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

Good morning, ladies and gentlemen. Welcome to the Capricor Therapeutics DMD Program Update Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to 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 and clinical studies, our enrollment of patients in clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments, involving our product candidates, including the ability to obtain regulatory approvals or otherwise bring products to the market. Revenue and reimbursement estimates, projected terms of definitive agreements, 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 the 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're 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, A.J., and thank you so much, all of you, for joining. The purpose of today's call is to provide a regulatory and clinical update for our deramiocel DMD Program and outline next steps. As you know, following the CRL we received in July, we held a Type A meeting with the FDA. The meeting minutes took longer than the standard 30 days because we are going back and forth with the agency on some important clarifications. And so we thought it was best to align with them before we presented any public-facing opportunities. Overall, the dialogue with FDA was constructive and productive, the outcome was positive, and we continue to work closely together on the path forward to approval for deramiocel in DMD. Now let me talk a little bit about HOPE-3, our pivotal trial, which, as you saw in the announcement this morning, FDA has agreed to accept the data and review it as part of our ongoing BLA. The trial was completed with 105 patients, all of them have passed the 12-month mark, and the database is currently undergoing cleaning with anticipated database lock before the end of the quarter with release of top line data at that time. The data remain blinded and the analyses are currently underway. We do expect top line results in mid-November of this year. Importantly, about 70% of the boys and young men had cardiomyopathy at baseline, which means that the trial was well designed to evaluate both skeletal muscle and cardiac outcomes. This was one of the questions that we had to answer and anticipate with the FDA. And as you might have seen, was part of the CRL that was actually released publicly. Now HOPE-3 is one of the largest placebo-controlled trials that has ever been conducted in Duchenne Muscular Dystrophy. In 105 patients, we believe that is an adequate and well-controlled trial and with each of the outcomes being both skeletal and cardiac, we're well powered to a steep statistical significance. When combined with each of the cohorts, we believe that the data set allows us the greatest opportunity to see what the evidences of statistical significance as well as clinical efficacy in DMD. Now I want to remind you that the data that we submitted as part of the original BLA was data that the FDA had encouraged us to apply on. That was the HOPE-2 clinical trial data as well as the HOPE-2 open-label extension compared to the external comparator control from Vanderbilt University, is strong data. It showed that we showed preservation of left ventricular ejection fraction and measure of cardiac function as well as volumes and other multiple parameters of cardiac function. When we submitted the BLA, as many of you have heard many times, we believe that this was the data that the FDA had requested and we gave them everything in terms of 50 information requests that came through. We passed our prelicensing inspection. We had a noneventful mid-stage meeting, and we're looking forward to our ADCOM, which was canceled as well as the late-stage meeting. However, the great part of the opportunity here for Capricor is that FDA knew that HOPE-3 was coming. They understand that, that data could be very important in demonstrating the efficacy of deramiocel. And so we had a productive Type A meeting, as I just mentioned, where they said they were not only willing to look at the data from HOPE-3, but they will continue to exercise regulatory flexibility. They were willing to look both at the skeletal muscle endpoint as well as the cardiac muscle endpoint. So this allows for 2 potential labeling opportunities the way that, that will be manifest is that the performance of the upper limb version 2.0 will stay as the primary efficacy endpoint. The agency was very uncomfortable with the concept of changing the primary endpoint. This is a legacy decision, it's the reason that the original BLA was based on the existing data of HOPE-2 and the HOPE-2 OLE because they were uncomfortable with the concept of changing the primary from HOPE-3. However, as HOPE-3 is well powered to show skeletal and they will allow us to continue to maintain and reopen the BLA that is currently under file using the skeletal muscle endpoint as well as the cardiac muscle endpoint for 2 labeling opportunities, we believe this is potentially the best possible outcome. And certainly, the tone of the meeting was supportive. They talked about the large unmet medical need. They appreciated the very complete presentation that we were able to give them where we brought our key opinion leaders, Dr. Chet Villa of Cincinnati Children's and Dr. Jon Soslow of Vanderbilt, both pediatric cardiologists and perhaps the world's best adjudicators of cardiac function in Duchenne muscular dystrophy. Dr. Craig McDonald, not only our national PI, but probably the most visible Duchenne Muscular Dystrophy physician in the United States as well as statisticians and members of our own team to talk not only about deramiocel, but also about treating the cardiomyopathy and why that is such an important indication because remember, it is the #1 cause of loss of life in Duchenne muscular dystrophy. Beyond the clinical and regulatory front, we also brought Aiden Leffler, one of our patients and his mom Mindy Leffler, who not only is a Duchenne mom, but has turned her personal journey into developing understanding of and measurements of clinical reported outcome measures and patients. Both of them presented to the FDA at the Type A meeting and talked about their experience with deramiocel and how it changed Aiden's life. There is a video available, which I believe best way to access it is on YouTube where AIden talks about his experiences with deramiocel and how it changed his life. We also have the work of Eliza Stacy, an incredibly impassioned plea from his mom, who is also battling Stage IV cancer that she is asking for deramiocel to be moved forward and approved so that her son has a chance to access deramiocel as his own cardiac function is beginning to deteriorate. We will continue to work with the patients, with the advocates, with the community, with the Food and Drug Administration and with all of you to get deramiocel across the line for DMD because we see not only anecdotally but also from the perspective of data that deramiocel indeed attenuates the progression of Duchenne muscular dystrophy both from a cardiac and skeletal muscle viewpoint. So with that in mind, the one question that remains a little bit unanswered is the timing of the PDUFA. I know that's going to be the first question that I get. Our plan is to submit the HOPE-3 data as a response to the CRL that we received in July. We are currently working with the agency on how we will deliver that data to them so that it can be best evaluated as quickly as possible. And to that end, we will provide updates as they become available. Financially, we remain in good shape. We have more than $120 million in cash and equivalents, which will fund operations well into 2026 and supports our launch readiness activity. We continue to work with Nippon Shinyaku, our partner, as we prepare for launch, we obviously now are gearing up for top line data before the end of the year and then ultimately resubmission of our BLA and moving forward as rapidly as possible to PDUFA and therefore, to launch. I'll stop there and take any questions as you have them. Again, thank you for your continued support. This has been a challenging time, not only for Capricor, but for all of biotechnology as we negotiate the Food and Drug Administration and some of the changes that have been put in place there. We are delighted currently with our potential opportunity. Thank you so much for your time today.

[Operator Instructions] Your first question comes from the line of Joe Pantginis with HC Wainwright.

Thanks for taking the questions, and especially for the updated visibility. I know everyone appreciates it across the street and the medical community. So a couple of questions, if you don't mind. And I know you talked about the PDUFA, but I think not necessarily the date, but I guess one would consider this putting HOPE-3 data in there a major amendment or do you feel that, as you said you'd hope to get the data on a timely basis that might impact whether it's a major amendment or not?

Yes, Joe. So thank you so much for your question. This is one of the reasons why we have held off on some of the public announcements of the results of the Type A is just that we're not completely sure on how the FDA is going to ask for this data, how they'll adjudicate it and how it will impact the time lines. My regulatory team tells me that we're going to submit it as a major amendment, that we're going to hope to weigh on the agency to use a quick turnaround of 2 months to PDUFA time keeping our priority review alive. But it's also possible that they'll ask for Class II resubmission, which really would slow down the clock and give them 6 months to review. So we'll continue to keep the street updated as we become more aware ourselves of what the agency will accept in the time line. Obviously, we'll work as hard as we can to get this across the line as fast as possible.

No, that totally makes sense. And I guess also the question here, and this has been the open question, it's good to have the visibility of keeping the primary endpoint to pull. But were there any real changes discussed with regard to the statistical analysis plan of how cardiomyopathy might play in? And then when you talk about 2 potential labeling opportunities, of course, it would be great to be a fly on the wall during your meetings. Is it -- do these labeling opportunities still -- are they still only gated on pull before you can -- if that fails, for example, which I don't believe it will, negate the potential for cardiomyopathy? Just want to make sure we're going down the right roads here.

Yes. So thanks. So again, these are really important and salient issues that were -- we grappled with them as well. Our current understanding is that they are wanting to maintain regulatory -- I was going to say rigidity, but let's say, strength, and so they're going to be looking for the primary efficacy end point theoretically to be positive with a p-value of less than 0.05. We are 2. And then with the key secondary being cardiac that would then be adjudicated on its statistical significance as well, which we also have very high hopes of hitting to the level of less than p 0.05. The issue is whether they would look through a negative pull to a primary cardiac or to the cardiac secondary is one of the issues we've raised with them and talked with them about in detail as many others who have sat at my desk and other companies know FDA never gives you firm language that you can absolutely bank upon. But what they did say is they would exercise regulatory flexibility and that they would continue to look at the cardiomyopathy as a separate indication and a separate opportunity. They understand that the current BLA was for the cardiomyopathy. They're not asking for a new BLA as far as I know, at this point, for the skeletal muscle myopathy. I don't know whether then the indication in the labeling would be gated on theoretically and practically the pull scores. Therefore, the ambulant or non-ambulant status of the patients. Obviously, they'll do full labeling discussions until you get a much later stage in the PDUFA process. So I know it's a long-winded answer. The answer to the question is this study was well powered to detect a statistically significant difference in the performance of the upper limb. We saw and hope to -- we see it in the open-label extension compared to the external comparators that we've used and certainly, this trial is powered for that. So we're looking forward to seeing that data and are expecting to see statistical significance in both the performance of the upper limb and cardiac functions measured by ejection fraction.

No, I appreciate that very much. And don't worry about your answer because my questions were long-winded as well, but it's nice to hear the positive center of the discussions.

Thanks, Joe.

And your next question comes from the line of Kristen Kluska with Cantor.

I'm very happy to see that this alignment is in place and you've been focused on executing now. So I wanted to ask for the HOPE-3. I know that it's very well powered, but can you share with us how the patient population is relative to the previous trial experiences, which also helped with your powering assumptions? And then I believe for the original submission, you had included the safety findings from this study. Can you just confirm that's the case and that, again, the CP looks very clean.

Yes. So let's start with safety because obviously, that's the most important issue always in the therapeutic. Yes, the safety was submitted with the original BLA. It's been updated, and it continues to be very safe with thank goodness, no serious adverse events directly related to the product. And so we are encouraged, of course, by the safety of the product. In terms of the powering of the study, it was -- HOPE-3 was powered on data assumptions from the HOPE-2 clinical study. Remember, the original powering was done based on a 60-patient study that was Cohort A. Cohort B was added when FDA had originally asked us to validate the manufacturing of the product from our San Diego facility. So the 105 patients is actually way overpowered based on the original assumptions. The patient populations are very similar. And yes, because so many of those guys that are in the later stages of the skeletal muscle myopathy aspect of Duchenne, also have cardiomyopathy with over 70% of them, as I said, having diagnosed cardiomyopathy and probably more of them on the verge of or starting to experience cardiac dysfunction. We feel very confident in the powering of the study.

And your next question comes from the line of Madison El-Saadi with B. Riley Securities.

Thanks for providing the update today. Can you remind us, is there a correlation between pulled and ejection fraction. And then to kind of follow up on a prior comment given that 70% of patients do have cardiomyopathy, does this tell us anything about what we could expect and how does that align with the HOPE-2 data set?

Yes. So -- thanks for the questions. In terms of the cardiomyopathy, the HOPE-2 data set suggests that when you have a -- especially if this was very evident in the open-label extension, if you have an ejection fraction that's maintained above 45% you have a really great chance of seeing stabilization. Once they start dropping below 45%, they have a lot of scar in their heart, a lot of disease, it's harder to stabilize and bring them back. So we're looking to treat primarily those patients. Well, any patient that has diagnosed cardiomyopathy or scar in the heart will be what we ask for on the label. But we're encouraging physicians to consider starting early because the data is stronger the earlier that the therapy has started. And I'm sorry, I lost the second part of your question. What was the second part of your question?

You mentioned that 70% have cardiomyopathy. I was just curious how that aligned with the Phase II? And then the second part, I'll go ahead and squeeze that second part. Will you have ejection fraction or pull measurements beyond 12 months? I know every patient has gone 12 months, but just curious if you will have some data sets at 18 months, et cetera.

Yes. Sorry. So the part that I missed originally was you asked about a correlation between pull and cardiomyopathy. And while they tend to coexist in terms of losing skeletal muscle function and it's very, very common as the disease progresses to start seeing the cardiac implications, they don't directly correlate. And it's been one of the conundrums in developing therapeutics for DMD because the heart muscle disease develops sort of on its own continuum compared to the skeletal muscle disease. And so you can have a patient that has pretty advanced heart disease, but might be still ambulant or you can have a patient that has -- is non-ambulant, losing a lot of upper limb function, but has a pretty strong heart. So they don't correlate, but they both need treating. And as Mindy Leffler, Aiden's mom said so eloquently, treat this cardiac, treat the skeletal whatever you treat, we'll be grateful. So we're taking that attitude as well. I thought I answered, but I'll reiterate. So the patient population in HOPE-3 in terms of cardiomyopathy is very similar to the HOPE-2 patient population. We were not using inclusion and exclusion criteria in HOPE-2 to specifically for cardiac, but if you actually bucket them, they're very similar in terms of the manifestations and representations of ejection fraction, especially as we move into the open-label extension aspect of HOPE-2.

And your next question comes from the line of Ted Tenthoff with Piper Sandler.

Great. And a very exciting update. I know it's been a long and winding road here, but I appreciate your persistence on behalf of the boys and investors. So thank you for the update. My question really has to do sort of twofold. Firstly, just with respect to Nippon Shinyaku, any update what's the latest there? Obviously, that potential milestone for regulatory approval of, I think, $80 million could be pretty relevant. And then also when it comes to the potential for pediatric voucher, just remind me sort of what the latest is there and how that could come into play?

Thanks, Ted. Yes. So in terms -- I'll take the last one first. In terms of the pediatric voucher, that program currently remains active, as I'm aware, until September of '26, we expect to have PDUFA before that. That's obviously going to be one of our goals. We do continue to qualify for that. We do not -- have not lost that. So that will be one of the opportunities that will remain front and center as we negotiate with the agency for our PDUFA dates, plus we just want to get it out there. The other question that you had was regarding Nippon Shinyaku. Yes, yes, was -- we continue to work very closely with them. They're doing the work that needs to be done to get ready for launch. In fact, we have a day meeting with them today in order to continue to work on launch activities. Obviously, this news is relieving to everybody that the FDA is willing to take HOPE-3 that we have the opportunity for dual labeling. And so I think we're all now sitting on the edge of our seats excitedly waiting for the top line data and to really move this program towards approval very rapidly.

And your next question comes from the line of Aydin Huseynov with Ladenburg.

Linda, A.J., thanks for providing this update. A couple of questions on our end. So do you think that there may be some sub-populations in the HOPE-3 trial, where more advanced patients may have sort of more profound benefits from deramiocel, like more advanced patients may have more cardiomyopathy. And do you think the FDA will be flexible enough to take sort of a holistic approach and look at both HOPE-2 and HOPE-3 data and give you some sort of more narrow label if needed?

Yes. I don't think that's actually going to be needed, and I actually think it's kind of the opposite. So our data and Jon's data, Jon Soslow's data as well suggest that there's sort of this tipping point around 45% ejection fraction. If you can think of the pathophysiology of Duchenne cardiomyopathy is like the skeletal multimyopathy, you have current -- steady loss of muscle mass then that can be measured by late gadolinium enhancement or scar. And the more scar the heart has, the harder it is to beat against that load. So we want to get in early, while they still have cardiac muscle to preserve and function to preserve, we believe that's a much better treatment paradigm than trying to salvage late which is much harder. There's really no way to turn the scar around once it's generated, especially in the heart. So no, I don't think that there will be cell populations that way. But if there were, it would be the greater than 45%. But we're not even talking or thinking about that. We've seen such statistically significant data across all ejection fractions that we've measured. The inclusion and exclusion criteria of HOPE-3 excluded those with very, very severe heart disease. What we know in Duchenne cardiomyopathy is once they cross a certain point where their function has dropped low, it really becomes a very rapid trajectory for its end of life, which is why the patients with Duchenne are so anxious to get on deramiocel because they know that they're ticking clock in terms of their cardiac function.

Makes sense. Makes sense. And another question I have, during your discussions with the FDA. Was there any other additional cardiac endpoint beyond LVEF that FDA was particularly interested in?

So we didn't really discuss other cardiac endpoints. Obviously, we saw 23 out of 24 cardiac-related endpoints improve in HOPE-2. And those -- that was published in the Lancet study. We've always presented the totality of cardiac data with MRI, there's a lot. I will present the volume, left ventricular end systolic index volume, which was very statistically significant and very clinically relevant in HOPE-2 to the FDA, and we'll also present to them a global statistical test of cardiac function, which will then allow them to see the totality of the evidence in terms of preservation of cardiac function.

And your next question comes from the line of Catherine Novack with Jones Trading.

Just wanted to get a clarity on something. So after a month of discussion ultimately didn't get to change the primary endpoint. So where exactly was FDA flexible? What were the requests that you had that FDA did comply with? Was it the dual labeling? Was it LVEF as a key secondary? Where were they flexible with you?

Yes. So that's kind of a complicated question. I think that they're trying to exercise regulatory flexibility across the program. Their lack of willingness to change the primary efficacy endpoint is really, as I mentioned, from what they've explained, regulatory dogma. Our concern, the reason we were asking for the change is we wanted to keep the current BLA open. The biggest win is that not only are they going to be keeping the current BLA open, they won't require us to submit a new BLA, so we can just submit this data under the current BLA, our inspections are done, a lot of answers are done. CMC review is done. So this was a giant win for us. We're very pleased with that flexibility. And the dual labeling opportunity, obviously, is one that's presented by the fact that we'll have a primary skeletal muscle and a key secondary of cardiac muscle function. So it was more the tone of the meeting, the idea to keep the current BLA open to understand the unmet need to be able to look at the cardiac data. Technically, the study was not originally designed around cardiac function, and they understand that over 70% of the patients have the cardiomyopathy. So they're willing to look at that data. So it's a complicated question because everything is flexible in terms of the fact that they started with having an in-person meeting with us. So I feel very positive about our interactions with the agency right now.

Yes. Okay. And then I remember at the time of the CRL, there were CMC items that the FDA had not yet addressed. Are these items still outstanding? Or has FDA kind of addressed your responses to those outstanding issues?

Yes. We've submitted them. They've acknowledged that they've received them and are ready to move forward with the next steps towards approval. We do not believe that there are any open CMC issues that will need to be addressed prior to PDUFA.

[Operator Instructions] Your next question comes from the line of Rohan Mathur with Oppenheimer.

This is Rohan on for Leland Gershell. Just a couple from me. When do you expect to submit the final statistical analysis plan? And if HOPE-3 were to miss the primary, would the statistically significant if a p-value of under 0.05 is achieved? And in that scenario, what would be the likely ?

Yes. So in terms of the specific analysis plan submission that is imminent. We're planning on submitting that really within the next few days. It's finalized and under final review. So we're looking forward to getting that in. In terms of whether FDA would look past a failed primary to a key secondary for statistical significance, obviously, that would be something that we would work very hard for them to understand the value of. They'll never say again, as somebody asked earlier, FDA would never write something like that down, but they did say they would continue to exercise regulatory flexibility that they understand that the unmet need of cardiomyopathy is separate than this skeletal muscle myopathy, and that there is nothing currently approved to treat the cardiomyopathy associated with Duchenne. There is no guideline-directed medical therapy. Deramiocel certainly provides the very first opportunity. We are hopeful that based on the powering of HOPE-3, based on the data from HOPE-2, based on the open-label extension studies compared to the external comparator and all the other data that we've aggregated over now 4 years that we will not have to deal with an issue of passing over the primary to look at the secondary, but please stay tuned as we update you further on our regulatory progress.

Got it. And just 1 more. With respect to discussions the CHMP. Can you give any updates there? And how are those discussions being guided by what's been happening with FDA?

Yes. So we've made the strategic decision right now to focus primarily on getting across the line in the United States. There's a lot going on outside the United States. I think everybody is aware of sort of President Trump's most favored nations, type of pricing paradigm and also, the current administration is focusing hard on making things better here in the United States. So we have made the decision, as I mentioned, to focus on getting this across the line in the United States getting this launch underway and then we'll focus outside the U.S. more directly at that time.

And your next question comes from the line of Boobalan Pachaiyappan with ROTH Capital Partners.

So a couple from us. So firstly, with respect to HOPE-3, what is your primary -- I mean, when you release the data, what if the primary end point was not met, but you still achieved statistical significance in your secondary endpoint? What could be the potential next steps? That's the first one. And then in terms of LVEF. I understand that the FDA doesn't want to go against its own regulatory dogma, but what if in the future, there's a new drug developer, who wants to approach only cardiomyopathy, and they wanted to use only LVEF as an endpoint because with all the publications from Soslow and others, do you think the agency will be open to discussing LVEF as a primary endpoint for someone else? I know it doesn't concern you, but just curious, your answer will provide some clarity to future drug developers.

Thanks. Well, your first question, I think, I just answered from the Oppenheimer analyst, but I'll reiterate that we're expecting that based on the powering of the study to hit the primary efficacy endpoint as well as the key secondary endpoint of left ventricular ejection fraction. If it misses on pull, will they look at cardiac, that's what we're hoping for. They certainly said they would exercise regulatory flexibility, and they also said they understood that the pathophysiology of skeletal muscle myopathy and the cardiomyopathy were similar, but needed different treatments. There is no guideline-directed medical therapy for the cardiomyopathy associated with Duchenne. And so if that eventuality occurred, of course, we would continue to work with the agency to get it across the line for the cardiac indication independent of the skeletal muscle indication. In terms of other drug developers, I guess I'm going to be a little solipsistic here and say that that's not something I'm thinking a lot about. I'm a cardiac physiologist, so I've spent my entire career thinking about the heart. And I can tell you that I think left ventricular ejection fraction is a really great indicator of the progression of cardiac disease. And I certainly would be wanting to work with the agency and help them understand the value of using that as a clinically driven endpoint that can predict morbidity and mortality.

And I'm showing no further questions at this time. I would like to turn it back to the Capricor's management for closing remarks.

So thank you so much for joining us this morning. We are delighted to provide this update on our Type A meeting. We look forward to releasing top line data before the end of the quarter. This is the culmination of many years of work, a lot of data, a very large clinical trial and certainly a long and now storied tail with the Food and Drug Administration. Please do pay attention to some of the videos and letters that are out there from the patient community. They not only are quite emotional, but they also provide a really good understanding of how deramiocel is working in the community. And again, thank you so much, and have a great day.

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