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

Good morning, ladies and gentlemen, and welcome to the Capricor Therapeutics DMD program update call and Webcast. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the conference over to host for today, Mr. A.J. Bergmann, Capricor's Chief Financial Officer. Please go ahead.

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 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, revenue and reimbursement estimates, 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 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 Marban, CEO.

Good morning, and thank you for joining us on this important call to update you on our recent progress with FDA. This morning, I am joined by my colleague, Dr. Kristi Elliott, our Chief Science Officer; Mr. Mark Awadalla, our Vice President of Clinical Operations; and A.J. Bergmann, our Chief Financial Officer. Each of us will present different sections of this presentation and are available for questions at the end of the session. This morning, we have a lot to cover, and we are really looking forward to updating you. I know there's been a lot of questions regarding our progress with FDA, the excitement around the efficacy of CAP-1002 and also the opportunity for approval. So first, you're going to be hearing from me, where I talk to a little bit about Capricor, in case you are not familiar with the company or need a refresher, our DMD program overview. I will then share with you the regulatory updates and some overview of our history with the FDA to make sure you understand the relevance of what we've accomplished here today. I'll be followed by Dr. Kristi Elliott who will talk to you about our nonclinical comparability, the [Indiscernible] assays that has been developed by her and her team. And ultimately, the opportunity that this gave us the transition seamlessly to commercial manufacturing. And then finally, you'll hear from A.J. Bergmann and Mark Awadalla regarding our commercial planning as we are actively getting ready to launch this product hopefully within the next year or 2. And then finally, we'll follow along with questions and answers at the end. So let me talk to you a little bit about the history of Capricor. We've been around for about 19 years. The cells were discovered, [Indiscernible] in 2004 and were originally considered to be stem cells that were available to treat heart disease. One of the great strengths with Capricor has been our strong underpinning of science and clinical development. And what we've been able to learn over these many years has now driven where we are today, a company that is about to introduce a product for commercial use and Duchenne muscular dystrophy. As we learned about the cell, scientifically called cardiosphere-derived cells and ultimately the product made now CAP-1002 is that they were not stem cells. These are not stem cells. They don't go in, they don't engraft. What they do is they release exosomes, exosomes-targeted site of injury and drive the mechanism of action, and that again has been validated by some of the studies you'll hear a little bit about from Kristi in a few moment. Ultimately, when we realized that the exosomes drove the biology, we were then able to transition from the original intracardiac delivery to easy, 4x a year intravenous delivery and still deliver the strong mechanism of action that we have highlighted in the red and blue boxes below, which is antifibrosis, anti-apoptosis, anti-inflammatory and pro regenerative. On the bottom, you'll see the clinical trial progression in blue are the clinical trials that were done in Duchenne muscular dystrophy, and I'm going to highlight those in the next slide. So what's very important in our progress is that we have done multiple clinical trials in Duchenne muscular dystrophy, each of them highlighting some very important parameters, which I would like to outline for you in this relatively busy slide. Number one, we have seen in almost every trial we have done improvement in the performance of the upper limb in patients that are non-ambulant, so the only way to measure is skeletal muscle function of shoulder, arm and hand is through a [Indiscernible] called the performance of the upper limb, which I'll highlight in a few moments. The other is that we are the only therapeutic that shows statistically significant improvement in cardiac function, both in our Phase I trial and in our Phase II trial, published sequentially in the Journal of Neurology [Indiscernible]. We now are in our pivotal trials shown below the HOPE-3 Cohort A clinical trial, which is reading out at the end of the year '24. Let me remind you, at the end of '23, we had a successful interim futility analysis which told us to go forward to the end of the trial. And then we also have [Indiscernible] open-label extension studies going, which has given us long-term, not only efficacy, but safety. Some of our patients have been followed for now coming up on 5 years with a very strong safety profile. All things -- these things taken together have really supported our ongoing relationship with FDA, which you'll hear about in the next few slides. So let me remind you that one of the advantages that Capricor has is a multiple regulatory designation, which has allowed preferred access to the Food and Drug Administration through our clinical development paradigm. The most important data I'd like to highlight is the RMAT, which is regenerative medicine advanced therapy designation. This designation is like breakthrough for cell and gene therapy and very importantly, is based on clinical data. So this is not just a designation like orphan joint designation for instance, which we have and are proud of where you can get it if you're treating a patient population that is of great need with few patients relatively impacted. This has to show RMAT designation. You have to show that your clinical data supports the extra time, effort and energy that FDA is going to give to you. So we have RMAT designation there, is largely related to our positive and ongoing interactions with the agency. We have rare pediatric disease designation, which gives us a pediatric coupon which everybody is aware of, can be used for multiple opportunities once you achieve approval and then, of course, orphan joint designation, which is well known to give you a priority in the market for a [Indiscernible] of time validating going after some of the smaller indications. Taken together, this gives us a really strong opportunity for regulatory support. Next slide. So because most of the clinical trials that have been done in Duchenne muscular dystrophy are done on the younger kids, those that are still ambulant of, [Indiscernible] 7-year-olds primarily. Many people are aware of the metric called the North Star Ambulatory Assessment, which by the way, we are measuring in our patients that are still able to ambulate. But once somebody goes off their feet, you still have to be able to measure all the functions. So nearly about 10 years ago, this assay called the performance of the upper limb or PUL was developed. It's been highly validated by multiple statistical analysis published in multiple journals and has been approved by the FDA as a primary efficacy endpoint as a measure of skeletal muscle performance, both for Capricor and for other companies that are also looking at nonangular types of disease processes. It is a 21 item scale, which allows you to correlate these clinical measures to activities of daily living. So lifting light and heavy can might be analogous to being able to lift a glass of water to your left or being able to feed yourself, brush your hair, brush your teeth, these activities are the ones that are very important. I'd also like to highlight, while we're talking about upper limb function, shoulder, arm and hand that for patients with Duchenne muscular dystrophy and other diseases where ambulation is eventually impacted, they are correlated to quality of life of a limb function because when a patient goes off their feet, oftentimes they're actually kind of glad. Their lives have not been supporting them well for quite a long time. Many of them have broken the bone. Many of them have fallen multiple times. So when they get to sit down, it's a little bit of a relief. But what they don't want to lose is the ability to do is use their phone, use the remote, power their wheelchair with their hand control, see themselves and also provide personal care like hygiene and toilet. So not only are we providing a therapeutic for a huge unmet medical need, we also are working with the patient population where their quality of life can be directly impacted by treating CAP-1002. Next slide, so we just completed enrollment at the end of '23 in the HOPE-3 pivotal trial, Cohort A, is the main study arm that is going to be used for approval of 61 patients that were enrolled. As I mentioned, the primary efficacy endpoint is the change in the performance of the upper limb, which is the second version at 12 months. The second version was improved on from the first version by changing floor and ceiling effects as well as redundancy in the assets with a stronger, better assets efficacy. And then, of course, because CAP-1002 was developed originally to treat heart disease. Our major secondary endpoint and cardiac function as measured by ejection fraction. We have other measures of cardiac function such as volume that will also be considered as a secondary endpoint and then a variety of quality of life -- and other measures of function that have been measured. We've completed the interim analysis at the end of 2023, that was successful. It was for futility and so the trial continued as planned. And we looked for data, top line data at the end of 2024, we are just months away now, and that data set will support BLA submission. So there's a lot of conversation within the community, within the investment community about what do we need to treat Duchenne muscular dystrophy, ultimately end up being reimbursed. And the way that you can think of this therapeutic paradigm is in 2 mode. One, it is in dystrophin modification. That would be something that would actually change the structure of the gene under the guise of gene therapies or exon skipper that actually can make some functional dystrophin and should lead to better skeletal muscle function. On the other side of that, are the secondary impacts of the disease. Those things that are not going to go away even with a successful gene or exon skipping therapy because none of them are 100% successful. So as long as they have cells being made in the body without dystrophin, there's going to be inflammation. There's going to be fibrosis. There's going to be all of the downstream effects of the pretty significant genetic abnormality. And so what we need then is to have therapies that can support the gene therapies in the exon skippers by reducing those secondary set. CAP-1002 is the perfect partner. Not only is this immunomodulatory, which means it regulates inflammation and allows good skeletal muscle and cardiac muscle to regrow, it also has anti-fibrotic and anti-inflammatory capability. And when we say regenerative, what we mean is that endogenous stem cells are driven back into the cell cycle to make new healthy muscle. And theoretically, if you have a gene therapy that allows for a healthier dystrophin-producing cells, or an exon skippers that allows for the same, and you're in a much better position to preserve that muscle if you can reduce the inflammation and the fibrosis. CAP-1002 has always been tested against all the standard of care medication. So all of our patients have been on a steady regimen of steroids, any other therapeutics that have been approved, we've even had some in our trials that have received gene therapy or on current exon first. So overall, a great tool in the toolbox, CAP-1002. We've had conversations with payers, they seem to think so as well. So the data bear out, we have great hopes for the future of CAP-1002 Duchenne muscular dystrophy. That brings me to the most important part on this call as the SG&A regulatory overview and update. So the first thing I'm going to do and I'm going to walk you through our recent history with FDA, then I'm going to provide to you on how we've aligned on our path to BLA, and that will be followed again by Kristi, who will give you the details why this is so important and establishment of nonclinical comparability. Next slide. So shown on this very busy table, I'm actually proud that it's busy because it shows a significant number of interactions with FDA over the past couple of years and a lot of progress and we have aligned on HOPE-3, what was that going to look like? What do they need to see? Where the trial needed to be and all those provided that we've obviously met in the design and implementation of Cohort A of HOPE-3. Then we had a jump into what we would call the [deep end] in terms of getting the other parts of the product ready for commercialization, which is the [unheralded], but extremely important chemistry manufacturing controls program. So you have to have a potency assay or potency assay profile that actually shows what the product is doing so that you can deliver that product safely and effectively every single time. This is not easy with the cell therapy because you're actually trying to measure something that a cell is doing and since you haven't manufactured like with a small molecule, you have to find those very important bioactivity and then correlate back to some kind of a molecular measurement, and that is exactly what we have done today. And that is why we are so excited to be here and share this with you, it is not a small achievement and has allowed us to roll forward not only with the FDA, but to look ourselves in the eye and know that the products that we are making correlate back to cells that were efficacious in the HOPE-2 clinical trial and the HOPE-2 open-label extension trial now over many years. As you may remember, we talked about last year, the fact that originally FDA had offered to do another clinical trial to validate our new San Diego commercial-ready facility in order to market out of San Diego. They wanted efficacy data because they were not convinced that we have developed enough nonclinical data to be able to support that the cells from L.A. and the cell from San Diego were exactly the same or should have the same bioactivity. Well, Kristi and her team were not to be dissuaded and they went back to the bench and they developed what I would consider not only a first-in-class, but also one of the most stringent and highly vetted potency assay and identity criteria that's been seen in this space. And that allows us to look at multiple genes and also the bioactivity of the cells in a reliable and repeatable way. When we took that data back to FDA, this -- just last quarter, we were able to convince them that we had enough data to support nonclinical comparability. That means that the assays that Kristi and her team have developed allow us to manufacture and market from San Diego based on LA data, the cells are the same or periodically are the same. And then any other sites that we build and move to, we should be able to use those assays as well. So this is a long-term horizon planning opportunity for the company that allows us to more effectively get this product not only through approval, but through commercialization and expansion of the market opportunity, which could include obviously, other indications. And then finally, we have an upcoming Type B clinical meeting. As we reported in our press release last week, the meeting that we had in the first quarter was focusing on this nonclinical comparability. It was a hurdle that we had to get over, and it was huge for us. Now we talked to them at that meeting about the opportunity for rolling BLA schedule as well as a request for a pre-BLA meeting. They were open to those suggestions and requested that we set another meeting, which we have in the second quarter defined to those [Indiscernible] that is for the pre-BLA meeting and the rolling BLA submission. We have high hope that's going to roll forward. We'll also be presenting the HOPE-2 open-label extension, 3-year data at that meeting to support the continuing efficacy that we are seeing with CAP-1002. Finally, before I move on from the slide, I want to mention that we have also been very lucky because the Food and Drug Administration has been so focused on the development of therapeutics for Duchenne muscular dystrophy. As many of you know, we and others say the time is muscle, we've had several informal meetings with Dr. Peter Marks and Dr. [Indiscernible] which allowed us to pave the way for the very successful formal meetings as well. So the FDA has been our partner. We appreciate that not only for us, but for the community ultimately for the patients that we are trying to go [Indiscernible]. Next slide, please. So let me just highlight for you the takeaways from our Q1 meeting with the FDA. The first, obviously, is this nonclinical comparability, that means the cell CAP-1002 are the same from Los Angeles, San Diego and into the beyond. And that is based on very sophisticated analytical data [approaching] that potency assay data of analyzing very sophisticated bioinformatic model. We're then able to use the San Diego facility for our BLA and upon potential product approvals, so we don't have to worry about other clinical use for demonstrating efficacy from another site. And then finally, we have a meeting coming up very shortly, in which we'll be able to discuss the pre-BLA opportunity as well as the schedule for the rolling BLA, which allows us to save a significant amount of time off of not only the BLA submission, but also on the path to PDUFA. So overall, a very positive meeting. The purpose of this call was not only to provide some of this color, which we can provide in a press release, but also to really give you a chance to hear Dr. Kristi Elliott, and how she came up with the idea of what ultimately the potency assay show, which allows us to have nonclinical comparability. Next slide. So I'd like to go back. I'm going to ask Kristi to take over and walk us through exactly what CAP-1002 does and why the nonclinical comparability [Indiscernible] supported with the cells from San Diego and LA. Kristi?

Thank you, Linda. Good morning. I'm excited to share our potency assays and importantly, our path to nonclinical comparability with you. As you're well aware, CAP-1002 with a cell therapy consisting of CDCs that have been isolated from donated healthy heart. We know from numerous clinical studies and hundreds of publications that CAP-1002 has multiple mechanisms of action. These include stimulating muscle growth, helping to retain muscle function decreasing inflammation and importantly, for our call today preventing scaring. CAP-1002 has been investigated in over 200 patients and we have seen clinical efficacy, particularly in our HOPE-2 and HOPE-2-OLE trials. Those trials were used as the basis for our development of our potency assay. If we go to the next slide, we were able to demonstrate 2 -- demonstrate the use of 2 state-of-the-art potency assays. Many of you are aware that potency assays are foundational for product approval. Many companies in our space struggle to develop potency assays that truly define the mechanism of action of their cells were truly define or show that all lots that are being produced are exactly the same. Capricor has spent several years developing these assays, and we are very excited that the FDA is aligned that these assays do measure the potency of CAP-1002. As I mentioned, the basis for these assays are clinical efficacy that was shown in the hope and HOPE-2-OLE trial. We use CAP-1002 lots that were used in those trials to develop 2 assays. The first assay is our clinical correlation assay performed by RNA seat. This is an innovated novel approach where we can use the profile or the fingerprint of clinically potent CAP-1002 cells and compare those to new lots manufactured either in L.A. or San Diego. In this way, we can show that all of the lots being produced have the same fingerprint and thus will be clinically beneficial in our patients. The second assay is the antifibrosis assay. This is a more traditional cell-based assay that clearly demonstrates the mechanism of action of CAP-1002. This assay was specifically requested by the FDA, and both assays were intended to be confirmatory of each other, meaning that all lots of CAP-1002 lets not only show correlation to clinically beneficial CAP-1002 lot used in previous trials, but they must also exert the mechanism of action in terms of anti-fibrosis. We use statistical analysis to analyze the data from many lots produced both in San Diego and in Los Angeles in order to demonstrate equivalent between the 2 sites. With that, we can go to the next slide, and I'll get into a little bit more detail about each assay. The first assay is what we call the clinical correlation assay. This assay is performed by RNA sequencing followed by sophisticated bioinformatics analysis. The real idea for this assay, as I mentioned, was used lots of CAP-1002 that has shown clinical benefit in patient. If a lot is to show clinical benefit in patients, we know that it has biological activity and therefore is potent. Therefore, lots that were used in the HOPE-2 and HOPE-2-OLE trial were sequenced in order to create a cell profile of clinically potent CAP-1002. In addition, we also sequenced other cell types, particularly potentially cell types that could be derived from the heart at the same time. We use RNA sequencing to create a profile or a fingerprint of CAP-1002 that contains differentially expressed genes, meaning genes that are not expressed by other cell types and that are also associated with potency, meaning that those teams are found highly expressed in cells that were used clinically that were shown to be biologically access. The combination of these 2 things has allowed us to create a unique fingerprint for CAP-1002. In addition, when building the bioinformatics model, although we started with over 200,000 transcripts, carefully identifying that were differentially expressed and also correlated with potency, we use a very stringent statistically significant cutoff to set the acceptance criteria. Therefore, we now have an extremely stringent and statistically significant assay, which can demonstrate that new lots of CAP-1002 produced at our San Diego facility or equivalent or have the same fingerprint as lots that were used in our clinical trial. With that, we can go to the next slide. So as I mentioned, our second potency assay is a more traditional assay. It is a cell-based assay, looking at a key mechanism of action for CAP-1002, which is anti-fibrosis. Fibrosis is a very clear pathological feature in DMD. It is a tissue hardening with scar formation, resulting from increased deposition of extracellular matrix proteins such as collagen. Knowing this as well as knowing that our mechanism of action is being exerted by factors and exosomes that are released from CAP-1002, we devised the cell-based assay to look exactly at the antifibrotic mechanism of action. In this assay, we collect factors and exosomes from CAP-1002 cells and we apply that to an assay to look to see if those factors can reduce collagen. This assay shows that those exosomes and factors released from CAP-1002 therein has anti-fibrotic activity, and this is directly indicative of a mechanism of action for CAP-1002. Next slide. Taken together, these 2 assays have been developed over several years at Capricor, they are first-in-class, distinct and highly specific potency assays that were designed to be confirmatory, again, meaning that all lots of CAP-1002 must not only be correlative to clinically potent lots, but they must also exert the mechanism of action in vitro. These data and potency assays were used to analyze lots coming from not only Las Angeles, but also from our new San Diego facility. All of the lots evaluated were shown to be potent. In addition, statistical analysis of the data from both of these potency assays was performed and showed that the lots being produced at both manufacturing sites were statistically equivalent, meaning that all the lots are potent and all the lots are deemed to be the same by stringent statistical analysis. We were incredibly excited that the years of development that we have spent on these potency assays as well as the stringent statistical analysis that was applied to the data from these assays was well received by the FDA and that we are aligned that these data demonstrate comparability between our Los Angeles and our San Diego facility. This allows us to use our San Diego facility for product launch, a huge achievement for Capricor. In the next slide, this is an image of our San Diego manufacturing facility where we are actively preparing for future BLA. With that, I'll hand over to Dr. Marban. Thank you.

Thank you, Kristi. We were very lucky to be able to lure Kristi to join us with her many years of background in stem cell biology, cell biology, exosome scientific development. We are grateful to have her. And as you can hear from the innovative work that she and her team have done. Capricor is the beneficiary for years of experience and her great intelligence. At this point, I'd like to turn the call over to A.J., our CFO; and Mark Awadalla, Vice President of Clinical Operations. We're going to walk you through the commercial planning for a potential launch. As we get closer and closer to data becomes more important on our plan to move this to the commercial scale, and we are actively involved in that. So with that, I will turn it over to you, A.J.

Thank you, Linda. We wanted to provide a brief overview on where Capricor is in terms of some of our commercial planning. As most of you know on the call, the United States Duchenne muscular dystrophy prevalence is between 15,000 to 20,000 cases. Also, on top of that, it is also estimated that approximately 50% of these boys and young men are nonambulant, which provides a patient number of 7,500 to 10,000 boys that may be addressable with CAP-1002. We envision a treatment regimen of 4 doses per year and a target reimbursement price for aiming to be similar or higher than the approved exon skipping therapies on market. We also envision and as teams from our open-label extension data, the potential for a multiyear treatment. And with the small market penetration, total product revenue estimates could exceed $1.5 billion. And that's important to stress, that is a very modest market penetration. We also believe that we'll have the potential to have over 100 patients from the open label extension transition to our commercial product upon approval, which is a very important opportunity for us as we enter the market with our partner, NS Pharma. With that, I'll transition over to Mark to talk a little bit more about the preparation.

Thank you, A.J. Good morning, everybody. I'd like to announce that we have initiated commercial and marketing activities with our commercial partner, NS Pharma. We are working together to ensure that our respective organizations are prepared for success and to implement an efficient and smooth product launch of CAP-1002. Next slide. As we further build on our strong clinical profile of both safety and efficacy that has been observed in HOPE-2 and HOPE-2 OLE clinical trials, it is expected that the HOPE-3 readout will solidify the benefits of CAP-1002, which will provide a significant commercial reach to our patients and caregivers. We have seen that the multifunctional mechanism of action of CAP-1002 of immunomodulatory antifibrotic and poor regenerative properties delivers a unique treatment effect for patients with DMD. Data to date has shown that CAP-1002 as a bimodal efficacy profile which not only attenuates the disease progression of skeletal function, but it also stabilizes and improves cardiac function as measured by left ventricular ejection fraction. These beneficial characteristics are the main differentiating factors of CAP-1002 among all other treatments currently approved for DMD patients. With long-term continuous treatment data of over 3 years, CAP-1002 continues to show year-over-year the benefits is not only efficacy but safety as well. The safety profile to date of CAP-1002 has been tremendously favorable in over 200 infusions to date and longitudinally with over 3 years of continuous treatment. With such a strong clinical profile and combined with a DMD industry leader such as NS Pharma, we believe that CAP-1002 will provide -- will prove to be a significant change in the treatment paradigm of DMD. Furthermore, with Capricor's commitment to patient support through our relationships with the patient advocacy groups and treating physicians, CAP-1002 is poised to potentially be a blockbuster drug, with estimates speculated to exceed well over $1 billion annually. Next slide. Additionally, the potential of CAP-1002 does not stop here. We believe that the mechanism of action and the safety efficacy profile will potentially be beneficial in earlier ambulant stages of DMD as well as other similar muscular dystrophy indications such as Becker's. Given these opportunities for label expansion and the durability of treatment with CAP-1002, the revenue-generating potential would more than likely be significantly increased. And with that, I'd like to turn it back to Linda.

Thank you, Mark. Really appreciate all the efforts that you've made and the rapid enrollment of the HOPE-3 clinical trial and the opportunity to drive this therapy as quickly as possible to patients and to family. So I'd like to just highlight a few important takeaways from this call if you will give me a few extra moments of your time. Number one, a lot of clinical comparability has been demonstrated using 2 distinct potency assays. This is important not only for the current submission of the BLA, but also for transitioning to a later stage and more advanced commercial manufacturing and bigger facilities. In addition, it allows the cells to pass the sniff test of each lot of cells should drive the same bioactivity as the lot before, which has been some of the application. As I mentioned, the San Diego facility can be used upon potential approval, will be slated and ready to go, and commercial manufacturing efforts will begin as recently as Q3 of this year. We are planning a Q2 meeting with the FDA to discuss the pre-BLA and the rolling BLA schedule. So if they choose to update from now, we expect those conversations to be as productive as the most recent one with FDA has been. The Phase III cohort data is expected in late Q4 2024. That means we are just months away from the Path 2 approval and also to the top line data expected. We will be expecting the open-label extension to your data imminently, and we'll present it to FDA at our upcoming meeting as well as publicly at a time to be determined, but we look forward to updating the public on not only the skeletal muscle benefit or long-term therapy with CAP-1002, but also the cardiac data. And then finally, Mark talked about this, but we are actively preparing for commercial launch, getting ready so that when we get approval and ultimately past PDUFA, it will be a seamless transition. I'll just take one more minute here to remind you that with over 125 patients in our open-label extension studies, these patients are likely to transition right away to commercial utility, as A.J. mentioned, and therefore, should drive a very strong revenue model just out of the gate. Next slide, please. So we'll stop our formal comments here. We'll take your questions. Before we do that, I would be remiss if I didn't say thank you to the Food and Drug Administration for making time available to us always to discuss informally and formally the development of our clinical program and the path to approval. We know that with their current interest in moving therapeutics for Duchenne forward, this is front and center of their agenda, but we are the beneficiaries of their time. And then finally, I can't say enough to the patients, to the families of Duchenne muscular dystrophy. There isn't a day that goes by that I don't get a text message or an e-mail from a family that is so anxious to see this therapeutic approved, and families, we are working hard to get it across the line for you. So stay a little bit patient as we move towards approval. Thank you, and we open the line for questions.

[Operator Instructions] your first question comes from Joe Pantginis from H.C. Wainwright.

Linda, I got 2 questions. One is a prospective question and one is a little more specific one diving into the total picture for CAP-1002 opportunity in DMD. So with regard to the prospective, obviously, I hope it resonates today the level of the scientific achievement that you've achieved here with regard to the comparability analysis. And the perspective that I'm looking for is these comparability analyses or potency assays specifically have really represented a major hurdle and has led to even significant delays for other companies. So hopefully, you can add some perspective to that about what you've accomplished.

Thank you, Joe. I really appreciate the question. And yes, that's why we decided to do a call as well as a press release because there are so many companies in so many situations in which people hurtle to the finish line with good clinical data, which, of course, we've seen in our multiple clinical trials, as I highlighted as well this morning. But to achieve the CMC or comparability achievement that we did where we can seamlessly transition not only from Los Angeles to San Diego, but as manufacturing needs grow with market penetration, to future facilities, it is no small feat. And the work that's been done, not only is just a potency assay that passes the regulatory hurdle, as I said, but more importantly, it's correlated back to efficacious cells from the HOPE-2 clinical trial, so that we have a confidence internally as well as to provide comfort to the agency and to users of the product that the cells will be efficacious as they were in HOPE-2. So overall, this is an innovative way of looking at potency, that's why we decided to highlight it. It's a really novel way of addressing the concerns of chemistry manufacturing controls, and we are continuously working to derisk the program so that not only will the clinical data drive the BLA, but ultimately, we will go quicker to PDUFA as we check all these boxes.

No, I appreciate that. And I guess the more specific question about the profile is you obviously have the agreed-upon path with regard to your primary endpoint, performance of upper limb, 2.0, et cetera. as the key metric. But when you look at the profile, again, we've discussed this in the past. To what extent currently has your cardiovascular data impacted your discussions with the FDA? And obviously, that should be a -- represent a big component of the data coming out from HOPE-3. So where do you think cardiovascular could fit in the overall picture?

So we have always highlighted the fact that we are the only cell -- the only product, not even cell type, the only product which seems to have demonstrated statistically significant improvement in ejection fraction in specifically Duchenne muscular dystrophy. So the agency, the families, the physicians, the cardiologists are all aware that they really do not have anything in their toolkit to specifically address the fibrofatty accumulation, the ultimate aggregation of scar, the degradation of cardiac function and perhaps potential terminal events associated with the cardiomyopathy. CAP-1002 comes from the heart. We've been able to show biodistribution studies that the cells track back to the heart by releasing their exosomes and driving the mechanism of action that way. And so we have high hopes for CAP-1002 and continuing to address the root cause of the cardiomyopathy, which is the fibrofatty accumulation. And we've also demonstrated that in multiple clinical trials. So FDA is aware of this. We're all looking very closely at the opportunity for cardiac function preservation and potentially restoration. And so yes, the agency is aware, as well as I mentioned, all of the people that are laser focusing on the opportunity for a therapeutic for the cardiomyopathy associated with Duchenne.

Looking forward to the update from your upcoming clinical meeting with the FDA.

Your next question comes from Ted Tenthoff from Piper Sandler.

Can -- what should we be expecting from the upcoming longer-term OLE data? And how important is that durability when it really comes to the discussions, not just with the agency, but also ultimately with physicians and their boys?

Yes. Thanks, Ted. So this is the most important point that you've raised when it comes to the long-term open-label extension data. It shows that the product is long-term safe, long-term efficacious and really provides good information not only for potential prescribers, but of course, for payers as we move forward. The agency is very impressed with the safety profile of CAP-1002. And so this provides long-term safety. I think it obviates any concerns that the agency, physicians, families and even ourselves had regarding immune complications from using an off-the-shelf cell type. And so overall, it really continues to work to derisk the program. So that's a very important pillar of information that we're getting from the open label extension data. The other is also it really informed us on how CAP-1002 is working in the patients because we've been able to really stay in touch with those guys on open-label extension, and they've really described to us that they can actually feel the function better several weeks after an infusion. And as they get to the end of a quarter and they're coming back in soon for another infusion, they start to feel their functions start to decline some. So they talk about it really eloquently. And this also provides really interesting information for us to build upon as we understand the product better and better and also for the very important feeling and functioning that comes with the actual therapeutic. And then finally, long-term preservation of function, and we look forward to seeing what will happen in the third year, but we're pretty confident that we're going to continue to see the same trends based on the information that we're getting. This also bodes well for long-term opportunity for patients to stay on CAP-1002 for many, many years where we're now planning for a lifetime strategy.

Yes. No, it makes a lot of sense, especially on the cardiovascular, but as you mentioned too, just on the functional and movement endpoint.

Your next question comes from Kristen Kluska from Cantor.

Kudos to the team for handling a lot of the important CMC things well ahead of schedule. I know it's a very cumbersome process. So if you're ultimately granted a rolling BLA, what items would you be able to potentially submit between that time through the data expected later this year? And would you receive any feedback live time? Or would the expectation be that feedback would occur at the end of the BLA cycle? I know you have another of designations, which means you have frequent meetings and conversations.

So we're not going to disclose at this time the order in which we're going to submit the modules. But I will tell you that some of them are getting close to ready and we plan on submitting them as they become available. The final piece, of course, will be the HOPE-3 cohort A data at the end of the year. However, as I've mentioned previously, we are going to submit the open-label extension data to the agency and work with them on that and continue to move this forward as quickly as possible. People ask me often now about speed to BLA, and that's front and center of our minds too. So every day, every week, every month that we can save off of a time line to get this therapeutic to the boys and young men with Duchenne, we take very seriously and are working around the clock to get that done. In terms of feedback, yes, the agency provides feedback as you go along. And so that's really important. We've had, as you saw on the table I presented earlier this morning, we've had multiple interactions with the agency already in 2024, and then several in 2023. We expect to continue the cadence of those conversations. We have a Q2 meeting coming up with them to discuss the clinical path forward, and we'll have more color and clarity after we receive feedback from the agency in terms of minutes on that. So yes, a lot of activity here. The most important thing is that we continue to work towards approval. We're expecting high penetration into the market. As we mentioned, we're already going to have many patients, over 100 patients on open-label extension coming into the BLA process. And so by the time we reach PDUFA, we expect them to come in through the commercial product. And so we have a lot of plans going on internally to expand manufacturing and be ready for a significant number of patients at commercial launch.

Okay. And I know that the team has grown substantially over the last year heading into this pivotal moment. But based on your more conservative approach initially ahead of this meeting and the work being done across both sites simultaneously, how does this FDA feedback allow you to shorten the time frame, but more importantly, give more time to prepare and advance and focus on this potential commercialization?

Yes, really important question. So this has been one of the most relevant pieces for us. Getting one site ready as a small biotech company is much more efficient than trying to get 2 sites ready. Our Cedars Los Angeles site is within a hospital. So we had to work with the infrastructure there and the system there, and it was going to be a significant climb. And I think the agency became aware of that, that it was really going to be a diminution of our resources in order to be able to get both sites ready. And since Kristi was so good at building this incredibly strong paradigm of comparability, we've finally got the agency over the line to understand that the cells were likely to be the same coming out of both sites. And so yes, we're going to be able to warehouse resources. We're going to be able to focus much more efficiently and in a timely fashion. And it has saved a significant amount of time off of preparation because we would have had to be preparing Los Angeles and San Diego simultaneously. So this is a big win for us in many ways. We're grateful to the agency for understanding the seriousness of the situation and the need to get the therapeutic to the boys and young men with Duchenne as quickly as possible.

Look forward to seeing the 3-year open-label extension data later this quarter.

[Operator Instructions] Your next question comes from Aydin Huseynov from Ladenburg.

Congratulations for the progress with the FDA. I've got a couple of questions. So regarding potency assays for product approval, RNA sequencing and antifibrotic assay that was specifically requested by FDA, so given the anti-fibrotic mechanism of action, what do you think about applications of CAP-1002 in fibrotic indications such as late-stage systemic sclerosis, IPF, et cetera.

Yes. Really good question, Aydin. And yes, I think we're aware that the bioactivity of CAP-1002 could be applied across multiple disease fronts that have the foundational aspect of inflammation and fibrosis. We've known that for a long time. We focus on Duchenne because it's most important to get the product across the line in the first indication. We believe very strongly in this indication where we really have passion for the patients and for the families dealing with Duchenne muscular dystrophy. But yes, there's a long line of therapeutics where we have opportunities to treat. There was a recent publication from one of our academic colleagues where they did just a single infusion into patients with pulmonary artery hypertension, and they were able to see an improvement in pulmonary function in those patients as well. There's over 200 papers published in the field using either cardiosphere-derived cells preclinically or CAP-1002 clinically that have really beneficial results in multiple disease areas. So we look forward to the ultimate expansion of CAP-1002 into other areas. But right now, our team is focusing on just getting this one across the line.

One question regarding commercial planning. So your partner, NS Pharma, is responsible for commercialization, and they already have their own exon skippers. So could you describe any complement or synergistic commercial activity as it relates to CAP-1002 and the exon skipper that they already have?

Yes. So as we've messaged for a while, NS Pharma and Capricor decided to get married for a very specific reason. They have really good penetration into sales and marketing in the United States. They had a passion for expanding their Duchenne franchise within the United States and, of course, Japan. We had therapeutics that was ripe and ready for that type of co-development. We do all of the work up into approval. They do marketing and distribution. We're good at getting it across the line. The science, as you've heard today, is stellar. As well as the clinical development led by Mark and his team is also really very efficient and effective. And they have an established med affairs and sales and marketing team. So there's a lot of synergy with our teams in terms of the therapeutics. Of course they go together. We've been messaging for a long time that CAP-1002 is a good player in the sandbox with any of the dystrophin modifying therapeutics, whether it be a gene therapy or exon skipper or both. A lot of physicians are talking about using gene therapy in little children, following up with exon skippers and then CAP-1002 sort of being the overarching companion to that type of paradigm in order to achieve the best function that we possibly can in those patients impacted by Duchenne muscular dystrophy. So with NS Pharma, we all speak to the same language. We're going after the same indication, same patient population. It's a really efficient way of getting our product to patients as quickly as possible once launch occurs.

So do you think the same patients can get both exon skipper and CAP-1002? So -- and thinking of the future, do you think the FDA will put any restrictions in terms of using CAP-1002 with other medicines?

No, I think one of the reasons why FDA has been as supportive as they have is they recognize the value of CAP-1002 used along with these other therapeutics. So we even have guys in our trials that are on exon skippers. We've had a few in gene therapies that have received gene therapy and still end up qualifying for inclusion/exclusion criteria to come on in. And so it really is a good opportunity for long-term safe use to help preserve function in these boys and young men with Duchenne. And it's relevant, and I'll just add here, you didn't ask, but I think it's a really important addendum is that we believe that the earlier that you start CAP-1002, the better efficacy you'll see in terms of preservation of function. And so our goal will be to continue to work with the agency not only for these later-stage nonambulants that has been the focus of our work to now, but also to be able to expand to the younger kids as well.

Perfect. And the last question I have, on Becker muscular dystrophy. So how do we see the path forward for Becker? I know you talked a little bit during the presentation, smaller patient population but longer use. So will there be any preclinical data related to Becker or any FDA discussions to initiate the clinical trial on Becker? Just can you give us a little bit more detail, if you can?

Yes. So we haven't taken on the issue of Becker on to the agency yet. We obviously have plans to do so. Our clinical team and our R&D team has been doing a significant behind the scenes work in order to prep for getting ready to expand potentially into the Becker dystrophies. It's a harder indication, I think everybody knows, because the disease decline is slower and hard to sort of figure out exactly the endpoint. I know Edgewise is working on it and they're paving the pathway. We'll sort of see how that develops. The most important thing to highlight here, however, is the Becker cardiomyopathy appears to be very similar to the Duchenne cardiomyopathy. So if you talk to the cardiologists treating both the Duchenne and the Becker patients, they can't tell the difference because of the way that the scar aggregates, the way that the function declines. And as most people know from the Becker muscular dystrophy, most of those guys ultimately pass from complications of the heart disease. So we're looking very closely at Becker cardiomyopathy. We'll continue to work with the agency, both on Duchenne muscular dystrophy, getting it across the line, and then initiate conversations over indication expansion as soon as we feel confident that we've gotten the Duchenne across the line. Having said that, today's update provides an incredibly strong background for going to the agency for indication expansion. Having an approved potency assay identity profile and then a long-term manufacturing plan gives a lot of strength to the program and allows us to work with the agency focusing now on other areas of clinical efficacy.

And there are no further questions at this time. I will turn the call back over to Linda for closing remarks.

Thank you for joining the call today. We really appreciate your time and look forward to providing updates on the HOPE-3 -- HOPE-2 open-label extension data, the HOPE-3 data, our activities with the FDA and other business development updates as they become available. Have a wonderful day, and thank you again for joining.

Ladies and gentlemen, this concludes your conference call for today. You may now disconnect. Thank you.