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

Good morning, and welcome to the Capricor Therapeutics DMD program update call. Today's call is being recorded. [Operator Instructions] It is now my pleasure to introduce your host, A.J. Bergmann. 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 research and development 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, revenue and reimbursement estimates, manufacturing capabilities, potential milestone payments, our financial position and our possible uses of existing cash and investment resources. 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. With that, I'd like to turn the call over to Linda Marban, CEO.

Good morning, everyone. A.J., if you could advance to the next slide, please. Thank you so much for joining us. Today, it's an amazing day for the patients with DMD as well as for those of us at Capricor because we are proud to announce that after working diligently with FDA through the course of 2024, we have decided to derisk our path forward by moving for full approval to treat Duchenne cardiomyopathy with deramiocel. Over the past 9 months, we have worked with the agency to develop a CMC, chemistry manufacturing and control strategy, where we have nonclinical comparability to transfer manufacturing from Los Angeles to San Diego, we were fully equipped and ready to deliver commercial doses to those in need. We have developed a clinical strategy where we have laser focused on the data collected during the HOPE-2, the HOPE-2 open-label extension study, and as you'll hear today using natural history data sets collected by investigators and key opinion leaders who really are moving this field forward rapidly. And finally, working with the FDA to establish a regulatory strategy so that we can get deramiocel into patients as quickly as possible because as we all know, not only [indiscernible] muscle in terms of skeletal muscle, but even more importantly, in terms of saving their hearts and their hearts' function. So now we are going to walk you through exactly what we're doing, how we're doing it and the data to support it, and I hope you'll stay with me on this journey through the next few moments. Next slide, please, A.J. Thank you. So today, we are announcing that we are planning to submit a BLA for full approval of deramiocel for treatment of DMD-cardiomyopathy. This filing will be based on existing data Capricor's HOPE-2, HOPE-2 open-label extension, and we'll do the comparisons with natural history data sets, which I'll describe to you in detail in the next few minutes. The submission will seek a broad cardiomyopathy label. What that means is that any time a physician feels that a young man's heart could benefit from deramiocel in terms of stabilization of cardiac function and a big risk factor for the development of heart failure, we will be able to effectively treat that patient. As I just mentioned, and I'd like to highlight, this will treat an extensive population of those with DMD as it is mutation-agnostic, and we also expect to be able to expand this label worldwide. Obviously, this strategy expedites our path to market shaving many months, if not a year off of our original time lines for BLA submission. Next slide, please. So I know many of you have been wondering what happened? Capricor clearly had a BLA meeting. We had announced during earnings that we were going to be meeting with the agency in August. We did, in fact, meet with the agency. We were able to show them the data that I am about to share with you, and that led to a series of informal meetings where we were able to discuss the best path forward, both for those with DMD, for Capricor and also for the field in general. What did we show them? We showed them strong, long-term cardiac data. We showed them data from a natural history data set, which was funded by the Office of Orphan Products and actually was designed to look specifically at biomarkers and the trajectory of DMD-cardiomyopathy. This all highlights and comes together because FDA has made a renewed and perhaps expanded commitment to the treatment of rare diseases where they are looking at totality of data. They're looking through and beyond just primary efficacy endpoints, they're looking to see our therapy is safe, most importantly, of course, and if safe, can they provide a benefit. And is that benefit going to be greater than anything that is available for them. And I think we all are in agreement right now that this for deramiocel is the best path forward for those with DMD. So now you'll spend a few minutes with me. I'd like to share with you the data that has led to this increased interest by the agency and the field and then take you through our data. Next slide, please. So this graphic is taken from a paper that was actually published probably about 7 or 8 years ago, and it shows that there is a steady, year-over-year decline in ejection fraction, which is the gold standard measurement of how the heart is meeting the needs of the body. It's the amount of blood that is squeezed from the heart with each contraction and it's important to be able to establish an ejection fraction in a normal range, let's say, between 55% and 70% most of the time in order to sustain healthy cardiac function. We've known for a long time the heart is a muscle, obviously, and therefore, is impacted by DMD. Up until about 10 years ago when steroids were started and ventilation became a real effort for treatment of Duchenne, there really was no time in these boys' lives to really effectively understand the implications of the cardiomyopathy. And in fact, many young men passed away where physicians thought it was the implications of respiratory dysfunction but in fact, it was the cardiomyopathy. And what has become clear, and as highlighted in this segment of a paper from Jon Soslow, the work that he has done in understanding DMD-cardiomyopathy is that it's the leading cause of mortality in DMD. There are no therapies available that are currently approved to treat the Duchenne cardiomyopathy DMD. And therapy must start early. Remember the heart is a muscle as well, and with every cardiac muscle cell loss, it is a load that the heart has to beat against with every beat. So it's critical to get in there early. Now you'll see that there's a dotted line here, and I'd like to highlight that. That is at the ejection fraction point of about 45%. Our data as well as natural history data has shown that this is a critical point at which below it is very hard to get the heart back up to what would be considered effective functioning. So it's critical to start therapy early. And as you can see here, most of the patients with DMD have ejection fractions above 45%. So this effectively increases our opportunity for TAM treating those that are at most effective point for salvage. So let me tell you now that we've outlined the cardiomyopathy associated with Duchenne, number one, cause of mortality, definitely in need of therapeutic development. Where does deramiocel come into this picture? Let's go to the next slide, and let me remind you that deramiocel is a cell therapy. As I've been stating for years, but I'll highlight today, it is not a stem cell. It doesn't go in and repopulate the heart or skeletal muscle. What it does is it stimulates endogenous repair modalities, highlighted primarily by immunomodulation, that is the balancing of immune function to drive repair; anti-inflammatory, that shuts down the inflammatory processes that are always present when you have breakdown of muscle which happens chronically in Duchenne muscular dystrophy; it's anti-fibrotic, prevents or attenuate scar development; and it's pro-angiogenic, that means it helps with neovascularization or development of new blood vessels so that the new and healthy muscle can be sustained appropriately. It has been -- deramiocel has been in over 200 patients safely. We have a very strong safety record. We understand how it works, why it works and are able to effectively manage patients that are getting deramiocel. And finally, it has been in over 300 publications by us and 55 labs internationally under the terminology cardiosphere-derived cells, it's where we started our scientific investigations, CAP-1002, the investigational name of the product, and now deramiocel, the generic name of the product. Let me remind you that one of the reasons that we've been able to move this therapeutic forward so efficiently over the past few years is by the efforts of the industry and of the FDA specifically to develop designations for this purpose. And for that, we have Orphan Drug Designation. We have Regenerative Medicine Advanced Therapy or RMAT designation, it's breakthrough for cell and gene and we qualify for a PRV, which is under the designation of Rare Pediatric Disease Designation, and we have full rights to the PRV in this -- with the program that was originally developed to spur the development of therapeutics for pediatric diseases, which, in fact, Duchenne muscular dystrophy is. So those are the cells. Now let me show you how they work in the heart. Shown here, and it's a busy graphic. So permit me a few moments to walk you through it, is a forest plot that was taken from our Lancet publication, The Lancet published our HOPE-2 Phase II data in 2022. A forest plot looks at the totality of data across a variety of measures to sort of look as to whether a therapeutic is sort of spuriously changing 1 or 2 things or whether there's really a trend that suggest therapeutic intervention is deriving a benefit for in this situation patients. So what you can see here in nearly all of the cardiac measures measured by MRI, the gold standard of measurement of cardiac function, CAP-1002 made a difference, was improving cardiac function in nearly every one of the measures. Now in the box that we've called out on the right, these are the most important measures of cardiac function ejection fraction; volumes; CK-MB, which is a biomarker that is released into the blood only when there is breakdown of cardiac muscle cells. And what you can see here is that in those important measures that not only predict trajectory towards morbidity and mortality if they move in the wrong direction, but we were actually seeing very statistically significant improvement in cardiac function and ejection fraction volumes, as I mentioned, very important predictors of cardiac outcomes. Now what's very important about this, and I want to highlight it here because it sets up the stage for the rest of the data and why we believe the FDA is supportive of this BLA filing is this is not data that you can want to feel better and therefore, perform better. It's not a patient-reported outcome measure. You can't wish your heart better. This is an objective measurement by magnetic resonance imaging. So the data here is really truly based on a placebo-controlled trial saw an improvement in cardiac function. Next slide, please, A.J. So as many of you know and we've reported, we've also been working with the HOPE-2 patients in open-label extension for the last 4 years. Once we finished HOPE-2, it became clear that the families wanted to continue with, at the time called CAP-1002, now deramiocel. We made a commitment as a company to the families and to those with DMD that we would provide it. We have shown in public meetings as well as in many earnings calls the HOPE-2 open-label extension data for the performance of the upper limb also showing very statistically significant results year-over-year. We also began to measure ejection fraction and volumes using cardiac MRI similar to what I just showed you from the HOPE-2 data. But because all patients were now getting the drug, we had to find something to benchmark against. What does it actually mean? Is the data that we're going to show you in the next few minutes meaningful in terms of preservation and improvement in cardiac function? Or in fact, is it just sort of the variations around a mean of natural history? Well, we were very lucky that Dr. Jonathan Soslow and his consortium also had the same interest in understanding the pathophysiology of cardiomyopathy associated with Duchenne muscular dystrophy. And so we got funding from the Office of Orphan Products at FDA as well as from the NIH to actually look at the pathogenesis of DMD cardiomyopathy, the biomarkers what causes the cardiac dysfunction in terms of how it progresses and then what the implications are for morbidity and mortality. We've been lucky enough to partner with Dr. Soslow and Vanderbilt University to get patient-level data to show the FDA that what happens in the natural history of Duchenne muscular dystrophy is different than what I'm about to show you that happens in the HOPE-2 open-label extension study. And let me remind you, and harking back to the slide I showed a few minutes ago, we already know that year-over-year, there was an annual decline in ejection fraction in patients with Duchenne muscular dystrophy. So in this next slide, I'm showing you the data that we actually were able to present to FDA. And in the blue boxes on the left, what you're looking at is the change in ejection fraction since the end of HOPE-2, the randomized double-blind placebo-controlled trial that we've talked about frequently and this 24 months into OLE, open-label extension and then 36 months into OLE. And what you see is an absolute stabilization of ejection fraction, the #1 predictor of pathogenesis and the development of advanced heart failure in boys and young men with Duchenne as well as other heart diseases. And yet in Dr. Soslow's data set, what you see is in that same cohort of patients in terms of ejection fraction entry criteria. So everybody had very similar ejection fraction at the beginning is a 5-point decline in that same time frame, 24 months in ejection fraction, which is an 8.1-point change in ejection fraction in 24 months compared to a 3-point improvement in the HOPE-2 open-label extension. So a total of 8.1 5 decline, Dr. Soslow's; 3 improvement in ours. Let me just remind you that all the clinical literature suggests that a change in ejection fraction of between 5 and 10 ejection fraction points is not only clinically meaningful for prevention of progression to heart failure, attenuation of risk of mortality, but also patients feel and function better. So overall, a very clinically significant benefit that was seen in the open-label extension patients compared to natural history. Next slide, please. In this slide, we're showing you the same data sets. Blue is deramiocel or CAP-1002 treated patients in the HOPE-2 open-label extension study compared to Dr. Soslow's data. This volumes or end systolic volume is the amount of blood that is left in the heart at the end of the squeeze, which is called systole. And it's a way of measuring basically the conformation or the shape of the heart, which is very important to maintain to meet the needs of the body. And so it's also been an endpoint that's been able to be used in approval for other therapeutics, drugs and devices over these many years because what we know is when the heart changes shape, it's called remodeling. It actually leads to the attenuation of ejection fraction shown on the previous slide and great risk of morbidity and mortality as a result of this heart disease. In this situation, getting bigger is bad. So a positive data point is actually worsening of disease and a negative data point is actually preservation of function or attenuation of disease. And what you can see is that with deramiocel, we saw over time compared to the external comparator of the natural history data set, 11 milliliters per meter squared improvement in end systolic index volumes in patients treated with deramiocel compared to the natural history. These are in patients with left ventricular ejection fractions greater than 45% at 24 months. This is a very clinically significant and relevant data point. It suggested what is called in the literature reverse remodeling, which is actually the movement of the heart back to a healthier conformation. This is the data we showed FDA. I've walked through it carefully with you because I wanted you to understand its relevance, it's important and why there is such excitement in our team, in the patient community, the advocacy community and favorable opportunity with the agency. So now that I've given you the data and the background, let me share with you our time lines. As I mentioned at the beginning of this call, we are preparing a full BLA submission for full approval for the cardiomyopathy associated with Duchenne muscular dystrophy based on the HOPE-2 data, I showed that to you; the HOPE-2 open-label extension data, I showed that to you. And we've compared it to Dr. Jon Soslow's natural history data, and we'll also be getting a data set from Cincinnati Children's Hospital Medical Center to further enhance our understanding of the disease process. The label that we are seeking is for DMD cardiomyopathy. It is a broad label. We are now laser focusing on getting this BLA across the line. We've been messaging for quite some time now that we would have data from our HOPE-3 Cohort A study by the end of this year. We are now focusing on the BLA for the cardiomyopathy. There is no point in submitting 2 BLAs in direct succession, and we don't want to have a data event in the middle of a BLA submission. This for the cardiomyopathy is a once-in-a-lifetime opportunity to be first-in-class, first to market, the only therapeutic that potentially could be approved to treat the cardiomyopathy associated with Duchenne. And so I am proud to tell you today that this is what Capricor is doing. This is what we'll be presenting to the agency. And all things being equal, we are hoping for PDUFA in the second half of 2025. Now the other issue I want to take on before I take your questions today is where does Deramiocel fit into the paradigm of treatment for Duchenne muscular dystrophy. I presented this slide and many similar over these years. And we've always said that deramiocel or CAP-1002 as it was known, would be a great tool in the toolbox to treat Duchenne muscular dystrophy, whether for the skeletal muscle myopathy, preservation of muscle function, attenuation of inflammation and fibrosis. But we've also been talking for years about the opportunity for the cardiomyopathy. Either way, deramiocel fits into the paradigm of treatment with Duchenne, whether the child has gotten gene therapy and then ends up having cardiac issues despite the gene therapy or exon skipping or any of the other drugs, we will be there with deramiocel to support that child and his opportunity to avoid heart failure. Obviously, there are many opportunities now for expansion of this therapeutic. Because we are going to potentially be first-in-class to treat the cardiomyopathies associated with Duchenne, it goes without saying that there are other cardiomyopathies that are similar, if not identical. It's been published and shown that the cardiomyopathy associated with Becker muscular dystrophy is identical to Duchenne muscular dystrophy. In fact, you can't tell them apart. So we're going to be working with the agency to expand our label to Becker muscular dystrophy. Let me remind you, we maintain all rights to everything outside of the Duchenne muscular dystrophy space. And obviously, there's other orphan cardiomyopathies as well. It goes without saying that we will also be moving towards post-approval label expansion to skeletal muscle myopathy as well in Duchenne, encompassing those patients that we've already been treating, although almost all of them, if not all of them, would qualify to receive deramiocel under the cardiomyopathy label as well. So we're looking forward to great things happening with our company, for our families, for the patients with Duchenne. And I'll close today just reminding you that we had a pre-BLA meeting. Everybody knows that I've been getting e-mails and calls every day, looking for information that I'm now providing to you today. Our rolling BLA submission was granted. I've mentioned that previously. Our first module is going in, in October of 2024. So just around the corner. And we aim to complete our BLA submission by the end of this calendar year, Q4 of 2024. As I mentioned, we're looking for PDUFA in the second half of 2025. We are ready from a manufacturing perspective, from a clinical development perspective. We have over 100 patients that are in open-label extension. By the time we reach PDUFA that we expect would transition immediately to the commercial product, so almost a built-in revenue stream there. And we have a significant number of milestones and royalty payments that would come our way as well as the PRV I mentioned earlier. To remind you, the most recent one of those sold for $158 million. And now with the risk potentially of that program not being renewed, the value of those go up exponentially all the time. We do have a good cash runway now. We are able to deploy on all of our milestones, thanks to our most recent deal, which we announced with Nippon Shinyaku just 1 week ago, which will take deramiocel to the EU as well as to Japan. And of course, as you know, they have marketing and distribution rights in the United States. I'll close now by saying that just yesterday, I had a call with a dad who obviously didn't know that this news is coming today. literally begging me to try and get deramiocel for his son. He was a HOPE-3 patient who has seen incredible stabilization of his cardiac function and has asked, please to try and extend open-label extension for those boys and young men. So what I'm going to say to him, dad, who I spoke to yesterday, we're going fast, and we're going to get this therapeutic across the line for your son. FDA is going to work with us, and we look forward to working with all of you as we get this across the line. Thank you so much, and I'll open the line now for questions.

[Operator Instructions] Your first question comes from Leland Gershell with Oppenheimer.

congratulations on this terrific regulatory update and for walking us through the comparative data that showed what appears to be unprecedented therapeutic efficacy in this setting. A few questions from us here. Clearly, treating earlier is better and is essentially all Duchenne patients develop cardiomyopathy as they age, when would be the right time for deramiocel to start? Will there be any sort of age information on the label or that you believe treating physicians will begin the therapy?

Thanks, Leland, and thanks for all your support over these years. It's always a pleasure to hear from you on every level. It's a really important question, and we've been participating in the Parent Project Muscular Dystrophy cardiomyopathy meetings for the past few years. And the key opinion leaders have been noodling over this one, how and when to start cardiac support for these boys and young men. Currently, up until really this announcement and this opportunity, there was nothing available except the type of cardiac drugs that one would use to treat in adults, who has a big heart attack or something like that. So it's been a lot of thought around that. The wonderful thing about deramiocel is it's very safe. It's easy to deliver, easy to get. It's a once-a-quarter infusion. And so I think physicians will be very interested in adopting it, especially with the, as you mentioned, unprecedented data. In terms of age, we don't see an age restriction on the label. It's going to be based on cardiac function. And all I can tell you is that the physician leaders are saying earlier is better. So we're not putting anything around this. We're going to have it available for those that need it, and we'll see at what point physicians think it's appropriate to start treating.

And following the last week's update with your partner in terms of the license to the EU geography, I want to ask if you can share any thoughts on likelihood of EU approval on the same data using a similar strategy for the EMA.

Yes. So obviously, this is breaking news for us. Just to give you a little bit of color, when we went in for our pre-BLA meeting, and we showed the cardiac data, we were proud of it and we were excited about it. But we really weren't thinking of this specific path. And it was the support of the agency that really has led us to this opportunity. They were intrigued by the data, and they felt that there was a great opportunity here. So we haven't put this forth in terms of our EU strategy yet. We're actually going to be starting to do that immediately. Of course, it's going to be our strategy in the EU as well. The good news is we'll have multiple prongs of opportunity in EU as well as in Japan, where our other options are with Nippon Shinyaku, both with the cardiomyopathy but also skeletal muscle data coming in the second half of '25.

And in terms of manufacturing, I wanted to see if you could share kind of your current capacity as you expect it to be available in the second half of next year, presuming approval and how that may change or increase maybe in subsequent years to serve the market more broadly?

Yes. So we, at home here, have been laser focusing on the manufacturing opportunities. And we built the clean room here in San Diego to meet initial market demand based on the forecasting done by Nippon Shinyaku in terms of doses they'd like to be able to provide at market launch. We're going to meet those and in fact, exceed it. We believe that there's going to be rapid adoption of this therapeutic. So we're set to go. We've got a commercial facility, kudos to our team for building it within our own footprint in our San Diego labs. Based on the deal we were able to do and announced last week with Nippon Shinyaku, we are also now looking to expand our manufacturing capabilities. So we should be able to launch effectively and meet market demand and then ultimately expand very rapidly after that. As I mentioned, we're expecting a rapid adoption of this therapeutic by the market.

Great. And then finally, with HOPE-3, now to be used as a label expansion strategy, any view on when you may unblind the HOPE-3 cohorts at this point?

Yes. No. So our current strategy is that we're going to combine Cohort A and Cohort B. So just to remind everybody that hasn't followed directly, Cohort B was originally asked for by FDA in order to support transition of manufacturing from Los Angeles to San Diego. So it's exactly the same protocol as Cohort A, which just supplemented patients from the San Diego facility. Because we got nonclinical comparability, so all of those patients are considered equal under the same protocol, our goal now is to combine those patients into a larger study. It increases the power, not that we thought that we were not underpowered to begin with, but it increases the power and it also gives us the flexibility of getting this PDUFA for cardiomyopathy across the line prior to any data event.

Your next question comes from Joe Pantginis with H.C. Wainwright.

This is great news, and I want to congratulate you after this very thoughtful path that you've been taking. So first, I wanted to -- I heard you say, Linda, a couple of times, like I wanted to get a sense of how the role of cardiomyopathy has evolved with your discussions with the FDA. It appeared or I might have heard that it might have been somewhat more recent when you show them these data. This is something you and I and on the conference call that we've been talking about for quite some time. So I wanted to get a sense about the evolution of how important cardiomyopathy has become in your discussions till today.

Thanks, Joe. Always a pleasure to hear from you. So it's a really important question that you just asked. We've been talking about the cardiomyopathy associated with Duchenne since our HOPE-Duchenne first clinical trial published in the Journal of Neurology. We knew that, that was a major opportunity for at the time, CAP-1002 in the treatment of Duchenne muscular dystrophy, and we showed improvement in scar and measures of cardiac function in the HOPE-Duchenne trial. As I showed in the fourth plot, we showed really remarkable data in the HOPE-2 clinical study, which was the Lancet publication, as I mentioned. So we've been talking to the agency about the cardiomyopathy really since the beginning of our clinical development. What changed? What changed was the field has done such an incredible job. Investigators like Dr. Jonathan Soslow, Dr. Chet Villa, Pat Furlong and Parent Project Muscular Dystrophy, who organized the cardiomyopathy working group; Larry Markham. I can go on for the next 10 minutes of the cardiologists that have been the hue and cry of the field that we need to get a therapy for this cardiomyopathy, and we need to pay attention to the data that exists. So in adult heart disease, most trials are morbidity as measured by MACE, major adverse cardiac events or mortality. And you can't do a mortality study in a rare disease with very few patients, and it's a pediatric disease. So the agency now has finally agreed to look at some of these endpoints, which in the past have been considered surrogates like ejection fraction or volumes in order to say, yes, these are predictors of mortality, which we don't want children to die. So let's really look at these. And that was why we've had this sort of moving ahead rapidly with the agency. And as I said, recently as is, we've been sharing this data with them for a while, the open-label extension 36-month cardiac data just came out in the spring time. So we were able to move that forward, showed it at PPMD in the summertime. And so that's where the agency really set up, took notice and said, "wait a minute, I think we've got a really great opportunity here for the families. Let's take a careful look at this data for BLA."

And then my next question is short, but I wanted to get your thoughts as you're filing your BLA now, would you expect there to be an advisory committee?

So we're certainly going to plan for an AdCom. Everybody should plan for an AdCom, you never know. But I will say this that it's a strong application. It's unprecedented data. The therapeutic is very safe, statistically significant. They'll have patient-level data from the natural history data set. So we're hopeful that we won't need an AdCom, but we certainly will be ready for AdCom.

Got it. And then I want to see if I heard you correctly as we're looking at the population breakdown. This really doesn't appear to be a limited subpopulation on cardiomyopathy, especially since you said it's the leading cause of mortality. So I mean it really does apply to a broad population, if I heard you correctly?

Yes. So that -- and I presented that in one of the earlier slides. So just a reminder, cardiac muscle as it dies, doesn't get replaced even like skeletal muscle does. And so every cell that dies is an extra load on that heart and makes that heart work harder. And if, in fact, the dystrophinopathy therapies like gene therapy, like exon skipping really take hold and work, these kids are going to need their hearts to be stronger, better, faster. And so it's going to be critical to get them on early. So we're not seeing any subgroup opportunity here. We're seeing it more as a broad label. Physicians will decide at their discretion. And what I can tell you, as I mentioned earlier, from being part of the cardiac working groups myself, the concept is to get them on early before there's evidence of real progression of ejection fraction decline.

No, great. And my last question is just taking a little bit of a turn. Very nice to see the ex-U.S. partnership with Nippon. Obviously, they seem to be the right one since you already have a great working relationship with them. Just curious if this was a competitive process.

Yes. So it was. I'm proud to say that we had term sheets from several other parties. They were competitive. They were great potential partners. We were really looking forward to the opportunity to work with them. We chose Nippon Shinyaku because we felt that we already had a great working relationship with them. They know our product. We've already set up a lot of the preambles to commercialization here in the U.S. And so it just made a lot of sense. And the other part that's really nice about that deal for us is that we get to maintain sort of the locus of control of getting it across the line in Europe, which we've done in the United States. And as you know, we're very comfortable working with our product. So great opportunity for us, great opportunity for Nippon, great opportunity for those with Duchenne.

Your next question comes from Kristen Kluska with Cantor Fitzgerald.

Congratulations, everyone, on these updates, and I appreciate all your commitment to helping these boys. I wanted to first drill down a little bit more in terms of the cardiomyopathy. So I understand in most patients, they develop this at some point or another. But looking at the addressable market today, what percent roughly would you say present with this? I think most of us were modeling just the non-ambulatory patients, about half of the patients being eligible. And then what age do these patients typically see a cardiologist? And in terms of building a sales force with your partners, do you think this is something that their cardiologist, excuse me, are going to consider treating with more than just other physicians they see in their practice?

Yes. Thank you so much. So if you just do sort of the back-of-the-envelope calculation based on the graphic that I showed in my presentation of the decline of ejection fraction over time and the dot plot, you're looking at about 70% of the patients that have a cardiomyopathy that would be relevant to treat. And I'm guessing, based on sort of what I've heard and seen in the meetings that probably somewhere around 8 years of age would be the right time to start them on this. It depends again on the pathogenesis. What we know is that the pathogenesis of the cardiac disease is not necessarily coupled with the skeletal muscle disease. So you could have a 6-year-old with a bad heart who's running around on his feet or you can have a 22-year-old who's non-ambulant and can barely move his hands but has a pretty decent heart. And so it will be at the discretion of the physicians and we expect a very broad market on this one. In terms -- and let me just highlight that by saying, 100% of the patients, not 70%, not 20%, not 30%, 100% of people with Duchenne muscular dystrophy developed a cardiomyopathy. So every single person with Duchenne worldwide would qualify for this therapeutic at some point. Let me also point out in terms of sales force and cardiologists, yes, I think it will be rapid adoption. As I mentioned, I've had the pleasure of participating and being part of actually the cardiac workshops held by Parent Project in Muscular Dystrophy. So I actually get to hear the discourse amongst the treating cardiologists. Most kids come into a cardiologist office pretty young. They know it's coming. They're working towards more and more aggressive management strategies. This is going to be a wonderful opportunity for the cardiologists because, as I mentioned, it's safe and effective. Side effects are minimal, if not non-existent, usually associated with a little bit of infusion headache kind of thing. So the kids go home and are fine. Whereas a lot of the cardiac drugs, if you're 70 years old and you're taking them, you might not care that you feel a little more fatigued or you have a little bit of a cough or something like that. But for an 8-year old, it's going to matter a lot. So I think it's going to be a rapid adoption.

Appreciate that. And then based on the time lines you gave to us, it sounds like the approval decision is going to come before the HOPE-3 full data reads out next year. So has the FDA given any sense about what they would want to see from that full readout to ensure that this drug stays on the market in that confirmatory study? And obviously, I understand that study's primary endpoint is on PUL 2.0 to support the label expansion. But will there also be an increased emphasis on the cardiac endpoints given that's what's supporting the approval process today?

Thanks, Kristen. Thanks for giving me the chance to highlight that the application that's going in at the end of this year is for full approval. That means the confirmatory study is not necessary. The label would be for the cardiomyopathy and it would be relatively impermeable. In terms of the opportunity for skeletal muscle myopathy and market expansion, that would happen with the release of new data. That would be something called a post-approval supplement, which would then be for label expansion. FDA is not talking to us at this point about what they'd want to see for that in terms of label expansion, but it's a standard clinical trial. So we would expect clinical significance of the primary efficacy endpoint, which is the performance of the upper limb 2.0. Obviously, we have secondary cardiac endpoints in there. But if, in fact, the label is for full approval, it would just become a nice to have, not A necessary to have. Having said that, and I want to highlight that pretty much everybody that will come under the expanded label for the skeletal muscle myopathy would be included in the cardiomyopathy label, especially our HOPE-3 guys. So the opportunity for label expansion may be to the younger patients or to those that are at other stages where they don't have the advanced heart disease. So we'll see sort of where it goes. Right now, we're working on this BLA and are incredibly enthusiastic about the opportunity.

Appreciate that. And last question from me. I understand why you looked at the left ventricular ejection fraction above 45%, 55%, et cetera, in the trial. But did you happen to see any patients where it was even lower? I understand at that point, a literature suggests that it could be really difficult to improve at that point. But like anything to assess there in terms of even just stabilization versus a further decline with what we'd expect from natural history?

Yes. So we actually showed this at PPMD and I'll be showing it at World Muscle Society. Dr. McDonald is our National PI, we'll be showing at World Muscle Society in the next few weeks. What we were able to show is even with those guys that were lower ejection fraction range, we saw stabilization and in fact, improvement of ejection fraction. It wasn't as strong as the over 45 response, which is to be expected, but it was definitely there. And so obviously, we'll look for clinicians to prescribe it to those guys that have ejection fractions that have dropped lower, and we look forward to that opportunity for them as well.

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

Congrats with the decision to file BLA based on cardiomyopathy. So given that deramiocel is a cardiac drug in the first place, I'm curious what today's decision means with other -- for other cardiomyopathies. And could you mention any other relevant indications where deramiocel could be potentially helpful? And maybe a broader question is does the patient -- does the cardiomyopathy has to be associated with DMD in order to be treated with deramiocel?

Well, obviously, our first label is going to be DMD-associated cardiomyopathy. That's what this application is for. But you're correct, and I highlighted at the end of my talk, but I'd like to bring out one more time that even as near a relative of Duchenne muscular dystrophy is Becker muscular dystrophy, where the cardiomyopathy is pathophysiologically identical. So we're going to be looking and have already sort of mentioned to the agency that we're going to be pursuing Becker muscular dystrophy as our next-in-line indication for label expansion for the cardiomyopathy. In terms of other cardiomyopathies, absolutely. Myotonic dystrophy also has a cardiomyopathy component, FSHD has a cardiomyopathy component. Pretty much all of the dystrophies do. And so we'll be looking at those first. And then, of course, to expand our horizon into other cardiomyopathies in which the pathogenesis is scar aggregation and reduction in function. Reminder that with a lot of these scar-based cardiomyopathies that are global as opposed to like a heart attack or something like that, there tends to be a lot of compensation from cardiac function until the heart can no longer compensate. So that's why the 45% cutoff is really important. It's the point at which, and there's studies going on now by important investigators like Jon Soslow and Chet Villa where they're actually looking at, at what point scar drives the tipping point and the patient goes into sort of a cliff situation where their ejection fraction declines and you can't really salvage very much. And so we're going to try in all of these diseases to get in front of that cliff experience and see if we can salvage as much cardiac function as possible by disaggregation of scar.

This is very helpful. Another question I have is about the potential drug-drug interaction. You could use the parallel with Exon Skippers. Also, what are your thoughts on using deramiocel after AAV gene therapy? And do you think this is sort of post-gene therapy market? Is it expanding? Or is it shrinking in that regard? So in other words, do you see the DMD market resembling sort of SMA market after ZOLGENSMA was first approved?

Yes. So it's a really interesting point. So we obviously think that deramiocel will be able to use very safely and effectively in conjunction with gene therapies, exon skippers or anything else. And not only do we have some clinical evidence of that, we actually have several guys that we've treated that are post-gene therapy and met inclusion criteria for HOPE-3 or emergency use authorization. We also did preclinical work from really the very beginning where we did co-therapeutics and the MDX mouse with gene therapy and, what at the time, CAP-1002 and saw actually synergistic benefits. So we really believe that they will work well together, and you can actually understand why. In terms of increasing market, I'm not an expert in the gene therapy. It's obviously not the area that we're working in. But just from attending a lot of conferences, there is evidence that there is a worsening of the heart disease in the post-gene therapy patients. Could be because they're using their skeletal muscle more, so they need their hearts to be stronger. It could be some other implication of the disease, process itself or the gene therapy itself. Like I said, this is not an area which I can effectively opine. But what I can say is that I do believe that it will even enhance the market further and may even drive it down to younger kids. If a 6-year-old is going faster, his heart might decline concomitantly faster and might need to get on deramiocel. And as I've said, almost too much at this point with it being very safe and easy to deliver, there'd be no reason not to put that 6-year old on it.

Yes. Makes sense. And the last question I have is about the potential pricing for deramiocel given how close we are to the approval, and whether you think there will be any payer sort of resistance of reimbursing 2 potential expensive DMD therapies at the same time if they are on exon skippers or some other therapies?

Yes. So that's one of the major beauties of this potential opportunity is not only for the patients, for their families, for their own hearts, it's the fact that this would be the only therapeutic for the DMD-cardiomyopathy. So we expect payers to embrace it and to actually fully support the polypharmacy that's necessary to address this disease, which is terminal. We always thought that we would not have a payer problem even with the skeletal muscle myopathy because of the fact that deramiocel would work in conjunction with sustaining the benefits derived by addressing the dystrophinopathy. But now with it being a potential cardiac drug, we think the payer should be very enthusiastic about reimbursing.

There are no further questions at this time. I will now turn the call over to Capricor for closing remarks.

Thank you so much for joining us on this really important and game-changing day, both, as I said earlier, for Capricor but most importantly, for the boys and young men with Duchenne. And even during this call, I just got a message from the dad I spoke to yesterday who is high-fiving from across the miles at this opportunity for his son and for those with DMD-cardiomyopathy. Thank you also to the Food and Drug Administration. My hats are off to those there that really are invested in making a difference for those with these terrible diseases and have the hard job of trying to make sure that only safe and efficacious products get across the line. So stay tuned as we move this program forward, and we look forward to working with you as we take deramiocel to market. Have a great day.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.