Q2 2023 Capricor Therapeutics Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Capricorn Therapeutics second quarter 'twenty to 'twenty, three financial results and corporate update call.
At this time all lines are in a listen only mode. Following the presentation, we'll conduct a question and answer session. If at any time. During this call you. The quiet immediate assistance. Please press star zero for the operator.
As a reminder, this conference call is being recorded I would now like to turn the conference over to our host Mr. A J Berkman cap of course, Chief Financial Officer.
Thank you and good afternoon, everyone 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 research and development plans, including our anticipated conduct and timing.
Preclinical and clinical studies plans to present, a report additional data our plans regarding regulatory filings potential regulatory developments regarding our product candidates manufacturing capabilities potential milestone payments and other possible uses of existing cash and investment resources. These forward looking statements are based on current information assumptions and expect.
Stations 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 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 .
Thank you AJ good afternoon, and thank you for joining our second quarter 'twenty to 'twenty three conference call.
Today, I would like to begin by reiterating our deep commitment to optimizing patient focused medicine and in the first half of 'twenty to 'twenty. Three we continued to make steady progress across our pipeline and are well positioned to deliver on important clinical and regulatory milestones for our duchenne muscular dystrophy program.
As well as continue to advance our axon platform technology.
I am extremely pleased with the recent additions of two new members to our board of directors with the additions of doctors Philip got wall and Paul Atwater. Dr. Gottwald. Most recently served as the global head Vice President of business development and licensing.
Novartis Institute for Biomedical research.
And has nearly 30 years of experience in drug development research corporate strategy and business development. Dr. Atwater brings over 30 years of internal medicine, and infectious disease experience as the Cheryl Lynn and Ken Fisher Professor of Medicine at the Johns Hopkins University School of <unk>.
Serving as a clinical director for the division of infectious diseases, and the director of the Cheryl Lynn and Ken Fisher Center for environmental infectious diseases.
Doctor got wall that Atwater deep industry experience will be invaluable as we continue to enhance our strategic and business development priorities across both our programs.
Our late stage clinical development program for <unk> in patients with Gmg continues to advance through development key priorities include enrollment of our phase III <unk> III clinical trial, which I will give more details on in the next few minutes as well as continuing discussions with the FDA regarding.
The proposed path towards submission of a biologics license application Bill.
Building on this momentum we believe we are well positioned to execute our corporate executives throughout objectives throughout the remainder of the year I will now dive into our programs and provide an update on recent actually.
Let me provide you an update on our recent FDA interactions.
Earlier this year as part of our our Mac designation, we held a type B C N C or chemistry manufacturing and controls related meeting with FDA, where we outlined our plans for production of commercial scale G. M. P cap 10 O two.
The outcome of this meeting was positive and the FTA clearly outline for us the deliverables necessary for the CMC portion of our BLA.
As we previously have reported there also was a discussion concerning the possible inclusion of additional patients who are in need to be treated with product from our San Diego GMP facility in order to support commercial product manufacturing at the site.
As this request would have likely extended the timeline for the completion of our pivotal trial and therefore, the time to BLA. We requested a subsequent type fee critical meeting with FDA to determine if there was a more efficient and expeditious path to BLA due to the great unmet medical need.
This patient population.
The advocacy community believes as we do the cap tenor to attenuate to disease progression and they have continued to raise awareness of our program within the FDA and specifically sabre and as the FDA continues to highlight the importance of patient perspective, they have continued to pay close attention to our.
Program.
To that end the FDA granted our request to discuss our program in more detail and this meeting occurred in July of this year.
The goal was to further outline a plan for an expedited path to BLA for cap penalty for the treatment of later stage DMT and I'm happy to share that FDA seemed generally support about this plant.
Currently we are awaiting the final minutes from FDA, which we expect this month.
We've already had another informal meeting with FDA to further define certain aspects of our program.
Greatly appreciated appreciative.
I appreciative of the Fda's guidance to optimize the hope three clinical trial designed to support our path to potential approval.
Next I'll provide an update on <unk>, our phase III clinical trial I am very pleased to inform you that as of today, we have randomized 48 subjects across 17 active sites and based on the currently designed sample size of 68 patients. We are on track to be fully enrolled early in the fourth quarter of this year.
Sure.
Furthermore, we remain on track to conduct an interim analysis on hope three in the fourth quarter of this year, which will primarily focus on a futility analysis.
I am very enthusiastic about the rate of enrollment which has been strong throughout the summer.
Propelled by the positive feedback from patients and families, including the anecdotal reports of disease attenuation.
Additionally, we are extremely pleased by the safety profile of cap Taro too and the overall support of our investigators and families.
Now for an update on our most recent hope to open label extension or O. L. A result presented at this year's parent project muscular dystrophy annual conference.
To remind you we presented positive statistically significant two year follow up results from this study.
As you May recall, the hope to OLED study previously met its primary endpoint at the one year time point on the pole version two point of scale.
At the 24 month time point, the data continued to show statistically significant differences and the poor performance of the upper limb version two point, Joe and the open label extension treatment group when compared to the original rate of decline of the placebo group from hope two after one year even.
More profound where the cardiac findings we observed while the natural history of DMD cardiomyopathy suggest a steady decline in cardiac function as measured by ejection fraction and hope to OLED, we observed improvements in heart function and six of nine patients.
Overtime, we also observed an increase in correlation with the performance of the upper limb version 2.0 and ejection fraction resolved.
The two year results from this open label study are tremendously impactful for DMD patients so in cardiac and skeletal functional benefit which underscores the potential long term benefits of top 10 O two treatments MGMT.
The disease modifying potential together with the favorable safety and Tolerability profile further position <unk> as a potential anchor therapy for DMD patients.
We are thankful to the patients and their families for their continuous commitment to working with us on demonstrating the potential benefits of cap Cana chip.
Now turning to our partnership strategy now that we have secured commercial and distribution rights in the U S and Japan with our partner <unk>, We continue to focus on securing additional partners in other markets around the world with Europe being a key priority and now have several company.
<unk> evaluating the opportunity.
Another focus I would like to briefly touch upon is the opportunity to evaluate new indications, where cap 10, or two might provide benefits to additional patients.
While we haven't committed any resources to this development area. Yet this opportunity would provide another potential avenue for partnering licensing or even sold development leveraging all the capabilities. We have built at Capricorn for cap temperatures.
Lastly, I would like to provide an update on our GMP manufacturing facility. We have designed this GMP manufacturing facility to produce commercial scale GMP cap 10 O. Two doses, we see this facility as our first subtle at a cost effective way to bring <unk> to market.
Officially and.
In anticipation of cappuccino to obtaining market approval.
Built this facility because we believe having the ability to manufacture in house will greatly increase our margins and will support the early launch of this product I am pleased to report that the San Diego facility is up and running engineering runs are underway and we remain on track to be able to release clinical doses in the third quarter.
This year.
Overall, I am very pleased with the progress of our DMD program.
We look forward to sharing further updates from our interactions with FDA, our progress with <unk>, three and the development of potential additional partnerships and new territories.
We have two new additions to our senior leadership team enhancing our regulatory and CMC internal expertise.
Yoshi Fang has assumed his role as vice president of regulatory.
C overseeing all regulatory activities Doctor Fang previously worked at the F D. A wave life Sciences and Kodiak Biosciences.
Each of these companies have overlapping areas with overlap are overlapping with our areas of focus.
Additionally, Jonathan Takeout has joined US as Vice President of program management and business operations overseeing CMC development.
Prior experience for Mr. Kato included kite pharma, where he played an integral role in the BLA approval of <unk>. One of the first approved cell therapy treatments for large b cell lymphoma.
I'm very pleased to welcome two new members to our team.
Now turning to our <unk> platform technology, which leverages the natural cell to cell communication of the body.
We are harnessing <unk> to serve as a novel drug delivery system with broad therapeutic applications and our proprietary stealth X expression platform is at the core of our <unk> program, which is focused on the development of two broad modality infectious disease and precision therapeutics.
As previously stated we believe that Exosomes are the future of drug delivery.
They were able to deliver content directly to the cell avoid detection by the immune system and can be targeted however.
However, one of the issues that the field has been grappling with is the ability to manufacture a large volume of a relatively homogeneous formulation similar to lipid nanoparticle.
We have focused a significant amount of time and energy into manufacturing and targeting <unk> and I'm delighted to share with you that we have made paradigm shifting progress on these objectives.
This development step allows for rapid and efficient development of future <unk> product.
To that end I'm very pleased to report that we have recently begun work with an undisclosed pharma company looking at enhancing delivery of Aso's using exosomes as the deliveries yet.
I look forward to providing more details on this in the coming months as this is a very important step for <unk> as we begin to leverage our platform staff acts.
If we look further to exploring the applications of our cell therapy platform as they expand into precision based therapeutics and are working and targets.
Primarily in neuromuscular diseases at this time.
Additionally, we recently published data in bio RFID Journal, featuring two vaccine candidates that were generated with <unk> X.
Those are engineered to express influenza H, three or Sars COVID-19 two spike.
When administered individually boats Delphax H stream as Don ex Spike introduced a strong immunization with the production of a potent humoral and cellular immune response. These.
The facts were obtained with administration of nano grams of protein and without adjuvant or lipid nanoparticles.
To test the potential benefits of the bi valent vaccine Hemagglutinin H, three and Sars cov, two spike protein for.
Individually engineered on the exome surface and mix before injection. This combination approach also induced a strong immune response and Mike.
With both antibody and T cell response.
Additionally, there were no detectable immune competition between answered it by combining multiple targets that are single vaccine formulations. These results support the potential therapeutic utility and versatility of our <unk> platform and addressing a broad range of infectious diseases.
Our current plans continued to focus on leveraging business development and partnering strategies as well as non dilutive grant funding for our <unk> platform technology.
In closing we are pleased with the advancements across our organization as we remain focused on becoming a commercial scale company with cap 10 O two with our lead asset and development of our <unk> technology. We are entering the second half of the year in a position of strength.
I look forward to working with our new board member and capitalizing on their deep industry experience and forward looking vision, which we feel will be invaluable as we continue to execute on the key priorities for <unk> and our <unk> platform.
Now with that I will turn the call over to our Chief Financial Officer, AJ Bergmann to run through our financial results for the second quarter of 2023.
Thank you Linda.
Afternoon's press release provided a summary of our second quarter 2023 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 the financial section of our website.
As of June 32023 of the company's cash cash equivalents and marketable securities totaled approximately $37 8 million compared to approximately $41 4 million on December 31, 2022 based on our current operating plan company's cash position is expected to be sufficient to support operations through the third quarter of 2020.
Four I would like to note that this expectation excludes any additional potential milestone payments under our exclusive commercialization and distribution agreement with the bunch and yaacov that may become deal, which would extend our cash runway.
Turning to the financials revenues for the second quarter of 2023 were approximately $3 9 million compared with zero for the second quarter of 2022. The primary source of revenue was from the ratable recognition of the $30 million upfront payment in accordance with our U S exclusive commercialization and distribution agreement we were.
C from the bunch and Yaacov <unk>.
Moving to our operating expenses for the second quarter of 2023, excluding stock based compensation, our research and development expense was approximately $8 4 million compared to approximately $4 7 million in Q2, 2022 again, excluding stock based compensation, our general and administrative expenses were approximately $1 7 million in Q2.
<unk> 2023, and approximately $1 4 million in Q2 2022.
Net loss for the second quarter of 2023 was approximately $7 4 million compared to a net loss of approximately $7 1 million for the second quarter of 2022 net loss for the first half of 2023 was approximately $15 1 million compared to a net loss of approximately $14 9 million for the first half of 2022 and when.
With that we will now open the lineup for questions. Thank you very much.
Thank you, Sir ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the number one on your Touchtone phone again that star followed by the number one if you would like to withdraw your request. Please press star followed by the number too.
Your first question comes from the line of Joe Pat Gannett from H C. Wainwright. Please go ahead.
Hi, good afternoon, Linda and a J thanks for taking the questions.
So I know, there's a lot of working parts here and I know my questions will revolve around some things that you might not be able to detail because the FDA minutes are not out yet, but I'm still going to ask them.
So with that said I guess, San Diego comes on line this quarter, if I heard you correctly.
Do you have a general range of the number of patients that would be required from that facility to start with.
Yeah, Joe Hey, good to talk to you and you're correct. There's very little we can say until we get the final minutes, but but I can tell you is that once we get them. We plan on doing a public release in semi either via press release, and our call sort of update the market in the community as to exactly the path forward. What I can tell you is that <unk>.
That's worked really closely with us they are very supportive of this program.
All of our patients families have reached out to FDA in order to adapt them to take a really careful look at cap required help move the program forward because they feel that their sons or feeling a functioning better and so we're confident that the answers that we get back from FDA will be the best ones possible to move the products towards BLA.
That makes sense and I guess for my next question, it's sort of in the same realm, but I'll ask it sort of scenario based so you do have the type you do have the minutes that youre waiting right. Now you also have the upcoming interim analysis in the fourth quarter for <unk>, three which you said, it's primarily based on futility. However in Europe .
Does one of the potential scenarios include the positive feedback from the minutes with regards to the data you might see in the interim that could allow for the acceleration or resetting of the timelines positively for <unk> III.
Yeah.
That was a pretty impressive question to ask Joe Good work I can tell you we're doing this a long time.
So the answer to that is.
Futility is the metric that we're looking at for the interim analysis <unk> been pretty clear with us that they want to keep this trial.
Very tightly regulated really carefully monitored because they believe in the product two we can tell from their feedback from us for us and so.
We're probably not going to use the interim for accelerated approval opportunity I can tell you that I am laser focusing on opportunities, where we may be able to take advantage of of an earlier look to look for an accelerated approval I cannot disclose now how.
How we might do that but that is something we're definitely thinking about.
Got it and I guess my other questions are more are strictly logistical so in the conduct of hopes III.
Youre, obviously encouraged by the enrollment rates that you've been seeing if I understand correctly.
What are the prominent reasons for screening failure of patients or what does the patient and also what does the patient pipeline look like for potential enrollment.
Yeah, Joe Great great questions. So screen pathway, which is really come down a lot. Thanks to our really our very strong new clinical team that we put in place.
The primary reasons that people fail out typically is that they don't have inclusion criteria of the performance of the upper limb square two to five and so we typically see in some of these guys who scores are too low and let me just say from a human level, it's heartbreaking because they have to have the ability to use.
Their hands and bring it to their mouth unassisted and we've probably got two or three calls a week from people, saying well you know if they want if they need help but if they use their other ads to boost its people want the captain or to adjust currently.
So that leads into the answer to your second question. The pipeline of potential patients is very rich there's a lot of energy around this open label extension data.
The P. P M D, meaning we were by far one of the busiest booth.
Only to surround them with the gene therapy and.
And so we are looking to build with <unk> with all of the gene therapies that could come along as anchor therapy for cap 10, or two and so the family see it that way as well. So we do not see any potential turned down or downturn that downturn, a downturn in patient opportunities moving forward.
Got it and then lastly, going away from home three and DMT, you did give us a little bit of a tease again about.
Additional cap 10 O two opportunities and I was just curious here any.
Hentschel for going back to any of the prior indications that you've worked on in the cardiovascular arena or any teasing you might want to give us now with regard to newer indications, whereas it's a wait and see.
Yeah.
So I think the best way to answer that is we are very.
Pleased with the progress of <unk> in DMD.
It's very clear that there seems to be disease, modifying and a very strong treatment effect persists. After years, our patients have done really well on a repeated exposure. We have open label extension patients that are in their third year or coming into their fourth year of treatment.
So it's very safe infusions are easy.
So we are opening the door internally to look at potential opportunities for cap 10 O. Two we're exploring both now and we'll provide updates as we have them to where we will likely deploy cap tethered to next but what I can tell you, yes, if you're sort of looking into your crystal ball.
We've seen really nice data in an inflammatory cardiomyopathy skeletal muscle disease neuromuscular disease.
We know that you know cap centre twos primary motive action as immuno modular Tory and pro regenerative. So we're going to continue to explore indications that the disease pathogenesis would be highlighted by those two processes.
Got it thank you Linda I appreciate it.
Thanks, Joe take account so you said.
Ladies and gentlemen, just a reminder, if you have a question. Please press star followed by the number one on your Touchstone song.
Your next question comes from the line of Alan Laing from Bio Watch news. Please go ahead.
Turning to a J.
Feedback and what wonderful commentary Linda your commentary.
Extends way beyond belief.
Love to hear it and also to start off the job the last analysts for the great questions.
A couple of separate questions you're into really <unk>.
Low volume of high margin products, although Lindsay caught my ear about the breakthrough.
Scalability is.
The pilot manufacturing model, a parcel template for capital of course future for.
Vertical integration in other words are you considering the usual modus operandi going forward you could simply replicate pilot sites and so it is their product soon to be met.
Bob.
Wonder if you could provide any commentary on that.
Are you talking all by the way, it's great to hear your voice and I hope you're continuing to do well, but are you talking primarily about exercise for cap tonneau too in terms of pilot manufacturing expansion.
Both if I understand the manufacturing you don't need a large footprint for either to accomplish what you mean.
Right, so they're they're similar but different obviously, so with captain O. Two we really have put several manufacturing scale.
Scale out.
At scale up opportunities in place so that we can reduce the footprint necessary and create Marcellus that's been.
Pretty effective and that's largely been the focus of the transfer to the San Diego GMP facility, we're working really closely with FDA and Theyre CMC group in order to make sure that the product is the same as we produce and the pilot facility, which is why we're working right now to get those out there into the clinic. So yes, we expect.
That we can expand this.
I won't exactly be as I think you're envisioning, which is we take too.
That little fault pilot facilities and turned it into a 100 little pilot facilities and it'll be an expanded facility, but the manufacturing processes will be largely the same.
So.
Therapy manufacturing opportunities has really expanded in the past couple of decades. So theres a lot of good opportunity there so not exactly how you envision but almost in terms of Exosomes that is one of the areas of great Pride for us as I mentioned in my prepared remarks.
What are the what are the things that have held back Exodontist. How are you going to make these how are you going to make them homogeneous how are you going to turn them into a product and we believe that we have done that we have taken sort of the state of the art and what is known about accident.
Lipid nanoparticles as well as some of the other engineering contracts and are building a really good manufacturing paradigm that also should be buildable and not really pilot plant expansion that one will be more like big Bubbling.
Bioreactors and that kind of thing as they move it forward, but that's a procedure that can easily go from you know a couple of mills, So 100 mill to leaders.
On to larger volumes in that that that makes any.
Since two hours.
It does.
You also caught my ear.
About the so undisclosed pharma into so I wanted to go more general.
If you have more commentary on the general farm in theater, MTS, because I've been watching the pallets pursuit from suitors or combination trials, because if I read.
The literature, if im wrong feel free to back me on the head.
Sirius services, so the current gene and cell therapies and this is a tough one to potentially becomes one plus one equals three and not to that extent.
A lot of.
Interest from both who are.
In that space.
Other comment on that in general.
Meanwhile, with the accidents in terms of their partnering potential.
Yes.
Yeah absolutely.
Yeah.
You know that this is one of the group.
Great opportunities and in biotechnology, and pharma is well aware of that and I think everybody knows the lipid nanoparticles can only take you so far we've.
We've been working as a field that I say, we because it's even predates my own career in science and delivery of targeted delivery of therapeutics to cells. We know how important that is and we can now harnessed something that the body makes naturally to do that and so that's why copper core has really turned our focus in the past few years towards an engineered access on top.
Form.
Working specifically with the <unk> made by a sell cap tenants, who makes perfectly wonderful exosomes, we think that they've mediate the mechanism of action of cap turning to but what we really want to do is turn <unk> into a drug product and so your engineered mechanism you put what you want on the inside and you tell them where to go on the outside it's like putting a ZIP code on it and Thats correspond.
<unk> is very interested in that and we have a very active business development program right now and one of the main hurdles with this manufacturing staff, which we have succeeded in doing so we look forward to great opportunities with the exit of a smoothing borrower.
Last question, but looking for a Jerry I guess for both of you, but it'll be a fun question, but.
Does get through some interesting things you got 10, more 10 million more dollars upfront costs and the last agreement you got a grant or another agreement that brings them another $10 million.
How would you like it use.
Yeah, Thanks, Alan and nice to hear from you I mean, obviously, bringing in non dilutive capital is a big focus for US as you heard Linda articulate both from potential and our approach to vaccinology as well as the next steps, which is targeted therapeutics, where exactly what we liked.
To deploy it I mean.
I had my wish list it would be great to use that non dilutive capital to move into these types of new indications that were hinting at here, whether it's new neuro muscular targets.
Potentially using the <unk> as a targeted vehicle that would be my wish list and taking those non dilutive capital dollars and the door is a big area that we're putting a lot of energy on Idaho, Linda one start tequila and anything else. Yeah. So you know cash is king as you are in product development mode and so yeah. We would definitely do is used.
And our laser focused targeted way to move our programs forward, so captain or to us at the front of the line right now.
Al.
Major dollars being spent are being spent on getting.
Captain or two approved and then the two.
Dollars leftover go towards the access on program as we move that forward if the dollars coming in are specifically requested to build a program. We would obviously work on that for instance, if there was a deal where they wanted to build a engineered accident, that's where a.
The proportion of those dollars as Scott so.
To that end you know we are.
Focusing on what we need to do a J and maintains a very tight ship in terms of managing our resources and that explains why we've been able to stay alive through some pretty difficult times.
Alright look forward in the.
Future with them to work in your office.
The future looks bright for both of us and our.
Our Malibu wonderful new what I hear.
Yeah, that's wonderful.
Future is bright for cap requirement if the future is bright for you that's great news Allen so let's see each other soon.
Thank you looking forward to it.
Alright take care.
Okay.
Thank you Sir.
Ladies and gentlemen, just a reminder, so do you have a question. Please press star followed by the number one on your Touchtone phone.
There seems to be no further questions at this time I'd now like to turn the call back over to capital management for any closing remarks.
Thank you overall I am confident that the company's upcoming catalysts provide a solid foundation for execution and value creation.
Main focus on driving our late stage clinical development program for for cap 10 O. Two N G M D.
Before we conclude today's call I want to extend my sincere appreciation to the clinicians patients and their families who are working with us to bring cap tentative closer to potential approval again, thanks to everyone who joined US. This afternoon and now you may disconnect your lines.
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