Capricor Therapeutics, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Capricorn Therapeutics second quarter 2024 earnings call. At this time, all participant lines are in the listen-only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that this call is being recorded on Wednesday, August 7, 2024. And I would like to turn the call over to our CFO, AJ Bergman, for the forward-looking statement.

Thank you. 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 enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, revenue and reimbursement estimates, manufacturing capabilities, potential milestone payments, our financial position, 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 the 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. Your caution 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.

Thanks, AJ. Good afternoon, and thank you for joining today's second quarter conference call. Now, over halfway through 2024, Capricorn continues to make significant progress on bringing our lead asset, Daromyosal, which was previously referred to as CAP-1002, closer to the submission of a biologics license application, or BLA, for the treatment of Duchenne muscular dystrophy, as well as developing our pipeline of exosome products for clinical development. Our published results in two independently conducted clinical trials and the recent long-term open-label extension results we believe are some of the strongest data seen in the space. As Daromyosal addresses the inflammation and fibrosis caused by the cell death due to the lack of dystrophin, which typically protects muscle cells from damage, we believe it can serve as a potential backbone therapy for all boys and young men afflicted with DMG. with the product's ability to significantly slow disease progression from both a skeletal and cardiac standpoint. Additionally, as the KOLs across the DMD fields have continued to message, DMD will require a multi-drug paradigm to address all of the pathological consequences of this disease. I want to remind everyone that as Daromyosal moves towards potential approval and commercialization, Our United States distribution agreement with Nippon Shinnyaku provides for approximately $700 million in potential developmental and sales milestones that may become due to Capricorn, which would enable us to invest in our commercial launch and give us the resources to strategically expand our focus to other diseases of inflammation and fibrosis. In fact, we were preparing to discuss opportunities to potentially expand Daromyosal into Becker muscular dystrophy with the FDA later this year. We believe in Daromyosal's potential to become a transformational treatment for DMD and beyond, and we are positioning Capricor to become a world-class commercial and R&D operation with a robust pipeline of opportunities for growth, including the expansion of our StealthX exosome-based platform. My goal is to position the organization to deliver for that transformation, and I continue to be proud of the progress that we have made to date. Now, I'd like to take a moment to update you on our recent three-year HOPE II Open Label Extension, or OLE, study results, which were presented at this year's PPMD Annual Meeting. Treated subjects showed a statistically significant benefit with a p-value of 0.001 and an improvement in 3.7 pull points on the pull 2.0 when compared to an external comparator data set of similar DMD patients. This translates into an approximate 50% delay in disease progression in treated patients versus the external comparator. Data also showed improvement in multiple cardiac measures, including left ventricular ejection fraction, as well as indexed left ventricular and left ventricular end systolic volume and end diastolic volume. These are measures of cardiac function and are considered highly relevant in terms of predicting long-term outcomes. In addition, Greater improvements in cardiac function were observed in those patients that had ejection fractions greater than 45% at the beginning of the HOPE II randomized clinical trial. Currently, as you know, there are no approved treatments specifically for DMD cardiomyopathy. Our HOPE II open-label extension study continues to show a favorable safety profile, and we believe these three results continue to underscore the potential long-term and consistent benefits of daromyosal for the treatment of DMD. Based on the favorable data from our clinical trials, I want to reiterate that our primary goal is to file a BLA as soon as possible. and we are actively working with FDA to accomplish that goal. Daromyosal is the only therapeutic, to our knowledge, that has shown statistically significant improvements in cardiac function and DMD-associated cardiomyopathy, which is the leading cause of death for those with DMD. FDA is aware of the strength of Capricor's cardiac data and may allow for its inclusion in the label for Daromyosal. which FDA acknowledges as important to the DMD patient community. We have just met with FDA in a very positive pre-BLA meeting. And while we are waiting final minutes from the meeting, I can share that we are discussing alternative paths to our BLA filing. One pathway would be filing our BLA with currently available data from the HOPE II and the HOPE II OLE studies to support an accelerated approval pathway with confirmatory data to be provided at a later date. Another option is a traditional full approval. We are pleased to announce FDA's acceptance of our rolling BLA of submission, and based on that, Capricor intends to initiate the filing of our BLA shortly. On the CMC front, as we reported last quarter, our San Diego manufacturing facility is fully operational and actively preparing for commercial runs necessary for the filing. Additionally, we have accelerated the pace of our preparations for commercial market entry. Our partner, Nippon Shin-Yaku, is focused on their role in getting Darum ISL ready for launch. We, and they, Expect rapid adoption of Daromyosal by payers and patients with DMD. We are actively engaged with them to ensure a smooth and successful launch. Capricor is focused on the areas of preparation for market access, reimbursement, as well as opportunities for expanded label usage. Now, for an update on our exosomes program, while our primary focus is on advancing Daromyosal, we are committed to our stealth exosome platform technology as part of our next generation drug delivery platform. We have been planning for the success of Daromyosal for several years, and to that end, have built a pipeline of engineered exosome products based on our foundational cell therapy experience. The goal has been to take advantage of our experience with scaling up and out cell therapies, as well as to continue to refine cell-based products such as exosomes. In terms of their ability to be quantified based on mechanism of action, as well as targeting them for a more strategic treatment paradigm. Our exosome platform focuses on the use of our proprietary StealthX technology to develop therapeutics by harnessing exosomes as delivery vehicles. This program requires the loading of specific cargoes into the exosomes and then attaching targeting moieties on the outside of the exosome to direct it where to go. We are currently ramping up our business development efforts with our exosome platform technology as we continue to develop the therapeutic opportunities of the platform. Regarding our vaccine candidate, we are actively collaborating with the United States government's Project NextGen, which aims to test vaccine candidates for COVID-19 prevention and also to prepare for future pandemics. Currently, our vaccine candidate is in the manufacturing phase with plans to deliver to the National Institutes of Allergy and Infectious Disease by the end of 2024. Then NIAID will then conduct and fully fund a phase one clinical trial. On the therapeutic front, we have recently made notable advancements with our exosome platform, which is in preclinical development. We presented data at the International Society for Cell and Gene Therapy in Vancouver, where we were selected for an oral presentation. Our preclinical data highlighted an exosome-based approach for targeted delivery to skeletal muscle in the mouse lower limb. Subsequently, our research demonstrated that using an in-house developed proprietary exogenous loading technique, we could not only target exosomes to muscle cells, but also deliver antisense oligonucleotides, one of our payloads, with exosomes carrying a muscle targeting moiety. This work was featured in a poster presentation at the International Society for Extracellular Vesicles in Melbourne, Australia. The data from both conferences strongly suggest that exosomes with targeting moieties can direct delivery to skeletal muscle and the mouse lower limb, presenting potential for targeted delivery applications, including the treatment of Duchenne muscular dystrophy. Combined with earlier data on Arginase 1 deficiency, which is being developed as a potential enzyme replacement therapy, these findings reinforce the potential of our platform. We believe there are significant opportunities for broad applications, and our data from our ScalpX program continues to support this belief. Now, I would like to take a few moments to provide our current corporate updates and priorities as we progress through 2024. Based on our significant progress over the last quarter and now a potential expedited path to BLA, this clarity gives us confidence that we're well positioned to bring additional capital into Capicor to strengthen our balance sheet and extend our cash runway. While there are various ways to accomplish this goal, our primary mission is to secure capital in the best interest of our shareholders. Therefore, we are pursuing multiple different business development opportunities, and we are in active discussions with several parties looking to potentially distribute DRAM-ISL in Europe for the treatment of DMG. We have been judicious with respect to partnering for the rights in the EMA, as we knew the asset would garner greater value as we progressed through clinical development and achieved clarity with FDA. I am very pleased to inform you that we are in late stage discussions for these rights, and we will share updates as they become available. we believe that jeremiah cell is a highly valuable asset in the eu as well as other regions around the world and our partnering efforts remain focused on securing these relationships additionally our u.s agreement with nippon shinyaku as i mentioned a moment ago has approximately 700 million dollars in potential milestone payments payable to capricorn 90 million dollars of which is up to the time of approval and are triggered upon certain regulatory-based achievements, some of them to be expected in the near term. We believe that we can achieve these milestones as they will continue to support our balance sheet and further extend our cash runway. Furthermore, if we receive approval for DERMA-ISL, we will be eligible to receive a priority review voucher, a PRV, based on our pediatric disease designation to which we retain full rights. And finally, we were pleased to announce earlier this quarter to be added to the Russell 2000 and Russell 3000 indices, which should bring added visibility to our company as we continue to remain focused on bringing more institutional buy and sell side support to our story. In conclusion, this has been an extraordinary year for Capricorn thus far. We have made significant strides in our regulatory pathway, getting closer to potential approval with each FDA meeting. Patients and families are fully supportive of our efforts and see the lasting power of DERA Mice Health in helping those with GMD to feel and function better. We have built, equipped, and are now producing doses from our manufacturing facility in San Diego for a fraction of the cost of other biotechnology companies. We have some of the strongest and most consistent data in terms of efficacy and safety in the GMD community with the HOPE II and the HOPE II open label extension data sets. We have a strong pipeline in our engineered exosome technology supported by StealthX. Capricorn's goal is to continue to meet its milestones and deliverables as we have set forth. As we continue to focus our efforts on bringing Jeremiah Cell towards potential commercialization and are investing judiciously across the organization to prepare for that endeavor. Over the next several months, we will be presenting at various medical, scientific, and investor-related conferences. details of which will be shared as they become available. And of course, finally, I want to thank the patients, their families, and all of our investors for their continued support. Later this quarter, we plan to announce further details from our pre-BLA meeting, at which time we will be able to articulate more formal guidance on the upcoming pivotal milestones of our DMD program. I will now turn the call over to AJ to run through our financials.