Capricor Therapeutics, Inc. (CAPR) Earnings Call Transcript & Summary

Greetings, and welcome to the Capricor Therapeutics HOPE-3 Program Update Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, A.J. Bergmann. Thank you, A.J. You may begin.

Thank you, and good morning, 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 R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, manufacturing capabilities potential milestone payments and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause our 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 Marbán, CEO.

Good morning, everyone, and thank you so much, A.J. I am delighted to be here this morning to present an update on our DMD program. And I would like to remind you that we are publicly traded NASDAQ listed under the symbol CAPR and as you just heard, all of our filings are currently up to date. So let me jump right into the topic of the morning. Many of you have been inquiring us for a while as to our path to BLA for CAP-1002, our lead products in the development of treatment for Duchenne muscular dystrophy. And I am really delighted to share with you that we have reached agreements with FDA on a direct path to BLA for CAP-1002. Highlighted here and these bullet points are the three major takeaways of our several meetings with FDA this year. And I would like to read these to you so that you're very clear as to the path forward. Number one, CAP-1002 drug product manufactured in the San Diego GMP facility is not necessary for a BLA submission. Number two, our ongoing HOPE-3 clinical trial will support a BLA submission and the number of patients necessary has been reduced from approximately 68 patients to approximately 58 patients, and that's largely due to a very low dropout rate of the clinical trial. And number three, Capricor and FDA will continue to discuss other alternative pathways to approval following completion of the enrollment of HOPE-3. Now what does this mean in practical purposes? Let me enunciate this for you. Number one, shown here in the blue boxes on the top are the takeaway messages of our interactions recently with FDA. As you may recall, we have had two meetings already in 2023. The first was to align on the CMC, or Chemistry Manufacturing Controls aspect of our pathway to approval and the other was on the clinical path to approval. Both meetings were highly productive, involved multiple back and forth opportunities for the product and a recognition of the importance of CAP-1002 to the Duchenne community. We now have aligned on a pathway to registration that can shorten our time to approval by approximately two years, which is not only a tremendous achievement for the company but also for the Duchenne muscular dystrophy community. What does this mean practically? It means that we can apply for a biologic license application, a BLA, out of our Los Angeles site without having to add patients from our San Diego commercial manufacturing facility for approval. This means that we'll have enrollment completed by the end of this year 2023 as well as our futility analysis, which is our interim analysis completed likely by the end of this year, beginning of next year as well. Let me just remind you that the reason for this type of progress on the part of Capricor and our relationship with FDA is due to our RMAT designation, which is similar to breakthrough for cell and gene therapy. We also have orphan designation. And most importantly, we are eligible for a PRV, or a Priority Review Voucher, which, as you know, can lead to significant strength for the balance sheet. Additionally, as you know, we have a deal with Nippon Shinyaku with milestone payments due from them that can be up to $790 million and some of those are also included in a pre-approval as well as post-approval fashion. Let me go through some of the details with you on our path to registration. Shown on the left-hand side, we now call the original group Cohort A. This clinical trial is the one that you know as the HOPE-3 clinical trial. We originally said that it was a 68-patient randomized, double-blind, placebo-controlled trial for our largely later stage or non-ambulant Duchenne muscular dystrophy patient population. This is the most highly unmet need patient population in Duchenne because many of the other therapies are targeting the younger children. So these boys and young men that are in their teens, in early 20s have really very few options ahead of them and are delighted not only with the opportunity presented by CAP-1002 in terms of its safety but also potential efficacy, but also it is a clinical trial that is available to them. We have reduced the number of patients based on an agreement with FDA, largely due to the fact that we have such a low dropout rate. So we've built in a pretty significant dropout rate into our initial calculation of 68 patients. We're not seeing that. As you can see, by treating 52 patients to date, we are almost done with enrollment. So we are very confident in our ability to reach statistical power based on the calculations by Pentara, our statistical consulting group, to reduce the number of patients necessary to achieve that power. Cohort A is being entirely treated out of our Los Angeles site. And as you can see, we have very safely statistically powered this trial at a 90% power and, of course, a statistical significance of p equals or less than 0.05. We are on a fast track internally towards a BLA with top line data expected in the fourth quarter of 2024. And then we plan to file the BLA shortly thereafter in 2025. So again, this has significantly shortened what we thought our pathway might have been. Now in order to switch to our larger scale commercial manufacturing facility in order to meet what is likely to be an increased demand for the product, we built a facility in San Diego. We've been talking about this for a while. This facility should meet not only FDA requirements for commercialization, but also EMA and PMDA requirements. The target enrollment for Cohort B is 44 patients. It's also a randomized, double-blind, placebo-controlled group. The power of this trial is at 80% and a p less than 0.05. Why are we powering it a little lighter than Cohort A? Because we will be able to get approval for Cohort B as part of a prior approval supplement. So what that means is we can get the BLA out of Los Angeles. And then we can shift to the commercial manufacturing plant after Cohort B is completed as part of a prior approval pathway, which, as you know, does not have quite the same implications for success as does the original BLA population. This was a giant success for us with FDA, and we're delighted that they have been so supportive of our program. And in addition to that, we see CAP-1002 as backbone therapy. What I want to emphasize here is that many of the patients in our trial are on exon skippers, some are post-gene therapy, all are required to be on steroids. And what that means is that CAP-1002 will go along with any other therapies that may be approved in the space so that we have the opportunity to continue to reduce the inflammatory consequences of Duchenne, to reduce the fibrosis associated with Duchenne, and to hopefully help to stabilize the progression of this very terrible disease. In addition, we have shown both in our open-label extension data as well as in the HOPE-2 data that there is a significant attenuation in the progression of Duchenne muscular dystrophy on those that are receiving CAP-1002, so that leads to the conclusion that this is likely to be a very good therapy for all patients with Duchenne. I want to emphasize that time is muscle for these patients. Once a muscle group is lost, they cannot get it back. However, stabilization of the progression is really what all the boys and young men with Duchenne are waking up this morning and asking for. They don't want to be worse today than they were yesterday. And what the clinical data thus far has shown with CAP-1002 is that we are helping them achieve that goal. There is an urgency to initiate therapy, the loss of upper limb strength or, as we call it, performance of the upper limb, PUL, points are never recovered. In addition, we are showing improvements in open-label extension as well as in HOPE-2 and it has been published in The Lancet, a preservation of cardiac function as measured by ejection fraction, the gold standard of cardiac function measurement. And what has -- this suggest is that this is an opportunity for one of the major causes of terminal events in boys and young men with Duchenne to be attenuated with CAP-1002. We'll continue, of course, to measure this in HOPE-3 and look forward to being able to include this on our label. And most importantly and one of the reasons why we've been able to get such tremendous support from FDA has been the fact that CAP-1002 is safe. We have treated over 200 patients. Many of our patients are open-label extension subjects are ones that have had multiple infusions over many years. We're now starting our fourth year of open-label extension and appears to have a very strong safety profile which is, of course, the most important metric of any therapy for any human being. So in order to strengthen our balance sheet, we also announced this morning an equity financing. This is an extremely important milestone for Capricor. It strengthens our balance sheet into 2025, post top line data for sure and definitely on our path towards BLA. We brought in our partner, Nippon Shinyaku, strengthens our relationship with them. They are working very closely with us because CAP-1002 is one of the important products in their opportunity, especially in the United States and Japan, where they have taken rights to work on the commercialization with us. We also welcome Highbridge Capital Management to our team with our financing announced this morning. This is a landmark financing for us and are grateful to have the opportunity to work with them to build out the CAP-1002 for DMD as well as some of the other initiatives in-house. Let me just remind you that the use of these proceeds are for research and development related to our product candidates, the manufacturing of our products, specifically in support of a BLA submission for CAP-1002 for the treatment of DMD and of course all of the other expenses that go into keeping a biotech running on a day-to-day basis. This financing does not include any potential milestone payments from Nippon Shinyaku, which let me remind you, as I said earlier, that this has biodollars up to $790 million both divided between pre and post approval. So I think that a summary of everything I have to share with you this morning. As I said, this has been many months in the working for us, and we're delighted to share the information on our path to BLA with you and to take your questions and to continue to work with you, with the Duchenne muscular dystrophy community, with our new equity partners and our team internally to move this forward. Of course, and I have to say this, the advocacy community for the Duchenne muscular dystrophy community has worked with us to help move this forward. The families, the young men with Duchenne are all working with us because they believe that they should have the opportunity to have every therapeutic made possible to attenuate this disease. And so thank you to all of you that may be on this call and out there that have made this possible for us. Thank you, and I look forward to questions.

[Operator Instructions] Our first question is from Aydin Huseynov from Ladenburg.

Congratulations for the great progress. Sorry for the background noise here. So I want to clarify, regarding the reasons for the dropouts, could you just clarify this? And how these dropouts is compared to other Duchenne trials, if you could at all compare this?

So the dropout rate for us has been very low. This is something that we saw in HOPE-2 and are now seeing in HOPE-3. I can't really comment on dropout rates in other trials. Typically, companies don't talk about it very much. What I can tell you is that our statistical consulting group at Pentara led by Suzanne Hendrix, who is very well known in the rare disease space for the design, a statistical analysis of clinical trials and has multiple approvals under her belt, has worked very closely with us, both in the design of HOPE-3, the design of Cohort A and Cohort B. She has been on the call with us with FDA, and we've even done follow-up calls with the statistical group at FDA to fine-tune the statistical analysis plan for HOPE-3. So we're very comfortable with how it's been designed. We're very confident based on the data that we've seen in the past with three positive clinical trials, measuring performance of the upper limb, that's all things, clinical trials and DMD being equal with a little bit of good luck, we'll hit that endpoints with HOPE-3 Cohort A.

And could you comment on any interactions you may have had with European agency at all?

Yes. So we really are anxious to expand CAP-1002 worldwide. And let me just say, we're not the only ones. We've actually had families move to the United States from Europe to be able to get into our trials. We're working now closely with some groups in Europe. We're looking for partners primarily to help us power it forward similar to what we did with Nippon Shinyaku in the United States and Japan. So please stay tuned as we progress towards outside U.S. activities.

Got it. Got it. And then last one. So I'm just trying to understand what you guys will do beyond -- I'm sorry, could you hear me now?

The most important part of your question, I didn't hear. I heard the beginning. So if you could just repeat.

So the question is, any plans beyond Duchenne with your specific drug?

Yes. absolutely. So we're -- look, we have spent 15 years developing CAP-1002 to be the finely tuned cell therapy that it is. We're very proud of it. It's not a stem cell therapy. It works by going in, releasing exosomes, exosomes-targeted site of injury. We've developed a potency assay that we're working very closely with FDA on making sure it gets us across the line. They really like it. It's a very specific RNA fingerprinting, so to speak, of the cells and kind of be attributed right back to the mechanism of action. The power of our clinical data, our CMC package, the clinical efficacy that we're seeing in Duchenne, we absolutely are planning on moving forward with CAP-1002 in multiple directions. The first will be towards the younger children in Duchenne muscular dystrophy, and then other neuromuscular diseases likely to be beyond that.

[Operator Instructions] Okay. And so it looks like there are no further questions at this time. I would like to turn the floor back over to Capricor management for closing comments.

Thank you so much for joining us today. We look forward to keeping you updated on our progress in CAP-1002's progress towards approval. And thank you very much for joining us this rainy New York morning.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.