Capricor Therapeutics, Inc.

Good day and welcome to the Capricorn Therapeutics second quarter 2022 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to AJ Bergman, CFO. Please go ahead, sir.

Thank you and good afternoon. 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, essential milestone payments, 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 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 for our second quarter 2022 conference call. Today, I will provide updates on our Duchenne muscular dystrophy program and our Exosome platform technology, as well as outline our priorities and path forward. This quarter has been productive on many fronts, and most notably, we achieved several key milestones across our lead program, CAP 1002, for the treatment of Duchenne muscular dystrophy otherwise known as DMD. To remind you, our current clinical initiative is aimed at treating DMD patients who are largely non-ambulant and in the later stages of their disease, and of course, for whom very few therapeutic options exist. This patient group comprises about half of the DMD population, or about 10,000 boys and young men in the United States. We have completed two successful clinical trials in DMD, and CAP-10-02 has proven to be safe and well-tolerated in over 200 patients to date. Now, let me walk you through some of the key highlights and recent updates. First, turning to HOPE-3, our ongoing Phase 3 pivotal study, which was initiated in the second quarter. which included site selection and activation of certified Duchenne care centers. HOPE-3 is a randomized, double-blind, placebo-controlled study with the goal to enroll 70 patients at approximately 15 to 20 investigative sites in the United States. In July, we reported the initiation of enrollment, and I am very pleased to inform you that as of today, we have enrolled seven patients. We have a growing list of interested candidates, and we are optimistic that we will now gain momentum in the recruitment of the trial. HOPE II, our Phase II study, which was published in The Lancet last year, together with the recent late-breaking open-label extension data presented at this year's Parent Project for Muscular Dystrophy, or PPMD, annual conference in June, are amplifying the interest in our HOPE III trials. Our current projections for enrollment are to be complete by the third quarter of 2023 or sooner. The promise of HOPE III builds on the recently reported HOPE II open label extension data, which continue to underscore the therapeutic potential of CAP 1002 and highlight its sustained safety and efficacy. Let me recap that data for you to highlight its relevance to our regulatory strategy and the clinical development of CAB 1002. HOPE II open-label extension was a very unique clinical study which allowed each patient to be used at their own control. First, we conducted HOPE II, where one group received placebo and one group received CAB 1002. Those results show statistical and clinically significant improvement in upper limb function in non-ambulant patients with DMD, as earlier mentioned and published. Then, all patients went off treatment into what we call the gap phase, which was approximately one year. All patients, no matter what group they were originally in, declined in upper limb function during the gap phase. Then, all patients went on CAP-1002 in the open-label extension part of the trial, and disease progression was attenuated up to 70%, most notable in those that were originally on placebo. What is also interesting is that the original CAP-1002 group declined off therapy at the same rate that the placebo group did, but entered the open-label portion of the trial with better upper limb function due to the fact that they had the benefit of one year of CAP-1002 in HOPE II. They started with better upper limb function and therefore finished with better upper limb function. This is exemplary of potential disease-modifying behavior of a therapeutic. We believe this data must be shown to FDA, both because of its statistical power and clinical benefit. but also because time is muscle. Based on this data set, every year that patients are off CAP 1002, they lose function that cannot be recovered. Based on our regulatory designations of RMAT, or Regenerative Medicine Advanced Therapy, and orphan disease designation, and also the importance of this data to people with DMD, we are requesting a meeting with FDA, which should occur this year to present this open label extension data, which we believe will further support our path forward towards potential regulatory approval. However, we remain focused on executing on our HOPE III clinical trial, which is slated to be our pivotal trial. To remind you, HOPE III's primary endpoint is the performance of the upper limb 2.0, a validated tool to assess skeletal muscle function and non-ambulant patients, and also the measure in which we saw statistically significant results in HOPE II and in HOPE II open-label extension. This meeting will complement a CMC meeting, which is required prior to BLA submission, which we are planning to hold later this year as well. Another key priority for our CAPTENDR2 program involves preparing for the future potential commercial launch, including the scale-up of manufacturing. While our current manufacturing site in Los Angeles is fully focused on supplying our HOPE III clinical trial, we are supplementing our manufacturing efforts by converting a portion of our San Diego labs to support potential early commercial launch. We see this facility as a versatile and cost-effective measure. Additionally, our manufacturing plan encompasses the work we have done with Lonza, as they may be an important part of our future scaled-up commercial plan for CAP-1002. As you know, we entered into a distribution and commercial agreement with Nippon Shin'yaku and its U.S. subsidiary, NS Pharma. and experienced and well-resourced commercial partner in the United States. NS Pharma has been a trusted DMD partner for the community and has already established a respected infrastructure to support patients and their caregivers. If approved, we believe Nippon Shinyaaku's leadership in this space will serve CAP-1002 well in reaching more eligible patients who could benefit from our therapy. As a reminder, Capricor's agreement with Nikon Shinnyaku came with a $30 million upfront payment to Capricor and has a potential to reach up to $705 million in milestone payments, some of which, if achieved, will be paid during the course of HOPE III. To maximize the potential benefit of CAP 1002 and reach patients globally, we will continue to explore ex-U.S. partnership opportunities. Our goal is to continue to execute on our regulatory, clinical, CMC, and business development goals, as I just outlined above, as we are committed to bringing CAP-10 or 2 to patients as quickly as possible. Turning now to our exosome technology. The last year has been focused on developing exosomes as a versatile platform for drug delivery and also on identifying potential applications. We have made significant progress in the manufacturing of exosomes as a competitive alternative to other lipid delivery systems with the additional benefit of having the potential to be targeted to a specific biomarker or cell type. Our targeted delivery platform can carry therapeutic payloads that are produced via an exogenous process for loading certain types of payloads, which is similar to what most in our space are doing. or via an endogenous loading process for other types of payloads, including proteins. This last approach relies on our proprietary technology, which allows for better consistency and preservation of the integrity of the cargo. We believe this positions Capicor to be able to attract potential partnerships and drive new therapeutic modalities. The emerging exosome platform will have potential applications in multiple domains, including vaccines, delivery of RNAs, including small interfering RNAs and antisense molecules, as well as other payloads. We have used our proprietary technology to develop an exosome-based vaccine with robust preclinical data. We plan on positioning this opportunity for partnering discussion. At present, Our focus is on the potential commercialization of CAP 1002 for DMT while we continue to develop our Exosome platform technology for future pipeline opportunities. By prioritizing our core programs, we have the ability to efficiently utilize our current cash position, which carries us into the second quarter of 2024 to deliver on important clinical and related milestones. I will now turn the call over to A.J. Bergman, our CFO, for a more detailed update on the financials.