockholders : We incurred a net loss in 2013 of $3.9 million compared to a net loss of $3.6 million in 2012. The net loss from 2013 benefited from a reduction in internal operations, but this beneficial effect was offset by inclusion of the operating expenses of LipimetiX Development, Inc. Net loss includes operating expenses of LipimetiX Development, Inc., which totaled (net of intercompany transactions) $2,652,000 for 2013, and $1,133,000 for 2012, net of net loss allocated to noncontrolling interests of $193,000 for 2013 and $473,000 for 2012.

Results of Operations Comparing Three-Month Period Ended June 30,

2015 to the Corresponding Period in 2014

General and Administrative ("G&A")

Results of Operations Comparing Three-Month Period Ended March 31, 2015 to the Corresponding Period in 2014 General and Administrative ("G&A") Expenses : G&A expenses related to our ongoing operations were $472,000 $552,000 in the first second quarter of 2015 compared to $452,000 $222,000 in the first second quarter of 2014. Administration expenses increased primarily due to costs related to the qui tam litigation, filing of a Form S-1, and investor relations activities. but were otherwise comparable between periods, reflecting similar We expect that we may have elevated general and administrative costs, compared to 2014 levels, while we continue fund raising activities.

Research and Development Expenses : Research

Research and development expenses : Research and development expenses were $350,000 $283,000 for the first second quarter of 2015 compared to $630,000 $1,172,000 for the first second quarter of 2014. Our research and development expenses varied in the first second quarter of 2015 compared to the same period in 2014 primarily due to the inclusion and fluctuation of operating expenses of LipimetiX Development, Inc., the JV, which totaled (net of intercompany transactions) $197,000 $150,000 for the three months ended March 31, June 30, 2015, and $418,000 $987,000 for the three months ended March 31, June 30, 2104. As discussed above, we have significantly reduced our development activities of AEM-28 and its analogs, including AEM-28-14, as we attempt to obtain additional funding.

Income Tax Benefit : Income tax benefit in

Income Tax Benefit : Income tax benefit in 2015 consisted of a refundable Australian research and development tax credit, as described in Note D to the March 31, 2015 financial statements included in this Prospectus, Quarterly Report on Form 10-Q, related to our joint venture's Australian clinical trial activities.

Net Loss attributable to Capstone Therapeutics

Net Loss attributable to Capstone Therapeutics stockholders : We incurred a net loss in the first second quarter of 2015 of $0.7 $0.8 million compared to a net loss of $1.1 $1.4 million in the first second quarter of 2014. Net loss is affected by the items discussed above in Interest General and Other Administrative Expenses, Income Net, Income Tax Benefit, and the inclusion of the operating expenses of LipimetiX Development, Inc., JV, which totaled (net of intercompany transactions) $197,000 $150,000 for the three months ended March 31, June 30, 2015 and $418,000 $987,000 for the three months ended March 31, June 30, 2014. As discussed above, we have significantly reduced our 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,

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