Capricor Therapeutics, Inc. (CAPR) Q3 FY2025 Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics Third Quarter 2025 Conference Call. [Operator Instructions] This call is being recorded on Monday, November 10, 2025. I would now like to turn the conference over to our CFO, AJ Bergmann, for the forward-looking statement. Please go ahead.

Thank you very much, and good afternoon, 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 our clinical studies, plans to present or report additional data, plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, 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 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 afternoon, and thank you for joining us on Capricor's Third Quarter 2025 Conference Call. This has been a very busy time for Capricor, as we are just weeks away from a major milestone, the top line readout from our HOPE-3 Phase III clinical study of deramiocel, our investigational cell therapy for the treatment of Duchenne muscular dystrophy. This pivotal study represents the culmination of nearly a decade of scientific development, all aimed at helping boys and young men living with this devastating disease. Importantly, HOPE-3 focuses primarily on non-ambulant individuals, a patient population that has historically had limited clinical research dedicated to it. HOPE-3 was conducted across 20 leading academic and clinical centers in the United States. The trial enrolled 105 participants and is one of the largest double-blind placebo-controlled studies ever conducted in the Duchenne population. The study was designed with a 1:1 randomization and is statistically powered to detect changes in both upper limb function -- as measured by the performance of the upper limb version 2.0, and cardiac function -- as measured by left ventricular ejection fraction, measured by cardiac MRI, as well as several secondary and exploratory endpoints. These 105 patients enrolled in HOPE-3 represent 2 cohorts: Cohort A, which received deramiocel manufactured from our Los Angeles clinical facility; and Cohort B, which receives products manufactured at our commercial GMP facility in San Diego. As a reminder, the FDA required the addition of Cohort B to evaluate the efficacy of the commercial scale product. While we have demonstrated nonclinical comparability, Cohort B provides the opportunity to generate direct evidence of efficacy for the commercial material. The San Diego facility was built to meet commercial manufacturing standards operating under elevated quality and compliance requirements to support commercial deramiocel production. Because the San Diego manufactured product is intended for commercialization, the statistical analysis plan for HOPE-3 includes analyses designed to evaluate efficacy, both across the combined cohorts and independently within Cohort B. We believe -- in alignment with our biostatisticians and clinicians who designed our statistical analysis plan with us -- that while the aggregated data are informative, demonstrating efficacy of the commercial scale product represents the most direct regulatory path to potential approval. From the standpoint of safety -- which, of course, is the most important aspect of the clinical study -- safety data from the trial have been regularly reported to the FDA, and no new or emerging safety signals have been observed. Across our entire program, we have now administered more than 800 infusions to, approximately, 150 boys and young men with Duchenne, with deramiocel continuing to demonstrate a strong and consistent safety profile. At Capricor, our mission remains clear: To bring forward the first therapy that directly addresses Duchenne muscular dystrophy associated cardiomyopathy. Nearly every patient with Duchenne develops cardiomyopathy, which remains the leading cause of death in these boys and young men. Deramiocel has been shown to help preserve both cardiac and skeletal muscle function, and our goal will be to emphasize to the FDA the life-limiting cardiovascular impact of this disease. Should deramiocel be approved, it would represent a first-in-class therapeutic option for this critical unmet medical need. We are now in the final stages of data preparation. Our statistical analysis plan has been submitted to the FDA, and the comment period passed without additional feedback. We plan to unblind the study once all data management processes are finalized, which, as noted, will occur within the next several weeks. The process has required review of more than 300 MRIs by independent external readers, who are fully blinded both to treatment allocation and sequence, a process that requires additional time to collect and analyze the data set. To remind you, after our pre-BLA meeting with the FDA in 2024, we submitted a BLA based on existing data from our HOPE-2 and HOPE-2 open-label extension trials compared to an external control comparator from the cardiac consortium. At that time, the purpose of HOPE-3 was to support potential ex-U.S. expansion, as well as label expansion. However, following receipt of the CRL in July, the role of HOPE-3 shifted. The CRL primarily cited the need for additional substantial evidence of effectiveness and certain CMC clarifications. Importantly, most of the CMC issues had already been addressed in prior information request responses. And the remainder were resolved shortly after the receipt of the CRL. While the CRL was unexpected, we were well positioned with HOPE-3 to provide the additional safety and efficacy data requested by the FDA. During our Type A meeting in August of this year, the FDA indicated that the HOPE-3 results could be submitted to address the issues raised in the CRL. A key element of that meeting was our request to keep the current BLA open and maintain the indication for DMD-associated cardiomyopathy. To advance that path, we proposed designating left ventricular ejection fraction -- LVEF -- as the primary efficacy endpoint. While the FDA did not allow this formal change, they agreed to exercise regulatory flexibility in reviewing the HOPE-3 data. Accordingly, we plan to submit the HOPE-3 results as a formal complete response to the CRL, with the goal of receiving a rapid review by the FDA and a new PDUFA date. As of now, FDA has classified the resubmission as Type 2, which means the review period can be up to 6 months, but there is precedent for faster review times. We will make every effort to advance deramiocel toward approval as efficiently as possible in 2026. To remind you, we are eligible to receive a priority review voucher if approved -- if approval is obtained prior to September 30, 2026, and PRVs may become increasingly valuable as the program approaches its statutory sunset. While we cannot predict the exact timing of approval, we remain highly motivated to achieve approval as early as possible in 2026, well ahead of that deadline. This consistency demonstrated across multiple clinical studies underscores deramiocel's potential to stabilize disease progression and preserve both muscle and heart function. We now look forward to seeing whether the data from HOPE-3 confirms these benefits in a larger, rigorously controlled pivotal trial. As we approach our quiet period, I will remind you that we expect to report top line data within the next few weeks. And we will do everything we can to keep both the market and the DMD community informed of our further plans with respect to this program and the release of the data. We also recently published a peer-reviewed paper in Biomedicines, detailing new mechanistic insights into deramiocel's mechanism of action. The study described in the paper demonstrated that cardiosphere-derived cells, CDCs, the active components of deramiocel, release exosomes and soluble factors that suppress fibrotic gene expression, collagen 1 and collagen 3 in human fibroblasts. These findings were consistent across more than 100 manufacturing lots, validating deramiocel's antifibrotic and immunomodulatory properties and further supporting its mechanism of action. To complement this publication, we also released a scientific video illustrating deramiocel's mechanism of action, which is available on our website, reinforcing the biologic rationale and consistency that underline our entire development program for deramiocel. Now focusing for a moment on the CMC front, following acceptance by the FDA of all findings from our pre-license inspection or PLI, our San Diego commercial facility is fully operational and preparing for GMP production activities. Our manufacturing and quality systems are fully implemented and all CMC-related items cited in the CRL have been addressed. This achievement reflects the strength of our operations and represents a critical milestone in ensuring readiness for commercialization and long-term product consistency. In parallel, we continue to prepare for launch with advancing initiatives in physician education, patient services, market access and reimbursement. We are engaging both neurology and cardiology specialists to ensure an integrated approach to patient care should deramiocel receive approval. While our immediate focus remains on U.S. approval, we are also laying the groundwork for potential global expansion and we'll share updates as appropriate. We are closely monitoring evolving U.S. and international pricing policies, including the current administration stance on most favored nation frameworks and we'll adapt our global strategy accordingly. Now I'd like to spend the next few minutes talking about our exosome platform. We continue to advance our StealthX program under Project NextGen, a U.S. government-funded initiative led by HHS and the National Institutes of Allergy and Infectious Disease to develop next-generation vaccines for COVID-19 and other potential infectious threats. The NIAID sponsored Phase I clinical trial remains ongoing and is evaluating multiple dose levels of the monovalent vaccine, targeting the spike or S antigen with an additional planned arm that will utilize a multivalent vaccine construct targeting spike S and the nucleocapsid N antigens, pending separate FDA clearance. We expect initial data in the first quarter of 2026, subject to completion of the trial by NIAID. The goal is to validate StealthX as a versatile non-mRNA adjuvant-free platform capable of delivering native proteins safely and efficiently, a model that could potentially extend to infectious and rare diseases alike. While vaccines are not our core business, this program serves as a critical proof of concept for the StealthX platform. Positive results could open the door to strategic collaborations and highlight the platform's potential for targeted therapeutic delivery well beyond vaccinology. With that, I will now turn the call over to AJ, to run through the financials. AJ?

Thanks, Linda. This afternoon's press release provided a summary of our third quarter 2025 financials on a GAAP basis. And you may also refer to our quarterly report on Form 10-Q, which we expect to become available shortly and will be accessible on the SEC website, as well as the Financial Section of our website. Let me start with our cash position. As noted, as of September 30, 2025, our cash, cash equivalents and marketable securities totaled approximately $98.6 million. We believe that based on our current operating plan and financial resources, our available cash, cash equivalents and marketable securities will be sufficient to cover anticipated expenses and capital requirements into the fourth quarter of 2026. Turning briefly to the financials. Revenue for the third quarter of '25 were 0 compared to approximately $2.3 million for the third quarter of 2024. Additionally, revenue for the first 3 quarters of 2025 were 0 compared to approximately $11.1 million for the first 3 quarters of 2024. I'd like to point out that the source of revenue in 2024, was the ratable recognition of the $40 million we have received under our U.S. distribution agreement with Nippon Shinyaku, which had been fully recognized as of December 31, 2024. Turning to our operating expenses for the third quarter of 2025. Excluding stock-based compensation, our research and development expense were approximately $18.1 million compared to approximately $11 million in Q3 2024. And for the first 3 quarters of 2025, excluding stock-based compensation, our research and development expenses were approximately $54.4 million compared to approximately $32.8 million in the first 3 quarters of 2024. Again, excluding stock-based compensation, our G&A expenses were approximately $4.1 million in Q3 2025, and approximately $2.2 million in Q3 2024. For the first 3 quarters of '25, excluding stock-based comp, our general and administrative expenses were approximately $11.1 million and approximately $5.7 million for the first 3 quarters of 2024. Net loss for the third quarter of '25 was approximately $24.6 million compared to a net loss of approximately $12.6 million for the third quarter of 2024. And net loss for the first 3 quarters of '25 was approximately $74.9 million compared to a net loss of approximately $33.4 million for the first 3 quarters of 2024. With that, I'll turn the call back over to Linda.

Thanks, AJ. As AJ just mentioned, we ended the quarter with approximately $100 million in cash, providing a solid foundation to continue executing on our near-term objectives and advancing our key programs. And let me just remind you that if deramiocel is approved, we remain eligible to receive $80 million milestone payment from NS Pharma, and a priority review voucher, which represents significant non-dilutive capital opportunities that would strengthen our balance sheet and extend our runway well into 2027 and beyond. We will now open the line for questions.

[Operator Instructions] Your first question comes from the line of Ted Tenthoff from Piper Sandler.

Great. Excited for the upcoming HOPE-3 data. I just want to get a sense for what we should expect from that in terms of what will be actually released in the initial data reporting in the top line data.

Ted, always great to hear your voice. Yes, the top line data will be primary and key secondary endpoints. We will release those as soon as we have them. And we'll host a conference call to explain them and help the markets, as well as the key opinion leaders help explain the ramifications of that data.

Just one quick follow-up, if I may. With the consideration of left ventricular ejection fraction as a key secondary, are there any statistical changes in this study because of elevating LVEF tanks?

No, Ted. So thanks for that. So the great thing is the study was always powered with the idea that we were well overpowered to measure ejection fraction. We had such strong results from HOPE-2 and HOPE-2 open-label extension that it really wasn't an issue. We have tremendous powering for ejection fraction. It was powered for PUL, but that the overarching power is quite strong for the cardiac as well.

Your next question comes from the line of Leland Gershell from Oppenheimer.

I wanted to ask just a bit further on HOPE-3 and the SAP. We're in this sort of unique circumstance of having a BLA that's for the cardiomyopathy, but the primary endpoint of the trial is the PUL 2.0. So wondering how the SAP designates treatment of the LVEF secondary endpoint in the situation in which you miss significance on the primary?

Yes. Leland, thanks so much. So this has obviously been an issue that we've spent a lot of time thinking about, working with the FDA. And we've brought in several very well-respected statistical consultants to help us build an SAP that allows for both of those parameters, right? So the Food and Drug Administration said we want the primary to remain the performance of the upper limb. We left it as a performance of the upper limb. The way that the primary is being analyzed, as I mentioned in my remarks. We'll look at the combined cohorts A and B. But we're going to focus then also on looking specifically at Cohort B, because that's going to provide strength in the manufacturing facility that we have built and passed PLI with. The alpha is going to be used in the primary endpoint, as would be in any other situation. And should we achieve statistical significance and that alpha passes through to the secondaries and continues along until you miss a secondary. The key secondary of ejection fraction, we did not reserve any specific alpha for. But we know from our Type A meeting that the FDA was interested in looking at all of the data in its totality. So the SAP is a pretty traditional one and actually fairly simple with which we think we have a lot of great opportunity to utilize the performance of the upper limb and then also ejection fraction. Now just to add a little bit of color to what you asked, because our open BLA is for cardiomyopathy. We are not going to ask -- at least in first iteration -- to expand the indication to skeletal muscle until we are assured that we're going to get the indication and label of cardiomyopathy. Once we have achieved that with the agency, we will then assuming that we have statistical significance in the primary, we'll then ask to expand to skeletal muscle as well.

Also just a question with respect to the cardiac MRI review procedure. Could you just run us through that? Are all of these reviewed by an external review? Or is there an adjudication process? If you wouldn't mind just summarizing that.

Yes. So that's obviously very important and something that we have a charter in place that was signed off on, which is multifaceted. So first, an outside CRO reviews every single MRI, they're first quality controls. So everybody looks at them, at the CRO to make sure that the image meets the standards of being able to be reviewed and analyzed. Once that happens, then they're read by a primary reader, a secondary reader; and then anywhere the primary reader and the secondary reader disagree by a certain number, which is of relevance that could not possibly change that much over a certain time period, there is a third reader that comes in for adjudication. And then the 3 of them look at it together to decide which, in fact, would be the appropriate read. So there's a tri-level measurement procedure. And they are independent to time point. So they don't know which time point it is and also to patient ID and obviously, the treatment group.

Your next question comes from the line of Joseph Pantginis from H.C. Wainwright.

Linda, I just wanted to clarify something quickly before my question. So depending on the primary endpoint, you said you're going to continue to look for cardiomyopathy and then if statistically significant, expand to skeletal, if I heard you correctly. Would that be in the form of an sBLA?

Yes. So interesting that you asked that. We don't really know exactly how we're going to go about that yet. It's going to involve conversations with the agency. So right now, we have a CRL. The CRL said we want to see more data. We're going to give them more data as a response to the CRL. We're going to provide all the data, which includes the primary and the key secondary endpoints, which we've also agreed that we would provide publicly. So you'll get to see them too. And then in those conversations, we'll decide how we're going to do the label expansion of skeletal should that be appropriate.

I just wanted to make sure I understood. Because it looks like with regard to the analyses, you're going to be looking at the 2 manufacturing cohorts of A and B versus B alone. Does that include any alpha spend at all? Or how should we view those in general impacting the SAP or not?

Yes. So the way that the analysis is built is a statistical analysis that's very commonly used, called the Hochberg analysis, which basically does not utilize alpha spend if you prespecify which group you are going to be directing your alpha towards. So if you are, for instance, going to say A or B and we'll take either one, that's an alpha spend so that you would then have a 0.025 going into your secondary. But if you actually direct it prespecified, you save all your alpha and therefore, you have it to use in your secondaries.

Maybe a question for AJ, and if you'd like to fill in, that would be great. I wanted to get a sense now with regard to your burn going forward. You have a couple of things coming down, a few things potentially going up. You'll have HOPE-3 wrapping up in the clinical trial expenses around that. I wanted to see about discussing manufacturing expenses that might be increasing, personnel and then maybe a gradual increase in exosomes. Maybe some views on how the expenses might be going forward.

Yes. Thanks, Joe. I mean, obviously, our expenses in the third quarter were higher than they had been. But we were moving towards pretty much a PDUFA date as we moved -- got -- received our CRL in July. A lot of the expenses you just said correctly have gone into the execution of the HOPE-3 trial, which is winding down. So we'll see those expenses hopefully continue to wind down. But they're going into the manufacturing and the development of the commercial product as we prepare and continue to prepare for a commercial launch. So we're maintaining and cautiously watching our burn in every area we can. We're building out our team in areas that are absolutely necessary. And then obviously, following the results of the data and our next steps with FDA. We'll continue to put the dollars to work where they need to go. So we feel very comfortable with where we're at. And we're putting -- diligently investing in where we hope to drive value. Exosome, same type of answer. Just to point out, NIAID is obviously funding that study. We've said that many times. We've already made the doses necessary for that. So that's well off our balance sheet, which hopefully will be a nice value driver and catalyst for us in the early part of 2026.

Your next question comes from the line of Kristen Kluska from Cantor.

I'm sending you all my best in the next few weeks ahead for the company. So on the statistical analysis plan, my understanding was when you originally designed the Phase III study, you powered it based off of Cohort A in terms of patient size number. And now that you will be using Cohort B, it's essentially the same size anyway. Is my understanding correct here?

Yes, pretty close, Kristen That's exactly right. So we combined them. It's been a long journey, right? So we started with Cohort A, then we were told by FDA we needed to add Cohort B for efficacy. Then when we were filing the BLA on the existing data, we combined A and B into sort of one clinical trial because they agreed to nonclinical comparability between the sites. But now especially with some of the things that's going on with the administration, the fact that our manufacturing plant in San Diego has passed PLI, we've answered their CMC issues. We feel that it was important to be able to highlight the potential efficacy of Cohort B. And yes, the powering is pretty much the same. Cohort B is a little smaller with an 80% powering. Cohort A was a 90% powering. But we still feel that we're well within the range of ability to achieve efficacy.

I know in the past, you've shared with us a little bit of the baseline characteristics amongst these patients, including the percent that had cardiomyopathy. As we now divide it between A and B, would you say that, that statement is still true? Or is there one cohort where the baselines are skewing a little bit differently?

Yes. So the baseline characteristics are pretty much identical across the cohorts. We didn't change inclusion/exclusion criteria for either one. And really, it didn't work out in any specific way that it was heavily weighted one way or the other. We have seen and obviously, I don't know the data from HOPE-3. But we've seen from HOPE-2 open-label extension from John Soasllow's natural history study that those patients that get treatment with ejection fraction over 45% seem to do specifically well compared to those that are worse off. So we're definitely trying to get to these guys as early in the pathogenesis of the cardiomyopathy as possible. I think when we did the analysis of Cohort A and B together in preparation for the CRL response, we had over 70 that would have had diagnosed cardiomyopathy. One thing that's really nice about Cohort B is we're also measuring scar as measured by late gadolinium enhancement. So we'll also be able to do a correlation between the amount of damage that looks visible in the heart as well as ejection fraction and/or volumes, which is going to be very important for the field moving forward to understand sort of what the tipping points are in terms of scar aggregation and function.

Your next question comes from the line of Catherine Novack from Jones Trading.

I just have a question on -- when you mentioned FDA intended to exercise regulatory flexibility. At what point would -- do you intend to ask them to exercise this kind of flexibility? There's a possibility that you don't see statistical significance on PUL, but there is some kind of apparent benefit on LVEF. Is this a situation in which you would want the FDA to try to look at the totality of the data going forward?

Yes. So you hit it exactly. We are obviously anxiously awaiting the data. The easiest story will be if we hit PUL and we hit ejection fraction. If for some reason, we miss on PUL. And I think there's a lot of information that's being discussed both in the Cognizente arenas in terms of the performance of the upper limb, what its utility is, how good of a measure it is, the lability of it, that kind of thing. If for some reason, we miss on PUL, but we hit hard on cardiac, that would be where we would ask for that regulatory flexibility. And we're hopeful that based on what we have in the Type A minutes, what we have educated the FDA about with the performance of the upper limb and the key opinion leaders that we would still be able to succeed in getting the label for cardiomyopathy.

Then if there's anything you can share specifically what -- about what FDA did say when it comes to regulatory flexibility. We've obviously seen them be more stringent when it comes to statistics in recent decision-making. If there's anything you can give us to -- any more specific detail you can give us about what FDA has said about what it means to exercise regulatory flexibility?

Yes. I think when we put out our press release on our Type A meeting, we actually provided a quote in there that came directly from the minutes, which basically said, we want you to submit all of your data from HOPE-3. We're not willing to change the primary to ejection fraction. But we will regard all of the data and make decisions based on pretty much the preponderance of all the data. They did not give us specifics. We did have a hallway conversation in which one of the reviewers assured the mother, Mindy Leffler. That came with us to our Type A meeting that they would be very sure to look at the cardiac data very carefully as they recognize that this was the unmet medical need with no approved therapeutics for that patient population.

Your next question comes from the line of Madison El-Saadi from B. Riley Securities.

A couple from us. Do you have a sense that from the FDA's position, how did they view Cohort B? Is it, I guess, more importance than the aggregate PUL? And then secondly, maybe what is the bar to achieve a more rapid review time that you alluded to? And has that been a request that has been made? Or is that something that you would, I guess, request alongside the submission of HOPE-3 data?

Yes, yes. All really good questions. So the reason that we're focusing a little bit more on Cohort B, which we might not have done had the original plan of the existing data been accepted. And we had approval already for the cardiomyopathy is because we knew that there was some question regarding the manufacturing of the product from San Diego that it was a shift from a clinical facility to a commercial facility and we passed the PLI. So we've seen, frankly, a lot of CRLs being issued in the last few months around CMC-related concerns. And so we wanted to obviate that by targeting our efficacy data to our approved facility. We thought that would be the safest way to go about it. And since the powering was basically the same. We thought that would be one of the best ways to assure the fastest path to approval. In terms of time lines and speeding it up, that, again, is going to be based on what we see in the data, where we can convince the agency to move a little bit quicker. We have seen them do it. They did it with Calvista. They did it with Stealth. They are typically falling back on as long a review period as possible. And part of that, I think, is just because they are so understaffed and going through so many changes themselves that speed is hard for them. But we certainly will work with them and try and get this to PDUFA as quickly as we possibly can.

If I may ask one more to clarify. I think you answered this a couple of questions back. But could you clarify the LGE stratification, if that was balanced across both cohorts? Or is that a Cohort B specific stratification that was reached?

Yes. So we didn't measure LGE in HOPE-2 or Cohort A. And that was largely because there was a little bit of a haze at the time that LGE might cause aggregation of the brain, that there might be some bad side effects. And so we didn't really want to jump into that pool of messiness. But several things happened along the way. One, those substantiations were not proven to be true. LGE is safe. And two, our cardiology leaders convinced us that since we know that the pathogenesis of the cardiomyopathy associated with DMD is very different than what would be considered an adult dilated cardiomyopathy. It would be really interesting to be able to correlate scar, how much, where, when and then how it potentially correlates with ejection fraction. So it's an exploratory endpoint. But one as a cardiac physiologist, I'm very excited to see because it could provide some very important answers in developing treatment paradigms for Duchenne muscular dystrophy.

[Operator Instructions] Your next question comes from the line of Boobalan Pachaiyappan from ROTH Capital Partners.

So I just have a couple starting from the Type 2 classification. I think this is the first time you're articulating that Type 2 is likely. And obviously, this is going to garner a review period of 6 months. So I wonder if there were any recent developments between you and the FDA that made you believe or the Class 1 resubmission is impossible. I just wanted to know when this decision on Type 2 was sort of like set in stone.

Yes, yes. So thanks for your question. I think I pretty much answered it when Madison asked a similar question a moment ago. So we know that most people are getting Class 2 resubmissions. That's what we're expecting. That's what we've been told we should expect. In terms of being able to speed it up, I think that's going to be incumbent upon the strength of the data. Our conversations with the agency and sort of other imponderable factors that I cannot answer until I have not only seen the data, but also met with the agency. But we'll go as fast as we can. We obviously are looking for a quick PDUFA as well.

Secondly, can you discuss whether the potency assay adequately fulfills the FDA's guidance of potency test for cellular product expectations?

Yes. So we're very proud of the way that we have developed the potency assay profile for deramiocel. One of our goals was always to make deramiocel a drug product and not sort of a hand-waving cell therapy. It works, but we really don't know how it works. And so our science team did a methodical multiyear program in which they looked at the data from HOPE-2. They then were able to identify the master cell banks that we use in order to treat the patients in HOPE-2, so we know it works. And then they took those specific cell banks. And they put it through some pretty rigorous RNA-seq assays looking at 166 genes. And all of this, by the way, is in a very nice by tactic few minute overview on our website. Looking at those 166 genes, then, use bioinformatics to basically quantify those that identify CDCs as a completely unique cell type and then identify which ones were up and which ones were down. Once we have identified which ones are CDCs by their genotype, we then put them through an antifibrosis assay, one of the stated mechanisms of action. Looking at the production of collagen 1 and collagen 3 or in this case, the knockdown of collagen 1, collagen 3. The main product of fibrosis. And each and every lot has to pass that by a certain quantification in order to be considered effective deramiocel. So we feel very confident in our potency assay profile. It's now been published. And again, if you're interested in more details, Dr. Christy Elliott, our Chief Science and Operating Officer, does a nice job explaining it in more detail on our website.

Your next question comes from the line of Matthew Venezia from AGP Alliance Global Partners.

Just one quick one on the potential label expansion. Is there any chance at first launch if an approval were to be granted that you could get a cardiac and skeletal label? Or are you mostly looking at label expansion further down the line?

No, I think we'll obviously enter into those conversations during our labeling discussions with the agency. Of course, it's all incumbent upon what the data shows. But certainly, if we achieve statistical significance in skeletal and cardiac in our labeling discussions, we will ask for the label to have both parameters.

Just to switch gears a little bit to the exosomes platform. For the COVID vaccine program, we've seen Vaxart recently sell their COVID vaccine program to Dynavax. What are the partnership opportunities that you potentially see? Has there been any inbound? Is there anything you could share on that front for the exosomes platform?

Yes. So we're all waiting with bated breath for the data to come through from the NIAID study. Obviously, the government shutdown has not helped that. We are looking forward to getting that data. I think once we have that data, we'll be on a more directed shopping expedition for the appropriate partner. This vaccine is fantastic. It's a native protein vaccine. We use no adjuvant. The lipid that encompasses it is an exosome, which is a natural product. So you don't have to worry about gumming up the liver or the spleen. And if the antibody response and T cell response is anything similar to what we saw preclinically, it should have really tremendous value -- plus because of the little bit of protein that we need to evoke a strong immune response. We can do multivalent vaccines, not only with multivalence for COVID. For instance, but we could do a COVID plus flu plus RSV and all of those are in the planning stages. So we're pretty excited to see that data. And we'll provide updates as the data becomes available.

Your next question comes from the line of Joseph Pantginis from H.C. Wainwright.

Linda, I want to make sure I'm absolutely sure on this. So forgive me if there's any repetition here. And this goes to the SAP around HOPE-3 and I'm getting questions on this as well. So obviously, you need the primary to hit to be able to trigger LVEF, if I heard that correctly, number one.

Is that a question? Or did you just miss Joe?

Is that the -- like I just want to make sure that's correct. You have to hit the primary in order to trigger the analysis of LVEF. And if you don't hit the primary, how would LVEF be analyzed? And what would you say would be the hurdle for success there?

Yes, yes, yes. So this is where sort of the colloquium of regulatory flexibility becomes the open-ended question. It depends on how far we miss on the PUL. Let's say, if we did and then what the p-value independently of ejection fraction would be. I think we would go in there and fight really hard if we missed by a little on PUL and achieved really nice p-values on ejection fraction. It depends on how dogmatic the agency is going to want to be on statistical analyses, which typically use up your alpha in your primary. But in this situation, because they had said they would be flexible, that they would look through to the cardiac data, that they know that the applications for cardiac and the BLA, they were looking for more cardiac data. There may be a lot more windows of opportunity than just sort of strict statistical dogma.

There are no further questions at this time. I will now turn the call back to Capricor management for their closing remarks. Please go ahead.

Thank you so much for all of your questions and also for participating today. Obviously, the coming weeks will be transformative for Capricor as we prepare to announce the HOPE-3 top line results. These data will define the next chapter for deramiocel and for our company as we advance toward our goal of delivering a life-changing therapy to patients and families affected by Duchenne muscular dystrophy. We remain steadfast in our mission and continue to execute with discipline, scientific rigor and readiness across every area of our business. To the DMD community, your courage and partnership continue to inspire everything we do. We look forward to sharing this important next step with you soon. Thank you so much for joining us today. And we will be in touch soon.

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