Capricor Therapeutics, Inc.

Good day and welcome to the Capri Call Therapeutics Inc. Second Quarter 2021 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to A.J. Bergman for the forward-looking statement. Please go ahead, sir.

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 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 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. 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.

Thank you, AJ. This has been a busy quarter for Capricor, with progress on all fronts. Today, we will review the progress of our two clinical programs with our lead asset, Cap1002. The first program involves Duchenne muscular dystrophy, or DMD, and the second involves the treatment of the hyperimmune response caused by COVID-19. Then, I will provide an update on our engineered exosome platform technology. Before I discuss our clinical updates, I would like to announce that we will be expanding our footprint to San Diego, California. We have selected a facility that will enable us to continue to build out our pipeline products, both CAP 1002 and the exosomes. This expansion will include enhancements to our research, clinical, and executive teams. As we evaluated the talent landscape, we felt that San Diego area would provide more opportunity for us to continue this expansion. Now let me start with DMD. As we have been talking about for a while, we have been working with the Office of Advanced Tissue and Therapeutics, otherwise known as OTAP, which is a division of CBIR of the FDA, to see if there was a path to accelerated or full approval for CAP-1002 in DMD based on the positive data from the HOPE II clinical study. I am delighted to tell you for the first time After the final statistical analysis of the data in our HOPE II clinical trial, we hit our primary efficacy endpoint of mid-poll 1.2, our secondary endpoint of the full-poll 2.0, and secondary cardiac endpoint of ejection fraction. The full data set has been submitted for publication. We have, of course, shared this data with FDA and will provide further updates on it after its publication or presentation at a scientific meeting. Based on the strength of the clinical data, we had an end-of-phase meeting with OTAS, and although it was a productive discussion, the consensus was that we should proceed to a Phase III clinical study. The principal thinking was that the size of the HOPE II dataset with 20 patients was relatively small, we now plan to move forward with a phase three pivotal trial. Currently, we are treating patients in an open-label extension study of HOPE-2 in which all patients are eligible to receive CAP-1002. In order to track progression of these patients and to enhance our safety database, we are using the PULL 2.0 and a relatively new but exciting measure of function called the DVA or Duchenne Video Assessment Tool. Recently, at the Annual Parent Project for Muscular Dystrophy, or PPMD meeting, we showed a video of a HOPE II OLE patient before receiving CAP-10O2 and after treatment, changing his position in his bed, which is targeted as one of the most important domains related to quality of life in Duchenne muscular dystrophy. The video showed marked improvement, including his visage, which was more relaxed as he more easily negotiated the task. This video is available on the PPMD conference website. This video has made its way through the DMD community, so the patients are more excited than ever about CAP 1002. We are committed to getting CAP 1002 to them as quickly as possible as we work towards potential registration. Now let me briefly summarize the design of the HOPE III trial. It will be a phase III study with approximately 65 to 75 patients in a one-to-one randomization scheme. As is common, we are building in a pre-specified interim analysis. The national principal investigator will again be Dr. Craig McDonald of UC Davis, who is one of the leading experts of DMD worldwide. Currently, we are planning on approximately 20 sites in the U.S. In terms of clinical readiness, we have begun engaging sites and securing clinical operations as our goal is to be ready to start the trial. In terms of manufacturing, we continue to work with Lonza, as we have previously discussed, to have commercial-ready clinical supply at the appropriate time. We plan on meeting with FDA to secure our CMC plan for commercialization. As we are gearing up for the pivotal trial, we have also had multiple discussions with payers who have been positive in terms of the reimbursement potential for CAP-1002 for DMD. Their projected price target is in line with other cell and gene therapies for rare diseases. This is instructive as we continue to evaluate the long-term value of CAP 1002 and DMD. Further, as we have previously stated, our plan is to secure a partner to take CAP 1002 through commercialization. To that end, our discussions with potential partners have accelerated and we look forward to providing updates to the extent that they materialize into a definitive agreement. Now, let me turn my attention to INSPIRE. which is the clinical trial we are conducting in patients with COVID-19. As you know, very few, if any, of the therapies that have been tried to combat the active virus, or its sequelae, have been effective. Based on a series of emergency use authorization cases conducted by us in 2020 and published in a peer-reviewed journal, Basic Research in Cardiology, we decided to conduct a randomized, placebo-controlled, double-blinded trial of CAP-1002 in these patients with severe but not critical COVID. Now, what does that type of patient look like? They are in the hospital and are in need of oxygen supplementation but are not on a ventilator. We carefully selected this particular patient population because they were the most responsive to CAP-1002's immunomodulatory properties in the emergency use series of patients. Plus, it is widely known that once patients are on a ventilator, the outcome is usually not positive, no matter which treatments have been utilized. The trial was designed to enroll up to 60 patients with a variety of exploratory endpoints, the purpose of which was to evaluate how CAP-1002 was helping in severe COVID-19. We have been careful in patient selection at our sites so that we will have the best data set possible to move forward with. Enrollment slowed for a while when COVID cases fell in the US, but now with the resurgence of the virus and the nature of the Delta variant, we are seeing increased enrollment and we'll be looking forward to seeing the impact of CAP-10-02 on severe COVID. At this time, based on our current plan, We anticipate top-line data in the near future. One of the reasons we are encouraged about the potential impact of CAP-1002 and COVID-19 has been in the data from a recently co-published paper with the United States Army Institute of Surgical Research. The paper is called Extracellular Vesicles Derived from Cardiosphere-Derived Cells as a Potential Antishock Therapeutic. The data from which supported our use of CAP-1002 in COVID-19. We have published that the mechanism of action of CAP-1002 is the exosomes that the cells release. And this paper highlights that mechanism by showing the impact of CDC EVs or exosomes on shock and trauma. The pathophysiology of which is similar to that seen in severe and critical COVID. Taken together, we are enthusiastically waiting for the data from INSPIRE to evaluate the clinical potential of CAP-1002 in COVID and other indications of hyperimmune activation. Now, I'd like to provide an update on our Exosomes platform technology. A year ago, we announced that we would be expanding our portfolio of products to engineered exosomes. As we realized the power of the exosomes derived from CAP-1002, we also learned that they were nature's communication device, able to deliver messages from cell to cell, and furthermore, able to deliver payloads across the cell membrane, an area of active investigation and therapeutics for many years. We saw this as a great opportunity to capitalize on our knowledge of exosomes, but not be harnessed by any particular feature of the exosome. We envisioned a technology that would allow us to custom load the exosomes and deliver payloads of choice rather than happenstance. We have spent the last year laying the groundwork for that exciting opportunity. First, we have recruited a team of people who have experience with engineering exosomes, starting at the vice president level, where we have recruited Dr. Christy Elliott, Dr. Elliott received her PhD from Johns Hopkins University and has more than a decade of experience in exosomes for therapeutic development and who has assembled a team of approximately 10 scientists working on our exosome platform technology. As I previously stated, this team will be primarily based in San Diego at our new research facility. This team is continuing to build out our vaccine program while advancing our exosome-based therapeutic pipeline. The research and development efforts continue to yield results, and in the second quarter, we have advanced the clinical developments of our novel multivalent COVID-19 vaccine. As seen in recent months, mutations in the spike protein on SARS-CoV-2 have resulted in highly contagious variants, specifically the Delta variant. These mutations in viral spike proteins may allow the virus to escape the immune response elicited by current vaccines. Therefore, annual vaccines are likely to become necessary to protect against variants of the coronavirus. It is becoming clear that existing vaccines will therefore need boosters to enhance immunity. That leads to the concept that new, innovative vaccine approaches may be necessary to continue to combat this virus globally. As such, our hypothesis is that our vaccine may offer greater protection and less toxicity, and we are planning for our COVID-19 vaccine to be administered as a booster to any currently available vaccines in a Phase I clinical trial. Now, let me tell you what is different about our vaccine. First, our mRNA payload is delivered in an exosome. Exosomes are nature's delivery vehicle, which we believe may confer advantages to intracellular delivery of nucleic acids specifically and may lead to more natural antigen processing. Secondly, we have a multivalent construct of both the S and N proteins. The N is highly conserved, which means it doesn't mutate as rapidly. And in fact, it is what is measured in traditional antibody testing of coronavirus. Our hypothesis is that the addition of the N protein may confer longer-lasting immunity to SARS-CoV-2. Because the spike protein mutates rapidly, it may be more difficult to develop vaccines that protect against the rapidly mutating virus. It is important to mount both an antibody or B-cell response, which the current vaccines do very well. But for continued protection, it is important to have a T-cell or memory response as well. We believe that by delivering multiple RNAs, which are processed intracellularly by natural processes, we may have a vaccine that could potentially offer stronger protection against the variants of COVID-19. IND-enabling studies for our COVID-19 vaccines are underway, and we are on track to submit an IND in the fourth quarter of this year. Although this timeline has been delayed from our original projections, we have worked through supply chain challenges and conducting multiple non-clinical CMC-related studies at FDA's request for one of the first exosome-based vaccines to our knowledge that may be moving into the clinic. Furthermore, this non-clinical work lays the groundwork for the development of exosome-based pipelines, as the basic platform is the same, which is an exosome loaded with a biologic molecule. I continue to believe that exosomes present an opportunity for other vaccines beyond COVID. At this time, we are exploring the power of an exosome-based vaccine for other indications by conducting studies with a large pharmaceutical company with the hope that the data from such studies may be used to support the overall efficacy of an exosome-based vaccine approach. Finally, in addition, expansion of our exosome platform technology is ongoing. We have and are continuing to expand our R&D and product development teams to enable additional exosome-based programs. we are actively working to identify multiple indications over the next few quarters as part of our expanded exosome pipeline. And some of these we plan to take into the clinic. We are investigating the use of both mRNA and siRNA as part of these therapeutic programs. Proof of concept studies for two new exosome programs are underway with initial data expected in the fourth quarter of this year. Taken together, It has indeed been a busy quarter for Capricorn, and we are anticipating finishing the year off strong with multiple clinical programs and the advancement of our engineered exosome platform technology. In addition, we recently added Karima S. Sabar to our board, who brings over 30 years of experience as a senior life sciences leader to our team. She successfully directed the global launch of two first-in-class vaccine and biotherapeutic products, and we look forward to her guidance as we embark on Capricor's next phase of growth. Lastly, please stay tuned regarding the announcement of a new leader to our senior management team. In closing, we will be presenting at various banking and corporate conferences later this year, as well as several leading scientific and medical conferences. including the Cantor Fitzgerald Global Healthcare Conference and the annual cell and gene therapy meeting on the MESA. We look forward to providing continuing updates on all of our programs. Thank you. Now I will turn the call over to A.J. Bergman, our CFO, for an update on the financials.