Capricor Therapeutics, Inc.

Greetings and welcome to Capricorn Therapeutics first quarter 2021 earnings and corporate update call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference call is being recorded. I'd now like to turn the conference over to your host, Mr. A.J. Bergman. Thank you. You may begin.

Thank you. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety, and intended utilization of our product candidates, our future research and development plans, including our anticipated conduct and timing of preclinical and clinical studies, our 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, including our quarterly and annual reports. We'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 CEO Linda Marban.

Good afternoon, and thank you for joining us for our first quarter 2021 corporate update call. We will begin today with an update on our Duchenne muscular dystrophy program, followed by an update on our exosome platform technology and our COVID-19 clinical program. We have several important updates on each of these programs and multiple key events we are looking forward to over the next several months. Let me begin with an update on our Duchenne muscular dystrophy program. One year ago, we reported positive top-line data from our HOPE II clinical trial, which was a randomized, double-blind, placebo-controlled, Phase II trial of CAP-1002, our cell therapy product, in non-ambulant boys and young men with advanced DMD. We saw improvements in skeletal muscle or upper limb, as well as improvement in cardiac function. This trial was focused on older patients with DMD who were primarily non-ambulant. It is important to understand the market size for CAP-10 or 2 in DMD. There are approximately 20,000 boys and young men with this disease in the United States who have limited to no other options available to them. Current estimates point to over half of the U.S. DMD population as being non-ambulant and potentially eligible for CAP 1002. If approved, we envision that CAP 1002 may be administered four times per year over many years. Over the past several years, our cell therapy product, CAP 1002, has been given safely to over 200 patients and to approximately 35 DMD patients for which we have gathered robust safety and efficacy data to date. Based on the strength of the data and our desire to be ready for commercialization of CAP 1002 should it be approved, we announced early in the first quarter of this year a collaboration with Lonza, a commercial manufacturing company, for the development of CAP 1002 for DMG and other potential indications. The collaboration aims to expand our ability and capacity to manufacture CAP-1002 for potential late-stage clinical trials and commercialization. Lonza operates in 120 sites and offices in more than 35 countries and has over 15,000 full-time employees. This collaboration with Lonza provides us with a partner who has world-class expertise in cell therapy manufacturing, and an established track record of commercializing biologics. Now, the path forward for CAB 1002 and DMD continues to be very exciting, and I would like to update you today on several key events that have occurred recently. First, we have submitted a new data package to FDA based on the complete HOPE II data sets and analysis, and based on our RMAT designation, which allows preferred access and an expedited path to registration for cell and gene therapies, we have requested a Type B meeting to continue our discussions regarding our path towards registration for this product. We believe that, based on the strength of the clinical data, an expedited path to registration might be warranted. To this end, we continue to explore ways to work with the FDA to accelerate the pathway to approval of the therapeutic for DMD. Now, while we remain optimistic, we recognize that FDA may remain firm in their requirement for another clinical trial. To that end, we are engaged in discussions with various parties regarding a potential partnership opportunity for this program, and we will keep you updated as to our progress on this front as well. We do anticipate further clarity on this program by the third quarter. Now, shifting gears for a moment, let's talk about our exosomes and specifically our vaccine for SARS-CoV-2, commonly called COVID-19. We continue our efforts to develop a novel vaccine candidate for SARS-CoV-2. While we are grateful that the currently available mRNA vaccines are working so well, This is by no means a solved issue. Experts predict that COVID will become endemic in the global population and therefore annual or even semi-annual vaccines may be necessary to combat emerging variants or prolonged protection from the virus. Our approach, which is multivalent and uses the exosome as a delivery vehicle, can potentially provide an alternative vaccine candidate to anything currently available or in development that we are aware of today. In addition, as we have been stating, the development of this vaccine product paves the way for expanded pipeline opportunities to use the exosomes as drug delivery vehicles. Essentially, nature's lipid nanoparticles, whether for other infectious diseases or for therapeutics. Part of the clinical development of exosomes as delivery vehicles is to establish their regulatory pathway. And we believe that we have done that through our work to date. Based on a recently submitted pre-IND, we received feedback from the FDA on our multivalent exosome mRNA vaccine. This feedback has given us the ability to focus on exactly what is necessary for approval of an IND. We are currently underway with IND enabling studies, and as planned, we are aiming to submit an IND by the third quarter of this year. Based on our conversations with the National Institutes of Allergy and Infectious Diseases, a part of the National Institutes of Health, with whom we have been speaking about our vaccine program, we are considering the following strategy. Since a high percentage of the U.S. population will have been vaccinated by the fall, and will likely be needing a booster, we are designing our phase one vaccine clinical trial with the idea that it can be used in addition to currently available vaccines as well as in a naive population. We still believe the CAHPS-CORS vaccine can be an important tool in the prevention of SARS-CoV-2. And further, the data we have published to date has shown that exosomes are less toxic than lipid nanoparticles and that the multiple proteins in the Capricor vaccine may potentially provide broader-based immunity to variants of COVID-19. We are designing the phase one trial to be conducted in approximately 20 patients, and it will likely provide a roadmap for this product and future vaccines using exosomes to deliver mRNA. We are hopeful that the FDA will support this plan. In addition, We will survey the landscape prior to the time of clinical trial initiation and evaluate if our vaccine candidates will be synergistic or beneficial when compared to the currently available vaccine. Various potential partners are intrigued by our approach as our various government agencies. We will keep you updated on possible funding opportunities for this program, so please stay tuned for updates on that as well. Now I'm going to be turning to the expansion of our exosome platform technology. Earlier this month, we announced the execution of a worldwide exclusive license agreement with Johns Hopkins University focused on exosome-based vaccines and therapeutics to treat a broad spectrum of diseases. Expansion of our portfolio allows for rapid advances in the therapeutic development of exosomes as delivery vehicles and also continues to support the growth of our vaccine program. We have built a high throughput relationship with the lab of Dr. Stephen Gould at Johns Hopkins University. And this license agreement codifies the opportunity to translate innovative science into new products with an expanding intellectual property portfolio, which we will continue to strengthen. As we have worked with Dr. Gould over the past year, This relationship will create more opportunities for future licensing based on the work we do together. Now turning to our exosome therapeutic program, we can talk about the call that we had in March. We focused on some of the scientific work which is ongoing in the Capricor Labs as we are focused on becoming a leading engineered exosome company. Our first targets, as we mentioned, are based on loading RNAs into the exosomes and focus on our ultimate goal of generating formulation of engineered exosomes and mRNAs to potentially prevent and treat human diseases. We have been focused on building out our core R&D product development and manufacturing teams to support the expansion of our technology and plan to have one to two indications identified over the next few quarters for which we plan to file INDs. As you know, we began enrollment of a Phase II placebo-controlled double-blind trial in up to 60 patients with severe COVID-19 late last year. This is with CAB 1002, our cell therapy product. We have been selective in our inclusion-exclusion criteria because we only want to treat those patients that we believe will benefit from CAP10R2. Let me remind you, the targeted patients are those that are in the hospital and need supplemental oxygen but are not ventilated. Our goal is to keep these patients off ventilation because in many cases, once a patient is artificially ventilated for COVID complications, their prognosis worsens considerably. Many are too sick for therapeutic solutions to save by that point. We look forward to seeing the data as our early clinical data suggested a potential benefit in this population of patients. A very recent paper in the journal Nature by Benjamin Izar and his colleagues showed that lung tissue from terminal COVID patients are filled with macrophages and other immune cells. We know from many preclinical studies that the exosomes from CAP-10-02, the identified mechanism of action of the cells, change macrophages from M1 towards an M2 expression profile. In other words, it turns them from inflammatory towards anti-inflammatory. The findings from this paper gives me great hope for CAP-1002 in treating severe COVID. I expect us to have data available in the third quarter of this year. Following receipts of this data, and if positive, we will plan to meet with FDA to discuss the next steps in development. In summary, we have various exciting programs ongoing at different levels of development with multiple key milestones coming up over the next several months. We have over $40 million in cash to execute on our plans and are working on strengthening our senior management team to be able to execute on our strategic plans moving through 2021 and into 2022. Please stay tuned regarding the announcement of new leaders to our teams. Earlier today, we had the opportunity to present at the American Society of Cell and Gene Therapy on the opportunity to use exosomes in SARS-CoV-2 vaccine. And next week, we are presenting a poster at the International Society for Extracellular Vesicles. Additionally, in June, we plan to present data at the PPMD conference to discuss our CAP 1002 program in DMD. Lastly, We have multiple publications in review with peer-reviewed journals and expect several key announcements over the next several months regarding our programs. I continue to be energized by the progress we are making both on our Exxon platform and with regards to pursuing a pathway for CAP 1002 for its potential approval and commercialization. I will now turn the call over to A.J. Bergman, our CFO, for an update on the financials.