Capricor Therapeutics, Inc.

Greetings and welcome to the Capricor Therapeutics second quarter 2020 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will 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 at any time during the presentation. As a reminder, this conference is being recorded Thursday, August 6, 2020. I would now like to turn the conference over to A.J. Bergmann, Chief Financial Officer. Please go ahead.

Thank you, 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 plans to present or report additional data, Our plans regarding regulatory filings, 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, and 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. No caution not to place undue reliance on these forward-looking statements. We disclaim any obligation to update such statements. With that, I'll start the call and turn it over to Linda Marbán, CEO.

Good afternoon, and thank you for joining us for our second quarter update call. I have never been more excited by Capacor's path forward. While the world has been suffering with this horrible pandemic, the Capacor team has been working harder than ever to advance our product candidates and our pipeline. I will begin my remarks with updates on our COVID-related programs. These include our Cap 1002, for the treatment of patients with COVID-19 and our rapidly progressing bioengineered exosome platform technology. To remind you, CAP-10-02 is broadly immunomodulatory, and our working hypothesis is that it is able to tamp down the cytokine storm that is a transitional event differentiating mild COVID-19 symptoms from those that lead to pneumonia and multi-organ failure. Our initial open-label experience where seven patients with COVID-19 were treated with CAP-1002 supported the notion that CAP-1002 may modulate the hyperimmune response in COVID-19 patients. While we were unable to definitively ascertain whether CAP-1002 improved patient outcomes, By analyzing blood samples and other tests, it was determined that the CAP-1002 demonstrated identifiable improvements in certain patients, such as a decrease in white blood cell counts, a decrease in IL-6, a decrease in C-reactive protein, and or a reduced reliance on supplemental oxygen. We have concluded that the appropriate timing for treatment using CAP10O2 is in advanced patients who are showing early signs of cytokine storm as demonstrated by oxygen desaturation and signs of systemic inflammatory response and early organ damage. We do not believe that patients who have only mild symptoms or those patients who are already in the most advanced stages of disease and are respirator dependents with end-stage organ failure are the best candidates. We believe that catching patients who are heading downhill early and treating them with CAP 1002 represents the optimized timing to further study CAP 1002 therapy. Now, open label studies produce headlines but rarely provide definitive data to satisfy regulators and discerning clinicians. Based on early experience, we are sufficiently confident to undertake a randomized placebo-controlled trial. We are committed to provide the highest standard of clinical data to the medical community. A multicenter, randomized clinical trial is now being prepared and subject to final regulatory approval will be our next clinical stage with CAP 1002 for COVID-19. We are excited. about the prospects of getting this trial executed. Now, today I'm going to provide the first update on our rapidly advancing bioengineered exosome platform. This, too, may have major potential application in the COVID-19 space. But developments in our COVID research are presenting opportunities for establishing a broad new platform for an array of other therapeutic opportunities down the road. At present, however, we are laser focused on COVID-19, and I have some remarkable breakthroughs that I am able to highlight. Now, let me tell you about the exosomes. Exosomes are natural nanoparticles released by all cell types that are capable of delivering potent signals and even molecules to desired sites of action. Now, you have previously heard me discuss CDC exosomes, as the active agent of our CAHPS 1002 cell therapy. Today, for the first time, I will discuss our novel engineered non-CDC exosomes. What is remarkable about exosomes is that since they are nature's vehicle for intercellular communication, we can modify or bioengineer them to carry therapeutic molecules such as messenger RNAs, inhibitory small RNAs, proteins or even drugs. Furthermore, exosomes can be engineered to carry specific markers, including receptor ligands or viral protein marker antigens on their surface. As such, exosomes are very well suited to be the basis of the next generation of vaccines. Specifically, they may be a more natural carrier of one or more messenger RNAs, or they may be bioengineered to form virus-like particles, otherwise known as VLPs, that mimic infectious virions but pose no risk of infection. At CapriQuar, there are two active vaccine projects underway which are making rapid progress. While we are focused on COVID-19, this platform technology could be potentially adapted to other vaccines as well. We are very optimistic that one or more of the vaccines being developed under Project Warp Speed will be demonstrated to be useful for the human population. That said, first-generation products often leave room for improvement. Each of the Warp Speed programs has its own pros and cons. A discussion of each program is beyond the scope of this call, but I would like to highlight our program and some of the differences between Capricor's and others' strategies. We are investing in two unique vaccine products that have now advanced to animal studies. Both use exosomes derived from human cells as the active carrier for the payload. The exosomal messenger RNA vaccine can be differentiated from other messenger RNA-based vaccines in two important ways. First, we formulate the messenger RNA vaccines using the exosomes. which are safe, non-toxic, and of biologic origin. This differentiates our approach from those that are using chemically derived lipid nanoparticles, liposomes, or other synthetic nanoparticles, many of which have been associated with adverse reactions, immune responses that limit repeat dosing, and limited ability to enter human cells. We load the exosomes with multiple messenger RNA molecules designed to elicit potent cellular and humoral antibody responses to all four structural proteins of SARS-CoV-2. Spike, which we've all heard about, but also nucleocapsid N, membrane M, and envelope E. This is critically important as all four proteins are targets of the immune response to SARS-CoV-2 infections. And what's more, N-specific vaccines have been proven effective at preventing other coronavirus infections. Furthermore, the messenger RNAs present the spike receptor binding domain, N protein, and the soluble portions of the M and E protein in forms that are optimized for exosomal display, and MHC for major histocompatibility complex presentation with the goal of stimulating a broad-based and long-lasting cellular immunity to the virus. In contrast, the other vaccines are unable to elicit immune responses to N, M or E and instead are only capable of eliciting an immune response to the spike protein. While we agree that spike is a critical component of any rational vaccine strategy and is incorporated in our approach as well. We believe that a broader-based approach that enlists immune responses to N, M, and E will have better outcomes. I am happy to say that studies in mice have confirmed that the exosomal messenger RNA vaccine induces strong immune responses to both spike and to the viral N protein, establishing the basic principle of exosome mediated mRNA vaccination. This is an important advance in exosome bioengineering and validates the use of the exosome platform for messenger RNA delivery in general and vaccination in particular. Now the second vaccine candidate is a structural mimic of a virus particle. often referred to as a true virus-like particle, VLP, as I stated earlier, or viral exosomes. This vaccine is generated by inducing human cells to produce exosomes containing all four structural proteins. The VLP-producing cell line assembles the F, N, M, and E proteins into exosomes Thank you for joining us. and is therefore the closest one can come to a killed virus vaccine, a class of vaccine that has been proven to be effective against animal coronaviruses. We are hopeful that our ongoing preclinical research will continue to yield exciting results, and it is our goal to bring these products rapidly forward in their development. Furthermore, the work we are doing in bioengineered exosomes is establishing a platform not only for vaccines but for the development of other potential therapeutic candidates. I will, however, leave this discussion to another time given our present intense focus on COVID-19. I will have further updates on this program very soon. Finally, I would like to provide you with an update on our CAP 1002 for Duchenne muscular dystrophy program. As we have previously presented, we had very positive data in our HOPE II clinical trial. And while it was a small trial, the positive results suggest a high likelihood that CAB 1002 improves both skeletal and cardiac muscle function in Duchenne muscular dystrophy. While the FDA has previously stated that a Phase III clinical trial is necessary, we have continued to present the case for an accelerated approval. Our position is based on the strong data sets with respect to both the performance of the upper limb and improved cardiac function relative to the placebo control group, as well as the excellent safety record of CAP-1002. In the present COVID environment, it is unlikely that we would be able to undertake a Phase III trial, but would seek some form of partnership should we not prevail in our discussions with the FDA. We believe that for the older boys treated in HOPE II, all of whom are steroid-dependent and mostly non-ambulant, CAB 1002 would present an excellent option to modify the intractable, downhill clinical trajectory that leads to increased dependence on caretakers and ultimately to death. We can only hope that the FDA working with us helps us find an expedient path forward. We are appreciative that FDA has been willing to hear our arguments. Now, currently, our main clinical focus is our COVID-19 therapeutics and on the development of vaccine programs with the further development of the exosome platform to follow. As AJ will update you in a moment, we are well capitalized to continue to deliver on our near-term milestones and are building a world-class scientific and product development team that is focused on the development of cell and engineered exosome-based therapeutics. I'd like to thank you for your time and attention today. As you can see, we have many milestones coming up and look forward to keeping you updated on these very important programs. I would like to now turn the call over to A.J. Bergmann, our CFO. A.J.?