Hi, good morning, everyone. My name is Ted Tenthoff. I'm a senior biotech analyst at Piper Sandler. And before we begin, I'm required to point out certain disclosures regarding the relationship between Piper Sandler and our next presenting company, Capricor, which are posted both at the back of the room and also at the registration desk. So Capricor is developing deramiocel to treat cardiomyopathy Duchenne muscular dystrophy. and i'm sure you saw this morning, they're blowing up today on positive HOPE-3 data. And we'll use these data to reply to the complete response letter that they got from the FDA earlier this year. Capricor shares are up about 300% today. So I'm thrilled to introduce my good friends, Linda Marbán, President and CEO, and also AJ Bergmann, the CFO. Thank you. And most importantly, congratulations.
You guys have been on this relentless quest to bring this therapy to boys. And one of the other CEOs I was talking to about this morning said that this is the first truly disease-modifying Duchenne muscular dystrophy. so it's a really incredible accomplishment. I know work's not done yet, but this is a really wonderful outcome today. So before we get into the data, maybe you guys can describe deramiocel, as composed of these cardiosphere-derived cells. What exactly are these, and how do they work to treat DMD?
Yeah, so one of the missions that we've had in our 20 years of development of deramiocel has been to understand not only the mechanism of action, but who and what these cells are. They are a unique cell type that is housed in the heart. You have them, and I have them. And then the method that we use to extract them and then grow them up is the proprietary method. So it's very similar to the extraction of the actual cell product in unique , but it's not enough to treat a disease. Then we developed, over the course of time, a way of getting them to synergistically grow into what would be considered relevant clinical doses. Our clinical dosing paradigm now is 150 million cells four times a year. Now, who are the cardiosphere-derived cells?
They are a unique cell type, primarily a stromal cell origin, as I mentioned, housed in certain areas of the heart where we know where to find them and get them out. After running many years of assays, primarily culminated in an RNA-seq assay looking at 166 genes that are differentially expressed in different cell types and comparing them to everything from a mesenchymal stem cell to a progenitor cardiac cell to a muscle cell to an immune cell to a fibroblast, they are truly unique with a unique fingerprint, which is why we are actually able to quantify them, qualify them, release them, and then demonstrate their potency using an FDA-approved and mechanism-of-action verified potency assay, which is looking at anti-fibrosis and anti-inflammatory activity.
Great. That's really helpful. So you guys reported positive phase III HOPE-3 data this morning, which was a placebo-controlled trial. Maybe you can tell us about the design and walk us through these positive results?
Absolutely. So HOPE-3 was a randomized double-blind placebo-controlled trial, what would be considered by the regulatory bodies as an adequate and well-controlled clinical trial. We enrolled 106 patients, 105 completed the study, randomized equally across the different arms, placebo and deramiocel treated. And 83 of the patients were able to undergo cardiac MRI, so the cardiac data was derived from 83 of the original grouping of patients. We hit the primary efficacy endpoint, which is the Performance of the Upper Limb 2.0. Our patients, our Duchenne guys, are the ones with the greatest unmet medical need. There's almost nothing for them. They're the later-stage non-ambulatory patients. There's 90% of these patients in our trials that are unable to ambulate on their own.
We had to have a measure in which we could measure functional improvement, skeletal muscle improvement, and the Performance of the Upper Limb is the best for that. It's a three-component measure looking at shoulder function, arm function, and hand function. The Goldilocks zone is the arm function, which is called the mid-level PUL. The Performance of the Upper Limb, version 2.0, was our primary. We hit that with statistical significance of a p-value of 0.03, which says that less than 3% of the data is due to chance, which is very exciting. We saw a 1.2-point change, which is considered clinically relevant not only by clinicians, families, but also by the Food and Drug Administration. We feel really great about our primary efficacy endpoint. We hit our key secondary endpoint, which is left ventricular ejection fraction.
It's how the heart meets the needs of the body, measured by cardiac MRI in a centrally read core laboratory, and what we saw there was a p-value of 0.04, also considered statistically significant, and therefore leaves open the opportunity to treat the heart disease for the first time ever in Duchenne. A tool will be in their toolbox that is specifically guided towards treating DMD cardiomyopathy or fibrotic cardiomyopathy, and then we established several what we call Type I error-controlled secondary endpoints. Our stat team, who are here with me in New York, were very careful to make sure that we didn't undergo scrutiny by the agency or others for having too many secondaries, going back to the well too many times, so these are ones that are very specifically controlled in terms of alpha spend, and we had all three of those.
That was the mid-level Performance of the Upper Limb, which was that arm Goldilocks zone I mentioned, a global statistical test which looked at the full function and survived, so there was a cardiac endpoint of ejection fraction, a skeletal muscle endpoint of Performance of the Upper Limb, and then a real opportunity for the patients with a patient-reported outcome measure called the PGI, and that was statistically significant as well, and then finally, one that I think harks back to the beginning of our clinical development program, which is the reduction in the amount of scar in the heart. That was measured in Cohort B only, and in those patients who saw a statistically significant reduction in the amount of scar, that was what we first discovered when we did HOPE-Duchenne, which was published in Neurology back in 2019.
And so we've had a consistent journey of clinically relevant, statistically significant data showing over and over the same basic function of deramiocel in treating DMD.
Yeah, again, remarkable, and congratulations. These are really important readouts, especially for these boys. So you guys, as you know, were issued a CRL earlier this year. How does HOPE-3 enable you to reply to that CRL? What are the steps?
So the CRL, the main contention in the CRL is that we didn't have an adequate, well-controlled clinical study, that they just didn't think that the data that we had was convincing enough. It looked good. They completely understood the unmet medical need and the fact that our data looked good, but they really wanted what we now have, which is an adequate, well-controlled, randomized double-blind placebo-controlled trial. So the trial is set and ready now to deliver data to them. The steps then become fairly straightforward. What we're going to do is respond directly to the CRL. We plan to do that before the end of this calendar year.
They have a very short period of time to get back to us and either accept that data and therefore reassign PDUFA or, for some reason, not accept it, which I don't know that I can see any reason why that would happen. And then we follow up later with things like the CSR and stuff like that. What we are expecting then, based on the fact that they've told us in our Type A meeting last August that they wanted a Class 2 resubmission, which gives them six months to review, we're anticipating PDUFA, as we sit here today, by middle of the third quarter, somewhere in July. Having said all that, and I think I've said this publicly, this data basically supports everything they ask for in the CRL. I don't believe that they should have to, they should need all that time for review.
So we're going to push for a quicker PDUFA, not accelerated approval. We're going for full approval. I've asked and asked it a few times this morning. Full approval. We have enough data for full approval for sure. We don't need an accelerated pathway, but I would like to see if I can speed up the PDUFA timeframe.
Now, this filing is under the existing BLA. So what do you envision? Again, this will kind of come out in the labeling discussions, but what do you envision the label potentially being if it's approved?
Yeah. So one of the first analyses I asked the staff team to do once we got the data was to look at sort of the breakdown of how people responded. And what was most important to us is that 40% of patients had a response both in cardiac function and skeletal muscle function. And over 70% of patients had one or the other, an improvement in skeletal or cardiac. So that is a very broad patient population by which could benefit from deramiocel. We want physicians to be able to offer it for their skeletal myopathy patients as well as their cardiomyopathy patients. So we'll be asking in our labeling discussions for a broad label, both for cardiomyopathy or skeletal muscle myopathy, especially addressing upper limb function or both.
Okay, great. I'm going to just pause because there's a lot that came out today. I've heard a lot of questions. Are there any questions from the audience for Linda and A.J. while they're here on the data, on the CRL, on the resubmission? So let's talk about kind of the market and the market opportunity. deramiocel is partnered with Nippon Shinyaku in the United States and also in Japan. Remind us the economics and maybe walk us through what this commercial opportunity looks like.
Yes, I'll take the first part of that. Yes. So Nippon Shinyaku has a sales marketing and distribution agreement with Capricor. It puts us in a very nice position. We get an $80 million milestone payment at approval. Then there are sales milestones and royalties, and we publicly message that the royalties are between 30%-50%. It's not that hard to figure out sort of what the mid-range of that would be, and in terms of the commercial opportunity, I will let my CFO take that one.
Yeah, thanks. I mean, I think everyone knows Duchenne is; it affects about 15,000 to maybe upwards of 20,000 boys and young men across the United States. Now, with this data in hand, both treating the cardiomyopathy and the skeletal muscle myopathy, we see a tremendous opportunity for uptake in this patient population. We're mutation agnostic. We can fit right alongside gene therapies and, of exon-skipping therapies that are available. And now we're a first-line treatment for the cardiomyopathy associated with it. So from a pricing standpoint, we feel very confident that we should be able to achieve the price tags in exon-skipping ranges, which presents a very healthy revenue model, especially in the United States. And then you can start to think about overseas opportunities as well.
And this would be the broadest label. And frankly, I think of any drug approved for DMD. You mentioned overseas. You are partnered with Nippon Shinyaku in Japan. You guys had kind of entered early negotiation in Europe. Obviously, the focus hasn't been getting this approved in the U.S. What do you see as the opportunity overseas? And do you have to do additional trial work? What do you think might happen?
Yeah. So obviously, the global scope of drug development has changed with the Most Favored Nations mandate by the Trump administration. So we do have feedback from EMA that the Cohort B aspect of the HOPE-3 trial, which independently achieved very robust statistical significance, would be enough for approval in Europe. So we're geared up for that should we want to pursue that. We also believe that that should be enough for approval in Japan with PMDA. We do have a partnership with Nippon Shinyaku in Japan, so we'll be talking to them imminently about how they'll want us to roll forward with that. Because of the pricing concerns related to Europe and the U.S., we're going to really work hard to get across the line in the U.S., get pricing established, get on the market, and then we'll evaluate outside of the U.S.
Oh, great. Would you like water?
Yeah. Thank you.
Great. So you mentioned manufacturing. You guys have built a plant down in San Diego. Maybe you can walk us through deramiocel manufacturing, but also sort of how that factors into your revenue component for deramiocel.
Yeah. So we've been gearing up for manufacturing now for a little over a year. We knew that obviously we were going to file the BLA. We filed it last year, so we've been ready for this. We have a new commercial scale facility in San Diego. It passed a pre-licensing inspection by the FDA, and we feel very confident that that will be able to meet the demand for at least the first year with about 500 patients. We also are building out space in our current footprint that will ultimately allow us to service the needs of about 2,500 patients annually and a further expansion nearby should that be necessary. We are in full-scale manufacturing mode now, getting ready for commercial, and look forward to getting this product on the market soon.
Yeah. Very exciting.
I don't know where this is going. Sorry.
No worries at all.
Yeah, and I'll just add to that, Ted. You were probably going to go there. But as we move towards the manufacturing expansion, which is well underway now, we're eligible for a PRV. You've said that program looks like it's likely to be renewed. So we would receive a PRV upon approval. It should be a very nice injection of cash to continue to expand out on the manufacturing front and everything else that we need to do what we just mentioned.
Absolutely. Now, beyond, obviously, the primary focus is DMD. We have a little bit more time, so I'll kind of expand this conversation into Becker's and other forms of DMD. How do you sort of think about those opportunities? I mean, Becker's is typically considered as a less severe Duchenne muscular dystrophy, but still has all of the hallmarks and is still a devastating disease. So how do you think about ultimately expanding, especially with some of these monies coming in, ultimately profit coming in from deramiocel? How could you expand into these other indications?
Yeah. So I'm really excited about Becker. Our team actually has been working on it behind the scenes, really for coming up on a year, exactly how you described it. It's really DMD in a more mild form. So I have a plan as to how I'd like to go about this. The cardiomyopathy associated with Becker's is genotypically identical to that of DMD. If you give a cardiologist an MRI and say, "Can you tell me if this is Becker's or DMD?" they cannot. So my current plan is to approach the agency in the first half of 2026. And ideally, I'd like to ask them for accelerated approval on Becker's with a long-term confirmatory because, as you mentioned, it's a slower progressing disease. So long-term clinical trials are likely necessary to see separation of placebo and treated.
I don't know if they'll be open to that, but I certainly will use it. Our KOLs love the idea because they have nothing for their Becker guys. There's nothing. And the Becker guys, they die typically around age 50 or somewhere like that. And it's almost exclusively from the cardiomyopathy aspect. So it's a heart disease for them. So I'm anxious for Becker's. There's other ones of these neuromuscular diseases that have cardiac components with a relatively similar pathophysiology of inflammation and fibrosis. And we look forward to expanding deramiocel. Now that we've put the manufacturing in place, we can expand. It's a modular manufacturing expansion, so it's relatively easy to expand. And we have a potency assay. Really, the sky's the limit in terms of the diseases we can address.
Going back to the overseas opportunity for a moment, do you envision manufacturing from the U.S., or do you think you'd ultimately, if you expand into these other geographies, maybe building out manufacturing more locally there?
Yeah, so we're exploring both opportunities, the cost-benefit relationship of manufacturing and then transporting the product overseas versus having the product made locally. We're going to evaluate those opportunities. Obviously, a lot of companies have very successfully expanded manufacturing into the Netherlands and some of the other areas of Europe. And we certainly are not going to rule that out if that becomes an opportunity.
Yep. Cool. And I know you guys ended the third quarter with just under $100 million. As we've talked about, you've got the potential for the $80 million approval coming in from Nippon Shinyaku for U.S. approval sometime next year. Again, potential to sell a PRV, which are valuable, certainly over $100 million of value. When you sort of think about all this, how long does this fund the company? What's it enable Capricor to accomplish?
Yeah, I think absolutely moving through those next steps in development would supply us a cash runway upwards of two - three years. That's an injection of $225 million. I think the most important component is obviously adding revenue to the bottom line. We have over 100 patients that we would move quickly onto commercial products, hopefully upon approval. So that will also be an injection of cash. So we're in a good spot. We have a very clean capital structure for those of us who followed Capricor for a long time. We don't have debt on our balance sheet. And we've obviously been developing this asset for the better part of 20 years. So we're now moving into the commercial element, which is exciting.
Very exciting. And congratulations. I'm just going to pause again. Any questions? I've got six minutes, so I'm going to indulge myself with one of my questions. So we just published a large report on Monday on the RNA field. And we actually included Capricor in that report because, again, at the core mechanism, as I asked you to describe earlier, these CDCs exude exosomes that have bioactive cargo to really exert their effect in the heart, but also in the skeletal muscle for boys with DMD. Now, these exosomes are something you spend a lot of time working on. You actually reported some data at the American Association for Extracellular Vesicles meeting and really are able to package these into cells with integrin silencing siRNAs.
In a long-winded kind of question, what do you see as the opportunity now beyond deramiocel to really take exosomes forward as a delivery vehicle for advanced genetic medicine?
Yeah. So we see exosomes as our second child. And just like raising your first child is where you hit the bump, your second child goes much more smoothly. So what we decided to work on with exosomes first was this manufacturing opportunity. And that's what we presented at AAEV about a week ago. We now can make large amounts of exosomes, which is what has held this field back. What people don't realize is it was in the dosing of the exosomes, not in the efficacy of the exosomes, that held back other developments of exosomes for delivering genetic materials or anything really that you want to get inside of the body or inside of a cell. And so we now have that scaled up. My team's very excited about that. We've explored multiple opportunities sort of in the background.
As you pointed out, we're going to theoretically and practically be cash rich from deramiocel, and so it'll be a great time for pipeline expansion. We know the power of the exosomes. They're much better than liposome or a lipid nanoparticle because they're not going to clog up your liver. They're not going to clog up your blood vessels. It's not going to impact your kidneys. They're very efficient. It was manufacturing that was really holding back because COGS were so crazily high. We have a vaccine program in place, which is still being carried out by the NIAID, even in this time of vaccine not being treated as frontline opportunity, and that's going very, very well, so we have three cohorts that have been treated with exosome-based vaccine. the good news there is it's going very smoothly.
We'll use this as a jump-off to develop exosomes for therapeutics, and we're evaluating now what we're going to put inside and try and make better.
Great. Well, again, congratulations, Linda and AJ. Amazing work. And I think this is going to be a day in the lives of DMD boys that is going to be an important day as you really hopefully transform this disease. So congratulations and all the best getting it across the.
Thank you.
And life.
Thank you so much.
Thanks everyone.