Q4 2019 Earnings Call Transcript

Published: 18 Mar 2020

[Operator:]

Greetings and welcome to the Capricor Therapeutics, Inc. Fourth Quarter and Full Year 2019 Earnings Call. Please note this conference is being recorded. I will now turn the conference over to your host, CFO, AJ Bergmann. Please go ahead.

[AJ Bergmann:]

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 call. 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 Marban:]

Good afternoon. And thank you for joining us today for our fourth quarter and full year 2019 financial results and corporate update call. Of course, before I get into the details of our call, on behalf of everyone at Capricor, I would like to express our concern for all those who have been affected by COVID-19. We recognize these are difficult times for everybody. But what is encouraging is that we in science and medicine, are coming together globally to fight this scourge. Is with this spirit that we at Capricor continue to move our programs forward. On that note, we are very pleased with the progress that we've made in 2019 and looking ahead, we are very enthusiastic about 2020. All of us at Capricor are driven to achieve our goal of bringing our lead product candidate, CAP-1002 to patients for the treatment of Duchenne Muscular Dystrophy, and we are committed to expanding our exosome platform technology to treat a variety of disorders. As stated in our recent announcement, we are focusing on developing exosomal vaccines for a variety of indications, including those of viral origin. We feel that this is especially important in light of everything happening right now with COVID-19. On the call today, I will be providing an overview of the development of CAP-1002 for DMD, our exosomes program with a specific focus on building a vaccine platform, the key events that occurred during the past year, and our goals and objectives for 2020. First, I want to highlight some of our important accomplishments in 2019. In July of 2019, a significant achievement was the positive Phase 2 interim six months data results of our HOPE-2 clinical trial investigating CAP-1002 for Duchenne Muscular Dystrophy. We revealed these clinical trial results at the 24th International Congress of the World Muscle Society in a late breaking presentation. We were delighted to present and increase the visibility of CAP-1002 to this audience of professional experts working in the area of neuromuscular disease.

[AJ Bergmann:]

Thank you, Linda. Afternoon's press release provided a summary of our fourth quarter and full year 2019 financials on a GAAP basis. You may also refer to our Annual report on form 10-K, which we expect to become available in the next few days, will be accessible on the SEC website, as well as the financial section of our website. As of December 31, 2019, the company's cash, cash equivalents and marketable securities totaled approximately $9.9 million, compared to approximately $7.3 million on December 31, 2018. As Linda mentioned, our cash position includes the approximately $5.1 million financing that was completed in December of 2019. This certain current plans projections, Capricor expects that its cash, cash equivalents and marketable securities will fund our research and development programs and other operations through at least the second quarter of 2021. Turning to the financials, in the fourth quarter of 2019, our net cash used in operating activities was approximately $1.8 million. For the fourth quarter of 2019 excluding stock-based compensation our R&D expense was approximately $800,000 compared to approximately $2.7 million in Q4 of 2018. Again, excluding stock-based compensation our general and administrative expense was approximately $800,000 in Q4, 2019, and Q4 of 2018. Net loss for the fourth quarter of 2019 was approximately $1.5 million, compared to a net loss of approximately $3.3 million for the fourth quarter of 2018. Again, net loss for the full year of 2019 was approximately $7.6 million, compared to a net loss of approximately $15.2 million for the full year of 2018. As you can see, we remain financially disciplined and continue to diligently manage our expenses and maximizing our resources to be used in the development of CAP-1002 for DMD, and our exosome development program. We will now open the lineup for questions.

[Operator:]

Thank you. . Our first questions come from the line of Joe Pantginis of H.C. Wainwright. Please proceed with your questions.

[Joseph Pantginis:]

Hi Linda and AJ, thanks for taking the call. Hope you're well and hope you stay well as well. I have two questions for you. First on the DMD program. So you had your Type B meeting with the FDA, presumably you got a lot of important guidance you touched upon it a little bit. So when the 12 month data come out, I guess can you sort of portray how much if the data point in the right direction to move forward with, how much is going to be sort of plug and play with regard to discussions you've already had with the FDA sort of just dotting the I's and crossing the T's with regard to the next study or a filing path.

[Linda Marban:]

Yeah, Joe, thank you. And thank you. As of right now, we are all well, I hope you and yours are too. These are frightening times for sure. Thank you for your question. So we have had guidance from FDA. FDA was pretty directive at our last meeting in which they stated that they felt that the data was very encouraging. But they felt that because of the unblinding due to the interim analysis means blinding was just at the level of the company, remember that patients, physicians and any of the investigators and staff are completely blinded to this point. They felt that a Phase III clinical trial would be appropriate. We are going to take a look at the 12 months data and evaluated, if it looks as good or better than the interim data six months, we're going to marshal all of our resources, all of the advocacy group that are so supportive of our work and talk to FDA about alternative strategies to move more quickly to registration. And that's not just from a corporate perspective of best interest of the company, so to speak, it's also for patients and the families traveling when you are a non-ambulant boy in a wheelchair, on an airplane to a clinical trial site is exhausting, expensive, time consuming, and sometimes depressing if you're in the placebo group at the end of it all. So what we're going to advocate with FDA is that we do have a chance to all patients have access to this through some type of registration. And then see about doing confirmatories on the back end. If that strategy and that's really 150% of my efforts, if that strategy does not work, we can fall back on the well-defined part of our Phase III, but that way in the back of my mind right now.

[Joseph Pantginis:]

Got it. Now, that's really helpful, thank you. And then my next question is on the latest release. It's, I think quite encouraging to see the increased focus now for the exosome program, especially since this has been percolating in the background for quite some time. So my question is, I don't know if this is going to hit the realm of the proprietary nature. But as you develop these assets, how are you looking to sort of, I guess, identify the payloads that are going to go into the exosomes, because they're not just that could be peptides, RNAs, different modalities that you've discussed in the past?

[Linda Marban:]

Yes, so in the guise of can favoring the prepared mind, or the unprepared government I'll say, just as a postscript, we decided a while ago that we're going to look at vaccines. Exosomes are uniquely suited for vaccine development, whether it be for an infectious disease such as coronavirus blends us, but also for immunotherapies that has tightly targeted delivery. What we were going to do and now has done in a focused way is focused on COVID-19. It's a great opportunity to help humanity and also develop that plug and play system that we are so interested in developing for vaccines. In terms of other payloads, we have a long list that we've developed with Dr. Gould. It's really a matching game of payloads and indications that we would like to specifically target. Our ultimate goal is to only develop a few internally for our own use, but to develop relationships with other partners that for instance, do RNA-based therapeutics or enzyme replacement therapeutics and have had difficulty in getting their payload to their target, so to speak. So we are opening several avenues, only one of which is our own development opportunity.

[Joseph Pantginis:]

That's really helpful. Thanks a lot, Linda.

[Linda Marban:]

Take care, Joe.

[Operator:]

Our next question is coming from the line of Jason McCarthy of Maxim Group. Please proceed with your question.

[Jason McCarthy:]

Hi, guys. Thanks for taking the questions. I'm going to stick with the COVID-19. Obviously, it is the subject that everybody's talking about. I want to take you in a different direction. You had shown data around your cell therapies in DMD, where cells migrate to the lung once they're used and that's where the exosome are released. And now we're seeing some other groups in the cell therapy space, who they are moving towards COVID-19 on the cell therapy side. Have you thought about it from that perspective, because I think you're the only group that shown that that long migration data, if you would. And that speaks to treating pneumonia and inflammation as that's what's killing people with COVID. Can you discuss that a little bit or kind of applying on that?

[Linda Marban:]

Thank you, Jason. And so, I'm just going to take a minute to talk about exactly what you've just said. So we have shown that our cells track to the ones that their mechanism of action is the releasing of the exosome. We've shown both with our cells but also with our exosome positive data, in sepsis, in autoimmune diseases such as lupus, and also in graft versus host disease. And we've recently submitted a paper in conjunction with our work with the United States Army on trauma. So -- and shock that comes along with it. So yes, we are actively and absolutely thinking about using our cells in the treatment of critical cases of COVID-19. I will tell you, that we are actively discussing this with physicians and with the Food and Drug Administration at this time. And so look for that is something that we'll be talking more about, hopefully in the coming days.

[Jason McCarthy:]

Okay. And are you aware of any emergency funding that the federal government or the NIH is making available to support programs like this or any other programs that are out there, because there are so many that are emerging. Are those types of non-dilutive funding sources that you're thinking about internally?

[Linda Marban:]

Yeah, so another really important and absolute question. So we have an internal grant writer whose entire job is to survey the landscape for these non-dilutive funding opportunities. And they're coming out. They're actually on -- to be honest with you not as quick as we thought that the U.S. government should respond. There's some coming through the Department of Defense through their MTech program that we're looking into, that should provide for some pretty rapid funding. Although not rapid enough if any relative of mine was in the hospital. And the NIH also was working in the same way. So I think everybody's trying. There's a whole lot of scrambling going on, as one can imagine, because people are trying to work from home and also deploy at the same time. So we're looking into all of this, but there's nothing clear yet.

[Jason McCarthy:]

Okay, great. Thank you for taking the question. Stay safe, guys.

[Linda Marban:]

Thank you, Jason. Stay well.

[Operator:]

Our next questions comes from the line of Alan Villalon of News. Please proceed with your question.

[Unidentified Analyst:]

Hi, Linda. Hi, AJ. Thanks for taking my question. In one of the announcements you teach us about the operational advantages of treating exosome -- treating exosomes and also the exosome vaccine approaches. One of the things that we struggle with currently with the incumbent method is the cost of manufacturing the cell type, scale up and also the speed candidate vaccine. Could you make any -- provide any color at this point in time the promise around generally around exosome based vaccines versus the incumbents on an operational level.

[Linda Marban:]

Yeah, Alan, thank you for that question. It's very important. One of the reasons why we decided to reach out and expand into vaccine development using exosomes for all the reasons that you enunciated, it allows for more of a sort of a plug and play technology allows for sort of putting more potential payload in there putting more antigens on the surface or nucleic acids inside the exosome. And it allows more for standardization over time as a cell free system. So all of the reasons that you talked about, and several more is one of the reasons why -- whether for COVID-19, influenza, or immunotherapy or any other reason one could think of needing a vaccine. One would like to be able to ultimately harness the power of the exosome. And we feel delighted to have the opportunity to work with Dr. Gould on this because he's been working on this type of strategy academically for a long time. And now he's able to take for his academic vision and turn it into a product development and potential therapeutic-targeted pipeline.

[Unidentified Analyst:]

Yeah, one more question along those lines and a quick comment. I saw the pattern and you mentioned it on the call with , this suggests potential protection then you've -- being generated and the silver lining , which I've always speculated would be relevant for coronavirus or other similar types of illnesses.

[Linda Marban:]

Yeah, yeah. And I'm not going to comment on any of that at this time. It's still in early stages and prefer to be a little quiet on sort of where and how they're targeting but do tune in next week when Dr. Gould does a key opinion leader call talking about exosomes for vaccines. Basically, what we're going to be talking about with him is why exosomes are good for the development of the vaccine whether it be for any indication. And some of that will be answered in his discussion.

[Unidentified Analyst:]

Well, about investments into vaccine technology, and we should have done this years ago, I hope you get the money. Thanks.

[Linda Marban:]

Thank you.

[Operator:]

Our next question comes from the line of Chen Glen of Glen Asset Management. Please proceed with your question.

[Unidentified Analyst:]

Hi, Linda, thank you for taking my call. Many of my question have been answered. I just hypothetically, if you get the funding from the government, the next week. How soon can you develop a vaccine and how soon start a path maybe you need to do animal test first and then human test. I'd just like know what the timeframe we're talking about.

[Linda Marban:]

So we are -- thank you so much for your question, and good to talk to you again. We are developing things as quickly as the research will allow us to do. We are in early stages, it's an early stage research project that has to be followed by animal testing and then of course clinical trials in humans. And all through the regulatory process with FDA. Luckily, we're in a situation where a lot of the regulatory hurdles are being torn down and the emphasis of getting therapies or strategies to patients as quickly as possible. In terms of money from the government. We're also looking into those opportunities independent of our development pathway.

[Unidentified Analyst:]

Great, thank you. You mentioned the DMD data. In your presentation you mentioned -- the you will finish the patient visit in the coming week. Did I hear correctly. So and how long did it take to compile all the data, a month or two to get the data? I'm trying to see whether you will get the phase 2 data out in the early part of Q2 or later part of Q2.

[Linda Marban:]

Yeah, so, I'm going to -- I'm going to take the public company hat here and say that our guidance is that it's going to be out in Q2, and I'm very confident that it will be out in Q2. I'm not going to go any further than that, especially during these trying times where getting people to work is a little bit more challenging than it has been in the past. But we are very confident that we'll have the data the second quarter, I will release it and whatever guide we think is appropriate at that time.

[Unidentified Analyst:]

Do you have the confidence you plan to release in the second quarter or just release to the investor as soon as you have the data?

[Linda Marban:]

We're reviewing opportunities regarding publishing, in credible journals, which may or may not have embargo policies. We're looking at presenting at relevant conferences. There's some very important DMD conferences that typically happen in the spring and early summer. Conferences at this point are all up in the air. So we don't know how that's going to play out in terms of some of the social isolation or social distancing that we're going through right now. So all of that is up in the air. But what I can say is that once we get the data, and we have a plan in place, we will release the data in that in that venue, and we'll make sure everybody knows about it.

[Unidentified Analyst:]

Okay, thank you Linda. Good luck.

[Linda Marban:]

Thank you. Thank you very much.

[Operator:]

We have reached the end of the question and answer session. I will now turn the call back over to Linda Marban for any closing remarks.

[Linda Marban:]

In closing, we continue to build on our recent progress and we expect 2020 to be a productive year. We are committed to becoming a leading company in the development of cellular and exosome therapies for rare diseases. We are focused on advancing the development of CAP-1002 and implementing our strategic plan to build our product opportunities to our exosome technology platform. I want to thank everybody for calling in today. Please stay safe, stay healthy, and we look forward to bringing you updates on our programs as they become available. And thank you very much for your time today.

[Operator:]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. And have a great evening.