Capricor Therapeutics, Inc.

Hey, ladies and gentlemen, and welcome to the Capricorn Therapeutics Incorporated third quarter 2022 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. AJ Bergman, Capricorn 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. 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, potential 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, 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.

Good afternoon, and thank you for joining us for our third quarter 2022 conference call. Today, I will provide updates on our Duchenne muscular dystrophy program and our exosome platform, as well as outline our priorities moving into 2023. Starting first with our cell therapy, CAP-1002, for the treatment of DMD. As a reminder, CAP-1002 is comprised of allogeneic cardiosphere-derived cells, or CDCs. CAP-1002 is not... made up of stem cells, but rather is a stromal cell line that is an endogenous population of cells derived from cardiac tissue that are then expanded using proprietary methods into multiple doses of 150 million cells. Our current program for CAP-10 or 2 is aimed at patients with advanced Duchenne muscular dystrophy for whom very few therapeutic options exist. This patient group is made up of about half of the DMD population, or about 10,000 boys and young men in the United States. From a portfolio management perspective, we believe that should CAP-1002 be approved for this patient population, we would prioritize and consider expanding into younger patients with DMD, as well as exploring other similar neuromuscular diseases. Consistent with our prior communications, we have three key priorities for our DMD program. First is the execution of our HOPE III Phase III pivotal trial. Second is continuing to engage with the FDA to bring CAP-1002 to patients as expeditiously as possible. And third is securing commercial partnerships outside the United States to ensure CAP-1002 reaches patients with DMD around the world. As previously presented, prior clinical experiences shows CAP-1002's ability to potentially slow disease progression and preserve cardiac function, as measured by changes in upper limb function and ejection fraction, which is known to be the gold standard in measuring heart health. In addition, evidence of disease modification was further supported by our HOPE II open-label extension study otherwise known as OLE, with the 12-month data presented at a podium presentation at the Parent Project for Muscular Dystrophy annual meeting in June, as well as at a poster session at the World Muscle Society in October. Further, the safety profile of CAP-1002 in the OLE study continues to be consistent with our Phase II results and is now supported by over 100 intravenous infusions. Patients enrolled in our HOPE II OLE trial continue to be treated, and we expect to have at least two successive years of treatment with CAP-1002 in these patients. This data supports the potential long-term safety and durability of treatment with CAP-1002, as well as the possibility for it to serve as backbone therapy. in DMT. Building on this momentum, we are happy to share positive updates on HOPE III, our Phase III pivotal trial, which is a randomized, double-blind, placebo-controlled study. To ensure our trial is well-powered, we plan to treat at least 68 patients at approximately 15 to 20 investigative sites in the United States. We are actively working with investigators and advocacy groups to drive enrollments and have enrolled 18 patients into the study as of today. We are encouraged by the pace of enrollments, and in addition to the eight active centers, plan to bring on additional sites by the end of the year. Our guidance remains on track for enrollment completion by the third quarter of 2023. An equally important priority for us is to continue engaging with the FDA on our regulatory pathway to approval as we actively enroll our Phase III program and progress towards potential registration. As part of our continuing engagement with FDA, we have submitted, at their request, the full set of 12-month open-label extension data, which, as I mentioned, was recently released. We will continue to provide updates on our discussions with FDA. As I mentioned last quarter, we began construction this summer to convert a portion of our San Diego lab space into a GMP manufacturing facility. We would expect, subject to FDA approval of CAP 1002, that this facility will be able to support early commercial launch of CAP 1002, as well as install as well as enabling tech transfer to scale up at larger manufacturing sites in the future. I am pleased to inform you that construction is nearing completion and we plan to begin qualification and training runs for CAP 1002 in the first quarter of 2023. We see this facility as a versatile and cost-effective way to bring CAP 1002 to market efficiently. Additionally, In conjunction with these efforts, a meeting request for pre-BLA CMC meeting with the FDA is in preparation. Turning to our commercial partnerships, as you may recall, we entered into a distribution and commercialization agreement with Nippon Shinjako, or NS Pharma, earlier this year for distribution rights for CAP-1002 and DMD in the U.S. Our agreement with NS Pharma has several milestones built in prior to regulatory approval, and we anticipate starting to trigger these in 2023 should we continue to execute according to plan. These milestone payments, if achieved, will further strengthen our balance sheet as we move towards the completion of HOPE III and towards potential commercialization. We are committed to maximizing the potential benefit of CAP 1002 and reaching patients globally in a timely manner. Therefore, we are actively pursuing additional partnership opportunities in Europe and Asia for CAP 1002 and DMD, and will provide updates as these discussions mature. We believe these partnerships, if secured, will not only help expedite the path to potential approval in global markets, but will also support our balance sheet in a non-dilutive fashion. We are very pleased with the progress for Cap1002. We have a clear path forward and are well positioned to deliver on our three main goals as we move into 2023. Now I'd like to turn to our ExaZone platform technology. We believe that our exosomes, which leverage nature's way of cellular communication and transportation, can serve as a novel drug delivery system with potentially broad therapeutic applications. We continue to make significant progress on the manufacturing and production of exosomes with an emphasis on ensuring scalability, reproducibility, and quality control. Building on the expertise and learnings from our core program in CAP 1002, for which the mechanism of action is mediated via exosomes, we have developed an extensive body of evidence and know-how on these three fronts. Our strong foundation has provided support for further downstream efforts for innovative therapeutic payload loading methods and tissue-specific targeting. Earlier this quarter, we announced the foundational data to support the use of exosomes as a potential first-in-class drug delivery platform. DELT-X, as we have trademarked it, is a proprietary expression platform for exosomes that allows us to genetically modify a parent cell line that then produces exosomes with specific proteins on the surface of the exosomes or other types of payloads inside the exosomes. This StealthX technology is at the core of our exosome platform, and we intend to utilize it in two broad modalities, vaccinology and the precision delivery of therapeutics. Earlier this quarter, we presented our most advanced application of StealthX with the production of a true multivalent exosome-based vaccine or booster for COVID-19. Based on this unique StealthX platform, we are able to rapidly develop protein-based vaccines that elicit a potent immune response using a very low dose of antigen without the need for an adjuvant or lipid nanoparticle carrier. Our vaccine is a multivalent vaccine containing exosomes that express spike and exosomes that express nucleocapsid proteins on their surface. potentially allowing for both strong humoral as well as T-cell immune responses. In preclinical studies, we have been able to observe neutralizing antibody activity against multiple serotypes, including Delta and Omicron. We also have demonstrated the power of the platform for multiplexing with StealthX-based vaccines, such as a combined flu plus COVID vaccine. data which we recently presented. Our StealthX platform has the potential to combine the best of both protein and mRNA vaccines. We believe that this platform will provide both the developmental speed of mRNA vaccines along with the potential superior immune activation of historical protein vaccines without the need to employ synthetic lipid nanoparticles. If our preclinical findings are recapitulated in human studies, we believe that StealthX has the potential to be a differentiated, next-generation vaccine platform. We look forward to providing more updates on this program as they become available. The tools that we are creating for our bioengineered exosome platform, including those used for StealthX, will support our efforts towards the development of precision-delivering therapeutics. The ability to decorate the surface of exosomes with proteins or other ligands, as well as to load potential therapeutic molecules inside the exosome, coupled with their relative low toxicity, as compared to synthetic lipid nanoparticles, allows us to explore a number of future potential therapeutic targets. As these programs develop, we will provide further updates. We are hopeful that both the StealthX vaccine as well as the therapeutic exosome platform may provide opportunities for partnering, collaborative, or business development, and we intend to make these potential alliances an increasing focus in our business development strategy alongside our efforts for possible partnerships for CAP-1002 in new territories. Approaching the end of 2022, Capricorn is executing on its objectives and goals. We are enrolling our pivotal trial for CAP 1002, engaging the FDA on our regulatory path forward, and strengthening our relationship with NS Pharma while exploring OUS partnerships. Our ExaZone platform technology has progressed significantly and is now entering into a new phase of maturing with a platform business strategy for potential partnerships that can create a new future revenue stream. One year after moving into our San Diego facility, we have assembled a great team across the organization, and our hiring plan is nearing completion. We will continue to exert financial discipline across the organization and believe that our current organizational structure and balance sheet will support entering 2023 with strong momentum. I will now turn the call over to A.J. Bergman, our Chief Financial Officer, for a more detailed update on the financial. A.J.?