Capricor Therapeutics, Inc.

Greetings and welcome to the Capricor Therapeutics, Inc. First Quarter 2020 Earnings Conference Call. During the presentation, all participants will be in a single remote. Afterwards, we'll conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference has been recorded. Thursday, May 14, 2020. I would like to send the conference over to AJ Bergmann, Capricor CFO. Please go ahead.

Thank you. 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. are future research and development plans, including our anticipated conduct and timing of preclinical and clinical studies, our plans to present or report additional data, our plans regarding regulatory filing, potential regulatory developments involving our product candidates, 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 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. We are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements. With that, I'll turn the call over to Linda Marbán, CEO.

Good afternoon, and thank you for joining us for our first quarter financial results and corporate update call. The first months of this most unusual and challenging year have been a productive time for Capricorps. I am pleased to report that we have made significant progress in the midst of the coronavirus pandemic. And, as many of you know, we are not on the sidelines in the fight against this deadly virus. We are working to develop potential treatments and vaccines against COVID-19. Our lead product candidate, CAP 1002, is currently being used to treat patients who have COVID-19 under the U.S. FDA's Compassionate Use Pathway. I will discuss our efforts against COVID-19 in a few moments. On the call today, I'm going to spend a few minutes discussing CAP 1002 for the treatment of Duchenne muscular dystrophy. But then the major focus of this update will be on CAP 1002 as a potential treatment for COVID-19 patients, the rapid progress of our exosomes program, which includes our vaccine initiative, and finally, our objectives for 2020. So first, let me update you on some of the company's recent highlights. Yesterday was a momentous day for Capricor as we released our 12-month data from the HOPE II clinical trial. The data was resoundingly positive with p-values below the 0.05 level in multiple measures of upper limb, cardiac, and respiratory function, and we believe it supports accelerated approval. Dr. Craig McDonald hosted a call with me to discuss the data and its importance to the DMD community. We plan on presenting this data to the FDA this summer with the goal of accelerating the pathway to approval of CAP 1002 for DMD. I will present highlights and a bit more color on our HOPE II data later in this presentation. Regarding our COVID-19 program, on April 29th, We announced positive results in six critically ill patients with COVID-19 who were treated with CAP-1002, all of whom are currently alive, and four of whom have been discharged. In fact, one of the patients was recently interviewed on television, ABC7 in Los Angeles, on Tuesday, March, May 12th, and he attributes the cells he received to saving his life. A peer-reviewed publication in the journal titled Basic Research in Cardiology was published on May 12th, which highlights this study. When compared to a natural history group, survival in those patients treated with CAP-1002 was markedly increased. Based on the positive data from the Compassionate Use series, we filed an expanded access IND with the FDA. We now have approval to treat up to 20 more COVID-19 patients with CAP-1002. However, we also submitted a revised protocol this week to add 20 more patients on placebo so that we can move quickly into a randomized placebo-controlled trial. I will elaborate a bit more on COVID-19 and CAP-1002 later in this presentation as well. In the second part of our two-pronged approach to COVID-19, we are harnessing our engineered exosome platform to build vaccines for COVID. To that end, on March 26th, we conducted a webcast with Dr. Stephen Gould, professor of biological chemistry at Johns Hopkins University, during which time he explained why exosomes are uniquely suited as a platform for vaccine development, whether for infectious disease, He presented further Capricor's strategic plans to expand and capitalize on the vaccine and therapeutic opportunities of our exosome technology platform as well. Working with Dr. Gould gives us the ability to develop a novel engineered exosome pipeline with access to premier academic data and preclinical studies. Now, as you can see, we have had a busy start to this year and will continue to build on our various programs throughout 2020. But for now, let me give you some additional color on our programs. Let's turn now to what is on everybody's mind and what is impacting almost everything we do, which is the coronavirus, commonly called COVID-19. This virus is causing so much sickness, death, and economic and financial destruction to the United States and the world. We have never seen anything that has had such a tremendous impact on our daily lives and which has so drastically disrupted the way we live and work. We at Capricor have taken this pandemic by the hand. As I mentioned a moment ago, we are taking a two-pronged approach to COVID-19. On the one hand, we are using CAP-1002, are cell therapy products, which, as you know, is in late-stage clinical development for Duchenne muscular dystrophy, to treat the cytokine storm which occurs in the later stage of the illness. On the other hand, we are developing our exosomes to be used as a vaccine platform to potentially prevent COVID-19. Using CAP-1002 to treat COVID is a case of serendipity favoring the prepared mind. Over 100 papers have been published on the bioactivity of the CDCs, the main components of TAP-10-02. And we have shown that CDCs release exosomes as well as anti-inflammatory cytokines, those that attenuate inflammation in a variety of disease models of profound inflammation, including sepsis, trauma-related shock, Kawasaki's disease, and other autoimmune diseases. We decided to use CAP-1002 in COVID because the pathogenesis of the disease is a viral phase in which the virus attacks the body and causes symptoms which are ever-emerging, as we all hear daily in the popular press. In some people, the virus leaves and the person recovers without sequelae. However, there is a subset of people in which the terror created by the virus overstimulates the immune system and the person developed a cytokine storm or post-inflammatory response phase. Paradoxically, our own immune systems can do more harm than good in these situations and trigger a whole host of inflammatory responses. Based on such strong preclinical and clinical data, we decided to offer CAP-1002 to patients with critical COVID-related ARDS, acute respiratory distress syndrome. through a compassionate use protocol. To remind you, a series of six critically ill patients were treated with 150 million cells, the same dose that we are using in DMD. Two of the patients received two doses one week after the first dose. As of today, we currently have a 100% survival rate and four patients have been discharged from the hospital. Two of them remain in the ICU but are clinically stable. Now, as I mentioned a few moments ago, Earlier this week, along with our colleagues at Cedars-Sinai Medical Center, we published a paper in the journal Basic Research in Cardiology, which was peer-reviewed, detailing the patient's trajectory following the cell treatment. In order to evaluate whether those treated with TAP-1002 had a different outcome to those that were untreated, the data from the six were compared to a group of 34 patients from the same hospital who did not receive TAP-1002. The treated patients did much better as the untreated patients had a mortality rate of 18% versus our 100% survival to date. Additionally, in this series of patients, and as noted in the publication, laboratory biomarkers correlated with poor outcomes were measured in all patients prior to cell delivery. Following infusion, several patients showed improvements in these biomarkers, such as ferritin, Absolute lymphocyte counts and C-reactive protein, which may be important in recovery from the cytokine storm. No adverse first events related to the administration of CAP-1002 were observed. We were so encouraged by this preliminary clinical data that we submitted an IND with the FDA for expanded access to treat up to 20 additional COVID-19 patients, which has been approved. We expect to begin enrolling patients into this program soon. We also submitted a revised protocol this week to add 20 placebo patients and move immediately into the randomized placebo-controlled portion of the trial to treat patients with severe to critical disease. This is, of course, subject to approval by the FDA. Based on the global concern surrounding COVID-19, we hope to fund at least part of this program with non-dilutive funding for which we are now applying. Now please stay tuned for updates on this very important program. As we all know, if the cells continue to look promising, they could offer hope for hundreds of thousands if not millions of people. Now let me turn your attention to Duchenne muscular dystrophy. As I mentioned, yesterday was a momentous day for Capricor. Based on the strength and value of the data from our HOPE II trial, We are getting calls from around the world from parents anxious to get CAP-1002 for their children with DMD. The data was perhaps the best ever seen in DMD studies with multiple areas of functional improvement in treated versus the placebo patients. To our knowledge, improvements in multiple areas of muscle function, including cardiac muscle, such as seen in HOPE2 have never been reported before. The only other positive data which has shown such profound effects are steroids. And remember, steroids may negatively impact cardiac function, not improve it. We are energized by the data and are laser focused on our goal to bring CAHPS 1002 to patients with Duchenne muscular dystrophy. Let me also remind you that all of our patients were steroid treated, so the effect of the cells was on top of all standard of care medicines, including any of the exon skipping drugs for which they qualified. As you know, DMD is a genetic disorder that causes muscle degeneration due to the lack of dystrophin, which is a protein in the muscle fiber membrane. The lack of dystrophin causes muscle damage and makes them unable to function properly and also produces inflammation, which is responsible for much of the deterioration of skeletal and cardiac muscle. DMD ultimately leads to an untimely demise, unfortunately at an average age of 27 with up to 40% of them related to heart failure. The HOPE II trials treated DMD participants who were mainly non-ambulant. These are boys and young men older than 10 years of age, Boys with DMD lose their ability to walk between ages of 12 and 15. Patients are living longer with DMD due to steroid therapy, and by the age of 18, 70% of patients with DMD have depressed heart function. Now, we presented the top-line data from the 12-month final data set from HOPE II yesterday. We were very pleased with the data, which we believe may offer real hope to the patients with advanced ages of DMD. The data is the first of its kind, as I said, because it is the first opportunity to treat skeletal and cardiac muscle dysfunction that comes from D&D and is targeted to those later stage patients for which no current therapies exist. The data was very strong, with multiple measures of cardiac and upper limb function achieving P values that suggest very little of the data could be due to chance. Furthermore, there are other These patients are not typically eligible for the current gene therapy trials, and there are a lot of misgivings that gene therapy may not work well in the highly fibrotic tissue that occurs in the older boys.