Thank you for joining. By way of quick introduction, I'm Will Han, Senior Vice President of Biotech Investment Banking. I'm thrilled today to welcome Linda Marbán, Chief Executive Officer of Capricor, and AJ Bergmann, Chief Financial Officer of Capricor. As a quick background on Linda and AJ, as well as Capricor, Linda is co-founder of Capricor and has served as Chief Executive Officer since 2010. Linda's been in the biotech field for over 20 years, and prior to Capricor, held various senior roles at Exogen, a gene therapy biotech company.
AJ has served as Capricor's Chief Financial Officer since 2018 and has been in the biotech industry for 15 years, joining the company in 2011. Capricor is a late-stage biotech company developing deramiocel, an allogeneic cardiac-derived cell therapy that is filed for approval for the treatment of Duchenne muscular dystrophy. PDUFA date of August 22nd, 2026. Let's start with the regulatory pathway. Can you provide an update on your interactions with FDA, including any feedback, recent meetings, maybe any upcoming labeling discussions?
It's been a really tumultuous year for Capricor from a regulatory perspective, but we feel like we are coming out on top. As people may remember, last year our AdCom was canceled at the last minute. We then got a CRL, after filing for approval based on the feedback from the FDA of exactly what they wanted. They, upon review, decided they wanted more clinical evidence. We were lucky, but also well prepared in having the HOPE-3 phase III pivotal trial, which had seen last patient, last visit around the time of the CRL. We were able to meet with the FDA in a Type A meeting, confirmed that the HOPE-3 data would suffice for approval. They turned down the opportunity for left ventricular ejection fraction as the primary efficacy endpoint, asked us to keep the Performance of the Upper Limb 2.0 as the primary efficacy endpoint.
That trial read out in early December of 2025. As many recall, we had our primary efficacy endpoint, our key secondary endpoint of ejection fraction, and our three Type I error-controlled secondary endpoints to have probably the best clinical data that's ever been presented in the Duchenne muscular dystrophy space in a randomized, double-blind, placebo-controlled trial. We filed the new HOPE-3 data with the FDA. It allowed us to reopen our BLA. Our PDUFA date is August 22nd, so 10 weeks and three days from today. We're very much in active conversations with the FDA now regarding information requests, regarding clinical opportunities, confirming all of the CMC data which we had previously presented, and all going very smoothly. Then, of course, discussing labeling opportunities, which we anticipate will go into a more serious mode in the next few weeks.
That's very helpful. Maybe kind of the other piece in terms of key recent developments. You recently filed legal action against NS Pharma. Can you just talk through that really quick in terms of the dynamics, that you're focused on pricing structure, the private label distribute model, any other kind of key aspects of that?
It's been very disconcerting to us to find out that the partner that we had worked with so closely was really intractable in coming to terms in a new type of agreement or partnership that would be reflective of what is needed for a contractual situation to work. Basically what happened is in the original contract that was signed, we had all built in a concept of a transfer price. This would allow us to have some small stake in the ground financially from them when they went to distribute our product. Upon negotiations or discussions, not negotiations, but discussions with consultants that worked primarily on reimbursement and pricing, it became clear that the structure as stated would not work, that it would then establish the average sale price well below any number that would be reflective of what would be considered appropriate for deramiocel.
NS Pharma acknowledged that it was the wrong structure. Capricor acknowledged it was the wrong structure. We all agreed that we needed to negotiate a new agreement, we went into a year of negotiations with them that failed because the only structure that they agreed to would be called a private label distributor, which has never, ever been done on a labeled product in the biopharma industry in the U.S. because it really eviscerates the company that gives those rights away and turns them into a contract manufacturer. As of March 27th, 2026, just a few months ago, we tried one last time to get NS to agree to a different type of structure that would work for both companies. They would not agree, so we filed the litigation, that's going very smoothly.
Right now, we have a really strong legal team that are working to defend the rights, really, of the patients with DMD who deserve deramiocel. Capricor's plan is to launch deramiocel independent of Nippon Shinyaku or NS Pharma at this point, so that we provide rapid access to those that need it the most, those are the patients. The legal stuff kind of goes on in the background, we look forward to a peaceful resolution, hopefully rescission, which allows both parties to kind of go back to ground zero. You keep your drugs, we keep ours, thank you.
It makes sense. Do you anticipate any impact to regulatory timing around the legal action?
Around the lawsuit?
Yes.
No. They kind of operate on separate arms. The regulatory pathway, in fact, FDA maintains a very strong dogma that they don't pay attention to anything that happens out in the marketplace. Their job is to decide if something is safe and efficacious for an indication and then help you decide who that should go to. They really don't have any interest in what's going on outside in terms of sales, marketing, and distribution.
Makes sense. Maybe just talking about the data you guys announced. Can you walk through the key efficacy and safety findings from the HOPE-3 trial, how they compare to the prior HOPE-2 results? Maybe start there.
We have had five clinical trials all showing approximately the same thing, which is the attenuation of skeletal muscle dysfunction as measured by the Performance of the Upper Limb, first in HOPE-Duchenne, then in HOPE-2 with the Performance of the Upper Limb 1.2. Primarily the mid-level PUL in HOPE-2, which is the use of the arms and would be considered potentially the Goldilocks measure of upper limb function, which I can go through in more detail in a little bit. Then in HOPE-3, we used the Performance of the Upper Limb 2.0. It's sort of like your smartphone. It's supposed to be the newer, better version with less redundancy and less floor and ceiling effect. That's the primary efficacy endpoint of the HOPE-3 clinical trial.
We hit that with statistically significant results as well as a clinically significant result we saw on an absolute value change of 1.2-point change in the Performance of the Upper Limb. FDA had stated previously and is in writing that a 1-point change would be considered relevant for clinical meaningfulness. We were really excited, not only for ourselves as a company, but also for the patients. This was the first clinical trial in Duchenne muscular dystrophy where a primary efficacy endpoint was not only hit from a clinical standpoint but also a statistical standpoint and also has been felt meaningfully by the patients. We're excited about that. The secondary endpoint of ejection fraction we also hit. That was a key secondary endpoint. We had asked FDA consistently since 2015 to allow us to use cardiac function ejection fraction as the primary efficacy endpoint.
They had denied that because they felt that the pathophysiology of the cardio function or cardiomyopathy of Duchenne had not been well delineated or understood. I think that's changing now. In regards to that, we have now both the only drug that I'm aware of in the Duchenne space that has demonstrated clinical relevance as well as statistical significance in skeletal as well as cardiac muscle function as defined by the statistical measures that were used and defined in the protocol and the statistical analysis plan presented to FDA. We've had the HOPE-2 open label extension. The three-year data has been presented publicly and both HOPE-3 and the HOPE-2 open label extension three-year data are under review for publication at this point.
We will present the five-year HOPE-2 open label extension data at the Parent Project Muscular Dystrophy meeting. This is unprecedented. We can't even find a natural history data set that goes out to five years assessing function in Duchenne patients because nobody has that data. We will be the first. It's a small study, but what I can say is that the results suggest long-term efficacy of deramiocel. What makes deramiocel even a better option for patients is its safety profile. It's a quarterly infusion of 150 million cells. They don't need a port. They don't need anything fancy. It's a simple butterfly needle, about an hour infusion. Most patients tolerate it really, really well. There's been no long-term or even short-term safety events that are of any critical significance.
Early stage clinical development, we saw some anaphylaxis, and sometimes we still see some hypersensitivity that's well managed with simple drugs such as steroids, antihistamines, sometimes acetaminophen. In general, the kids love it. They feel and function better, and there's a strong safety profile. We know that all of our long-term OLE patients show up literally the day that they qualify for their infusion because they start to feel the effects of the drug wearing off, and they want to get that boost again, and they can literally start to feel it work again. We're very excited. The other piece of deramiocel that's really powerful is that we're a good player in the sandbox. deramiocel is designed to address the inflammation and the fibrosis associated with Duchenne muscular dystrophy.
It should provide support to gene therapies, exon skippers, other drugs that might work to mediate the draconian effects of the genetic disease. Two sides of the same coin. Let's work on fixing whatever the mutation that causes the problem, the lack of dystrophin, and then the sequelae of inflammation fibrosis, which is deramiocel.
Yeah. That's very helpful. Maybe if you could just expand a little bit more on the competitive landscape, just again, kind of where specifically you see and just given the fantastic efficacy so far and how you see it playing with other key assets.
We don't feel that we really have any competitors. There's an anti-fibrotic drug that's been approved, givinostat, that's being used. It does not seem to have the cardiac benefit. Also does not seem to have the long-term anti-fibrotic effects that we see with deramiocel, although anything that can be done for these boys and young men should be tried. We're focusing hard on the fact that we attenuate the inflammation and the fibrosis in the skeletal muscle realm, especially in the patients that we've studied most effectively, which are the later stage non-ambulant guys. Let's remember, those guys really have no options left, right? Even the gene therapies, I think they're going to start trying them again. Exon skippers, those guys, some of them have been on them for a very long time.
Whatever disease attenuation they've gotten from those dystrophin modifying types of therapeutics is already in place, and this is an added benefit with deramiocel. We feel like rather than being competitive, as I mentioned a moment ago, we go well with any other therapy. I think it's also worth mentioning that genetic diseases seem so simple, right? Oh, you have just a tiny little mutation, tiny little exon that's just not working quite right in this genetic disease. We should be able to fix that, right? Take our toolbox of biology and let's fix it. It's so tantalizing. Even diseases like cystic fibrosis. We should be able to fix this, right? It's so simple. It's one amino acid on a chloride channel. In general, these diseases are very hard to fix.
It's going to be a polypharmacy approach with Duchenne and all these other diseases, and we're excited not only for Duchenne, but in the expansion of our pipeline. We expect to be able to make impacts in Becker muscular dystrophy. We're looking at FSHD. We're looking at limb-girdle, other types of pathologies that are similar to Duchenne that have cardiac complications that we'll be addressing as well.
Yeah. No, that makes sense. I know obviously you're still in discussions with the FDA, so maybe limited in terms of what you can say, but as you think about the label going forward, just given obviously what we just talked about around competitive landscape or rather synergistic landscape, just kind of curious how you look at the potential label and then also potential addressable market.
The label that we're asking for is for attenuation of or improvement in upper limb dysfunction as demonstrated in HOPE-3. Anybody that has sort of loss of upper limb function, even in early stage, late stage, ambulant patients that have an attenuated 10-meter walk test, those will be our sweet spot patients. The youngest boy that we've treated thus far with deramiocel is 10 years old, we're not anticipating going much younger than that, but we'll see how far the FDA will let us push that envelope towards the younger guys. We think that the earlier that they get on to deramiocel, the best impact it will have. I know our key opinion leaders, a lot of the physicians would love to see those young boys on deramiocel. We'll work hard on that.
We're also going to ask for a cardiomyopathy label. What we see, and it's absolutely phenomenal, is that, and you'll see this actually, I'll give you kind of a hint that we're going to be presenting this data at Parent Project Muscular Dystrophy. There really is a line in preservation of cardiac function of ejection fractions above 45% versus those below 45%. It literally is a dividing line that is unequivocal. It's going to be critical to give deramiocel while they still have preservation of cardiac function. Remember, unlike skeletal muscle where you can drive skeletal muscle back into the cell cycle, make new muscle, with the heart, once a cardiac muscle cell is lost, that cell is lost, and the replacement of cardiac muscle cells at its most liberal understanding is about 1% per year.
We don't get a lot of chances to fix cardiac muscle. We have to get in there and preserve it. That's where we're going to be focusing hard in our labeling discussions with the agency is that we've got to get early with these guys. The way that you would do that is attenuation of left ventricular ejection fraction, even on some basic level. Also measurement of scar. A lot of these guys now are getting MRIs as part of standard of care, especially at certified Duchenne care centers, starting pretty early on, six, seven years of age. As soon as the clinicians start to see scar, they'd like to see them on deramiocel because we want to slow that process down.
Remember, the more scar tissue you have in your heart, the more burden you put on your heart, the more risk you are for cardiac dysfunction. Ultimately, that's what happens to these kids. They end up getting so much scar that their hearts can't function normally. That's when their ejection fractions start to drop. Unlike an adult heart disease where you can sort of have a slow, steady decline of cardiac function, what we see in these Duchenne kids is sort of a paradoxic aggregation of scar. They're almost asymptomatic. Nobody really knows what's going on. A lot of that is because they're not ambulant. There's not a lot of burden on their heart. Their hearts really kind of fail almost in a falling off the cliff way, which is pretty different than an adult disease.
If you see an adult that's had a heart attack and cardiac dysfunction and they end up with an ejection fraction of 25%, they've probably got a lot of life left in them. With a Duchenne kid, when they start to drop below 30%, they really go very quickly. We have to get in there early.
I'd imagine some of the feedback you've heard from KOLs or neuromuscular specialists has been kind of the same in terms of areas that they would want to see therapy being used.
Yeah. The KOLs love deramiocel because it's safe, it works, it is easy to administer, and the benefits are clear to see. The other thing that's really nice and the benefit of deramiocel is the mechanism of action which we've talked about and has been the subject of really several hundred academic papers now, both by our labs of our collaborators, and others, shows that deramiocel works primarily by anti-inflammatory, anti-fibrotic mechanisms. Our potency assay, which has been accepted by the FDA as an anti-fibrotic potency assay, as well as an identity criteria which identifies deramiocel as very unique from any other cell type. The KOLs really like that the story is clean. We know what it's supposed to do. It measures that. It works like a drug. It's easy to deliver. It's safe, and it works.
Yeah, they're very supportive, and we look forward to rapid adoption on the commercial side.
Yeah. That's fantastic. Maybe kind of talking about the commercial side, you obviously recently hired a new Chief Commercial Officer. Just kind of curious what steps you're planning to take as you gear up for commercial launch.
This is really an exciting time. I'm a scientist, and I decided to go into biotech now, as you mentioned, several decades ago because I wanted to bring the idea of we could make improvements in human health and therapies to people, medicines to people. I'm actually going to be able to do this. I'm really excited, both on a personal and professional level. Building the commercial team at Capricor is a dream come true. We have hired Mike Moyer as our Chief Commercial Officer. He comes to us from the rare disease space. Specifically, he has experience in Duchenne muscular dystrophy. He was at Sarepta, was participating in launching ELEVIDYS. He knows our patients, he knows our community, he knows how the world of Duchenne muscular dystrophy commercialization works. We're building the team with him.
I think most people know that in a rare disease, especially one like Duchenne, where patients are well-informed, tied to each other, Facebook groups, advocacy groups, the whole key is market access. Market access, patient services, and reimbursement strategies. Those are our three pillars that we're putting in place right now and building actively for launch. We expect our PDUFA to be coming very soon. The number one focus of Capricor is commercial preparation and launch, and we intend to do it with aplomb. The good news is we have over 100 patients that are on open label extension at this point that will likely roll over into commercial product. We'll be able to help them get there again by sort of making sure that we get reimbursement strategies in place and payer engagement. Payers are excited about deramiocel.
The cardiac benefits are the only that have been demonstrated in Duchenne muscular dystrophy. We expect to have a good road with our payers. As a result of that things are looking up in terms of getting ready for launch and getting this product to the people that really need it the most, those with Duchenne.
Yeah. That's great. Kind of on that payer point, I guess, how are you thinking about pricing? I don't know if you're giving that guidance now, but just relative to some of the other therapies out there, given obviously this potential synergistic use with some of the others in the group.
Yeah. Since I'm joined by my Chief Financial Officer, AJ Bergmann, I'll let you take that pricing question.
Yeah, thanks. Well, obviously, we're thinking and engaging really hard on the payer front right now, speaking with multiple payers, developing our decks that are needed to get out there. What we've guided to is that to be at or above the approved exon-skipping therapies, and I think those are slightly different, that they're weight-based, but that's our aim in terms of the current price. This is a chronic therapy, so it'll be administered over many years, four doses a year. We feel fairly confident with the data that we presented and the data that we're going to continue to generate, we should be able to achieve very reasonable target for that.
Got it. Very helpful. In terms of MFN, obviously, we would assume that just given it's a rare disease, maybe it's a little bit lower for new tech, but just kind of curious if you have thought about that so far.
Yeah. Obviously we've thought about that a lot. We have focused on U.S. approval, primarily for multiple reasons. One, we've done our clinical trials in the U.S. Two, we're a U.S.-based company, and we have almost 350 U.S. employees, which obviously we feel tremendous responsibility to them. Also because getting into Europe independent of MFN is complicated. We want to make sure that we have the right partner, and the right partner will likely be one that understands not only that we got approval in the United States, but that what the EMA is going to ask of us. We're actively engaging with EMA now. That's always been part of our goal. Once we have clarity, which I think we'll know what they want.
We've had some preliminary discussions with them. We think that the HOPE-3 clinical trial might suffice for EMA approval. We'll then actively seek a partner in Europe. MFN has been giving a headache for all of us because everybody's been trying to figure out how we fit, right? Rare disease orphan designation technically can get around the MFN. We have ATMP, which is orphan designation in Europe. Because of the focus on the U.S., we realized that we need to get across the line there and then find a European partner that knows how to negotiate MFN as well as all the other regulatory opportunities and commercialization opportunities in Europe, which is what we're going to do.
Yeah, makes sense. I guess the other kind of part of just prepping for commercial launch is really then around manufacturing. Given it's a cell-based product, can you just speak to kind of some of the prep work you are doing to make sure you're ready to hit the ground running day one?
Yeah. Capricor made a commitment to ourselves a long time ago that we were going to maintain manufacturing as part of our core capabilities and ability to drive deramiocel through commercialization. It is a cellular therapy. The good news is we really have fine-tuned the manufacturing into a very strategically driven, very efficient process. It's led by my Chief Operating Officer, Dr. Kristi Elliott, background in cell biology and long-term in manufacturing, and she's just absolutely a star. She was able to design and build a small commercial manufacturing facility in our Torrey Pines location that will meet the needs of initial launch, about 200 patients, 250 patients annually. Then we're in late stage construction in our exact same building of more plug-and-play clean rooms that will come on sequentially in 2027.
Ultimately, by the end of the year, able to meet the needs of about 2,000 patients or 2,500 patients, which should be more than adequate for the first year or two post-launch. Then we have a new facility that we've identified close in La Jolla, close to our current facilities in Torrey Pines that is ready to be built out should we decide that that's an opportunity that we should take, which we're actively designing and planning right now.
Yeah. Maybe kind of switching gears a little bit, you had mentioned a little bit earlier deramiocel and kind of ability to go into potential other muscular dystrophies, other diseases. Maybe just expanding a little bit more on that, kind of the scientific rationale for that, kind of where you might be focused
Yeah. As a perfect jump off from our last question, which is we have fine-tuned manufacturing, we have a potency assay, identity criteria. We have a cell therapy that is a drug product, it's very exciting to me. Just sort of as a sidebar, I've been in science for a long time, I remember the advent of the antibody world where nobody thought antibodies could be commercialized, nobody thought they could be made, manufactured, costs could be controlled, whatever. Now we know where antibody therapies are. They're as common as breathing. We're going to see cell therapies do the same thing in the next 10 years, we're at the forefront of that. I'm very excited about that opportunity. DMD is our first pass in terms of approval and commercialization of our cell-based deramiocel.
We look at other diseases of inflammation and fibrosis with both skeletal as well as cardiac implications. Becker is obviously one of our first targets. We'll be going after Becker very shortly after we achieve PDUFA for Duchenne. After that, there'll be other ones that are on the similar dystrophic or dystrophinopathy type paradigm, so limb-girdle, FSHD. We're looking at other types of rare cardiomyopathies that would be beneficial to preservation of cardiac muscle structure and function.
Maybe just kind of talk a bit more broad about the platform, the StealthX exosome platform, some of the key advantages you might have, how you might think about utilizing that as well.
Yeah. Our exosome technologies have been coming behind for the last multiple years, six, seven years. We discovered the exosomes mediate the benefit of deramiocel, and that's actually been part of our potency assay profile. The exosomes that are released by the cells are what drive the mechanism of action. We became interested in exosomes as therapeutic mediators themselves quite a while ago. We decided not to pursue that in lieu of the cells, because the cells are great for releasing exosomes. Why mess with what works? Now that we have identified that as sort of the API, we've now taken exosomes both from our cells, CDC-based exosomes, as well as StealthX, which is a generic exosome made by a standard cell line. We're doing two different things with them.
We're looking at biodistribution, we're looking at targeting, and we're looking at sort of the indications that would be appropriate for utilization of an exosome-based therapeutic. Following sort of behind in a lot of the footsteps of those that have pioneered bringing new therapies forward, our first indication that we used our exosomes for is in a vaccine. That program has been funded and actually operated by the National Institute of Allergy and Infectious Diseases. It's an exosome-based vaccine that has the spike protein of COVID inside. The follow-on product will be the N plus S, so the nucleocapsid as well as spike protein. It's safe. We'd like to sort of go up in dosing and sort of continue our work with NIAID, continue to build this vaccine platform forward.
I think, as everybody knows, there has been a lot of negative implications of vaccine development and even vaccine utilization in the U.S. in the past few years. We think those times will pass soon. We'll continue to keep our vaccine program alive under a low simmer so that we can ultimately take it forward, also build therapeutics for the exosome-based technologies, which again, will be an exciting opportunity in 2027 and 2028.
Got it. Yeah, no, very exciting. Maybe one final question just to close it out. Obviously, a lot to do ahead of you across the platform, pipeline, commercial launch. Can you just speak to maybe your cash balance now, kind of how you're thinking about funding all this going forward?
Yeah, sure. Capricor's obviously built this deramiocel program and the pipeline of exosomes very strategically over this last 15 years as we've continued to mature. We have $278 million in the bank at the end of the first quarter. Super strong balance sheet. We're growing, but we're investing very judiciously, as Linda pretty much articulated, in the CMC expansion as well as the commercial development, and then very judiciously in our pipeline. We have strong conviction that building that pipeline behind the scenes is a huge value driver as we bring deramiocel to the market. Secondarily to that, at approval, we're eligible for a priority review voucher. I think everybody knows those sell for quite significant sums of money. I think the last one was $190 million.
We would look to sell that and monetize that in short order, which would give us an even stronger balance sheet as we move into the commercial launch. We feel very good about the cash position we're in. The hiring we're doing, it's going right to the right areas. Then, of course, you add in the revenue element, hopefully at post-launch, of course, and that presents a whole new range of opportunities with this pipeline. We feel good about it.
Great. Listen, it sounds like you obviously guys have a very exciting next 12 months-24 months ahead of you. Very much look forward to watching your continued success.
Well, thank you so much for having us. Thank you for the insightful questions, and we look forward to getting to know you better as well.
Absolutely.
All right. Thank you.
Thanks