Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Greetings. And welcome to Capricor 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. As a reminder, this conference call is being recorded. I’d now like to turn the conference over to your host, Mr. AJ Bergmann. Thank you. You may begin.

[AJ Bergmann:]

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.

[Linda Marbán:]

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 topline data from our HOPE-2 clinical trial, which was a randomized double-blind placebo-controlled Phase II trial of CAP-1002 our cell therapy products and 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-1002 and 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 the CAP-1002 may be administered 4 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 DMD and other potential indications. The collaboration aims to expand our ability and capacity to manufacturer CAP-1002 for potential late-stage clinical trials and commercialization. Lonza operate 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.

[AJ Bergmann:]

Thank you, Linda. This afternoon’s press release provided a summary of our first quarter of 2021 financials on a GAAP basis. You may also refer to our quarterly report on Form 10-Q, which we expect to become available in the next few days, it will be accessible on the SEC website, as well as the financial section of the Capricor website. As of March 31, 2021, the company’s cash, cash equivalents totaled approximately $41.9 million, compared to approximately $32.7 million on December 31, 2020. Based on our current plans and projections Capricor expected cash and cash equivalents will fund our research and development programs and other operations through at least the second quarter of 2023. In the first quarter of 2021, our net cash used in operating activities was approximately $3.3 million and for the first quarter of 2021 excluding stock-based compensation, our research and development expenses was approximately $3.2 million, compared to approximately $1.1 million in Q1 2020. Again, excluding stock-based compensation, our G&A expense was approximately $1.3 million in Q1 2021 and approximately $900,000 in Q1 2020. Net loss for the first quarter of 2021 was approximately $5.2 million, compared to a net loss of approximately $2.1 million for the first quarter of 2020. Thank you very much for your time and attention today. We will now open the line up for questions.

[Operator:]

Thank you. Our first question comes from Alan Leong with BioWatch News. Please proceed with your questions.

[Alan Leong:]

Hi, Linda. Hi, AJ. Thank you for taking my question. In your extended DMD package to the FDA, can we safely assume that the longer term data has the same trends as we saw before. There’s no disconfirmation or contradiction from the earlier results?

[Linda Marbán:]

Hi, Alan. Good to hear your voice. Yes. We are -- I’m carefully discussing what’s in the package and also in a submitted manuscript because of Embargo policies. I will say that I am even more excited by the final data than I was by the topline data as happens sometimes in clinical trials. Once the database is locked, and you can do the final analysis, the data is fine tuned in a certain way. And I will just say that we believe more than ever that CAP-1002is an effective treatment for the treatment of DMD.

[Alan Leong:]

Looking forward to the manuscript when it comes out. I wonder if you could help differentiate for my clients, because I get some questions. You have the engineered exosomes and you have the Aztecs platforms. Can you -- I know you’ve talked about the engineered exosomes, but can you just go into a little more color and why and differentiate these provocative platforms? And I have a question about can you combine the capabilities and -- but really it’s just to kind of compare the two why does a couple of different platforms there?

[Linda Marbán:]

Yeah. Thank you. So, we’re very careful to say that our engineered exosome platform is expanding because it is, so we can start with multiple different cell types and then drive the exosomes to do different jobs biologically. In certain cases, for instance, like with the SARS-CoV-2 vaccine, we’re starting with a standard HEK293-F cell, which is a commercially available cell line. It’s perfect for loading in those RNAs for the vaccine and just getting them where we need to go to derive an immune response. On the other side, the Aztecs are an engineered version of a CDC exosome or the exosomes that we believe are responsible for the mechanism of action of CAP-1002. Because we wanted to be able to ascertain that these can be made commercially, we actually have fabricated them using a standard cell line and then putting several molecular components inside so that we can drive that same benefit. Different uses, potentially one of the therapy for inflammatory diseases, another potentially for vaccines for treatment of monogenic diseases and other opportunities of custom loading. And we don’t -- we reserve the right to custom load the Aztecs as time goes on as well. So, this is a multi-pronged platform starting with the same basic component which is an exposome.

[Alan Leong:]

Thank you. And last question and this is really for AJ, I think, how do you see funding goals going forward? Over the years when there’s been kind of a magician, you have some general comments about how you approach this?

[AJ Bergmann:]

Yeah. Sure. Thanks, Alan. Well, I think, you heard me say in our remarks, we’re in a great cash position for our current time and what we’ve laid out, we have over $40 million in the bank. And that will fund everything that we have planned right now from our Phase I vaccine trial to moving forward in the next steps of our Duchenne program, as well as advancing preclinically some of the candidates and areas that we’re thinking of taking the exosome technology. Obviously, we are going to be opportunistic, but we’re in a really good position right now to continue to deliver and hopefully lay out the progress for the milestones that you heard today. There are opportunities for non-dilutive funding and Capricor has been very successful in years past and we continue to pursue various options for that type of funding.

[Alan Leong:]

Well, thank you. Good luck in the future. I look forward to the things coming out from Q3. Thanks.

[AJ Bergmann:]

Thanks, Alan.

[Linda Marbán:]

Thanks, Alan. Be well.

[Operator:]

Our next question comes from Joe Pantginis with H.C. Wainwright. Please proceed with your question.

[Unidentified Analyst:]

Good afternoon. This is Matt on for Joe this afternoon. Just a couple of questions for you, the first one, as you continue discussions with the FDA regarding muscular dystrophy, what do you consider to be the major limiting step at this point?

[Linda Marbán:]

Can you clarify what you’re trying to ask? What is the major limiting step with FDA or for us or I -- help me understand that…

[Unidentified Analyst:]

Oh!

[Linda Marbán:]

… so I can answer for you.

[Unidentified Analyst:]

Yeah. No worries, particularly on your end, you think that there’s anything that with your conversations with the FDA that you guys can provide? Are you waiting on the FDA to come back to you quicker, because I think you can provide mean time that could slow down or speed up the process to move this forward?

[Linda Marbán:]

Yeah. No. We are proceeding very quickly and expeditiously towards our goal of registration. We’re very lucky to have RMAT designation, which gives us preferred access to FDA and so we’ve been in ongoing dialogue with them over this very exciting data for a little bit of time now. So stay tuned for more exciting news on this program.

[Unidentified Analyst:]

Yeah. Great. Thanks for the clarification there. And then switching gears a bit, it’s very nice to see the Johns Hopkins agreement that you mentioned previously for exosome and the progress you made up front. COVID vaccines are obviously one of your leads. I was wondering you can give an additional insight or be more specific about possible indications that you guys might be targeting that we can look for probably in the near future?

[Linda Marbán:]

Yeah. So, thanks, Matt. We have been exploring multiple opportunities using the exosomes as delivery vehicle. So what we’ve learned and are really excited about is that you can take mRNA, you can put it inside of an exosome and then you can derive biology in terms of the translation of a protein into a full inactive protein. And we’ve been able to show that with the vaccine candidate in animals, driving expression, and ultimately, an immune response to the N nucleocapsid and the S spike protein. And then also and this has been published in bio-archive online publications. We’ve been able to show that there is this imaging mRNA called entaraise that if you put it in your exposome and you deliver it not only is the entaraise protein express, but it has enzymatic activity, which allows us to drive that signal to light up and we can image do all kinds of exciting bio-distribution studies. In terms of indications, we have several that we are actively exploring and doing preclinical work on and we look forward to updating you as the time comes.

[Unidentified Analyst:]

Yeah. Great. It’s very exciting. Thank you again for taking my questions and congrats on all the progress.

[Linda Marbán:]

Thank you.

[Operator:]

Our next question comes from Mike Swamp with Polestar Capital . Please proceed with your question.

[Unidentified Analyst:]

Hi, Linda. It’s Mark Swamp . Nice to talk to you. Nice presentation. Quick -- two quick questions. Is there any possibility of interim data analysis on the use of CAP-1002 and COVID-19 for the lung involvement?

[Linda Marbán:]

Yeah. Hi, Mark. It’s great to hear your voice. It has been a while.

[Unidentified Analyst:]

Yeah.

[Linda Marbán:]

We are actively enrolling that study. We look to have full enrollment by Q3 and we have made the decision not to do an interim analysis based on the fact that the trials enrolling well and we’d like to see the full dataset. So stay tuned, I know it’s hard for all of us to wait. But we really believe that the best way to do this is to get all the patients in and then take a good look at the data. The good news is as of short endpoint. So it’s a 90-day endpoint, which is nice.

[Unidentified Analyst:]

Could you give us a little more granularity on how early in the course of the illness of those patients? Are they being randomized? I mean, the -- just the use of supplemental or to is a bit of a vague criterion. Is there an effort to get the -- see the criteria onboard early?

[Linda Marbán:]

Yeah. Yeah. Exactly. So, of course, we’d like to get in there as early as possible, but what we know, unequivocally is that, they seem to be most bioactive when there’s pretty active inflammation going on. So…

[Unidentified Analyst:]

Yeah.

[Linda Marbán:]

… we look for a reduce saturations of oxygen in the blood, patients needing Po2 or needing oxygen supplementation, but not needing ventilation. And we like to see them not needing ventilation sort of upcoming in the next 24 hours or 48 hours. And there are several other including/exclusion criteria that we can go through, after this call or another time just for brevity. But essentially, just to sort of get to the nut of what you’re saying, what you’re asking is, we’re trying to get them at the point where they’ve got active inflammation, active -- attenuation of ability to breathe normally, but hopefully, not being so far gone that they’re in have ARDS or multi-organ system failure or other types of pathologies such as that.

[Unidentified Analyst:]

Yeah. Are you tracking IL-6 levels on those patients as a consequence of the cardiac issues?

[Linda Marbán:]

Yes. Yeah.

[Unidentified Analyst:]

Okay.

[Linda Marbán:]

So we’re looking for several of the biomarkers 1, alpha, beta, IL-2, IL-6, IL-10, IL-12 and then ferritin and some of the others that have been correlated with outcomes.

[Unidentified Analyst:]

And just a quick shifting gears and I won’t keep annoying you, but on the issue of the DMD trial, I -- that’s a wonderful amount of cash on the hand to have, is the thinking still that probably embarkation on a Phase III in DMV would be only with a partner?

[Linda Marbán:]

Mark, we are…

[Unidentified Analyst:]

Question…

[Linda Marbán:]

Yeah. We are really enthusiastic about our DMD program.

[Unidentified Analyst:]

Also we…

[Linda Marbán:]

I am holding back. I’m holding back a little bit because I have to, we want to get this published in a major journal our field we feel that will power the data forward. We’re working with FDA. We don’t want to say anything publicly that could change the tenor of those very friendly interactions. But what I can say for sure is that, once we have clarity from the FDA and the good news is, we expect that by the third quarter of this year.

[Unidentified Analyst:]

Yeah.

[Linda Marbán:]

And the manuscript to be published, we will decide then, what to do next with the program. We may decide to do the Phase III. We may partner it. We may partner some of it. Do some of it ourselves. It really depends on sort of the feedback we get from FDA.

[Unidentified Analyst:]

Yeah. Lots of moving parts it sounds like so. Okay.

[Linda Marbán:]

Yeah.

[Unidentified Analyst:]

All right. Thank you. Long Capricor.

[Linda Marbán:]

There’s also -- just very, very quickly, there’s also the opportunity in DMD of non-dilutive funding. There’s been support by the California Institute of Regenerative Medicine in the past. We haven’t ruled out the opportunity of going back and seeing if that would be a way of funding the program, should we want to do it that way.

[Unidentified Analyst:]

Wonderful. Okay. Really appreciate it, Linda. Thank you.

[Linda Marbán:]

Thank you. Be well,

[Unidentified Analyst:]

You too.

[Operator:]

We’ve reached the end of the question-and-answer session. I’d like to turn the call back over to Linda Marbán for closing comments.

[Linda Marbán:]

Thank you for joining us today on our first quarter call. We look forward to providing updates to you over the next several months on these exciting milestones. And please look for us presenting at the various meetings that I mentioned and be well in these very trying times. Thank you.

[Operator:]

This concludes today’s conference. You may disconnect your lines at this time and we thank you for your participation.

[Linda Marbán:]

Thank you.