Q2 2022 Capricor Therapeutics Inc Earnings Call

August 10, 2022

Operator 3: Good day, and welcome to the Capricor Therapeutics Q2 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to AJ Bergman, CFO. Please go ahead, sir.

Operator: Good day, and welcome to the Capricor Therapeutics Q2 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to AJ Bergman, CFO. Please go ahead, sir.

Good day and welcome to back Africa Therapeutics second quarter 2022 earnings call. Today's conference is being recorded at this time I'd like to turn the conference over to AJ Bergmann CFO . Please go ahead Sir.

Anthony Bergmann: Thank you and good afternoon. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety, and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential milestone payments, and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports.

Thank you and good afternoon before we start I would like to state that we will be making certain forward looking statements. During today's presentation. These statements may include statements regarding among other things the efficacy safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies.

Present or report additional data our plans regarding regulatory filings potential regulatory developments involving our product candidates.

Central milestone payments and a possible uses of existing cash and investment resources. These forward looking statements are based on current information assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward looking statements. These and other risks are described in our periodic filings made with the SEC, putting our quarterly and annual reports.

Anthony Bergmann: You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements. With that, I'll turn the call over to Linda Marbán, CEO.

You are cautioned not to place undue reliance on these forward looking statements and we disclaim any obligation to update such statements with that I'll turn the call over to Linda Mcmahon CEO .

Linda Marbán: Good afternoon, and thank you for joining us for our Q2 2022 conference call. Today, I will provide updates on our Duchenne muscular dystrophy program and our exosome platform technology, as well as outline our priorities and path forward. This quarter has been productive on many fronts, and most notably, we achieved several key milestones across our lead program, CAP-1002, for the treatment of Duchenne muscular dystrophy, otherwise known as DMD. To remind you, our current clinical initiative is aimed at treating DMD patients who are largely non-ambulant and in the later stages of their disease, and of course, for whom very few therapeutic options exist. This patient group comprises about half of the DMD population, or about 10,000 boys and young men in the United States.

Good afternoon, and thank you for joining us for our second quarter 2022 conference call today, I will provide updates on our duchenne muscular dystrophy program and our extra the old platform technology as well as outline our priorities and path forward.

This quarter has been productive on many fronts and most notably we achieved several key milestones across our lead program Cat Turner two for the treatment of Duchenne muscular dystrophy, otherwise known as D. M D.

To remind you our current clinical initiative is aimed at treating DMD patients who are largely non ambulant and in the later stages of their disease.

Of course for whom very few therapeutic options.

This patient group comprises about half of the DMD population.

We're about 10000 boys and young men in the United States.

Linda Marbán: We have completed 2 successful clinical trials in DMD, and CAP-1002 has proven to be safe and well-tolerated in over 200 patients to date. Now let me walk you through some of the key highlights and recent updates. First, turning to HOPE-3, our ongoing phase 3 pivotal study, which was initiated in Q2, which included site selection and activation of certified Duchenne care centers. HOPE-3 is a randomized double-blind placebo-controlled study with the goal to enroll 70 patients at approximately 15 to 20 investigative sites in the United States. In July, we reported the initiation of enrollment, and I am very pleased to inform you that as of today, we have enrolled 7 patients. We have a growing list of interested candidates, and we are optimistic that we will now gain momentum in the recruitment of the trial.

Linda Marbán: We have completed two successful clinical trials in DMD, and CAP-1002 has proven to be safe and well-tolerated in over 200 patients to date. Now let me walk you through some of the key highlights and recent updates. First, turning to HOPE-3, our ongoing phase 3 pivotal study, which was initiated in Q2, which included site selection and activation of certified Duchenne care centers. HOPE-3 is a randomized double-blind placebo-controlled study with the goal to enroll 70 patients at approximately 15 to 20 investigative sites in the United States. In July, we reported the initiation of enrollment, and I am very pleased to inform you that as of today, we have enrolled 7 patients. We have a growing list of interested candidates, and we are optimistic that we will now gain momentum in the recruitment of the trial.

We've completed two successful clinical trials in D. M D and top 10 are two has proven to be safe and well tolerated in over 200 patients to date.

Now, let me walk you through some of the key highlights and recent updates.

First turning to hope three our ongoing phase III pivotal study, which was initiated in the second quarter, which included site selection and activation of certified to Sun care centers.

<unk> III is a randomized double blind placebo control studies with the goal to enroll 70 patients at approximately 15 to 20 investigative sites in the United States.

In July we reported the initiation of enrollment and I am very pleased to inform you that as of today, we have enrolled seven patients.

We have a growing list of interested candidates and we are optimistic that we will now gain momentum and the recruitment of the trial.

Linda Marbán: HOPE-2, our phase 2 study, which was published in The Lancet together with the recent late-breaking open label extension data presented at this year's Parent Project Muscular Dystrophy, or PPMD Annual Conference in June, are amplifying the interest in our HOPE-3 trial. Our current projections for enrollment are to be complete by Q3 2023 or sooner. The promise of HOPE-3 builds on the recently reported HOPE-2 open label extension data, which continue to underscore the therapeutic potential of CAP-1002 and highlight its sustained safety and efficacy. Let me recap that data for you to highlight its relevance to our regulatory strategy and the clinical development of CAP-1002. HOPE-2 open label extension was a very unique clinical study which allowed each patient to be used as their own control.

Hope to our phase two study, which was published in the lancet last together with the recent late breaking open label extension data presented at this year's parent project muscular dystrophy or P. P. M D annual conference in June .

Our amplify the interest in our hopes are your trial.

Our current projections for the walls are to be complete by the third.

Third quarter of 2023 or sooner.

The promise of hope three built on the recently reported hope to open label extension data.

Which continue to underscore the therapeutic potential of cap Turner too.

And highlight its the same sustained safety and efficacy.

Let me recap that data for you to highlight its relevance to our regulatory strategy and the clinical development of cap tenancy.

Hope to open label extension was a very unique clinical study, which allowed each patient should be used as their own control.

Linda Marbán: First, we conducted HOPE-2, where one group received placebo and one group received CAP-1002. Those results showed statistical and clinically significant improvement in upper limb function in non-ambulant patients with DMD, as earlier mentioned and published. All patients went off treatment into what we call the gap phase, which was approximately one year. All patients, no matter what group they were originally in, declined in upper limb function during the gap phase. All patients went on CAP-1002 in the open label extension part of the trial, and disease progression was attenuated up to 70%, most notable in those that were originally on placebo.

First we conducted hope too well.

Our water group received placebo and one group received cap tenants you.

Those results showed statistical.

And clinically significant improvement in upper limb function and non ambulant patients with gmg as earlier mentioned and published.

Then all patients went off treatments into what we call the gap phase, which was approximately one.

All patients no matter what group they were originally.

Declines in upper limb function during the GAAP days.

Then all patients went on cap tenant you and the open label extension part of the trial.

And disease progression was attenuated up to 70%.

Most notable and those that were originally on placebo.

Linda Marbán: What is also interesting is that the original CAP-1002 group declined off therapy at the same rate that the placebo group did, but entered the open label portion of the trial with better upper limb function due to the fact that they had the benefit of one year of CAP-1002 in HOPE-2. They started with better upper limb function and therefore finished with better upper limb function. This is exemplary of potential disease-modifying behavior of a therapeutic. We believe this data must be shown to FDA, both because of its statistical power and clinical benefit, but also because time is muscle. Based on this data set, every year that patients are off CAP-1002, they lose function that cannot be recovered.

What is also interesting is that the original cap 10 O. Two group declined off therapy at the same rate that the placebo group jet, but entered the open label portion of the trial with better upper limb function.

Due to the fact that they had the benefit of one year of top 10 O two in hope too.

They started with better upper limb function, and therefore finished with better upper limb function.

This was exemplary of potential disease modifying behavior out there.

Therapeutic.

We believe this data must be shown to FTA.

Because of its statistical power on a clinical benefit but also because time is muscle.

Based on this dataset every year that patients are off cappuccino too they lose function that cannot be recovered.

Linda Marbán: Based on our regulatory designations of RMAT, or Regenerative Medicine Advanced Therapy, and Orphan Drug Designation, and also the importance of this data to people with DMD, we are requesting a meeting with FDA, which should occur this year, to present this open label extension data, which we believe will further support our path forward towards potential regulatory approval. However, we remain focused on executing on our HOPE-3 clinical trial, which is slated to be our pivotal trial. To remind you, HOPE-3's primary endpoint is the Performance of the Upper Limb 2.0, a validated tool to assess skeletal muscle function in non-ambulant patients, and also the measure in which we saw statistically significant results in HOPE-2 and in HOPE-2 open label extension.

Based on our regulatory designations of our match, our regenerative medicine advanced therapy, and orphan disease designation and also the importance of this data to people with D. M. D. We are requesting a meeting with FDA, which should occur this year to present. This open label extension data, which we.

We believe will further support our path forward towards potential regulatory approval.

However, we remain focused on executing on our hope three clinical trial, which is slated to be our pivotal trial.

To remind you hoped III primary endpoint is the performance of the upper limb to point out.

Validated tool to assess skeletal muscle function and non ambulant patients and also the measure in which we saw statistically significant results and hope to.

And hope to open label extension.

Linda Marbán: This meeting will complement a CMC meeting, which is required prior to BLA submission, which we are planning to hold later this year as well. Another key priority for our CAP-1002 program involves preparing for the future potential commercial launch, including the scale-up of manufacturing. While our current manufacturing site in Los Angeles is fully focused on supplying our HOPE-3 clinical trial, we are supplementing our manufacturing efforts by converting a portion of our San Diego labs to support potential early commercial launch. We see this facility as a versatile and cost-effective measure. Additionally, our manufacturing plan encompasses the work we have done with Lonza, as they may be an important part of our future scaled-up commercial plan for CAP-1002.

This meeting will complement a CMC meeting, which is required prior to BLA submission, which we are planning to hold later this year as well.

Another key priority for our cap 10, or two program involves preparing for the future potential commercial launch, including the scale up of manufacturing.

Our current manufacturing site in Los Angeles is fully focused on supplying our hope three clinical trial.

We are supplementing our manufacturing efforts by converting a portion of our San Diego labs to support potential early commercial launch we see this facility is a versatile and cost effective measure.

Additionally, our manufacturing plan encompasses the work we have done those laws as they may be an important part of our future scaled up commercial plan forecasts hold true.

Linda Marbán: As you know, we entered into a distribution and commercial agreement with Nippon Shinyaku and its US subsidiary, NS Pharma, an experienced and well-resourced commercial partner in the United States. NS Pharma has been a trusted DMD partner for the community and has already established a respected infrastructure to support patients and their caregivers. If approved, we believe Nippon Shinyaku's leadership in the space will serve CAP-1002 well in reaching more eligible patients who could benefit from our therapy. As a reminder, Capricor's agreement with Nippon Shinyaku came with a $30 million upfront payment to Capricor and has a potential to reach up to $705 million in milestone payments, some of which, if achieved, will be paid during the course of HOPE-3.

As you know we entered into a distribution and commercial agreement with Nippon <unk> and its U S subsidiary and as pharma and experienced and well resource commercial partner in the United States.

And that pharma has been a trusted DMT partner for the community and has already established a respected infrastructure to support patients on their caregivers.

Approved we believe Nippon sheet Jaquez leadership in this space will serve top 10 are two well and reaching more eligible patients who could benefit from our therapy.

As a reminder, cap of course agreement with Nippon and Yahoo came with a $30 million upfront payment to copper core and has a potential to reach up to $705 million in milestone payments some of which if achieved will be paid during the course of three <unk>.

Linda Marbán: To maximize the potential benefit of CAP-1002 and reach patients globally, we will continue to explore ex-US partnership opportunities. Our goal is to continue to execute on our regulatory, clinical, CMC, and business development goals as I just outlined above, as we are committed to bringing CAP-1002 to patients as quickly as possible. Turning now to our exosomes technology. The last year has been focused on developing exosomes as a versatile platform for drug delivery and also on identifying potential applications. We have made significant progress in the manufacturing of exosomes as a competitive alternative to other lipid delivery systems with the additional benefit of having the potential to be targeted to a specific biomarker or cell type.

To maximize the potential benefit of cap cannot you unreached patients globally, we will continue to explore ex U S partnership opportunities.

Our goal is to continue to execute on our regulatory clinical CMC and business development goal as I just outlined above as we are committed to bringing cap tells you to patients as quickly as possible.

Turning now to our Exosomes technology. The last year has been focused on developing exosomes as a versatile platform for drug delivery and also on identifying potential applications.

<unk> made significant progress in the manufacturing of Exosomes as a competitive alternative to other lipid delivery systems with the additional benefit of having the potential to be targeted to a specific biomarker or cell types.

Linda Marbán: Our targeted delivery platform can carry therapeutic payloads that are produced via an exogenous process for loading certain types of payloads, which is similar to what most in our space are doing, or via an endogenous loading process for other types of payloads, including proteins. This last approach relies on our proprietary technology, which allows for better consistency and preservation of the integrity of the cargo. We believe this positions Capricor to be able to attract potential partnerships and drive new therapeutic modalities. The emerging exosome platform will have potential applications in multiple domains, including vaccines, delivery of RNAs, including small interfering RNAs and antisense molecules, as well as other payloads. We have used our proprietary technology to develop an exosome-based vaccine with robust preclinical data. We plan on positioning this opportunity for partnering discussions.

Our targeted delivery platform can carry therapeutic payloads that are produced beer and exogenous process for loading certain types of payloads, which is similar to what most in our space are doing or via an endogenous loading process for other types of payloads, including proteins.

This last approach relies on a proprietary technology, which allows for better consistency and preservation of the integrity of the cargo.

We believe dispositions cap are core to be able to attract potential partnerships and drive new therapeutic modalities.

Emerging actually don't platform will have potential applications in multiple domains, including vaccines delivery of Rnas, including small interfering RNA is an antisense molecule as well as other payloads, we have used our proprietary technology to develop an extra zone based vaccine.

Robust preclinical data we plan on positioning this opportunity for partnering discussions.

Linda Marbán: At present, our focus is on the potential commercialization of CAP-1002 for DMD, while we continue to develop our exosome platform technology for future pipeline opportunities. By prioritizing our core programs, we have the ability to efficiently utilize our current cash position, which carries us into Q2 2024 to deliver on important clinical and related milestones. I will now turn the call over to AJ Bergmann, our CFO, for a more detailed update on the financials.

At present, our focus is on the potential commercialization of cap 10 O. Two for DMT, while we continue to develop our axon platform technology for future pipeline opportunities by prioritizing our core programs, we have the ability to efficiently utilize our current cash position.

Carries us into the second quarter of 'twenty 'twenty four to deliver on important clinical and related milestones.

I will now turn the call over to AJ Bergmann, our CFO for a more detailed update on the financials.

Anthony Bergmann: Thank you, Linda. This afternoon's press release provided a summary of our Q2 2022 financials on a GAAP basis. You may also refer to our quarterly report on Form 10-Q, which we expect to become available shortly and will be accessible on the SEC website as well as in the financial section of the company website. As of 30 June 2022, the company's cash equivalents, and marketable securities totaled approximately $51.4 million, compared to approximately $34.9 million on 31 December 2021. As Linda mentioned, we believe that based on our current operating plan and financial resources, we expect that our available cash equivalents, and marketable securities will be sufficient to cover anticipated expenses and capital requirements into Q2 2024. Turning now to the financials.

Thank you Linda this afternoon's press release provided a summary of our second quarter of 2022 financials on a GAAP basis. We may also refer to our quarterly report on Form 10-Q, which we expect to become available shortly and will be accessible on the SEC website as well as the financial section of the company website as of <unk>.

June 30th 2022, the company's cash cash equivalents and marketable securities totaled approximately $51 4 million compared to approximately $34 9 million on December 31 2021.

I want to mention we believe that based on our current operating plan and financial resources, we expect that our available cash cash equivalents in marketable securities will be sufficient to cover anticipated expenses and capital requirements into the second quarter of 2024.

Turning now to the financials in the first half of 2022, our net cash provided by operating activities was approximately $17 5 million driven by the $30 million upfront payment from the bunch and yaacov for.

Anthony Bergmann: In H1 2022, our net cash provided by operating activities was approximately $17.5 million, driven by the $30 million upfront payment from Nippon Shinyaku. For Q2 2022, excluding stock-based compensation expenses, our research and development expense was approximately $4.7 million, compared to approximately $3.4 million in Q2 2021. Excluding stock-based compensation, our general and administrative expense was approximately $1.4 million in Q2 2022 and approximately $1.2 million in Q2 2021. Net loss for H1 2022 was approximately $14.9 million, compared to a net loss of approximately $9.9 million for H1 2021. With that, we will now open the line up for questions.

For the second quarter of 2022, excluding stock based compensation expenses, our research and development expense was approximately $4 7 million compared to approximately $3 4 million in Q2 2021.

Excluding stock based compensation of our general and administrative expense was approximately $1 4 million in Q2, 2022, and approximately $1 2 million in Q2 2021 net loss for the first half of 2022 was approximately $14 9 million compared to a net loss of approximately $9 9 million for the first half of 2021.

With that we will now open the lineup for questions.

Operator 3: Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's press star one to ask a question. We'll take our first question from the line of Joseph Pantginis with H.C. Wainwright. Please go ahead. Your line is now open.

Operator: Thank you. If you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that's press star one to ask a question. We'll take our first question from the line of Joseph Pantginis with H.C. Wainwright. Please go ahead. Your line is now open.

Thank you if you'd like to ask a question. Please signal by pressing star one on your telephone keypad, if youre using a speakerphone. Please make sure. Your mute function is turned off somehow your signal to reach our equipment.

Press Star one to ask a question.

We will take our first question from the line of Joe <unk> with H C. Wainwright. Please go ahead. Your line is now open.

Joseph Pantginis: Hi, Linda and A.J. Good afternoon. Thanks for taking the question. A couple questions actually. First, wanted to get a little more color or detail. Now, obviously, the answers will be predicated on what the FDA says, but, you know, how would you describe your wish list or goal for what you hope to get out of your upcoming FDA meeting where you said the primary goal is to present the OLE data? Are you looking to change the potential launch dynamic? Have it potentially come to market earlier? I mean, what is the ultimate goal here?

Hi, Linda and good.

Good afternoon, and thanks for taking the question.

So a couple of questions actually so first.

Wanted to get a little more color or detail now obviously, the answers will be predicated on what the FDA says but.

How would you describe your wish list or goal for what you hope to get out of your upcoming FDA meeting, where you said the primary goal is to present the lead data are you looking to change the potential.

Launch dynamic habit potentially come to market earlier, I mean, what is the ultimate goal here.

Linda Marbán: Yeah, I mean, our ultimate goal, Joe, and first of all, great talking to you. Looking forward to seeing you in September. Our ultimate goal is to get CAP-1002 to market and to these DMD kids as quickly as possible. As I said in my talk, and I've been saying now for a few weeks, time is muscle. What became very clear in the open label extension data is when they were off CAP-1002, they declined, and as soon as they go back on CAP-1002, they get better. The placebo patients were on the steady course of decline, similar to natural history for two straight years, the year on placebo and the year on CAP. Then as soon as they went on CAP-1002, we saw the delay of the decline of the disease process by about 70%.

Yeah, I mean, our ultimate goals, Joe and first of all great talking to you and I'm looking forward to seeing in September .

Our ultimate goal is to get captain or two to market and to the D. M. D kids as quickly as possible as I said in my talk and I've been saying now for a few weeks time as muscle what became very clear in the open label extension data is when they were all cap 10 O two they decline and as soon as they go back on club Terra too they got better.

The placebo patients were on a steady course of declines similar to natural history for two straight years, so you're on placebo and a year on gap and then as soon as they went on cap tenor to the delay.

We saw the delay of the decline of the disease process by about 70%.

Linda Marbán: We think this data is extraordinary. We think it is representative of disease modifying activity. We are going in strong to the FDA to show this data, and we are excited to work with them to bring this to approval as quickly as we possibly can.

We think this data is extraordinary we think it is a representative of disease modifying activity, we are going and strong to the FDA to show. This data and we are excited to work with them to bring this to approval as quickly as we possibly can.

Joseph Pantginis: The muscle data certainly speak for itself in my belief. I guess I'll ask it in another way as I'm thinking about it. With regard to the commercialization dynamic, is there a potential? I mean, let's just call it swing for the fences at this point with regard to, you know, does CAP-1002 have the potential to be on the market prior to the readout of HOPE-3? When I say on the market, I mean something like maybe a managed access program on a patient-by-patient basis based on the data you look to present.

And the muscle data certainly speak for itself and I believe so I guess I'll ask it in another way as I'm thinking about it so with regard to the commercialization dynamic. So is there a potential I mean, let's just call. It swing for the fences at this point with regard to you know.

Does cap 10 O two have the potential to be on the market prior to the readout of hope three and when I say on the market I mean, something like maybe a.

Our managed access program on a patient by patient basis based on the data you've looked at present.

Linda Marbán: Yeah. Our goals right now are very focused. The building blocks are in place to get CAP-1002 ready for commercialization. That means meeting with the FDA regarding the CMC, making sure that we are BLA ready, presenting the open label extension data to the FDA, getting their feedback, and then we'll decide our path forward there. What's the best path forward? The exciting thing with our regulatory designation of RMAT, we really get preferred access to FDA, so they're going to work with us on this. Certainly everybody that we've shown the data to is excited by it. Anecdotally, the patients are saying they're definitely feeling and functioning better. They're going to stand up and say, and sometimes even shout the same thing. Certainly we've put the team in place.

Yeah. So our goal right now are very focused on the building blocks are in place to get cap tenor to ready for commercialization that means meeting with the FDA regarding the CMC and making sure that we are BLA ready presenting the open label extension data to the FDA getting their feedback and then we will decide.

Our path forward there, what's the what's the best path forward.

The exciting thing with a regulatory designation of Rmi, we really got preferred access to FDA, So theyre going to work with us on this and certainly everybody that we've shown the data to is excited by it and anecdotally the patients are saying, they're definitely feeling a functioning better.

So there theyre going to stand up and say and sometimes even shelf. The same thing. So certainly we've put the team in place.

Linda Marbán: We've got the manager there. If anybody knows, they know I'm a big baseball fan, so swinging for the fences is not something I'm afraid to do.

Got the manager there and if anybody knows I know I'm, a big baseball fan so clean for the census is not something I'm afraid to do.

Joseph Pantginis: There you go. Okay. I guess with regard to either concomitant timing of the meeting or a separate meeting with regard to CMC, I'm glad you are planning ahead with regard to your manufacturing, you know, and supplementing out of San Diego lab. I'm glad you made those comments. How would you potentially project your needs beyond that from a manufacturing standpoint?

There you go Okay and then.

I guess with regard to either.

Concomitant timing of the meeting or a separate meeting with regard to CMC.

I'm glad you're you are planning ahead with regard to your manufacturing you know somewhat supplementing out of San Diego lateral glad you made those comments how would you potentially project your needs beyond that from a manufacturing standpoint.

Linda Marbán: In terms of the manufacturing, we're working on that plan right now. We have the facility, as I just announced, that we are building as part of our San Diego labs here. It is a relatively low cost option, which affords us a tremendous opportunity for not only getting this product ready for BLA, but also for commercial launch. We'll evaluate along with our partner, NS, the need as it becomes more apparent, and we'll keep everybody updated on our plans for that as we move forward.

In terms of the manufacturing we're working on that plan right now we have the facility outside of just announced that we were building as part of our San Diego.

<unk> here it is a relatively low cost option, which affords us a tremendous opportunity for not only getting this product ready for BLA, but also for commercial launch we will evaluate along with our partner in.

The need is it becomes more apparent and we'll keep everybody updated on our plans for that as we move forward.

Joseph Pantginis: Got it. Just lastly, because obviously the future has a lot of exosomes being discussed. You mentioned a couple of things here and in your press release too. You know, you're going to be looking for some preclinical data, maybe get a little more visibility about what kind of things we might see without necessarily tipping your hand. You said you also have a potential partnering candidate in the form of a vaccine candidate. Is that something apart from your COVID candidate that you've discussed previously?

Got it and then just lastly, because obviously the.

The future has a lot of exosomes.

It's being discussed.

So you mentioned a couple of things here and in your press release to you know there's going to.

I'd be looking for some preclinical data maybe get a little more visibility about what kind of things we might see without necessarily tipping. Your hand, and you said you also have a potential partnering candidate in the form of vaccine candidate is that something <unk>.

From your Covid candidate that you've discussed previously.

Linda Marbán: Yeah, it's sort of a twist on the COVID candidate, so I can't really talk too much about it right now because we're really working very hard with our IP and legal teams to make sure we're protected on every level. What I can tell you about this is it's going to be very exciting because it takes the exosomes, which you know we've been working on for a long time. We've standardized the manufacturing of such so that they can be scaled up and manufactured in a way that would make them competitive with any lipid delivery system out there. But we can put a targeting molecule on the outside, and we can put custom payloads on the inside. The current vaccine candidate is similar to a recombinant protein vaccine, so

Yeah, it's it's sort of a twist on the Covid candidates. So I can't really talk too much about it right now because we're really working very hard with our IP and legal teams to make sure. We're protected on every level. What I can tell you about this is it's going to be very exciting because it takes the accidental but you know we've been working on for a long time with <unk>.

Standardize the manufacturing of such so that they can be scaled up and manufactured in a way that would make them competitive with any lipid delivery system out there, but we can put a targeting molecule on the outside and we can put custom payloads on the inside the current vaccine candidate is similar to a recombinant protein vaccine. So but has the advantage of being able.

Linda Marbán: has the advantage of being able to be made into other types of vaccine candidates very quickly. We use COVID sort of as our model system, rapidly available and something that we've been working on for a while, but in reality, could be translated to any infectious disease or other types of utility where a protein-based vaccine might be necessary or desired.

To be made into other types of vaccine candidates very quickly. So we use COVID-19 sort of as a model system.

Probably available is something that we've been working on for a while but in reality could be translated to any infectious disease or other types of utility where a protein based vaccine might be necessary or desired.

Joseph Pantginis: Got it. My last question, if you don't mind, and it's actually kind of important I think, just based on the current biotech environment, which looks like it's starting to bounce back but, you know, cash is king right now, so being able to have a balance into Q2 of 2024, speaks volumes. I wanted to address, you know, one of your comments in the press release and AJ's comments about, you know, excluding potential strategic uses of this capital. Is this something that would look to expand your pipeline externally from an external source or, you know, further expand an exosome program? Or I guess what kind of things could we look at if that would be one of the options you consider?

Got it and my last question, if you don't mind.

And it's actually kind of important I think just based on the current biotech environment, which looks like it's starting to bounce back but.

Cash is king right now so being able to have a balance into the second quarter of 2024 speaks volumes. So I wanted to address you know one of your comments in the press release and <unk> comments about you know excluding.

Excluding potential strategic uses of this capital is this something that would.

Look to expand your pipeline externally from an external source or further expand and Exosomes program or.

What kind of things could we look at if that would be one of the options you consider.

Anthony Bergmann: Yeah. Joe, happy to take a little bit of that question. I mean, obviously we're being judicious with our cash spend. I think we have a nice runway into Q2, as we just articulated, of 2024. You know, really we're prioritizing what our current mission is, focused on CAP-1002 for DMD and the exosome pipeline right now, in a preclinical status. It's obviously out there and we're considering all options, but we're gonna do our best to effectively manage our burn rate moving forward.

Yeah, Joe happy to take a little bit of that question I mean, obviously, we're being judicious with our cash spend I think we have a nice runway into the second quarter, because we just articulated of 'twenty 'twenty four.

And you know really were priority prioritizing what our current mission is focused on cat two for DMD in the <unk> pipeline right now and a preclinical status. So it's obviously out there and we're considering all options, but where we're going to do our best to effectively manage our burn rate moving forward.

Joseph Pantginis: Got it. Thank you, guys.

Got it thank you guys.

Linda Marbán: Thanks, Joe. Take care.

Thanks, Joe take care.

Joseph Pantginis: You too.

Yes.

Okay.

Yeah.

Anthony Bergmann: Operator, do we have another question?

Okay.

Operator, do we have another question.

Okay.

[Analyst]: Hello?

Joseph Pantginis: Hello?

Yes.

Okay.

Hello.

Anthony Bergmann: Hi, Alan.

Hi, Alan again start.

Operator 2: Again, star one if you'd like to ask a question or make a comment.

Operator: Again, star one if you'd like to ask a question or make a comment.

Again star one if you'd like to ask a question or make a comment.

Yes.

[Analyst]: Hello?

Joseph Pantginis: Hello?

Hello.

Operator 2: Yeah. Go ahead, Alan. It's open.

Operator: Yeah. Go ahead, Alan. It's open.

Yeah go ahead, Alan and its own James Linda.

Anthony Bergmann: Go ahead, Alan. It's AJ and Linda Marbán.

[Analyst]: Okay. I'm sorry. I couldn't hear anything for a bit. Linda, AJ, it's good to talk to you. Linda, I'd like to pursue something that was mentioned earlier. There was an off time for the treatment condition during the interim period, and the functioning looks like it continues its descent even after CAP-1002 was restored. How do you envision the treatment group might look like if it didn't go off treatment for that interim period? With that, feel free to provide any additional thoughts you had about the need for continuous treatment.

Allan Allan: Okay. I'm sorry. I couldn't hear anything for a bit. Linda, AJ, it's good to talk to you. Linda, I'd like to pursue something that was mentioned earlier. There was an off time for the treatment condition during the interim period, and the functioning looks like it continues its descent even after CAP-1002 was restored. How do you envision the treatment group might look like if it didn't go off treatment for that interim period? With that, feel free to provide any additional thoughts you had about the need for continuous treatment.

Okay.

Alright.

I couldn't hear anything for that.

Linda Linda.

Linda is it good to talk to you in.

I'd like to pursue something that was mentioned earlier and.

There isn't.

<unk> for the treatment condition.

During the interim period, and they're functioning looks like.

<unk> continues its defense even after capital is restored.

Do you envision with treatment group might look like if it didn't go off treatment for the interim period.

Feel free to provide any additional thoughts you had about the need for continuous treatment.

Linda Marbán: Yeah. Thanks, Alan. Great to talk to you. Obviously, that's the question that we're looking forward to answering as we continue to move this program forward. You know, what we know from HOPE-2, the first clinical program called HOPE-Duchenne, and what we're believing we will see in HOPE-3 is that being on CAP-1002 delays the progression of the disease. Again, let me emphasize, time is muscle. We don't get the function back. Once it's lost, it appears to be lost. We delay progression. We delay it about 70%. If you wanna think about that in sort of a temporal way, you can think that out of a year of function, we're preserving 8 months. When you add that up over time, it's a very significant improvement in the trajectory of decline.

Yeah, Thanks, Alan Great to talk to.

Obviously, that's a question that we're looking forward to answering as we continue to move this program forward.

We know from both to the first clinical program called Hope Duchenne and what we're believing we will see and hope through years of being on cap to delay the progression of the disease, but again, let me emphasize times muscle they don't get the function back. Once this lawsuit appears to be loss. So we delay progression we delay at about 70%. If you wanted to think.

About that and sort of a temporal way you can think that out of the year a function, we're preserving eight months.

Add that up over time, it's a very significant improvements and the trajectory of decline.

Linda Marbán: We also believe that CAP-1002, based on its mechanism of action, which has been published and discussed, will perform with gene therapies, with exon skippers, other potential therapeutics that are coming along the pathway and the development for DMD. It's not gonna be a one or the other, but a both scenario. We are very much looking forward to seeing the fact that we can kind of maintain patients steady for years, hopefully. This is a, you know, rest of your life kind of therapeutic, the way we're envisioning it right now, which just to highlight, half of the patients with DMD right now are non-ambulant. That's 10,000 patients.

We also believe the cap 10 or two based on its mechanism of action, which has been published and discussed with pro forma with gene therapies with exon skipper other potential therapeutics that are coming along along the pathway in the development for D. M. D. So it's not going to be on one or the other but both scenario.

And so we are very much looking forward to seeing the fact that we can kind of maintain patient study for years hopefully this is <unk>.

Rest of your life kind of therapeutic <unk> visiting your right now, which just to highlight a handful of patients with CMT right. Now are non ambulant. That's 10000 patients that makes 10000 boy approximately eligible for four times a year dosing starting between 10, and 15 year stage and going until 25 or 30 years of age which is now.

Linda Marbán: That makes 10,000 boys approximately eligible for 4 times a year dosing, starting between 10 and 15 years of age and going until 25 or 30 years of age, which is now when they typically pass away. Could be longer if everything works well. This is a long-term therapeutic option for DMD. Very safe as well.

When they typically pathway could be longer.

Everything works well.

This is a long term therapeutic option for DMD very safe as well.

Okay.

[Analyst]: If I can ask some fine lines on the intent on adding commercial capacity for CAP-1002. Longer term, do you see it as a co-manufacturing at the same time with Lonza or just a backup or something you see even larger, longer term as you continue expanding the United States and elsewhere.

Allan Allan: If I can ask some fine lines on the intent on adding commercial capacity for CAP-1002. Longer term, do you see it as a co-manufacturing at the same time with Lonza or just a backup or something you see even larger, longer term as you continue expanding the United States and elsewhere.

If I can ask them timelines on the <unk>.

Adding commercial capacity for cap two.

Long term do you see it as a.

Co manufacturing at the same kind of influenza or are just a backup or something you see even larger longer term as the U S.

As you continue to expand in the United States and elsewhere.

Linda Marbán: As you can imagine, Alan, we were incredibly excited by the open label extension data. It literally put our program in terms of preparing for commercial launch on fast forward. We are now evaluating options for scaling up and scaling out manufacturing. They've already been sort of put the building blocks in place. How that's gonna be enacted as we begin to move into the market, we will be able to better assess as we get closer to that. The reason that we decided to build this facility here in our San Diego labs is because it allows us right now to make doses that are commercial ready. We're already preparing for commercial launch, and that's gonna help us hopefully with our regulatory strategy as well as getting CAP-1002 into patients that need it as rapidly as possible.

As you can imagine Alan we were incredibly excited by the open label extension data.

It literally put our program in terms of preparing for commercial launch on fast forward. We are now evaluating options for scaling up and scaling our manufacturing they've already been sort of put the building blocks in place how thats going to be enacted as we begin to move into the market.

We will be able to better assess as we get closer to that.

The reason that we decided to build this facility here in our San Diego lapses, because it allows us right now to make doses that are commercial ready. So we're already preparing for commercial launch and that's going to help us hopefully with our regulatory strategy as well as getting cap cana to enter patients that needed as rapidly as possible.

[Analyst]: Eduardo Marbán, I'm rooting for you. I talk to patients from around the world, and they're actually tracking and are excited about this trial. Good luck and hope to see you soon.

Allan Allan: Eduardo Marbán, I'm rooting for you. I talk to patients from around the world, and they're actually tracking and are excited about this trial. Good luck and hope to see you soon.

I've decided I'm rooting for you I talked to patients from around the world and they are actually tracking and are excited about this trial.

Good luck and hope to see you soon.

Linda Marbán: Thanks, Alan. Be well.

Thanks, Alan do well thanks Alan.

Anthony Bergmann: Thanks, Alan. Operator, I think you might have some technical difficulties. If you can hear us, I think that's the end of the questions, and we're gonna make some closing remarks.

Operator, I think you might have some technical difficulties.

If you can hear us.

We're going to turn the I think that's the end of the questions.

Going to make some closing remarks.

Linda Marbán: Thank you for joining us today. In summary, we are pleased with our progress in Q2, and we will continue to provide updates on our interactions with FDA on CAP-1002 as well as our engineered exosomes program. We are more encouraged than ever about the outlook of the company, and over the next several months, we plan to provide further updates on our progress at various conferences, including the H.C. Wainwright Global Investment Conference, the Cantor Fitzgerald Cell and Genetic Medicines Conference, both being held in September, as well as the Exosome-Based Therapeutic Development Summit in October, where we are featured in several presentations. Before we conclude today's call, I would like to thank our team at Capricor, our investors, and the many people who have been supportive along the way, including our patients and their families. Once again, thank you for joining us today.

Okay.

Thank you for joining us today.

In summary, we are pleased with our progress in Q2, and we will continue to provide updates on our interactions with FDA on <unk> as well as our engineered extra that one program.

More encouraged than ever about the outlook of the company and over the next several months we plan to provide further updates on our progress at various conferences.

The H C Wainwright Global Health care Conference.

Cantor Fitzgerald solid genetics Medicine conference, both being held in September as well as the extra cellular vehicle based therapeutic development summit in October .

We are featured in several presentations.

Before we conclude today's call I would like to thank our team of Capricorn, our investors and the many people who have been supportive along the way, including our patients and their families. Once again, thank you for joining us today.

Okay.

Operator 3: This concludes today's conference. Thank you for your participation. You may now disconnect.

Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.

This concludes today's conference. Thank you for your participation you may now disconnect.

[music].

Yeah.

[music].

Okay.

[music].

Q2 2022 Capricor Therapeutics Inc Earnings Call

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