Q4 2023 Capricor Therapeutics Inc Earnings Call
Participants
Anthony Bergmann; Chief Financial Officer; Capricor Therapeutics Inc
Linda Marbán; Chief Executive Officer and Director; Capricor Therapeutics Inc
Joseph Pantginis; Analyst; H.C. Wainwright & Co., LLC
Kristen Kluska; Analyst; Cantor Fitzgerald.
Aydan Huseynov; Analyst; Ladenburg Thalmann & Co. Inc.
Presentation
Operator
Good afternoon, ladies and gentlemen, and welcome to Capricor Therapeutics' fourth-quarter 2023 earnings call. (Operator Instructions)
This call is being recorded on Thursday, February 29, 2024.
I would now like to turn the conference over to AJ Bergmann, CFO of Capricor. Please go ahead.
Anthony Bergmann
Thank you, and thank you for joining today. 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 enrollment of patients in our clinical studies; our plans to present or report additional data; our plans regarding regulatory filings, potential regulatory developments involving our product candidates; manufacturing capabilities; potential milestone payments; our financial position; 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. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.
And with that, I'll turn the call over to Linda Marbán, CEO.
Linda Marbán
Thanks, AJ. Good afternoon and thank you for joining today's call. I'm encouraged with the progress we have made at Capricor in 2023 and into 2024. And today, I will outline our main priorities for our lead CAP-1002 program, as well as provide a brief update on our exosome platform technology.
2023 was a big year for Capricor as we are now gearing up for a biologics license application and commercialization. To that end, Capricor has assembled a team primarily focused on executing in four main areas in order to prepar to bring our lead product, CAP-1002, to market for the treatment of DMD as expeditiously as possible. These are clinical manufacturing, BLA readiness, and commercial preparation. I will provide an overview of each area today.
First, let me provide a clinical update on our Phase 3 HOPE-3 pivotal trials, enrolling late-stage ambulant and non-ambulant young men with DMD across the United States. Late last year, we announced completion of enrollment in our Phase 3 pivotal HOPE-3 clinical trial where we enrolled 61 subjects randomized one-to-one to CAP-1002 or placebo.
In December, we conducted a prespecified interim utility analysis and we were very pleased to announce that the trial was successfully deemed to not be futile with a positive recommendation to continue the trial. This analysis was based on an assessment by the Data Safety and Monitoring Board -- otherwise known, of course, as the DSMD -- of 30 subjects to reach a six-month time point at assessing their poll scores in a blinded fashion. This important positive outcome triggered our first milestone payment of $10 million from Nippon Shinyaku, further strengthening our balance sheet and extending our cash runway.
Now, as you know, 2024 is a pivotal year for Capricor, as you will have data from Cohort A of our Phase 3 HOPE-3 clinical study at the end of the year, as well as fully enroll Cohort B by the second quarter of this year. To remind you, Cohort B was designed at the request of FDA to demonstrate comparable efficacy of CAP-1002 from our San Diego manufacturing facility to that produced in Los Angeles.
This cohort, which is designed to enroll approximately 44 subjects, is enrolling very well. In fact, enrollment has proceeded even faster than predicted, partially based on the fact that there are no current therapeutics approved and very few in clinical trials for these later-stage non-ambulant patients.
The primary endpoint of HOPE-3 is a change from baseline in the Performance of the Upper Limb version 2.0, of course, commonly known as the PUL, at one year as well as various secondary skeletal and cardiac endpoints, including left ventricular ejection fraction. We have already seen efficacy in the PUL 2.0 and our Phase 2 HOPE-2 study where the data showed a 1.8 point improvement relative to placebo and was statistically significant.
Even more validating that as shown in our Lancet paper, multiple pull endpoints, whether specific regions or combinations showed improvements were statistically significant changes in multiple domains. Importantly, Katherine or two treated patients saw improvements in left ventricular ejection fraction, which is the gold standard measure of cardiac function. We saw a 4% improvement in treated patients with a p-value of 0.002. In addition, there were significant improvements in left ventricular end systolic and left ventricular end diastolic volume, further suggesting structural improvements in the heart. There are no approved therapeutics that we are aware of that directly address the cardiomyopathy associated with DMD. Therefore, the importance of oh two in this area of unmet medical need cannot be understated. We have long term safety and efficacy data in this patient population as we are continuing to follow the patients from the HOPE two study in an open-label extension study into their 4th year, and we will plan to have the three year results available in the second quarter of 2024.
The two were year results shared last year continue to show statistically significant differences and of Bert Powell to point out in the open label extension treatment group when compared to the original rate of decline of the placebo group from HOPE two after one year further, while the natural history of DMD cardiomyopathy suggests a steady decline in cardiac function as measured by ejection fraction in the hope to open label extension, we observed improvements in heart function in 66% of patients. The two year results underscore the potential long-term benefits of CAP-1002 treatment and TMG as we envisioned CAP-1002 as a multi-year treatment. This dataset will strengthen both our potential revenue modeling and payer discussions for long-term reimbursement. Dmd has rapidly become an orphan disease that has garnered a lot of attention, not only because of the terrible nature of a disease that robs children of the ability to use their muscles world, but also because of the promise of disease modification by gene therapies and exon-skipping technologies to potentially allow modification at the district. And oftentimes many have thought that along with exon-skipping technologies, if the gene therapies are approved, there will no longer be a need for other treatments for DMD. Nothing could be further from the truth. The current gene therapy paradigm allows for a small, albeit potentially rather relevant amount of microdystrophin protein to be made correct. Clinical data suggests there is an attenuation of disease progression from treatment with the gene therapy. However, we believe that it will require a multidrug paradigm to address all of the pathological consequences of DMD, primarily inflammation and fibrosis caused by the lack of dystrophin CAP-1002 is perfectly positioned to be a partner therapy for D-MD. As I stated, mechanism of action is immunomodulation and reduction in fibrosis. In fact, some of the current efforts at hope through our post gene therapy. But still qualify for CAP-1002 based on the study's inclusion and exclusion criteria. Cap 1002 has a strong safety profile and as a once a quarter infusion that has shown to be well tolerated. If cat tends to delay disease progression, which years of data and multiple clinical trials have demonstrated. It is our hope that CAP-1002 was the year for preferred treatment with Gene or exon skipping therapies.
Now I would like to take a few minutes to update you on our recent FDA interactions and regulatory goals. For the program over the next several quarters. As you may recall, we met with FDA last year and aligned on the design of our current Phase 3 program with Cohort A. being the primary dataset for the filing of the BLA and data from Cohort B to be used to transition to our San Diego manufacturing facility. Now that Cohort A. has been fully enrolled and Cohort B is heading towards full enrollment. We have continued to discuss with FDA and the opportunity to expedite the filing of our BLA, keeping in mind that in order to successfully achieve BLA acceptance. A critical aspect is to meet all CMC requirements as outlined by FDA. To that end, we have successfully established a potency assay for CAP-1002 based on the mechanism of action of the product, which is acceptable to FDA for our to-be marketed products and critical to the establishment of comparability between each of our manufacturing sites. As many of you know, FDA leadership has taken a great interest in helping move the field of treating DMD forward, and we continue to believe that we can work with them on a strategy to move CAP-1002 towards approval. Importantly, our San Diego manufacturing facility is now fully operational staff and producing doses for clinical use. Currently, we can produce enough CAP-1002 in our San Diego facility to meet and exceed s Pharma's forecast for year one of product lines, if approved by FDA. We also have plans in place to expand our San Diego facilities operations to support a larger demand as may be necessary, but further expansion or investment would be something we will look forward to do following potential BLA acceptance, I would like to highlight that we have expended a relatively small amount of capital to build our commercial manufacturing. This has also allowed us to strengthen our IP portfolio with additional process and method based patent filings and know-how. We also are able to control COGS effectively to drive margins as high as possible on revenue and or revenue shares. Importantly, we can also potentially expand our CAP-1002 program to other indications while replicating our manufacturing modules. All of this taken together puts capital core in a good position as we prepare for our potential initial commercial product in DMD, a majority of the investment into our facility operations and personnel has gone into preparations for this endeavor and I feel confident that we can deliver according to the timelines we have set forth now for an update on our commercial partnership with NS. pharma, who is already actively preparing for the potential launch of Captain I2. Assuming the data is positive and we have an accepted BLA, we continue to work closely with them as we move closer to that goal as we have stated, subjects are continuing to report slowing of disease progression on CAP-1002, which is supported by the pull data. This positive data combined with the strong safety profile has led to nearly four participants in open-label extension studies. Therefore, by the time of a potential BLA acceptance really expect to have approximately 120 patients already on CAP-1002. On an ongoing basis, these patients would likely become our first commercial patient. This potential revenue stream will be very supportive of a strong launch and will provide an initial commercial market for this product. Additionally, we are in the early stages of establishing a strong commercial team to support our partner and U.S. farmers.
Now I'd like to briefly turn to provide an update on our Exosome technology. Currently, we are pursuing two avenues of opportunity. One is our vaccine program using Stealth X, our proprietary platform that is useful for engineering select proteins, either inside or on the surface of the exosome. And the other is using the same basic platform for the development of therapeutics.
One of our major achievements this year was being selected as part of the U.S. government's project next gen, which is slated to text vaccine candidates for potential use in preventing COVID-19 as well as prepare for future pandemics, the structure of the arrangement with Niagara, which is otherwise known as the National Institute of Allergy and Infectious Diseases, the Capricorn will provide that was manufactured vaccine. The campaign for which is underway now and they will conduct and fully fund a Phase one clinical trial. There will be three groups tested a low dose and a high dose S. and the current strain of COVID-19 and then a valid candidate containing evidence the nucleocapsid.
I am pleased to inform you that we have submitted an IDING. to the FDA for ourself expecting, which is currently under review. And we anticipate that once the IND has approved denial and initiate the clinical trial in late 2024, I will provide more specific timelines on this program as we progress through the year. This will be the only multivalent candidate tested as far as we know, and we have high hopes for its success in terms of potential safety and efficacy of nine finds that the vaccine meets this criteria for safety and efficacy, they may consider our program for a fully-funded Phase 2. This opportunity is very important for copper because it supports our Exosome base vaccine. And while we don't have intention to become a vaccine focused company, it sets up the program nicely for partnering and other business development opportunities. As a reminder, the power of this technology is that it combines the speed of an mRNA vaccine with the potential efficacy of a competent protein-based vaccine, should it work in humans as well as in preclinical animal studies, it could be a very important improvement.
And vaccinology also on the exosome front, we are in discussions with several potential partners to develop the therapeutic arm of our engineered Exosome technology strategy involves taking the same Celltech platform and using it to target a specific tissue and then appropriately deliver a payload. Each pre early preclinical data suggests the strategy works, and we are looking forward to sharing more color on this important program as data becomes available.
And finally, on the corporate side, we raised approximately $23 million late last year and an equity offering to support our balance sheet into 2025. This strategic financing was anchored by Nippon Shinyaku further cementing our strong relationship and their commitment to capital as we think about moving through 2024 and into 2025, I want to remind you that our US agreement with Nippon Shinyaku comes with an additional 90 million of potential milestone payments up to the time of approval, which are triggered upon certain regulatory base achievements following potential approval there is an additional 605 million in potential milestone payments, which will be payable to Caterpillar based on various sales base targets being met. Furthermore, if we receive FDA approval for CAP-1002 for the treatment of DMD, we would be eligible to receive a priority review voucher for the PRV based on our previous receipt of a rare pediatric disease designation, which we retain full rights to and will look to sell to support our balance sheet.
Lastly, we are in active discussions with several parties related to the European rights of CAP-1002 for DMD. Our main goal is to continue to support our balance sheet, leveraging non-dilutive partnerships to fuel capped energy towards potential approval and support the exosome program.
Overall, I want to thank you for your support.
We continue to diligently manage our resources, focus our efforts on bringing capital to towards potential commercialization in the most expeditious way possible. We are very much looking forward to the next several months as we will be continuing our interactions with FDA announcing our three year open-label extension data, completing enrollment for Cohort B and presenting at various medical scientific and investor related conferences.
I will now turn the call over to A.J. to run through our financials. AJ?
Anthony Bergmann
Thank you. Linda saw afternoon's press release provided a summary of our fourth quarter and full year 2023 financials on a GAAP basis, and you may also refer to our annual report on Form 10 K, which we expect to become available shortly, will be accessible on the SEC website as well as our website.
Turning to the financials, let me start with our cash position. We ended December 31st, 2023, with cash, cash equivalents and marketable securities of approximately 39.5 million. This excludes the $10 million milestone payment we received in January of 24 from Nippon Shinyaku under our distribution and commercialization agreement. Based on our recent operating results and projections, we expect our cash runway to extend into the first quarter of 2025, but This expectation excludes any additional potential milestone payments under our exclusive commercialization and distribution agreements with Nippon Shinyaku in the fourth quarter of 23, our revenue was approximately $12.1 million compared to approximately $1 million for the fourth quarter of 2022, which was primarily attributable to the ratable recognition of the $40 million, which includes the upfront and milestone payment we have received in accordance with our U.S. commercialization and distribution agreement with Nippon Shinyaku. Excluding stock-based compensation, our research and development expenses were approximately $9.4 million for the fourth quarter of 2023 compared to approximately $6 million for the fourth quarter of 2022. The increase in expenses of 3.4 million was primarily due to increased clinical and manufacturing costs associated with our Phase 3 HOPE-3 trial. Excluding stock-based compensation, our general and administrative expenses were approximately $1.9 million for both the fourth quarter of 23 and 2022. Net loss for the fourth quarter of 23 was approximately $800,000 compared to a net loss of $7.7 million for the fourth quarter of 2022. And net loss for the full year 23 was approximately $22.3 million compared to a net loss of approximately $29 million for the full year 2022. And with that, we will now open the line up for questions. Operator, go ahead.
Question and Answer Session
Operator
Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. (Operator Instructions)
Joe Pantginis, H.C. Wainwright.
Joseph Pantginis
I Linda and A.J. Thanks for taking the questions.
Good afternoon, Tom. First off, so I wanted to talk about your regulatory discussions. So last year you had some pretty clear frameworks that you shared with us again today about the need for Cohort A. and giving some manufacturing comparability from Cohort B out of the San Diego facility and you keep talking about ways to potentially expedite so I wanted to explore that a little bit. So first question is, is I mean, when you look at this, you have the our MET status is one of the potentials here a rolling BLA because you'll be able to start submitting data quicker as part of the filing and other options you might be considering.
Linda Marbán
Now I have the pleasure and thanks for the question.
So yes, I'm mean, I start answering by saying I've been working on this therapeutic for 19 years.
And where we are right now is just so staggeringly exciting to me that sometimes hard to to express. But what has been the best part of the last few months has been the careful attention that FDA has been paying to Capricorn and to CAP-1002. They recognize the positive safety and efficacy data. They've looked at the open-label extension data, the HOPE two data from and they're working very closely with us so yes, all options are on the table right now in terms of how to get this across the line as fast as possible on, as I mentioned, leadership within Sabre as aware of our program and really working very closely with us. We have our map. We have our rare pediatric disease designation, orphan disease designation. So we have a lot of the bells and whistles that will carry our program as quickly as possible into the arms of DMD patients.
Joseph Pantginis
Got it.
And then just curiosity for Cohort B, are you directly needing to show manufacturing comparability or do these patients need to be follow up for a certain time.
Linda Marbán
So we felt since events suspended the program by building in a full one-to-one randomized clinical trial with safety and efficacy built-in. So basically, as a mirror image of Cohort A., we're working with FDA on what they're going to actually ask us for what we know and what we can guarantee on is that they are willing to accept the license application on Cohort A. What we're going to need from Cohort B is still what we're working with them on. But it really is Sam am I am and we've not only been prepared for, but something that comes along very naturally.
So the trial overview, let me reemphasize will be fully enrolled by second quarter of this year, and then we're going to be able to potentially position that as a post-marketing commitment for the program.
Joseph Pantginis
And then my last question if you don't mind and thanks for bearing with me on.
Linda Marbán
Absolutely.
Joseph Pantginis
We've been talking about this for several years because we've been excited about the data. So I guess how would you portray the role of the cardiovascular data you've been accumulating through HOPE two and beyond the evolution of your regulatory discussions and how much that may or may not be coming into play to date?
Linda Marbán
Yes. So obviously, one of the most important cornerstones of our regulatory strategy, but also in the eagerness of the community to get approval for CAP 10, oh two, to remind you and I stated this we saw a 4% improvement in ejection fraction, the gold standard of cardiac function and hope to hope to on open-label extension. We didn't start measuring cardiac function until two years, and we'll have three year data in the second quarter of this year. So stay tuned for that on cardiac function, but we're pretty convinced that it's going to be one of the major parts of what we're going to look for on our label. And it's the primary secondary endpoints that has been built into hopefully both Cohort A. and Cohort B.
Got it.
Joseph Pantginis
Thanks for the added details, Linda?
Linda Marbán
Absolutely, Joe, always a pleasure.
Operator
Kristen Kluska, Cantor Fitzgerald.
Kristen Kluska
Your line is now open for everyone that have anything like that. Yes, my question, how are you how are you doing that now thinking about the potential for combinations? I completely understand the need for that. But can you comment on what your expectations would be from payer support and then either gene therapy typically requires a lot more, Brian, my bank that you have a different kind of big manufacturing, et cetera. Would it be your expectation that top 1002 would be the first therapy essentially given in this case? And would that be an advantage in case there is some payer pushback.
Linda Marbán
So we've had really positive feedback from payers, not just some capital for, but also in Pharma has done significant work in preparing for market launch. And the way that we're understanding it is that there's going to be therapy that would be necessary for sort of management of the dystrophin off of these rights so the exon skippers and the gene therapies. And here because there's not an approved gene therapy, theoretically, yes, we don't really know how they're going to approach choosing.
Those are both or whatever.
But what we do know is that there needs to be adjunctive therapy that would manage.
And I've talked about this a lot.
The immunomodulation or the inflammatory response caused by the constant breakdown of protein in the body due to the mutation as well as manage the fibrosis and help to support perhaps the framework laid down by a gene therapy or an Exxon Skipper, which would be a healthier protein. So we are very confident on the payers that find it beneficial to cover both the dystrophin apathy management strategy as well as cap tenor to the management of the inflammation and fibrosis.
Now in terms of the order in which the therapeutics are, given that we would sort of have to talk to some of the KOLs. We're already starting to do some of that market research, obviously, because we're going for our initial label for some of the later-stage patients, at least based on the hope through data, we reserve the right to ask FDA to go as young as possible. Colloquially, we always say time is muscle. And the data has shown that once people get on cash generative to disease progression is significantly attenuated almost immediately. So in terms of the timing of how that's done, and that remains to be seen, but we're very confident that will be part of the the overall treatment paradigm addition.
Kristen Kluska
Thank you for that. And then we have Dean, I'm quite bullish the four to five year olds wrap the therapy which I think underscores the unmet need here. So I wanted to ask what your thoughts are about the cadence you might see in terms of patients wanting therapy, especially because you are going after that non ambulatory population? And then what capacity would you be able to it help with a given half of the patients with DMD? Thanks again.
Linda Marbán
Yes. So thank you. So we plan on swinging the door wide open in terms of what we ask FDA for that benefit here. Unlike many therapeutics, we're going to come into BLA with four or five years worth of safety, data tracking children from, you know, theoretically age 10 and beyond. So we're going to open the door and see what the opportunity is. Obviously, if I had a child with DMD. I want to get my child on CAP-1002 as young as possible. There's really no downside and potentially could even have impact on who knows things like steroid dosing and things that that may have on ultimate impacts of side effects in terms of what we're looking for, I think that was your second question we're looking for utilization of catheter to as early as as it becomes available to the community.
We're right there with it, yes.
Thank you.
Kristen Kluska
Thank you for your time.
Operator
Aydan Huseynov, Ladenburg.
Aydan Huseynov
Good afternoon, everyone. Good afternoon, Linda and Jay. Congratulations with the progress this quarter and staying on track with the guidance, the top line in Q4 24.
I have a couple of questions. First, I wanted to ask you about on the potential expansion of indication. I think you mentioned something on your in your remarks on and on we are the most natural expansion on I think we talked about it is was the Becker dystrophy that we see a tremendous increase in value in other Becker companies. And given your cardiomyopathy focus and focus on improving skeletal cardiac muscle function, could you and expand a little bit on your on any potential efforts that you are making regarding that expansion?
Linda Marbán
Yes.
Thanks, David.
And I know it's good to talk with you. So yes, we've been talking about this for a while. Obviously, there's tremendous opportunities for expansion. As I mentioned, the manufacturing paradigm is that we have a potency assay that's been accepted by FDA.
We understand the mechanism of action and how to make the cells?
Yes, we certainly are poised to expand our efforts. Becker is certainly one that's of great interest, especially since the primary manifestation later. Life is the cardiomyopathy, which as we've talked about it is one of the main targets. The cost synergies seems to ameliorate how they said that we are are right now focusing almost all of our efforts on getting cap tenor to across the line for DMD. We're working on the BLA. We're working on a launch strategy, commercialization strategy. And so our indication expansion will come behind that. And I will provide more color to you and to the market as those opportunities become available.
Aydan Huseynov
Okay, understood. And another question I have is regarding the on our hope to open an extension on open-label extension trial results in the second quarter. So what are your expectations regarding the spin?
Linda Marbán
Well, we have three year data coming out in the second quarter of this year as I said the two year data was extraordinary. We presented that most recently at PPMD, and I will be sharing some more data at the Muscular Dystrophy Association meetings next week in Orlando. And we have every expectation based on the anecdotes that we hear from the subjects and their families, that this trend of stabilization of disease attenuation of disease progression will continue we're really looking forward to seeing the MRI data because that will be two years of sequential cardiac function data. And we have every reason to believe that we should be able to stabilize heart function as well. So we also have so many families that call us that tell us that their sons are able to do what they weren't able to do before they can't wait for their next infusion. Can we please get in sooner because we feel a wearing off after three months. So I'm very much looking forward to seeing that data and then ultimately sharing it with all of you.
Aydan Huseynov
Understood. Thank you for that. And the last question is regarding the European discussions discussions with potential European partners. So in your discussions with them are first of all, if you could give us a little about a little bit of insight. Are these like established players?
Linda Marbán
Are these new players?
Aydan Huseynov
And what are the typical questions that you have or what is the which part of D&O capped on auto value, they are most interested in. If you could expand a little bit on this Yes.
Linda Marbán
So you know, I think the European community is as interested in getting therapies across the line for DMDS. is that the US authorities, they have a little bit different strategy in Europe.
As you probably are aware, there is a little bit different way of going about it.
The parties that we're talking to are some new and some established. I think we've been on the radar for several larger companies for a long time now. And with the data coming around the corner, they were paying more attention on perhaps one of the best things is that our San Diego manufacturing facility can be EMA qualified, so we can make doses here and ship them to Europe, which is an added benefit and in terms of the questions that we get, I think would be the typical ones, which is regulatory strategy getting capped to across the line. What clinical trial work will be needed from our from our standpoint is probably going to be fairly straightforward and we definitely look forward to making CAP-1002 available worldwide.
Aydan Huseynov
Okay.
Thank you so much and congratulations with the progress this quarter.
Linda Marbán
I stated. Take care.
Operator
(Operator Instructions)
There are no further questions at this time. I'm turning it over to the management for closing remarks.
Linda Marbán
Before we conclude today's call, I wanted to extend my sincere gratitude to the patients, their families, the clinicians and our partners at Nippon Shinyaku and NS. pharma and of course, at FDA who continue to work with us to bring cap tenor to closer to potential approval again, thank you to everyone who joined us this afternoon, and I look forward to seeing you it means in the future.
Operator
Ladies and gentlemen, this concludes today's conference. Thank you for joining You may now disconnect.
