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What changed in CAPRICOR THERAPEUTICS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CAPRICOR THERAPEUTICS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+564 added−564 removedSource: 10-K (2026-03-17) vs 10-K (2025-03-26)

Top changes in CAPRICOR THERAPEUTICS, INC.'s 2025 10-K

564 paragraphs added · 564 removed · 395 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

132 edited+68 added−64 removed167 unchanged
Biggest changeIn pursuit of this objective, we intend to focus on the following activities: ​ ● continuing the development of our deramiocel program for the treatment of DMD in preparation for potential commercialization, which includes streamlining our manufacturing capabilities, furthering our commercial capabilities and securing additional partners in other markets around the world for the potential launch in the U.S., Japan, Europe and in other select territories, subject to rights of Nippon Shinyaku as our exclusive distributor for DMD in the U.S. and Japan; ● exploring further product expansion opportunities for deramiocel outside of DMD; ● advancing our exosome technology for therapeutic development, focused on internal research, strategic partnerships and collaborations; and ● opportunistically evaluating strategic collaborations to accelerate development and commercialization timelines as well as potentially expand our pipeline within our core therapeutic areas. ​ Our History ​ Capricor, Inc., a wholly-owned subsidiary of Capricor Therapeutics, was founded in 2005 as a Delaware corporation based on the innovative work of its founder, Eduardo Marbán, M.D., Ph.D.
Biggest changeOur current strategic priorities include the following: ​ ● advancing Deramiocel through the regulatory process and preparing for potential commercialization in the United States and other key markets; ● continuing the development of our Deramiocel program for the treatment of DMD and preparing for potential commercialization, including expanding manufacturing capabilities to support commercial supply, further developing our commercial infrastructure, and securing additional partners in select international markets, subject to the rights of Nippon Shinyaku as our exclusive distributor for DMD in the United States and Japan; ● evaluating potential additional therapeutic indications for Deramiocel beyond DMD; ● advancing our exosome platform for therapeutic development through internal research, strategic collaborations and partnerships; and ● selectively pursuing strategic collaborations and partnerships to accelerate development and commercialization timelines and potentially expand our pipeline within our core areas of focus. ​ Our History ​ Capricor, Inc., a wholly-owned subsidiary of Capricor Therapeutics, Inc., was founded in 2005 as a Delaware corporation to develop therapeutic applications based on the discovery of cardiosphere-derived cells by its founder, Eduardo Marbán, M.D., Ph.D.
In addition, Capricor or its designee will hold the Marketing Authorization in Japan if the product is approved in that territory. ​ Binding Term Sheet with Nippon Shinyaku (Territory: European Region) ​ On September 16, 2024, Capricor entered into a Binding Term Sheet (the “Term Sheet”) with Nippon Shinyaku for the commercialization and distribution of deramiocel for the treatment of DMD in the European region, as defined in the Term Sheet.
In addition, Capricor or its designee will hold the Marketing Authorization in Japan if the product is approved in that territory. ​ European Region Binding Term Sheet ​ On September 16, 2024, Capricor entered into a Binding Term Sheet (the “Term Sheet”) with Nippon Shinyaku for the commercialization and distribution of Deramiocel for the treatment of DMD in the European region, as defined in the Term Sheet.
In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC.
In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC.
If Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights and fails to cure that breach after 90 days’ notice from CSMC, instead of terminating the license, CSMC has the option to convert any exclusive license to Capricor to a non-exclusive or co-exclusive license.
If Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights and fails to cure that breach after 90 days’ notice from CSMC, instead of terminating the license, CSMC has the option to convert any exclusive license to Capricor to a non-exclusive or co-exclusive license.
We have forged productive collaborations with pharmaceutical and biotechnology companies, government agencies, academic laboratories, and research institutes with diverse area expertise and resources in as effort to advance our programs. ​ Commercialization and Distribution Agreement with Nippon Shinyaku (Territory: United States) ​ On January 24, 2022, Capricor entered into a Commercialization and Distribution Agreement (the “U.S.
We have forged productive collaborations with pharmaceutical and biotechnology companies, government agencies, academic laboratories, and research institutes with diverse area expertise and resources in as effort to advance our programs. ​ Commercialization and Distribution Agreement (Nippon Shinyaku - United States) ​ On January 24, 2022, Capricor entered into a Commercialization and Distribution Agreement (the “U.S.
In 2018, we were granted the Regenerative Medicine Advanced Therapy (“RMAT”) designation for deramiocel for the treatment of DMD. The FDA grants the RMAT designation to regenerative medicine therapies intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates a potential to address unmet medical needs for that condition.
In 2018, we were granted Regenerative Medicine Advanced Therapy (“RMAT”) designation for Deramiocel for the treatment of DMD. The FDA grants RMAT designation to regenerative medicine therapies intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates the potential to address unmet medical needs.
Data from the study suggests disease modification with statistically significant differences in the PUL v2.0 scale in the deramiocel original treatment group when compared to the original placebo group from HOPE-2. The HOPE-2-OLE study previously met its primary endpoint at the one-year timepoint on the PUL v2.0 scale.
Data from the study suggests disease modification with statistically significant differences in the PUL v2.0 scale in the Deramiocel original treatment group when compared to the original placebo group from HOPE-2. The HOPE-2-OLE study previously met its primary efficacy endpoint at the one-year timepoint on the PUL v2.0 scale.
Subject to regulatory approval, Capricor will have the right to receive a share of product revenue which falls between 30 and 50 percent. ​ Commercialization and Distribution Agreement with Nippon Shinyaku (Territory: Japan) ​ On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku.
Subject to regulatory approval, Capricor will have the right to receive a share of product revenue which falls between 30 and 50 percent. ​ Commercialization and Distribution Agreement (Nippon Shinyaku - Japan) ​ On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku.
Under the JHU License Agreement, Capricor is required to exercise commercially reasonable and diligent efforts to develop and commercialize licensed products covered by the licenses from JHU. ​ Pursuant to the JHU License Agreement, JHU was paid an initial license fee and, thereafter, Capricor is required to pay minimum annual royalties on the anniversary dates of the JHU License Agreement.
Under the JHU License Agreement, Capricor is required to exercise commercially reasonable and diligent efforts to develop and commercialize licensed products covered by the license from JHU. ​ Pursuant to the JHU License Agreement, JHU was paid an initial license fee and, thereafter, Capricor is required to pay minimum annual royalties on the anniversary dates of the JHU License Agreement.
Nippon Shinyaku and NS Pharma, Inc. (its wholly-owned U.S. subsidiary) will be responsible for the distribution of deramiocel in the United States. Pursuant to the U.S. Distribution Agreement, Capricor received an upfront payment of $30.0 million in 2022.
Nippon Shinyaku and NS Pharma, Inc. (its wholly-owned U.S. subsidiary) will be responsible for the distribution of Deramiocel in the United States. Pursuant to the U.S. Distribution Agreement, Capricor received an upfront payment of $30.0 million.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (“APA”) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by CMS and other agencies with significant oversight of the healthcare industry.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (“APA”) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision may have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by CMS and other agencies with significant oversight of the healthcare industry.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any product that is ultimately approved, if approved.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any product that is ultimately approved.
Orphan drug designation is granted by the FDA’s Office of Orphan Drug Products to drugs intended to treat a rare disease or condition affecting fewer than 200,000 people in the United States or a disease or condition that affects more than 200,000 people in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.
Orphan drug designation is granted by the FDA’s Office of Orphan Drug Products to drugs intended to treat a rare disease or condition affecting fewer than 200,000 people in the United States or a disease or condition that affects more than 200,000 people in the United States for which there is no reasonable expectation that the cost of developing and making the drug available in the United States will be recovered from sales in the United States.
Federal Civil Monetary Penalties Law (the “CMPL") authorizes the imposition of substantial monetary penalties against an entity, such as a pharmaceutical manufacturer, that engaged in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal health care programs to provide items or services reimbursable by a federal health care program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment.
Federal Civil Monetary Penalties Law (the “CMPL") authorizes the imposition of substantial monetary penalties against an entity, such as a pharmaceutical manufacturer, that engaged in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal healthcare programs to provide items or services reimbursable by a federal healthcare program; (3) violations of the federal Anti-Kickback Statute; or (4) failing to report and return a known overpayment.
Although we do not currently have any products on the market, once our product candidates or clinical trials are covered by federal health care programs, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal and state governments of the jurisdictions in which we conduct our business.
Although we do not currently have any products on the market, once our product candidates or clinical trials are covered by federal healthcare programs, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal and state governments of the jurisdictions in which we conduct our business.
Distribution Agreement”) with Nippon Shinyaku, a Japanese corporation. Under the terms of the U.S. Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in the United States of deramiocel for the treatment of DMD. ​ 9 Table of Contents Under the terms of the U.S. Distribution Agreement, Capricor will be responsible for the clinical development and manufacturing of deramiocel.
Distribution Agreement”) with Nippon Shinyaku, a Japanese corporation. Under the terms of the U.S. Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in the United States of Deramiocel for the treatment of DMD. ​ 10 Table of Contents Under the terms of the U.S. Distribution Agreement, Capricor will be responsible for the clinical development and manufacturing of Deramiocel.
The Federal Criminal Statute on False Statements Relating to Health Care Matters makes it a crime to knowingly and willfully falsify, conceal, or cover up a material fact, make any materially false, fictitious, or fraudulent statements or 22 Table of Contents representations, or make or use any materially false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services.
The Federal Criminal Statute on False Statements Relating to Health Care Matters makes it a crime to knowingly and willfully falsify, conceal, or cover up a material fact, make any materially false, fictitious, or fraudulent statements or representations, or make or use any materially false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services.
Preclinical results from murine and rabbit models published in the peer-reviewed journal, Microbiology Spectrum , showed the StealthX™ vaccine resulted in robust antibody production, potent neutralizing antibodies, a strong T-cell response and a favorable safety profile. These effects were obtained with administration of only nanogram amounts of protein and without adjuvant or synthetic lipid nanoparticles.
Preclinical results from murine and rabbit models published in the peer-reviewed journal, Microbiology 8 Table of Contents Spectrum , showed the StealthX™ vaccine resulted in robust antibody production, potent neutralizing antibodies, a strong T-cell response and a favorable safety profile. These effects were obtained with administration of only nanogram amounts of protein and without adjuvant or synthetic lipid nanoparticles.
The FDA intends to take action on a priority review marketing application within 6 months of filing, compared to 10 months of filing for regular review submissions. 18 Table of Contents Additionally, a product may be eligible for accelerated approval if it is intended to treat a serious or life-threatening disease or condition and would provide meaningful therapeutic benefit over existing treatments.
The FDA intends to take action on a priority review marketing application within 6 months of filing, compared to 10 months of filing for regular review submissions. Additionally, a product may be eligible for accelerated approval if it is intended to treat a serious or life-threatening disease or condition and would provide meaningful therapeutic benefit over existing treatments.
Earlier filed broad patent applications directed to the discovery of the platform technology thus usually expire ahead of patents covering later developments such as 13 Table of Contents manufacturing processes, specific formulations, additional indications and dosing regimens. Patent expirations on products may therefore span several years and vary from country to country based on the scope of available coverage.
Earlier filed broad patent applications directed to the discovery of the platform technology thus usually expire ahead of patents covering later developments such as manufacturing processes, specific formulations, additional indications and dosing regimens. Patent expirations on products may therefore span several years and vary from country to country based on the scope of available coverage.
We continue to file patents on processes, indications, dosage forms and formulations directed to extend the patent portfolio related to deramiocel and our exosome technologies as our technology progresses. Our product candidates and our technologies are primarily protected by composition of matter and process (methods of use and methods of making) patents and patent applications as well as trade secrets.
We continue to file patents on processes, indications, dosage forms and formulations directed to extend the patent portfolio related to Deramiocel and our exosome technologies as our technology progresses. 14 Table of Contents Our product candidates and our technologies are primarily protected by composition of matter and process (methods of use and methods of making) patents and patent applications as well as trade secrets.
Other Healthcare Fraud and Abuse Laws Although we currently do not have any products on the market and do not make patient referrals or bill Medicare, Medicaid, or other government or commercial third-party payors, our activities, including current and future arrangements with investigators, healthcare professionals, consultants, third-party payors and customers, may be subject to additional healthcare laws, regulations and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.
Healthcare Laws and Compliance Requirements Although we currently do not have any products on the market and do not make patient referrals or bill Medicare, Medicaid, or other government or commercial third-party payors, our activities, including current and future arrangements with investigators, healthcare professionals, consultants, third-party payors and customers, may be subject to additional healthcare laws, regulations and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which we conduct our business.
Failure to comply with the applicable U.S. requirements may subject us to administrative or judicial sanctions, such as the FDA’s refusal to approve a pending NDA or a pending BLA, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions and/or criminal prosecution.
Failure to comply with the applicable U.S. requirements may subject us to administrative or judicial sanctions, such as the FDA’s refusal to approve 16 Table of Contents a pending NDA or a pending BLA, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions and/or criminal prosecution.
In addition, holders of an approved NDA or BLA are required to report certain adverse reactions to the FDA, comply with certain requirements concerning advertising and promotional labeling for their products, and continue to have quality control and manufacturing procedures conform to 19 Table of Contents cGMP after approval.
In addition, holders of an approved NDA or BLA are required to report certain adverse reactions to the FDA, comply with certain requirements concerning advertising and promotional labeling for their products, and continue to have quality control and manufacturing procedures conform to cGMP after approval.
At this time, Capricor and Nippon Shinyaku have entered into various amendments to the Term Sheet, pursuant to which the parties agreed to extend the date during which the parties shall negotiate the definitive agreement to April 30, 2025. ​ Collaboration Agreement with NIH ​ In 2023, we were notified by the NIH that we had been selected to be part of Project NextGen, an initiative by the U.S.
At this time, Capricor and Nippon Shinyaku have entered into various amendments to the Term Sheet, pursuant to which the parties agreed to extend the date during which the parties shall negotiate the definitive agreement to April 1, 2026. ​ Collaboration Agreement with NIH ​ In 2023, we were notified by the NIH that we had been selected to be part of Project NextGen, an initiative by the U.S.
If applicable, our preclinical and clinical studies must conform to the FDA’s Good Laboratory Practice (“GLP”), and Good Clinical Practice (“GCP”) requirements, respectively, which are designed to ensure the quality and integrity of submitted data and protect the rights and well-being of study patients.
If applicable, our preclinical and clinical studies must conform to the FDA’s Good Laboratory Practice (“GLP”), and Good Clinical Practice (“GCP”) requirements, respectively, which are designed to ensure the quality 17 Table of Contents and integrity of submitted data and protect the rights and well-being of study patients.
Currently, the Priority Review Voucher can be used to obtain priority review for any subsequent application and may be sold or transferred an unlimited number of times. Congress has only authorized the rare pediatric disease priority review voucher program until September 30, 2024.
Currently, the Priority Review Voucher can be used to obtain priority review for any subsequent application and may be sold or transferred an unlimited number of times. Congress has currently authorized the rare pediatric disease priority review voucher program until September 30, 2029.
Oftentimes, even after a drug has been approved by the FDA for sale, the FDA may require that certain post-approval requirements be satisfied, including the conduct of additional clinical studies. If such post-approval requirements are not satisfied, the FDA may withdraw its approval of the drug.
Oftentimes, even after a drug has been approved by the FDA for sale, the FDA may require that certain post-approval requirements be satisfied, including the conduct of additional clinical studies. If such post-approval requirements 20 Table of Contents are not satisfied, the FDA may withdraw its approval of the drug.
An initial license fee payment was made in 2022 and additional milestone fees may become due based on the progress of our development program.
An initial license fee payment was made and additional milestone fees may become due based on the progress of our development program.
In addition, Capricor may terminate for any reason upon 60 days’ written notice. ​ 11 Table of Contents Cedars-Sinai Medical Center License Agreements License Agreement for CDCs On January 4, 2010, Capricor entered into an Exclusive License Agreement with CSMC (the “Original CSMC License Agreement”), for certain intellectual property related to its CDC technology.
In addition, Capricor may terminate for any reason upon 60 days’ written notice. ​ Cedars-Sinai Medical Center License Agreements License Agreement for CDCs On January 4, 2010, Capricor entered into an Exclusive License Agreement with CSMC (the “Original CSMC License Agreement”), for certain intellectual property related to its CDC technology.
Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties of between $14,308 and $28,619 per false claim or statement for penalties assessed after January 15, 2025 with respect to violations occurring after November 2, 2015.
Penalties for federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties of between $14,308 and $28,619 per false claim or statement for penalties assessed after July 3, 2025 with respect to violations occurring after November 2, 2015.
In principle, NHI price revisions are conducted once every two years in conjunction with the 21 Table of Contents April revision of medical fees. When NHI drug prices are revised, most drugs will be priced lower than before the revision.
In principle, NHI price revisions are conducted once every two years in conjunction with the April revision of medical fees. When NHI drug prices are revised, most drugs will be priced lower than before the revision.
The information on, or accessible through, our website is not incorporated into this Annual Report on Form 10-K or any other filings we make with the U.S. Securities and Exchange Commission (the “SEC”). We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference.
The information on, or accessible through, our website is not incorporated into this Annual Report on Form 10-K or any other filings we make with the U.S. Securities and Exchange Commission (the “SEC”). We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference. ​ 28 Table of Contents
As of the date of this filing, we have 149 granted patents and pending patent applications covering processes and compositions of matter related to the CDC (deramiocel) technology as well as processes and compositions of matter related to exosome technologies.
As of the date of this filing, we have over 150 granted patents and pending patent applications covering processes and compositions of matter related to the CDC (Deramiocel) technology as well as processes and compositions of matter related to exosome technologies.
Capricor’s next milestone payments will be triggered, if at all, upon a successful completion of a full Phase 3 study, for which a payment of $500,000 will be due, and upon receipt of a full FDA market approval for which a payment of $1,000,000 will be due. ​ The JHU License Agreement will, unless sooner terminated, continue in effect in each applicable country until the date of expiration of the last to expire patent within the patent rights, or, if no patents are issued, then for twenty years from the effective date.
Capricor’s next milestone payments will be triggered, if at all, upon receipt of a full FDA market approval for which a payment of $1,000,000 will be due. ​ The JHU License Agreement will, unless sooner terminated, continue in effect in each applicable country until the date of expiration of the last to expire patent within the patent rights, or, if no patents are issued, then for twenty years from the effective date.
Regulatory Designations Regulatory Designations for deramiocel for the treatment of DMD In 2015, the FDA granted orphan drug designation to deramiocel for the treatment of DMD.
Regulatory Designations Regulatory Designations for Deramiocel for the treatment of DMD and BMD DMD : In 2015, the FDA granted Orphan Drug Designation to Deramiocel for the treatment of DMD.
In addition, Capricor has filed patent applications related to the technology developed by its own scientists. 10 Table of Contents University of Rome License Agreement Capricor and the University of Rome entered into a License Agreement, dated June 21, 2006 (the “Rome License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by the University of Rome to Capricor (with the right to sublicense) to develop and commercialize licensed products under the licensed patent rights in all fields. ​ Pursuant to the Rome License Agreement, Capricor paid the University of Rome a license issue fee, is currently paying minimum annual royalties in the amount of 20,000 Euros per year, and is obligated to pay a lower-end of a mid-range double-digit percentage on all royalties received as a result of sublicenses granted, which are net of any royalties paid to third parties under a license agreement from such third-party to Capricor.
University of Rome License Agreement Capricor and the University of Rome entered into a License Agreement, dated June 21, 2006 (the “Rome License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by the University of Rome to Capricor (with the right to sublicense) to develop and commercialize licensed products under the licensed patent rights in all fields. ​ Pursuant to the Rome License Agreement, Capricor paid the University of Rome a license issue fee, is currently paying minimum annual royalties in the amount of 20,000 Euros per year, and is obligated to pay a lower-end of a mid-range double-digit percentage on all royalties received as a result of sublicenses granted, which are net of any royalties paid to third parties under a license agreement from such third-party to Capricor until expiration of the license.
Accordingly, the NHI drug price revisions every two years may lead to the cut of the drug price in Japan.
Accordingly, the NHI drug price revisions every two years may lead to the cut of the drug price in Japan. Other U.S.
Additionally, the U.S. federal Physician Payments Sunshine Act (the “Sunshine Act”), created under the ACA, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) report annually to Centers for Medicare and Medicaid Services (“CMS”) information related to certain payments or other transfers of value made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists, and licensed chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists, certified nurse-midwives and U.S. teaching hospitals and to report annually certain ownership and investment interests held by physicians and their immediate family members.
Additionally, the U.S. federal Physician Payments Sunshine Act (the “Sunshine Act”) and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, among others, track and report annually to the Centers for Medicare and Medicaid Services (“CMS”) information related to all payments or other transfers of value made to U.S.-licensed physicians (defined to include doctors, dentists, optometrists, podiatrists, and licensed chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, anesthesiologist assistants, certified nurse anesthetists, certified nurse-midwives and U.S. teaching hospitals, as well as track and report annually certain ownership and investment interests held by U.S.-licensed physicians and their immediate family members, unless an exception applies.
Information for certain clinical trials also must be publicly disclosed within certain time limits on the clinical trial registry and results databank maintained by the NIH. 16 Table of Contents Typically, clinical testing involves a three-phase process; however, the phases may overlap or be combined: ● Phase 1 clinical trials typically are conducted in a small number of volunteers or patients to assess the early tolerability and safety profile, the pattern of drug absorption, distribution and metabolism, the mechanism of action in humans, and may include studies where investigational drugs are used as research to explore biological phenomena or disease processes; ● Phase 2 clinical trials typically are conducted in a limited patient population with a specific disease in order to assess appropriate dosages and dose regimens, expand evidence of the safety profile and evaluate preliminary efficacy; and ● Phase 3 clinical trials typically are larger scale, multicenter, well-controlled trials conducted on patients with a specific disease to generate enough data to statistically evaluate the efficacy and safety of the product, to establish the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.
Typically, clinical testing involves a three-phase process; however, the phases may overlap or be combined: ● Phase 1 clinical trials typically are conducted in a small number of volunteers or patients to assess the early tolerability and safety profile, the pattern of drug absorption, distribution and metabolism, the mechanism of action in humans, and may include studies where investigational drugs are used as research to explore biological phenomena or disease processes; ● Phase 2 clinical trials typically are conducted in a limited patient population with a specific disease in order to assess appropriate dosages and dose regimens, expand evidence of the safety profile and evaluate preliminary efficacy; and ● Phase 3 clinical trials typically are larger scale, multicenter, well-controlled trials conducted on patients with a specific disease to generate enough data to statistically evaluate the efficacy and safety of the product, to establish the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug.
Efforts by the current administration to limit federal agency budgets or personnel may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidates or obtain regulatory approval for our product candidates.
Department of Health and Human Services, FDA, and CMS. Efforts by the current administration to further limit federal agency budgets or personnel may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidates or obtain regulatory approval for our product candidates.
Left ventricular ejection fraction (LVEF), a global measure of cardiac pump function, decreased in the placebo group over time, but improved in the deramiocel group, showing a 107% slowing of the progression of cardiac disease (p=0.002). Additionally, the data suggested global improvements in cardiac function as measured by indexed volumes (LVESV, LVEDV).
Left ventricular ejection fraction, a global measure of cardiac pump function, decreased in the placebo group over time, but stabilized in the Deramiocel group, showing a 107% slowing of the progression of cardiac disease (p=0.002). Additionally, the data suggested statistically significant benefits in cardiac function as measured by indexed volumes (LVESV i , LVEDV i ).
Namely, the IRA imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation; implements changes to the Medicare Part D benefit that, beginning in 2025, cap beneficiary annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers; and, beginning in 2026, establishes a “maximum fair price” for a fixed number of high expenditure pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the CMS.
Among other reforms, the IRA imposes inflation rebates on drug and biological product manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation; implements changes to the Medicare Part D benefit that cap beneficiary annual out-of-pocket spending at $2,000 (adjusted annually for inflation), with new discount obligations for pharmaceutical manufacturers; and establishes a “maximum fair price” for a fixed number of high expenditure pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the CMS.
Orphan Drugs Under the Orphan Drug Act, the FDA may grant orphan drug designation to therapeutic candidates intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S. or 17 Table of Contents more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a therapeutic candidate for this type of disease or condition will be recovered from sales in the U.S. for that therapeutic candidate.
Competitors may use this publicly available information to gain knowledge regarding the progress of development programs. 18 Table of Contents Orphan Drugs Under the Orphan Drug Act, the FDA may grant orphan drug designation to therapeutic candidates intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S. or more than 200,000 individuals in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a therapeutic candidate for this type of disease or condition will be recovered from sales in the U.S. for that therapeutic candidate.
The minimum annual royalties are creditable against future royalty payments. ​ The Rome License Agreement will, unless extended or sooner terminated, remain in effect until the later of the last claim of any patent or until any patent application comprising licensed patent rights has expired or been abandoned.
The minimum annual royalties are creditable against future royalty payments. ​ The Rome License Agreement remained in effect until the later of the last claim of any patent or until any patent application comprising licensed patent rights has expired or been abandoned.
Other legislative changes have been proposed and adopted since the ACA was enacted.
Other legislative changes have been proposed and adopted in the United States since the ACA was enacted.
The FDA defines a “rare pediatric disease” as a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years and that affects fewer than 200,000 individuals in the United States, or a disease or condition that affects more than 200,000 people in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.
The FDA defines a “rare pediatric disease” as a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years and that affects fewer than 200,000 individuals in the United States, or a disease or condition that affects more than 200,000 individuals in the United States for which there is no reasonable expectation that development costs will be recovered from sales.
Department of Health and Human Services to advance a pipeline of new, innovative vaccines providing broader and more durable protection for COVID-19. As part of Project NextGen, the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health, will conduct a Phase 1 clinical study with our StealthX™ vaccine, subject to regulatory approval.
Department of Health and Human Services to advance a pipeline of new, innovative vaccines providing broader and more durable protection for COVID-19. As part of Project NextGen, the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health, is conducting a Phase 1 clinical study with our StealthX™ vaccine. NIAID's DMID is overseeing the study.
At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control biopharmaceutical and biologic product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
At the state level, individual states in the U.S. have increasingly passed legislation and implemented regulations designed to control biopharmaceutical and biologic product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
Patents and Proprietary Rights Our goal is to obtain, maintain and enforce patent rights for our products, formulations, manufacturing processes, methods of use and other proprietary technologies, preserve our trade secrets, and operate without knowingly infringing on the valid and enforceable proprietary rights of other parties, both in the United States and abroad.
The last-to-expire patent licensed under the Rome License Agreement expired on January 4, 2026. ​ Patents and Proprietary Rights Our goal is to obtain, maintain and enforce patent rights for our products, formulations, manufacturing processes, methods of use and other proprietary technologies, preserve our trade secrets, and operate without knowingly infringing on the valid and enforceable proprietary rights of other parties, both in the United States and abroad.
Under the terms of the collaboration, Capricor will be responsible for supplying investigational product for the trial. ​ Intellectual Property Rights for Capricor’s Technology - Deramiocel and Exosomes Capricor has entered into exclusive license agreements for intellectual property rights related to certain cardiac-derived cells with Università Degli Studi Di Roma La Sapienza (the “University of Rome”), JHU and CSMC.
Under the terms of the collaboration, Capricor is responsible for supplying investigational product for the trial. ​ Intellectual Property Rights for Capricor’s Technology - Deramiocel and Exosomes Capricor has entered into exclusive license agreements for intellectual property rights related to certain cardiac-derived cells with Università Degli Studi Di Roma La Sapienza (the “University of Rome”), Johns Hopkins University and Cedars-Sinai Medical Center.
We believe these developments will enable us to scale up our manufacturing capabilities and allow us to manufacture enough material for early-stage clinical development, subject to FDA approval. We have explored the use of various cell sources to generate our exosomes for preclinical and potential clinical use.
These developments have enabled us to scale up our manufacturing capabilities and allowed us to manufacture enough material for early-stage clinical development. We have explored the use of various cell sources to generate our exosomes for preclinical and potential clinical use.
Aspects of our exosome pipeline have been supported through collaborations and alliances. Our collaborations and research around exosomes include the National Institutes of Health (“NIH”), the National Institute 2 Table of Contents of Allergy and Infectious Diseases (“NIAID”), Johns Hopkins University (“JHU”), the Department of Defense (“DoD”), the U.S. Army Institute of Surgical Research (“USAISR”), and Cedars-Sinai Medical Center (“CSMC”).
Our collaborations and research around exosomes include the National Institutes of Health (“NIH”), the National Institute of Allergy and Infectious Diseases (“NIAID”), Johns Hopkins University (“JHU”), the Department of Defense (“DoD”), the U.S. Army Institute of Surgical Research (“USAISR”), and Cedars-Sinai Medical Center (“CSMC”).
In addition, federal agency priorities, leadership, policies, rulemaking, communications, spending, and staffing may be significantly impacted by election cycles, including, for example, the current presidential administration’s commitment to significantly reduce government spending through cuts to federal healthcare programs and reductions in the workforces of key government agencies, such as the U.S. Department of Health and Human Services, FDA, and CMS.
In addition, federal agency priorities, leadership, policies, rulemaking, communications, spending, and staffing may be significantly impacted by election cycles. For example, the current presidential administration has signaled its continued commitment to significantly reduce government spending through cuts to federal healthcare programs and reductions in the workforces of key government agencies, such as the U.S.
Research and Development Our ongoing research and development activities primarily concern deramiocel and exosomes and are focused on the characterization of their composition and actions, the evaluation of their therapeutic potential in selected disease settings, the development of next generation product candidates, and the identification of new technologies and indications.
Trademark registrations generally are for fixed but renewable terms. 15 Table of Contents Research and Development Our ongoing research and development activities primarily concern Deramiocel and exosomes and are focused on the characterization of their composition and actions, the evaluation of their therapeutic potential in selected disease settings, the development of next generation product candidates, and the identification of new technologies and indications.
In addition, several recently passed state laws require disclosures related to state agencies and/or commercial purchasers with respect to certain price increases that exceed a certain level as identified in the relevant statutes.
In addition, several state laws require disclosures related to state agencies and/or commercial purchasers with respect to certain price increases and new product launches that exceed certain pricing thresholds as identified in the relevant statutes.
For example, the Budget Control Act of 2011 included reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislation, will stay in effect into through the first eight months of the fiscal year 2032 sequestration order (with the exception of a temporary suspension, and subsequent reduction, due to the COVID-19 pandemic).
For example, through the process created by the Budget Control Act of 2011, there are automatic reductions of Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislation, will stay in effect through the first eleven months of fiscal year 2032, unless additional Congressional action is taken (with the exception of a temporary suspension, and subsequent reduction, due to the COVID-19 pandemic).
The maximum aggregate amount of milestone payments payable under the JHU License Agreement, as amended, is $1,850,000. In March 2022, Capricor paid the $250,000 development milestone related to the Phase 2 study pursuant to the terms of the JHU License Agreement.
The maximum aggregate amount of milestone payments payable under the JHU License Agreement, as amended, is $1,850,000. In December 2025, Capricor accrued the $500,000 development milestone related to the Phase 3 study pursuant to the terms of the JHU License Agreement.
Additionally, the California Privacy Rights Act (“CPRA”) was passed in November 2020 and amended the CCPA beginning in 2023. The CPRA imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
The CPRA imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
In that portion of the leased premises where we manufacture deramiocel, we believe that we follow current good manufacturing practices to the extent that they are applicable to the stage of our clinical programs, although our facility at CSMC is not current Good Manufacturing Practices (“cGMP”) qualified for commercial manufacturing.
In the portion of the leased premises where we manufacture Deramiocel, we believe that we follow current good manufacturing practices to the extent applicable to the stage of our clinical programs, although this facility is not cGMP-qualified for commercial manufacturing. At this time, we do not plan to extend our lease at CSMC beyond mid-2026.
There is also the U.S. federal criminal False Claims Act, which is similar to the federal civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government.
Additionally, although the federal False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes. 23 Table of Contents There is also the U.S. federal criminal False Claims Act, which is similar to the federal civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government.
If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject, without limitation, to significant civil, criminal and administrative penalties, damages, fines, individual imprisonment, disgorgement, exclusion from participation in federal and state healthcare programs, reputational harm, diminished profits and future earnings, additional oversight and reporting obligations pursuant to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with applicable laws and regulations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results.
If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject, without limitation, to significant civil, criminal and administrative penalties, damages, fines, individual imprisonment, disgorgement, exclusion from participation in federal and state healthcare programs, reputational harm, diminished profits and future earnings, additional oversight and reporting obligations pursuant to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with applicable laws and regulations, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. 25 Table of Contents Additionally, we expect our products, if and when approved, may be eligible for coverage under Medicare, the federal healthcare program that provides health care benefits to the aged and disabled, and covers outpatient services and supplies, including certain pharmaceutical products, that are medically necessary to treat a beneficiary’s health condition.
Trademark protection varies in accordance with local law, and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered. Trademark registrations generally are for fixed but renewable terms.
Trademark protection varies in accordance with local law, and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered.
Cell Line License Agreement with Life Technologies On March 7, 2022, Capricor entered into a non-exclusive cell line license agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific, Inc., for the supply of certain cells which we are utilizing in connection with the development of our exosomes platform.
These amendments also obligated Capricor to reimburse CSMC for certain attorneys’ fees and filing fees in connection with the additional patent applications and patent families. 13 Table of Contents Cell Line License Agreement with Life Technologies On March 7, 2022, Capricor entered into a non-exclusive cell line license agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific, Inc., for the supply of certain cells which we are utilizing in connection with the development of our exosomes platform.
Additionally, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. In the future, there may be additional challenges and/or amendments to the ACA.
Additionally, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Moreover, there have been several recent U.S.
These programs represent our core technology and products. ​ The following table summarizes our active product development programs: ​ ​ ​ Product Candidate Indication Development Stage ​ Distributor/Partner/Collaborator Deramiocel (allogeneic CDCs) Duchenne muscular dystrophy – Cardiomyopathy* BLA accepted for priority review; PDUFA: August 31, 2025 ​ Nippon Shinyaku Co., Ltd.
These programs represent our core technology and products. ​ The following table summarizes our active product development programs: ​ ​ ​ Product Candidate ​ ​ ​ Indication ​ ​ ​ Development Stage ​ Distributor/Collaborator Deramiocel (allogeneic CDCs) Duchenne muscular dystrophy* BLA under U.S. FDA review (PDUFA target action date August 22, 2026) ​ Nippon Shinyaku Co., Ltd.
Many of the organizations competing with us have substantially greater financial resources, larger research and development staffs and facilities, longer drug development history in obtaining regulatory approvals, and greater manufacturing and marketing capabilities than we do.
Many of these organizations have substantially greater financial resources, larger research and development staffs and facilities, longer histories of obtaining regulatory approvals and greater manufacturing and commercialization capabilities than we do.
Under the FDA's Rare Pediatric Disease Priority Review Voucher program, upon the approval of a qualifying New Drug Application (“NDA”) or BLA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for a Rare Pediatric Disease Priority Review Voucher that can be used to obtain priority review for a subsequent NDA or BLA.
Under the FDA’s Rare Pediatric Disease Priority Review Voucher program, upon approval of a qualifying New Drug Application (“NDA”) or Biologics License Application for the treatment of a rare pediatric disease, the sponsor may be eligible to receive a Rare Pediatric Disease Priority Review Voucher.
Also, third-party payors may refuse to include a particular branded drug on their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or another alternative is available.
Also, third-party 21 Table of Contents payors may refuse to include a particular branded drug on their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or another alternative is available. Third-party payors are increasingly challenging the prices charged for medical products and services.
Further, in August 2022, former President Biden signed into law IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and the creation of new Medicare inflation rebates.
For example, in August 2022, former President Biden signed into law the IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and changes to the Medicare Part D benefit design.
Capricor has also entered into an exclusive license agreement for intellectual property rights related to exosomes with CSMC and JHU.
Capricor is also a party to an exclusive license agreement for intellectual property rights related to exosomes with CSMC.
Technology and Platforms Cell Therapy Platform (Deramiocel) Our core program is focused on the development and commercialization of a cell therapy technology (referred to herein as deramiocel) comprised of cardiosphere-derived cells (“CDCs”), which are a rare population of cardiac cells isolated from donated cells of healthy human hearts, for the treatment of DMD.
Technology and Platforms Cell Therapy (Deramiocel) Our core program is focused on the development and commercialization of Deramiocel, a cell therapy product candidate comprised of cardiosphere-derived cells (“CDCs”), a population of cardiac-derived stromal cells isolated from qualified donated human hearts, for the treatment of Duchenne muscular dystrophy.
If the definitive agreement is entered into on the same economic terms as the term sheet, Capricor will receive an upfront payment of $20.0 million upon execution of the definitive agreement, with potential additional development and sales-based milestone payments of up to $715.0 million.
Subject to regulatory approval, Capricor would receive a double-digit share of product revenue and additional development and sales-based milestone payments. If the definitive agreement is entered into, Capricor will receive an upfront payment of $20.0 million upon execution of the definitive agreement, with potential additional development and sales-based milestone payments of up to $715.0 million.
This resulted in a favorable recommendation to continue the HOPE-3 trial as planned. ​ The primary outcome measure of the HOPE-3 study will be the Performance of the Upper Limb (“PUL”) v2.0, a validated tool specifically designed for assessing high (shoulder), mid (elbow) and distal (wrist and hand) functions, with a conceptual framework reflecting weakness progression in upper limb function.
The primary outcome measure of the HOPE-3 study was the Performance of the Upper Limb (“PUL”) v2.0, a validated tool specifically designed for assessing high (shoulder), mid (elbow) and distal (wrist and hand) functions, with a conceptual framework reflecting weakness progression in upper limb function. In HOPE-3 we also measured various secondary endpoints including cardiac function assessments.
With the exception of hypersensitivity reactions early in the clinical trial, which were mitigated with a common pre-medication regimen, there were no serious safety signals identified by the HOPE-2 DSMB. HOPE-2 Study Results - 12-Month Efficacy Data ​ ​ ​ ​ ​ ​ ​ 12-Month Difference in Change from Baseline† ​ ​ ​ Δ, deramiocel vs.
With the exception of hypersensitivity reactions early in the clinical trial, which were mitigated with a common pre-medication regimen, there were no serious safety signals identified by the HOPE-2 Data Safety and Monitoring Board (“DSMB”).
Capricor may also terminate the Rome License Agreement for any reason upon 90 days’ written notice to the University of Rome. ​ The Johns Hopkins University License Agreements License Agreement for CDCs Capricor and JHU entered into an Exclusive License Agreement, effective June 22, 2006 (the “JHU License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by JHU to Capricor (with the right to sublicense) to develop and commercialize licensed products and licensed services under the licensed patent rights in all fields and a nonexclusive right to the know-how.
In addition, Capricor has filed solely-owned patent applications related to the CDC and exosomes technology developed by its own scientists. 11 Table of Contents The Johns Hopkins University License Agreement for CDCs Capricor and JHU entered into an Exclusive License Agreement, effective June 22, 2006 (the “JHU License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by JHU to Capricor (with the right to sublicense) to develop and commercialize licensed products and licensed services under the licensed patent rights in all fields and a nonexclusive right to the know-how.
We typically file trademark applications and pursue their registration in the U.S., Europe and other markets in which we anticipate using such trademarks. We are the owner of several common law, and federal trademark registrations or applications in the U.S. including, but not limited to, Capricor®, Capricor Therapeutics, StealthX™, and the Capricor 14 Table of Contents logo.
We are the owner of several common law, and federal trademark registrations or applications in the U.S. including, but not limited to, Capricor®, Capricor Therapeutics, StealthX™, and the Capricor logo.
Disclosure of the results of these trials can be delayed in certain circumstances for up to two years after the date of completion of the trial. Competitors may use this publicly available information to gain knowledge regarding the progress of development programs.
Disclosure of the results of these trials can be delayed in certain circumstances for up to two years after the date of completion of the trial.
ITEM 1. BUSINESS Overview Capricor Therapeutics, Inc. is a clinical-stage biotechnology company focused on the development of transformative cell and exosome-based therapeutics for treating Duchenne muscular dystrophy (“DMD”), a rare form of muscular dystrophy which results in muscle degeneration and premature death, and other diseases with high unmet medical needs.
ITEM 1. BUSINESS Overview Capricor Therapeutics, Inc. is a biotechnology company focused on the development and potential commercialization of cell and exosome-based therapeutics for the treatment of Duchenne muscular dystrophy (“DMD”), a rare genetic disorder characterized by progressive muscle degeneration and premature death, as well as other diseases with significant unmet medical need.
We intend to leverage our technology, collaborations and resources to develop therapeutics for diseases with high unmet needs.
We intend to leverage our technology platforms, collaborations and internal capabilities to develop therapeutics for diseases with significant unmet medical need.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese risks are discussed more fully below and include, but are not limited to, risks related to: Risks Related to Our Business ● substantial additional funding is needed to complete the development and commercialization of our product candidates within and outside the United States; ● the Company has incurred significant losses and may never be profitable; ● the occurrence of security breaches, improper access to or disclosure of our data or user data, and other cyber incidents or undesirable cyber activity related to our, or our third-party vendor’s systems and data; and ● we may not have adequate personnel and may not be able to attract or retain personnel needed to develop our products. ​ Risks Related to Clinical and Commercialization Activities ● our success depends upon the viability of our product candidates, all of which require regulatory approval to commercialize and we cannot be certain any of them will receive regulatory approval to be commercialized; ● delays in commencement, enrollment, and completion of clinical testing could result in increased costs to us and delay or limit our ability to obtain regulatory approval for our product candidates; ● we may not be able to manufacture deramiocel in sufficient quantities to meet market demand; ● product candidates can fail to meet their efficacy endpoints at any time during the clinical development process, which would likely make them ineligible for becoming commercial products; ● we may not be able to satisfy clinical and/or regulatory requirements necessary for the approval of our product in the U.S., Europe, Japan or other select territories; ● we may not be able to reach the milestones set forth in our distribution agreements therefore preventing us from receiving the financial benefits of those agreements; ● our exosome technologies are unproven in their ability to achieve sufficient biological activity or scale in development to date; and ● our partners may not perform as expected and therefore deny us the financial benefits of those agreements.
Biggest changeThese risks are discussed more fully below and include, but are not limited to, risks related to: Risks Related to Our Business ● substantial additional funding may be required to complete the development and potential commercialization of our product candidates in the United States and internationally; ● the Company has incurred significant losses and may never achieve or sustain profitability; ● the occurrence of security breaches, improper access to or disclosure of our data or third-party data, and other cyber incidents or undesirable cyber activity related to our systems or those of our third-party vendors; and ● we may not have adequate personnel and may not be able to attract or retain personnel necessary to develop and potentially commercialize our product candidates. ​ Risks Related to Clinical and Commercialization Activities ● our success depends upon the viability of our product candidates, which require regulatory approval prior to commercialization, and we cannot be certain that any of them will receive such approval; ● delays in the commencement, enrollment or completion of clinical testing could result in increased costs to us and may delay or limit our ability to obtain regulatory approval for our product candidates; ● we may not be able to manufacture Deramiocel in sufficient quantities or at acceptable cost to meet market demand; ● product candidates can fail to meet safety or efficacy endpoints at any time during the clinical development process, which would likely prevent them from becoming commercial products; ● we may not be able to satisfy clinical or regulatory requirements necessary for the approval of our product candidates in the U.S., Europe, Japan or other select territories; ● we may not be able to reach the milestones set forth in our distribution agreements and therefore may not receive the financial benefits associated with those agreements; ● our exosome technologies may not demonstrate sufficient biological activity or scalability in development; ● our partners may not perform as expected and therefore we may not realize the anticipated benefits of those agreements; and ● the successful commercialization of our product candidates will depend in part on the extent to which governmental authorities and health insurers establish coverage, adequate reimbursement levels and pricing policies, including potential most-favored-nation pricing pilots or proposals that could require additional rebates for our product candidates, if approved. ​ ​ 29 Table of Contents Risks Related to the Manufacturing of our Product Candidates ● the manufacturing of our product candidates is dependent on complex supply chains, including the availability of donor hearts and other raw materials that are critical for the manufacturing of our product candidates; ● we may need to rely upon third-party manufacturers to expand our manufacturing capabilities for later-stage clinical trials and potential commercialization; ● we may not have sufficient manufacturing capacity or facilities required for any future scale-up of manufacturing; ● we may not be able to successfully replicate or scale our manufacturing processes; ● we may not be able to comply with current Good Manufacturing Practice (“cGMP”) regulations; ● we may not be able to identify or retain necessary manufacturing personnel; and ● the FDA may not ultimately determine that our manufacturing processes are comparable or acceptable, or approve our manufacturing facilities for commercial production. ​ Risks Related to Our Intellectual Property ● we may not be able to obtain, maintain, protect, and enforce our intellectual property rights; ● we may face potential challenges to the validity, enforceability, or scope of our intellectual property; ● we may experience claims from third parties that we are infringing their patents or other intellectual property rights; and ● we may not be able to satisfy our obligations under our licensing agreements.
The issuance of additional shares of common stock, warrants or other convertible securities and the perception that such issuances may occur or exercise of outstanding warrants or options may have a dilutive impact on other stockholders and could have a material negative effect on the market price of our common stock.
The issuance of additional shares of common stock, warrants or other convertible securities and the perception that such issuances may occur or the exercise of outstanding warrants or options may have a dilutive impact on other stockholders and could have a material negative effect on the market price of our common stock.
You may experience future dilution as a result of future equity offerings. In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share paid by any investor.
You may experience future dilution as a result of future equity offerings. In order to raise additional capital, we may offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share paid by any investor.
Our certificate of incorporation, our bylaws and Delaware law contain provisions that may have the effect of preserving our current management, such as: ● authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; and ● establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
Our certificate of incorporation, our bylaws and Delaware law contain provisions that may have the effect of preserving our current management and board structure, such as: ● authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; and ● establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.
Our current and anticipated future reliance on a limited number of third-party manufacturers exposes us to the following risks: ● We may be unable to identify manufacturers needed to manufacture our product candidates on acceptable terms or at all because the number of potential manufacturers is limited, and subsequent to approval of an BLA or NDA, the FDA must approve any replacement contractor.
Our current and anticipated future reliance on a limited number of third-party manufacturers exposes us to the following risks: ● We may be unable to identify manufacturers needed to manufacture our product candidates on acceptable terms or at all because the number of potential manufacturers is limited, and subsequent to approval of a BLA or NDA, the FDA must approve any replacement contractor.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: ● we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials; ● clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon drug development programs; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors, including our CROs, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we, our investigators, or any of the overseeing IRBs or ethics committees might decide to suspend or terminate clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our product candidates may be greater than we anticipate; ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; ● regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate; and ● any future collaborators that conduct clinical trials may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.
We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including: ● we may receive feedback from regulatory authorities that requires us to modify the design of our clinical trials; ● clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon drug development programs; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; ● our third-party contractors, including our CROs, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; ● we, our investigators, or any of the overseeing IRBs or ethics committees might decide to suspend or terminate clinical trials of our product candidates for various reasons, including non-compliance with regulatory requirements, a finding that our product candidates have undesirable side effects or other unexpected characteristics, or a finding that the participants are being exposed to unacceptable health risks; ● the cost of clinical trials of our product candidates may be greater than we anticipate; 39 Table of Contents ● the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; ● regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate; and ● any future collaborators that conduct clinical trials may face any of the above issues, and may conduct clinical trials in ways they view as advantageous to them but that are suboptimal for us.
See Part I, Item 1 – Healthcare Reform for additional detail on recent legislative and regulatory changes that could affect our operations. Our risk mitigation measures cannot guarantee that we effectively manage all operational risks and that we are in compliance with all potentially applicable U.S. federal and state regulations and all potentially applicable foreign regulations and other requirements.
See Part I, Item 1 – Healthcare Reform for additional detail on legislative and regulatory changes that could affect our operations. Our risk mitigation measures cannot guarantee that we effectively manage all operational risks and that we are in compliance with all potentially applicable U.S. federal and state regulations and all potentially applicable foreign regulations and other requirements.
In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Many third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies but also have their own methods and approval processes to decide which drugs they will pay for and establish reimbursement levels.
In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies but also have their own methods and approval processes to decide which drugs they will pay for and establish reimbursement levels.
As we advance our programs, in particular our lead product candidate deramiocel, we have incurred and will continue to incur substantial costs associated with those programs. For example, we are increasing our spending on manufacturing-related costs as we prepare to be able to manufacture deramiocel for a potential commercial launch following potential regulatory approval.
As we advance our programs toward potential commercial launch, in particular our lead product candidate Deramiocel, we have incurred and will continue to incur substantial costs associated with those programs. For example, we are increasing our spending on manufacturing-related costs as we prepare to be able to manufacture Deramiocel for a potential commercial launch following potential regulatory approval.
Risks Related to Our Business We need substantial additional funding before we can complete the development of our product candidates. If we are unable to obtain such additional capital, we will be forced to delay, reduce or eliminate our product development and clinical programs and may not have the capital required to otherwise operate our business.
Risks Related to Our Business We need additional funding before we can complete the development of our product candidates. If we are unable to obtain such additional capital, we will be forced to delay, reduce or eliminate our product development and clinical programs and may not have the capital required to otherwise operate our business.
Factors relating to our business that may contribute to these fluctuations include the following factors: ● our need for substantial additional capital to fund our trials and development programs; ● delays in the commencement, enrollment, and timing of clinical testing; ● the viability of deramiocel as a potential product candidate and its development through all stages of clinical development; 30 Table of Contents ● the viability of our exosome technologies as potential product candidates and the advancement of our exosome technologies through all stages of its preclinical and clinical development; ● any delays in regulatory review and approval of our product candidates in clinical development; ● our ability to receive regulatory approval or commercialize our product candidates, within and outside the United States; ● potential side effects of our current or future products and product candidates that could delay or prevent commercialization or cause an approved treatment to be taken off the market; ● market acceptance of our product candidates; ● our ability to establish an effective sales and marketing infrastructure once our products are commercialized, as necessary or to establish partnerships with other companies who have greater sales and marketing capabilities; ● the ability of our distribution partner, Nippon Shinyaku, to successfully market and sell our deramiocel product if and to the extent it is approved; ● our ability to establish or maintain collaborations, licensing or other arrangements, including strategic partnerships for deramiocel outside of DMD and our exosome technologies; ● our ability and third parties’ abilities to obtain and protect intellectual property rights; ● competition from existing products or new products that may emerge; ● guidelines and recommendations of therapies published by various organizations; ● the ability of patients to obtain coverage of, or sufficient reimbursement for, our product candidates; ● our ability to maintain adequate insurance policies; ● our ability to successfully manufacture our product candidates in sufficient quantities and on a timely basis to meet clinical trial and potential commercial demand; ● our dependency on third parties to formulate and manufacture our product candidates, as necessary; ● our ability to maintain and staff our current manufacturing facilities; ● our ability to build or secure new manufacturing facilities, if necessary, and achieve and maintain cGMP and obtain required certifications as required; ● costs related to and outcomes of potential intellectual property litigation; ● compliance with obligations under intellectual property licenses with third parties; ● our ability to implement additional internal systems and infrastructure; ● our ability to adequately support future growth; ● if our products are approved for commercial sale, the ability to secure adequate reimbursement levels for our products; ● our ability to attract and retain key personnel to manage our business effectively; and ● the ability of members of our senior management to manage our business and operations.
Factors relating to our business that may contribute to these fluctuations include the following factors: ● our need for additional capital to fund our trials and development programs; ● delays in the commencement, enrollment, and timing of clinical testing; ● the viability of Deramiocel as a potential product candidate and its development through all stages of clinical development; ● the viability of our exosome technologies as potential product candidates and the advancement of our exosome technologies through all stages of their preclinical and clinical development; ● any delays in regulatory review and approval of our product candidates in clinical development; ● our ability to receive regulatory approval or commercialize our product candidates, within and outside the United States; ● potential side effects of our current or future products and product candidates that could delay or prevent commercialization or cause an approved treatment to be taken off the market; ● market acceptance of our product candidates; ● our ability to establish an effective sales and marketing infrastructure once our products are commercialized, as necessary or to establish partnerships with other companies who have greater sales and marketing capabilities; ● the ability of our distribution partner, Nippon Shinyaku, to successfully market and sell our Deramiocel product if and to the extent it is approved; ● our ability to establish or maintain collaborations, licensing or other arrangements, including strategic partnerships for Deramiocel outside of DMD and our exosome technologies; ● our ability and third parties’ abilities to obtain and protect intellectual property rights; ● competition from existing products or new products that may emerge; ● guidelines and recommendations of therapies published by various organizations; ● the ability of patients to obtain coverage of, or sufficient reimbursement for, our product candidates; ● our ability to maintain adequate insurance policies; ● our ability to successfully manufacture our product candidates in sufficient quantities and on a timely basis to meet clinical trial and potential commercial demand; ● our dependency on third parties to formulate and manufacture our product candidates, as necessary; ● our ability to maintain and staff our current manufacturing facilities; ● our ability to build or secure new manufacturing facilities, if necessary, and achieve and maintain cGMP and obtain required certifications as required; ● costs related to and outcomes of potential intellectual property litigation; ● compliance with obligations under intellectual property licenses with third parties; ● our ability to implement additional internal systems and infrastructure; ● our ability to adequately support future growth; ● if our products are approved for commercial sale, the ability to secure adequate reimbursement levels for our products; ● our ability to attract and retain key personnel to manage our business effectively; and ● the ability of members of our senior management to manage our business and operations.
We have licensed certain patent and other intellectual property rights that cover cardiospheres, and cardiosphere-derived cells, (including our deramiocel product candidate) from the University of Rome, JHU, and CSMC. We have also licensed certain patent and other intellectual property rights from CSMC that cover extracellular vesicles, such as exosomes and microvesicles.
We have licensed certain patent and other intellectual property rights that cover cardiospheres, and cardiosphere-derived cells, (including our Deramiocel product candidate) from the University of Rome, JHU, and CSMC. We have also licensed certain patent and other intellectual property rights from CSMC that cover certain aspects of certain extracellular vesicles, such as exosomes and microvesicles.
Our corporate headquarters and our manufacturing and research facilities are located in San Diego and in the greater Los Angeles, California area, a region known for seismic activity, as well as being susceptible to drought and fires.
Our corporate headquarters and our manufacturing and research facilities are located in San Diego and in the Los Angeles, California area, a region known for seismic activity, as well as being susceptible to drought and fires.
Our manufacturing capabilities could be affected by cost-overruns, unexpected delays, equipment failures, labor shortages, operator error, natural disasters, unavailability of qualified personnel, difficulties with logistics and shipping, problems regarding yields or stability of product, contamination or other quality control issues, power failures, and numerous other factors that could prevent us from realizing the intended benefits of our manufacturing strategy and have a material adverse effect on our business.
Our manufacturing capabilities could be affected by cost-overruns, unexpected delays, supply chain failures, equipment failures, labor shortages, operator error, natural disasters, unavailability of qualified personnel, difficulties with logistics and shipping, problems regarding yields or stability of product, contamination or other quality control issues, power failures, and numerous other factors that could prevent us from realizing the intended benefits of our manufacturing strategy and have a material adverse effect on our business.
The degree of market acceptance of any of our approved products will depend on a number of factors, including: ● limitations or warnings contained in a product’s FDA-approved labeling; ● changes in the standard of care for the targeted indications for any of our product candidates, which could reduce the marketing impact of any claims that we could make following FDA approval; ● limitations inherent in the approved indication for any of our product candidates compared to more commonly understood or addressed conditions; ● demonstrated clinical safety and efficacy compared to other products; ● prevalence and severity of adverse effects; ● the effectiveness of marketing and distribution efforts; ● availability of reimbursement from managed care plans and other third-party payors; ● cost-effectiveness; ● timing of market introduction and perceived effectiveness of competitive products; ● availability of alternative therapies at similar costs; and ● potential product liability claims.
The degree of market acceptance of any of our approved products will depend on a number of factors, including: ● limitations or warnings contained in a product’s FDA-approved labeling; ● changes in the standard of care for the targeted indications for any of our product candidates, which could reduce the marketing impact of any claims that we could make following FDA approval; ● limitations inherent in the approved indication for any of our product candidates compared to more commonly understood or addressed conditions; ● demonstrated clinical safety and efficacy compared to other products; ● prevalence and severity of adverse effects; ● the effectiveness of marketing and distribution efforts; ● availability of reimbursement from managed care plans and other third-party payors; ● cost-effectiveness; ● timing of market introduction and perceived effectiveness of competitive products; 66 Table of Contents ● availability of alternative therapies at similar costs; and ● potential product liability claims.
The success of our product candidates will depend on several factors, including the following: ● our ability to demonstrate our products’ safety, tolerability and efficacy to the FDA or any comparable foreign regulatory authority for marketing approval; ● successful and timely completion of our clinical trials; ● initiation and successful patient enrollment and completion of additional clinical trials on a timely basis; ● timely receipt of marketing approval for our products; ● obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; ● avoiding and successfully defending against any claims that we have infringed, misappropriated or otherwise violated any intellectual property of any third-party; ● the performance of our current and future distributors or collaborators, if any; ● the extent of, and our ability to timely complete, any required post-marketing approval commitments imposed by FDA or other applicable regulatory authorities; ● successfully developing a companion diagnostic test on a timely and cost effective basis, if required; ● establishment of supply arrangements with third-parties for raw materials and product supplies and potential manufacturers who are able to manufacture clinical trial and commercial quantities of drug substance and drug products; ● our ability to develop, validate and maintain a commercially viable manufacturing process that is compliant with cGMP at a scale sufficient to meet anticipated demand; ● establishment of arrangements with potential manufacturers who are able to develop, validate and maintain a commercially viable manufacturing process that is compliant with cGMP at a scale sufficient to meet anticipated demand and over time enable us to reduce our cost of manufacturing, if necessary; ● successful launch of commercial sales following marketing approval; ● a continued acceptable safety profile following marketing approval; ● commercial acceptance by patients, the medical community and third-party payors; ● the availability of coverage and adequate reimbursement and pricing by third-party payors and government authorities; ● the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; ● the impact of infectious disease outbreaks or pandemics on our operations, ability to conduct clinical trials and on the ability of our regulators to review and approve or authorize our products; ● our ability to compete with other therapies; and ● our ability to conduct post-marketing surveillance and comply with requirements of FDA and other comparable regulatory authorities after product approval.
The success of our product candidates will depend on several factors, including the following: ● our ability to demonstrate our products’ safety, tolerability and efficacy to the FDA or any comparable foreign regulatory authority for marketing approval; ● successful and timely completion of our clinical trials; ● initiation and successful patient enrollment and completion of additional clinical trials on a timely basis; ● timely receipt of marketing approval for our products; ● obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the United States and internationally; ● avoiding and successfully defending against any claims that we have infringed, misappropriated or otherwise violated any intellectual property of any third-party; ● the performance of our current and future distributors or collaborators, if any; ● the extent of, and our ability to timely complete, any required post-marketing approval commitments imposed by FDA or other applicable regulatory authorities; ● successfully developing a companion diagnostic test on a timely and cost effective basis, if required; ● establishment of supply arrangements with third-parties for raw materials and product supplies and potential manufacturers who are able to manufacture clinical trial and commercial quantities of drug substance and drug products; ● our ability to develop, validate and maintain a commercially viable manufacturing process that is compliant with cGMP at a scale sufficient to meet anticipated demand; ● successful launch of commercial sales following marketing approval; ● a continued acceptable safety profile following marketing approval; ● commercial acceptance by patients, the medical community and third-party payors; ● the availability of coverage and adequate reimbursement and pricing by third-party payors and government authorities; ● the availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing treatments; ● the impact of infectious disease outbreaks or pandemics on our operations, ability to conduct clinical trials and on the ability of our regulators to review and approve or authorize our products; ● our ability to compete with other therapies; and ● our ability to conduct post-marketing surveillance and comply with requirements of FDA and other comparable regulatory authorities after product approval.
If our product candidates fail to comply with applicable regulatory requirements, such as cGMPs, a regulatory agency may: ● issue warning letters or untitled letters; ● require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for non-compliance; ● impose other civil or criminal penalties; ● suspend regulatory approval; ● suspend any ongoing clinical trials; ● refuse to approve pending applications or supplements to approved applications filed by us; ● impose restrictions on operations, including costly new manufacturing requirements; or ● seize or detain products or require a product recall. ​ The third parties we use in the manufacturing process for our product candidates may fail to comply with cGMP regulations.
If our product candidates or manufacturing operations fail to comply with applicable regulatory requirements, including cGMPs: ● issue warning letters or untitled letters; ● require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for non-compliance; ● impose other civil or criminal penalties; ● suspend regulatory approval; ● suspend any ongoing clinical trials; ● refuse to approve pending applications or supplements to approved applications filed by us; ● impose restrictions on operations, including costly new manufacturing requirements; or ● seize or detain products or require a product recall. ​ The third parties we use in the manufacturing process for our product candidates may fail to comply with cGMP regulations.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (APA) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by U.S.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (APA) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision may have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by the U.S.
If our product candidates fail to comply with applicable regulatory requirements, such as good manufacturing practices, a regulatory agency may: ● issue warning or untitled letters; ● require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions, and penalties for noncompliance; ● impose other civil or criminal penalties; ● suspend regulatory approval; ● suspend any ongoing clinical trials; 46 Table of Contents ● refuse to approve pending applications or supplements to approved applications filed by us; ● impose restrictions on operations, including costly new manufacturing requirements; or ● seize or detain products or require a product recall.
If our product candidates fail to comply with applicable regulatory requirements, such as good manufacturing practices, a regulatory agency may: ● issue warning or untitled letters; ● require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions, and penalties for noncompliance; ● impose other civil or criminal penalties; ● suspend regulatory approval; ● suspend any ongoing clinical trials; ● refuse to approve pending applications or supplements to approved applications filed by us; ● impose restrictions on operations, including costly new manufacturing requirements; or ● seize or detain products or require a product recall.
Furthermore, negative, delayed or inconclusive results may result in: ● the withdrawal of clinical trial participants; ● the termination of clinical trial sites or entire trial programs; ● costly litigation arising out of the trials; ● substantial monetary awards to patients or other claimants; ● the requirement that additional trials be conducted; ● impairment of our business reputation; ● loss of potential revenues resulting from the inability to commercialize our product candidates. ​ 34 Table of Contents As the results of earlier preclinical studies or clinical trials are not necessarily predictive of future results, any product candidate we advance into clinical trials may not have favorable results in later clinical trials or receive regulatory approval.
Furthermore, negative, delayed or inconclusive results may result in: ● the withdrawal of clinical trial participants; ● the termination of clinical trial sites or entire trial programs; ● costly litigation arising out of the trials; ● substantial monetary awards to patients or other claimants; ● the requirement that additional trials be conducted; ● impairment of our business reputation; ● loss of potential revenues resulting from the inability to commercialize our product candidates. ​ As the results of earlier preclinical studies or clinical trials are not necessarily predictive of future results, any product candidate we advance into clinical trials may not have favorable results in later clinical trials or receive regulatory approval.
Although we do not currently have any products on the market, if our therapeutic candidates or clinical trials become covered by federal health care programs, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal, state and foreign governments of the jurisdictions in which we conduct our business.
Although we do not currently have any products on the market, if our therapeutic candidates or clinical trials become covered by federal healthcare programs, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal, state and foreign governments of the jurisdictions in which we conduct our business.
The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval. Congress has only authorized the rare pediatric disease priority review voucher program until September 30, 2024.
The FDA may also revoke any priority review voucher if the rare pediatric disease drug for which the voucher was awarded is not marketed in the U.S. within one year following the date of approval. Congress had only authorized the rare pediatric disease priority review voucher program until September 30, 2024.
In addition, several materials incorporated into our products require lengthy order lead times and additional supplies or materials may not be available when required on terms that are acceptable to us or our manufacturing partners, or at all, and our manufacturing partners and suppliers may not be 59 Table of Contents able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet demand for our products and our results of operations.
In addition, several materials incorporated into our products require lengthy order lead times and additional supplies or materials may not be available when required on terms that are acceptable to us or our manufacturing partners, or at all, and our manufacturing partners and suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet demand for our products and our results of operations.
The commencement, enrollment and completion of clinical trials can be delayed for a number of reasons, including, but not limited to, delays related to: 36 Table of Contents ● findings in preclinical studies; ● reaching agreements on acceptable terms with prospective CROs, vendors and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, vendors and trial sites; ● obtaining regulatory clearance to commence a clinical trial; ● complying with conditions imposed by a regulatory authority regarding the scope or term of a clinical trial, or being required to conduct additional trials before moving on to the next phase of trials; ● obtaining IRB approval to conduct a clinical trial at numerous prospective sites; ● recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including the size of the patient population, nature of trial protocol, meeting the enrollment criteria for our studies, screening failures, the inability of the sites to conduct trial procedures properly, the inability of the sites to devote their resources to the trial, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications; ● the impact of infectious disease outbreaks or pandemics on site personnel availability, patient screening and patient enrollment; ● competition from other companies operating in the same disease setting; ● developing and validating any companion diagnostic to be used in the trial, to the extent we are required to do so; ● patients failing to comply with the clinical trial protocol or dropping out of a trial; ● clinical trial sites failing to comply with the clinical trial protocol or dropping out of a trial; ● addressing any conflicts with new or existing laws or regulations; ● the need to add new clinical trial sites; ● retaining patients who have initiated their participation in a clinical trial but may withdraw due to the treatment protocol, lack of efficacy, personal issues, or side effects from the therapy, or who are lost to further follow-up; ● manufacturing sufficient quantities of a product candidate for use in clinical trials on a timely basis; ● obtaining advice from regulatory authorities regarding the statistical analysis plan to be used to evaluate the clinical trial data or other trial design issues; ● demonstrating the bioequivalence of products we manufacture to prior products manufactured by us; ● complying with design protocols of any applicable special protocol assessment we receive from the FDA; ● severe or unexpected drug-related side effects experienced by patients in a clinical trial; ● collecting, analyzing and reporting final data from the clinical trials; ● breaches in quality of manufacturing runs that compromise all or some of the doses made; positive results in FDA-required viral testing; karyotypic abnormalities in our cell product; or contamination in our manufacturing facilities, all of which events would necessitate disposal of all cells made from that source; ● availability of materials provided by third parties necessary to manufacture our product candidates; ● availability of adequate amounts of acceptable tissue for preparation of master cell banks for our products; ● requirements to conduct additional trials and studies, and increased expenses associated with the services of the Company’s CROs and other third parties; and ● meeting logistical requirements for the delivery of investigational product.
The commencement, enrollment and completion of clinical trials can be delayed for a number of reasons, including, but not limited to, delays related to: ● findings in preclinical studies; ● reaching agreements on acceptable terms with prospective CROs, vendors and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs, vendors and trial sites; ● obtaining regulatory clearance to commence a clinical trial; ● complying with conditions imposed by a regulatory authority regarding the scope or term of a clinical trial, or being required to conduct additional trials before moving on to the next phase of trials; ● obtaining IRB approval to conduct a clinical trial at numerous prospective sites; ● recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including the size of the patient population, nature of trial protocol, meeting the enrollment criteria for our studies, screening failures, the inability of the sites to conduct trial procedures properly, the inability of the sites to devote their resources to the trial, the availability of approved effective treatments for the relevant disease and competition from other clinical trial programs for similar indications; ● the impact of infectious disease outbreaks or pandemics on site personnel availability, patient screening and patient enrollment; ● competition from other companies operating in the same disease setting; ● developing and validating any companion diagnostic to be used in the trial, to the extent we are required to do so; ● patients failing to comply with the clinical trial protocol or dropping out of a trial; ● clinical trial sites failing to comply with the clinical trial protocol or dropping out of a trial; ● addressing any conflicts with new or existing laws or regulations; ● the need to add new clinical trial sites; ● retaining patients who have initiated their participation in a clinical trial but may withdraw due to the treatment protocol, lack of efficacy, personal issues, or side effects from the therapy, or who are lost to further follow-up; ● manufacturing sufficient quantities of a product candidate for use in clinical trials on a timely basis; ● obtaining advice from regulatory authorities regarding the statistical analysis plan to be used to evaluate the clinical trial data or other trial design issues; ● demonstrating the bioequivalence of products we manufacture to prior products manufactured by us; ● complying with design protocols of any applicable special protocol assessment we receive from the FDA; ● severe or unexpected drug-related side effects experienced by patients in a clinical trial; ● collecting, analyzing and reporting final data from the clinical trials; ● breaches in quality of manufacturing runs that compromise all or some of the doses made; positive results in FDA-required viral testing; karyotypic abnormalities in our cell product; or contamination in our manufacturing facilities, as well as equipment failures, operator error, variability in yields or cell viability, 38 Table of Contents or other deviations that may result in lot failures or product loss, all of which events would necessitate disposal of all cells made from that source; ● availability of materials provided by third parties necessary to manufacture our product candidates; ● availability of adequate amounts of acceptable tissue for preparation of master cell banks for our products; ● requirements to conduct additional trials and studies, and increased expenses associated with the services of the Company’s CROs and other third parties; and ● meeting logistical requirements for the delivery of investigational product.
Risks Related to Product and Environmental Liability ● our products may expose us to potential product liability. Risks Related to Our Common Stock ● we expect that our stock price will continue to fluctuate significantly; and ● we have never paid dividends and we do not anticipate paying dividends in the future.
Risks Related to Product and Environmental Liability ● our products or product candidates may expose us to potential product liability. Risks Related to Our Common Stock ● we expect that our stock price will continue to fluctuate significantly; and ● we have never paid dividends and we do not anticipate paying dividends in the future.
The full impact on our business of any future cuts in Medicare or other programs is uncertain. In addition, we cannot predict any impact which the actions of the current Trump administration and the U.S. Congress may have on the federal budget.
The full impact on our business of any future cuts in Medicare or other programs is uncertain. In addition, we cannot predict the impact that the actions of the current Trump administration and the U.S. Congress may have on the federal budget.
In addition, any uncertainties resulting from the initiation and continuation of any litigation or inter partes review proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. Some jurisdictions in which we operate have enacted legislation which allows members of the public to access information under statutes similar to the U.S.
In addition, any uncertainties resulting from the initiation and continuation of any litigation or inter partes review proceedings could have a material adverse effect on our ability to raise the funds necessary to continue our operations. 60 Table of Contents Some jurisdictions in which we operate have enacted legislation which allows members of the public to access information under statutes similar to the U.S.
Any such 55 Table of Contents litigation, if instituted, could have a material adverse effect, potentially including monetary penalties, diversion of management resources, and injunction against continued manufacture, use, or sale of certain products or processes. Some of our technology has resulted and/or will result from research funded by agencies of the U.S. government and the State of California.
Any such litigation, if instituted, could have a material adverse effect, potentially including monetary penalties, diversion of management resources, and injunction against continued manufacture, use, or sale of certain products or processes. Some of our technology has resulted and/or will result from research funded by agencies of the U.S. government and the State of California.
To date, efforts by others to leverage natural exosomes have generally 35 Table of Contents demonstrated an inability to generate exosomes with predictable biologically active properties or to manufacture exosomes at suitable scale to treat more than a small number of patients. Our success will depend on our ability to demonstrate that our exosome technologies can overcome these challenges.
To date, efforts by others to leverage natural exosomes have generally demonstrated an inability to generate exosomes with predictable biologically active properties or to manufacture exosomes at suitable scale to treat more than a small number of patients. Our success will depend on our ability to demonstrate that our exosome technologies can overcome these challenges.
Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees. 58 Table of Contents We depend on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees. We depend on intellectual property licensed from third parties and termination of any of these licenses could result in the loss of significant rights, which would harm our business.
The patent positions of pharmaceutical and biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain uncertain and unclear. No clear statutes or common law regarding the breadth of claims allowed in biopharmaceutical patents has clearly emerged to date in the 56 Table of Contents United States.
The patent positions of pharmaceutical and biopharmaceutical companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain uncertain and unclear. No clear statutes or common law regarding the breadth of claims allowed in biopharmaceutical patents has clearly emerged to date in the United States.
We and these third parties are required to comply with current good clinical practices (“cGCPs”), which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these cGCPs through periodic inspections of trial sponsors, principal investigators and trial sites.
We and these third parties are required to comply with current good clinical practices (“cGCPs”), which 63 Table of Contents are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these cGCPs through periodic inspections of trial sponsors, principal investigators and trial sites.
We have a history of net losses, expect to continue to incur substantial net losses for the foreseeable future, and may never achieve or maintain profitability. Our operations to date have been primarily limited to organizing and staffing our company, developing our technology, and undertaking preclinical studies and clinical trials of our product candidates.
We have a history of net losses, expect to continue to incur substantial net losses for the foreseeable future, and may never achieve or maintain profitability. Our operations to date have been primarily limited to organizing and staffing 31 Table of Contents our company, developing our technology, and undertaking preclinical studies and clinical trials of our product candidates.
If we were to encounter any of these difficulties, our ability to provide our product candidate to patients in clinical trials, or to provide product for treatment of patients once approved, would be jeopardized. We will need to increase our manufacturing capacity in the future and we may encounter problems at our current manufacturing facilities.
If we were to encounter any of these difficulties, our ability to provide our product candidate to patients in clinical trials, or to provide product for treatment of patients once approved, would be jeopardized. ​ 54 Table of Contents We will need to increase our manufacturing capacity in the future and we may encounter problems at our current manufacturing facilities.
Risks Related to Competitive Factors ● our products, if approved, will likely face intense competition; and ● any of our product candidates for which we receive regulatory approval may not achieve broad market acceptance, which could limit the revenue that we will generate from their sales, if any.
Risks Related to Competitive Factors ● our products, if approved, will likely face significant competition; and ● any of our product candidates for which we receive regulatory approval may not achieve broad market acceptance, which could limit the revenue we may generate from their sales, if any.
Our development of a potential vaccine for COVID-19 or other indications is at an early stage and is subject to significant risks. 64 Table of Contents Our development of a vaccine of COVID-19 is in early stages and we may be unable to produce a vaccine that successfully treats a particular virus in a timely manner, if at all.
Our development of a potential vaccine for COVID-19 or other indications is at an early stage and is subject to significant risks. Our development of a vaccine of COVID-19 is in early stages and we may be unable to produce a vaccine that successfully treats a particular virus in a timely manner, if at all.
The failure to comply with current or future regulations could result in the imposition of substantial fines against the Company, suspension of production, alteration of our manufacturing processes, or cessation of operations. Our business depends on compliance with ever-changing environmental and human health and safety laws.
The failure to comply with current or future regulations could result in the imposition of substantial fines against the Company, suspension of production, alteration of our manufacturing processes, or cessation of operations. 68 Table of Contents Our business depends on compliance with ever-changing environmental and human health and safety laws.
A significant natural disaster, such as an earthquake, flood or fire, occurring at our headquarters or manufacturing facilities, or at the facilities of any third-party manufacturer or vendor, could have a material adverse effect on our business, financial condition and results of operations.
A significant natural disaster, such as an earthquake, flood or fire, occurring at our headquarters or manufacturing facilities, 33 Table of Contents or at the facilities of any third-party manufacturer or vendor, could have a material adverse effect on our business, financial condition and results of operations.
If we are unable to manage our growth effectively, our business would be harmed. 33 Table of Contents Risks Related to Clinical and Commercialization Activities Our success depends upon the viability of our product candidates and we cannot be certain any of them will receive regulatory approval to be commercialized.
If we are unable to manage our growth effectively, our business would be harmed. Risks Related to Clinical and Commercialization Activities Our success depends upon the viability of our product candidates and we cannot be certain any of them will receive regulatory approval to be commercialized.
If our clinical trials of our product candidates or future product candidates do not sufficiently enroll or produce results necessary to support regulatory approval in the United States or elsewhere, or if they show undesirable side effects, we will be unable to commercialize these product candidates.
If our clinical trials of our product candidates or future product candidates do not 35 Table of Contents sufficiently enroll or produce results necessary to support regulatory approval in the United States or elsewhere, or if they show undesirable side effects, we will be unable to commercialize these product candidates.
Many of these organizations competing with us have substantially greater financial resources, larger research and development staffs and facilities, greater clinical trial experience, longer drug development history in obtaining regulatory approvals, and greater manufacturing, distribution, sales and marketing capabilities than we do.
Many of these organizations competing with us have substantially greater financial resources, larger research and development staffs and facilities, greater clinical trial experience, longer drug development history in obtaining regulatory approvals, and greater manufacturing, distribution, 64 Table of Contents sales and marketing capabilities than we do.
If we are unable to procure policies in the amounts, with suitable coverage and for the duration required, we could be in breach of our agreements with such third parties. 66 Table of Contents Our business involves risk associated with handling hazardous and other dangerous materials.
If we are unable to procure policies in the amounts, with suitable coverage and for the duration required, we could be in breach of our agreements with such third parties. Our business involves risk associated with handling hazardous and other dangerous materials.
To this end, we require all of our employees, consultants, advisors and contractors to enter into agreements which prohibit unauthorized disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.
To this end, we require all of our employees, consultants, advisors and contractors to enter into 59 Table of Contents agreements which prohibit unauthorized disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business.
Distribution Agreement and the Japan Distribution Agreement with Nippon Shinyaku for the exclusive commercialization and distribution rights 63 Table of Contents in the United States and Japan, respectively, of deramiocel for DMD. We continue to evaluate additional potential partners for this program in other territories outside of these territories, subject to any rights of Nippon Shinyaku.
Distribution Agreement and the Japan Distribution Agreement with Nippon Shinyaku for the exclusive commercialization and distribution rights in the United States and Japan, respectively, of Deramiocel for DMD. We continue to evaluate additional potential partners for this program in other territories outside of these territories, subject to any rights of Nippon Shinyaku.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including: ● the efficacy and safety of the product; 41 Table of Contents ● the potential advantages of the product compared to alternative therapies; ● the prevalence and severity of any side effects; ● whether the product is designated under physician and other provider treatment guidelines as a first-, second- or third-line therapy; ● our ability, or the ability of any future collaborators, to offer the product for sale at competitive prices; ● the product’s convenience and ease of administration for patients and healthcare practitioners compared to alternative treatments; ● the willingness of the target patient population to try, and of physicians to prescribe, the product; ● limitations or warnings, including distribution or use restrictions and safety information contained in the product’s approved labeling; ● the strength of sales, marketing and distribution support; ● the performance of third-party distributors, such as our exclusive distributor for our lead product candidate, deramiocel; ● changes in the standard of care for the targeted indications for the product; and ● the availability of coverage by, and the amount of reimbursement from, government payors, managed care plans and other third-party payors.
The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including: ● the efficacy and safety of the product; ● the potential advantages of the product compared to alternative therapies; ● the prevalence and severity of any side effects; ● whether the product is designated under physician and other provider treatment guidelines as a first-, second- or third-line therapy; ● our ability, or the ability of any future collaborators, to offer the product for sale at competitive prices; ● the product’s convenience and ease of administration for patients and healthcare practitioners compared to alternative treatments; ● site-of-care requirements, infusion logistics, and the ability of treatment centers and payors to support administration and access on a timely basis; ● the willingness of the target patient population to try, and of physicians to prescribe, the product; ● limitations or warnings, including distribution or use restrictions and safety information contained in the product’s approved labeling; ● the strength of sales, marketing and distribution support; ● the performance of third-party distributors, such as our exclusive distributor for our lead product candidate, Deramiocel; ● changes in the standard of care for the targeted indications for the product; and 43 Table of Contents ● the availability of coverage by, and the amount of reimbursement from, government payors, managed care plans and other third-party payors.
Our inability to promptly obtain relevant compendia listings, coverage, and adequate reimbursement from both government-funded and private payors for new drugs that we develop and for which we obtain regulatory approval could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our financial condition.
Our inability to promptly obtain relevant compendia listings, coverage, and adequate reimbursement from both government-funded and private payors for new drugs that we develop and for which we obtain regulatory approval 50 Table of Contents could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our financial condition.
Perceived 70 Table of Contents uncertainties as to our future direction as a result of stockholder activism may lead to the perception of a change in the direction of the business or other instability and may affect our relationships with vendors, distributors, collaborators, prospective and current employees and others.
Perceived uncertainties as to our future direction as a result of stockholder activism may lead to the perception of a change in the direction of the business or other instability and may affect our relationships with vendors, distributors, collaborators, prospective and current employees and others.
Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trial set forth in an IND or clinical trial application, we cannot guarantee that such regulatory authorities will not change their requirements in the future.
Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trial set forth in an IND or clinical trial application, we cannot 37 Table of Contents guarantee that such regulatory authorities will not change their requirements in the future.
We have limited 39 Table of Contents experience in designing late-stage clinical trials and may be unable to design and conduct a clinical trial to support marketing approval. Further, if our product candidates are found to be unsafe or lack efficacy, we will not be able to obtain marketing approval for them and our business would be harmed.
We have limited experience in designing late-stage clinical trials and may be unable to design and conduct a clinical trial to support marketing approval. Further, if our product candidates are found to be unsafe or lack efficacy, we will not be able to obtain marketing approval for them and our business would be harmed.
Under the FDA's Rare Pediatric Disease Priority Review Voucher program, upon the approval of a BLA or NDA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for a Rare Pediatric Disease Priority Review Voucher that can be used to obtain priority review for a 43 Table of Contents subsequent BLA or NDA.
Under the FDA's Rare Pediatric Disease Priority Review Voucher program, upon the approval of a BLA or NDA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for a Rare Pediatric Disease Priority Review Voucher that can be used to obtain priority review for a subsequent BLA or NDA.
Our research and development activities, preclinical studies, clinical trials, and manufacturing and marketing of our potential products are subject to extensive regulation by the FDA and other regulatory authorities in the United States, 44 Table of Contents as well as by regulatory authorities in other countries.
Our research and development activities, preclinical studies, clinical trials, and manufacturing and marketing of our potential products are subject to extensive regulation by the FDA and other regulatory authorities in the United States, as well as by regulatory authorities in other countries.
We may also make further changes to our manufacturing process before or after commercialization, and such changes may require us to show the comparability of the resulting product to the product 51 Table of Contents used in the clinical trials using earlier processes.
We may also make further changes to our manufacturing process before or after commercialization, and such changes may require us to show the comparability of the resulting product to the product used in the clinical trials using earlier processes.
Our failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to repeat 61 Table of Contents clinical trials, which would delay the regulatory approval process.
Our failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval process.
If we experience difficulties acquiring sufficient quantities of required materials or products from our existing suppliers, or if our suppliers are found to be non-compliant with the FDA, EMA or other comparable applicable foreign bodies, then qualifying and obtaining the required regulatory approvals to use alternative suppliers may be a lengthy and uncertain process during which production could be delayed and we could lose sales.
If we experience difficulties acquiring sufficient quantities of required materials or products from our existing suppliers, if our suppliers stop manufacturing one or more of our raw materials, or if our suppliers are found to be non-compliant with the FDA, EMA or other comparable applicable foreign bodies, then qualifying and obtaining the required regulatory approvals to use alternative suppliers may be a lengthy and uncertain process during which production could be delayed and we could lose sales.
As a result, significant regulatory policies may be subject to increased litigation and judicial scrutiny. In addition, federal agency priorities, leadership, policies, rulemaking, communications, spending, and staffing may be significantly impacted by election cycles.
As a result, significant regulatory policies may be subject to increased litigation and judicial scrutiny. In addition, federal agency activities, priorities, leadership, policies, rulemaking, communications, spending, and staffing may be significantly impacted by election cycles and legislative developments.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable securities rules and regulations, and are subject to the listing 69 Table of Contents requirements of The Nasdaq Stock Market LLC (“Nasdaq”).
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable securities rules and regulations, and are subject to the listing requirements of The Nasdaq Stock Market LLC (“Nasdaq”).
It is difficult for us to predict how Medicare coverage and reimbursement policies will be applied to our products in the future and coverage and reimbursement under different 48 Table of Contents federal healthcare programs are not always consistent. Medicare reimbursement rates may also reflect budgetary constraints placed on the Medicare program.
It is difficult for us to predict how Medicare coverage and reimbursement policies will be applied to our products in the future and coverage and reimbursement under different federal healthcare programs are not always consistent. Medicare reimbursement rates may also reflect budgetary constraints placed on the Medicare program.
We are actively looking into potential additional strategic partnerships for our product candidates, particularly for deramiocel in additional territories outside the United States and Japan, and for our exosomes product candidates. For example, we are in advanced negotiations pursuant to a binding term sheet with Nippon Shinyaku for the distribution of deramiocel in the European region.
We are actively looking into potential additional strategic partnerships for our product candidates, particularly for Deramiocel in additional territories outside the United States and Japan, and for our exosomes product candidates. For 61 Table of Contents example, we are in negotiations pursuant to a binding term sheet with Nippon Shinyaku for the distribution of Deramiocel in the European region.
Moreover, there is a relatively limited safety data set for product candidates using an exosome platform. An adverse safety issue or other adverse finding in a clinical trial conducted by a third-party with a product candidate similar to ours could adversely affect our clinical trials.
Moreover, 41 Table of Contents there is a relatively limited safety data set for product candidates using an exosome platform. An adverse safety issue or other adverse finding in a clinical trial conducted by a third-party with a product candidate similar to ours could adversely affect our clinical trials.
Supreme Court has modified certain legal tests so as to make it harder to obtain patents from the USPTO, and to defend issued patents against invalidity challenges. As a consequence, issued patents may be found by federal courts to contain invalid claims according to the revised legal 57 Table of Contents standards.
Supreme Court has modified certain legal tests so as to make it harder to obtain patents from the USPTO, and to defend issued patents against invalidity challenges. As a consequence, issued patents may be found by federal courts to contain invalid claims according to the revised legal standards.
For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.
For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and 34 Table of Contents significantly increase our costs to recover or reproduce the data.
The time required to obtain approval in other countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States as well as other risks.
The time required to obtain approval in other countries might differ from that required to 48 Table of Contents obtain FDA approval. The regulatory approval process in other countries may include all of the risks detailed above regarding FDA approval in the United States as well as other risks.
There is no guarantee that laws and regulations pursuant to which our OPOs provide donor hearts will not change, making it more difficult or even impossible for the OPOs to continue to supply us with the hearts we need to produce our product candidates.
There is no guarantee that laws and regulations pursuant to which our OPOs provide donor hearts will not change, making it more difficult or even 53 Table of Contents impossible for the OPOs to continue to supply us with the hearts we need to produce our product candidates.
Our ability to stop third parties from making, using, selling, offering to sell, or importing our products is dependent upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these products and activities.
Our ability to stop third parties from making, using, selling, offering 58 Table of Contents to sell, or importing our products is dependent upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these products and activities.
In addition, outbreaks of viruses, infectious diseases or pandemics (including, for example, the outbreak of the novel coronavirus (COVID-19)), terrorist acts or acts of war targeted at the United States, and specifically in the California region, or geopolitical conflicts, such as the Russia-Ukraine conflict and the conflicts in 32 Table of Contents the Middle East, could cause damage or disruption to us, our employees, facilities, contractors and collaborators, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, outbreaks of viruses, infectious diseases or pandemics (including, for example, the outbreak of the novel coronavirus (COVID-19)), terrorist acts or acts of war targeted at the United States, and specifically in the California region, or geopolitical conflicts, such as the Russia-Ukraine conflict, Venezuela, and the conflicts in Gaza, Iran, and across the Middle East, could cause damage or disruption to us, our employees, facilities, contractors and collaborators, which could have a material adverse effect on our business, financial condition and results of operations.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline. The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline. The trading market for our common stock may depend in part on the research and reports that industry or financial analysts publish about us or our business.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are insufficiently positive to support marketing approval, or if there are safety concerns, we may: ● incur unplanned costs; ● be delayed in obtaining marketing approval for our product candidates or not obtain marketing approval at all; ● obtain marketing approval in some countries and not in others; ● obtain marketing approval for indications or patient populations that are narrower or more limited in scope than intended or desired; ● obtain marketing approval subject to significant use or distribution restrictions or with labeling that includes significant safety warnings, including boxed warnings; ● be subject to additional post-marketing testing requirements; or ● have the drug removed from the market after obtaining marketing approval. 38 Table of Contents Our drug development costs will also increase if we experience delays in testing or marketing approvals.
If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are insufficiently positive to support marketing approval, or if there are safety concerns, we may: ● incur unplanned costs; ● be delayed in obtaining marketing approval for our product candidates or not obtain marketing approval at all; ● obtain marketing approval in some countries and not in others; ● obtain marketing approval for indications or patient populations that are narrower or more limited in scope than intended or desired; ● obtain marketing approval subject to significant use or distribution restrictions or with labeling that includes significant safety warnings, including boxed warnings; ● be subject to additional post-marketing testing requirements; or ● have the drug removed from the market after obtaining marketing approval.
If we enter into any strategic partnerships with pharmaceutical, biotechnology or other life science companies, we will be subject to a number of risks, including: ● we may not be able to control the amount and timing of resources that our strategic partners devote to the development or commercialization of product candidates; ● strategic partners may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; ● strategic partners may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs; ● strategic partners may not commit adequate resources to the marketing and distribution of any future products, limiting our potential revenues from these products; ● disputes may arise between us and our strategic partners that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; ● strategic partners may experience financial difficulties; ● strategic partners may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; ● business combinations or significant changes in a strategic partner’s business strategy may also adversely affect a strategic partner’s willingness or ability to complete its obligations under any arrangement; and ● strategic partners could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors.
If we enter into any strategic partnerships with pharmaceutical, biotechnology or other life science companies, we will be subject to a number of risks, including: ● we may not be able to control the amount and timing of resources that our strategic partners devote to the development or commercialization of product candidates; ● strategic partners may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; ● strategic partners may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs; ● strategic partners may not commit adequate resources to necessary pre-launch activities or the marketing and distribution of any future products, limiting our potential revenues from these products; ● disputes may arise between us and our strategic partners that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; ● strategic partners may experience financial difficulties; ● strategic partners may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; ● business combinations or significant changes in a strategic partner’s business strategy may also adversely affect a strategic partner’s willingness or ability to complete its obligations under any arrangement; and ● strategic partners could independently move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors. ​ Our results of operations could be materially harmed if we or our distributor are unable to accurately forecast customer demand for our products and manage our inventory.
Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of worldwide 45 Table of Contents revenue, whichever is higher.
Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of worldwide revenue, whichever is higher.
The U.S. federal budget remains in flux, which could, among other things, result in additional cuts to Medicare payments to providers and otherwise affect federal spending on clinical and preclinical research and development. The Medicare program is frequently mentioned as a target for spending cuts.
The U.S. federal budget remains subject to uncertainty and change, which could, among other things, result in additional reductions in Medicare payments to providers and otherwise affect federal spending on clinical and preclinical research and development. The Medicare program is frequently mentioned as a target for spending cuts.
Moreover, to the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive 29 Table of Contents covenants.
Moreover, to the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional significant dilution, and debt financing, if available, may involve restrictive covenants.
Some of our pre-commercial activities also may be subject to some of these laws. For more information on potentially applicable healthcare laws and regulations, See Part I, Item 1 – Other Healthcare Fraud and Abuse Laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.
Some of our pre-commercial activities also may be subject to some of these laws. For more information on potentially applicable healthcare laws and regulations, See Part I, Item 1 – Other U.S. Healthcare Laws and Compliance Requirements. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform.
This number of shares available for future issuance under those plans was subsequently increased by 2,279,114 shares on January 1, 2025 in accordance with the terms of our 2021 Equity Incentive Plan which include an automatic increase previously approved by our Board and stockholders.
This number of shares available for future issuance under those plans was subsequently increased by 2,868,420 shares on January 1, 2026 in accordance with the terms of our 2025 Equity Incentive Plan which include an automatic increase previously approved by our Board and stockholders.
In addition, regardless of the level of insurance coverage, damage to our facilities or any disruption that impedes our ability to manufacture deramiocel in a timely manner could materially and adversely affect our business, financial condition, operating results, cash flows and prospects. 52 Table of Contents Additionally, we rely on third-party vendors for certain tests (sterility, etc.) required for product release.
In addition, regardless of the level of insurance coverage, damage to our facilities or any disruption that impedes our ability to manufacture Deramiocel in a timely manner could materially and adversely affect our business, financial condition, operating results, cash flows and prospects. Additionally, we rely on third-party vendors to perform certain tests (such as sterility testing) required for product release.
Additionally, we cannot predict with any certainty if, or when, we might commence any clinical trials of our exosome product candidates, whether we will be able to secure additional strategic partners, or whether our current trials will yield sufficient data to permit us to proceed with additional clinical development and ultimately submit an application for regulatory approval of our exosome product candidates in the United States or abroad, or whether such applications will be accepted by the appropriate regulatory agencies.
Additionally, we cannot predict with any certainty if, or when, we might commence any additional clinical trials of our exosome product candidates, whether we will be able to secure additional strategic partners, or whether our current trials will yield sufficient data to permit us to proceed with additional clinical development and ultimately submit an application for regulatory approval of our exosome product candidates in the United States or abroad, or whether such applications will be accepted by the appropriate regulatory agencies. 32 Table of Contents Our business depends entirely on the successful development and commercialization of our product candidates.
For example, the current presidential administration’s commitment to significantly reduce government spending through cuts to federal healthcare programs and reductions in the workforces of key government agencies, such as the U.S. Department of Health and Human Services, CMS and FDA.
For example, the current presidential administration has signaled its continued commitment to significantly reduce government spending through cuts to federal healthcare programs and reductions in the workforces of key government agencies, such as the U.S. Department of Health and Human Services, CMS and FDA.
Even when substitute suppliers are available, the need to verify the substitute supplier’s regulatory compliance and the quality standards of the replacement material could significantly delay production and materially reduce our sales.
Substitute suppliers may not be available and even if substitute suppliers are available, the need to verify the substitute supplier’s regulatory compliance and the quality standards of the replacement material could significantly delay production and materially reduce our sales.
Risks Related to Our Common Stock We expect that our stock price will continue to fluctuate significantly. The stock market, particularly in recent years, has experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks.
Risks Related to Our Common Stock We expect that our stock price will continue to fluctuate significantly. The stock market, particularly for pharmaceutical, biotechnology and other life sciences companies, has experienced significant volatility in recent years.
The requirements of being a public company may strain our resources and divert management’s attention.
The requirements of being a public company may strain our resources and divert management’s attention from operating our business.
Additionally, if a serious adverse event in any of our clinical trials were to occur during the period in which any required license was not in place, we could be exposed to additional liability if it were determined that the event was due to our fault and we had not secured the required license.
Additionally, if a serious adverse event in any of our clinical trials or during any time when our product is being commercially distributed were to occur during the period in which any required license was not in place, we could be exposed to additional liability if it were determined that the event was due to our fault and we had not secured the required license.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor example, the information technology department works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact on our business. The Company is currently in the process of implementing a cybersecurity oversight committee to enhance governance and ensure dedicated focus on cybersecurity risk management.
Biggest changeFor example, the information technology department works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact on our business. The Company is currently in the process of retaining an additional vendor to provide enhanced cybersecurity expertise to ensure governance and dedicated focus on cybersecurity risk management.
Such a breach could expose us to business interruption, future lost revenue, ransom payments, remediation costs, liabilities to affected parties, cybersecurity protection costs, lost assets, litigation, regulatory scrutiny and actions, reputational harm, and harm to our vendor relationships. ​ 71 Table of Contents
Such a breach could expose us to business interruption, future lost revenue, ransom payments, remediation costs, liabilities to affected parties, cybersecurity protection costs, lost assets, litigation, regulatory scrutiny and actions, reputational harm, and harm to our vendor relationships. ​ 74 Table of Contents
This committee will work closely with the board to provide regular updates on the organization’s cybersecurity posture, performance, and emerging risks, while ensuring that cybersecurity strategies align with business objectives and regulatory requirements.
This vendor will work closely with our in-house information technology department to provide regular updates on the organization’s cybersecurity posture, performance, and emerging risks, while ensuring that cybersecurity strategies align with business objectives and regulatory requirements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our facilities are adequate and suitable for our current needs and that we will be able to obtain new or additional leased space in the future, if necessary. ​ ​ ​ ​ ​ Location of Property Lease Expiration Date (1) Purpose Square Footage (approximate) 10865 Road to the Cure, Suite 150, San Diego, California September 30, 2033 Corporate Headquarters: Laboratory, manufacturing and office space 34,348 10865 Road to the Cure, Room 7, San Diego, California December 31, 2025 Laboratory space (Vivarium) 234 8840 Wilshire Blvd., 2 nd Floor, Beverly Hills, California Month-to-Month, terminable on 90-day notice Office space 1,627 8700 Beverly Blvd., Davis Building, Los Angeles, California July 31, 2026 Laboratory, manufacturing and office space 1,892 10835 Road to the Cure, Suite 140, San Diego, California November 30, 2025 Laboratory and office space 11,173 1359 Keystone Way, Suite A, Vista, California November 19, 2025 Laboratory and manufacturing space 18,188 (1) Certain leases have specific options for potential renewal or extensions. ​
Biggest changeWe believe our facilities are adequate and suitable for our current needs and that we will be able to obtain new or additional leased space in the future, if necessary. ​ ​ ​ ​ ​ Location of Property Lease Expiration Date (1) Purpose Square Footage (approximate) 10865 Road to the Cure, San Diego, California September 30, 2033 Corporate headquarters: manufacturing, laboratory and office space 34,348 10865 Road to the Cure, Room 7, San Diego, California December 31, 2026 Laboratory space (vivarium) 234 8840 Wilshire Blvd., 2 nd Floor, Beverly Hills, California April 22, 2026 Office space 1,627 8700 Beverly Blvd., Davis Building, Los Angeles, California July 31, 2026 Laboratory, manufacturing and office space 1,892 10835 Road to the Cure, Suite 140, San Diego, California June 30, 2026 Laboratory and office space 11,173 (1) Certain leases have specific options for potential renewal or extensions. ​ ITEM 3.
Added
LEGAL PROCEEDINGS For information regarding material legal proceedings, please refer to Note 15 – “Commitments and Contingencies – Legal Contingencies” in our consolidated financial statements included in this Annual Report on Form 10-K. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None. ​
Biggest changeRecent Sales of Unregistered Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None. ​ ITEM 6. RESERVED Not applicable. ​ 76 Table of Contents
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock Our common stock is traded on the Nasdaq Capital Market under the symbol “CAPR”. ​ Holders According to the records of our transfer agent, Equiniti Trust Company LLC, as of March 24, 2025, we had 133 holders of record of common stock, which does not include holders who held in “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “CAPR”. ​ Holders According to the records of our transfer agent, Equiniti Trust Company LLC, as of March 16, 2026, we had 112 holders of record of common stock, which does not include holders who held in “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

79 edited+47 added−67 removed42 unchanged
Biggest changeR&D expenses consist primarily of compensation and other related personnel costs, supplies, clinical trial costs, patient treatment costs, rent for laboratories and manufacturing facilities, consulting fees, costs of personnel and supplies for manufacturing, costs of service providers for preclinical, clinical and manufacturing, certain legal expenses resulting from intellectual property prosecution, stock-based compensation expense and other expenses relating to the design, development, testing and enhancement of our product candidates. 77 Table of Contents The following table summarizes our R&D expenses by category for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ($) Change (%) Compensation and other personnel expenses ​ $ 16,390,412 ​ $ 11,272,356 ​ $ 5,118,056 ​ ​ 45 % Duchenne muscular dystrophy program (deramiocel) ​ 23,049,349 ​ 18,667,993 ​ 4,381,356 ​ 23 % Exosomes platform research ​ ​ 2,908,678 ​ 2,090,999 ​ 817,679 ​ 39 % Facility expenses ​ ​ 2,759,096 ​ ​ 1,457,097 ​ ​ 1,301,999 ​ ​ 89 % Stock-based compensation ​ ​ 3,605,667 ​ ​ 1,916,245 ​ ​ 1,689,422 ​ ​ 88 % Depreciation ​ ​ 773,985 ​ ​ 626,514 ​ ​ 147,471 ​ ​ 24 % Research and other ​ ​ 481,398 ​ ​ 416,835 ​ ​ 64,563 ​ ​ 15 % Total research and development expenses ​ $ 49,968,585 ​ $ 36,448,039 ​ $ 13,520,546 ​ ​ 37 % ​ R&D expenses for 2024 increased by approximately $13.5 million, or 37%, compared to 2023.
Biggest changeThe following table summarizes our R&D expenses by category for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change ($) ​ ​ ​ Change (%) ​ ​ ​ Compensation and other personnel expenses ​ $ 28,260,696 ​ $ 16,390,412 ​ $ 11,870,284 ​ ​ 72 % Duchenne muscular dystrophy program (Deramiocel) ​ 34,254,585 ​ 23,049,349 ​ 11,205,236 ​ 49 % Exosomes platform research ​ ​ 5,225,572 ​ 2,908,678 ​ 2,316,894 ​ 80 % Facility expenses ​ ​ 5,991,848 ​ ​ 2,759,096 ​ ​ 3,232,752 ​ ​ 117 % Stock-based compensation ​ ​ 8,917,527 ​ ​ 3,605,667 ​ ​ 5,311,860 ​ ​ 147 % Depreciation and amortization ​ ​ 950,615 ​ ​ 773,985 ​ ​ 176,630 ​ ​ 23 % Research and other ​ ​ 853,752 ​ ​ 481,398 ​ ​ 372,354 ​ ​ 77 % Total research and development expenses ​ $ 84,454,595 ​ $ 49,968,585 ​ $ 34,486,010 ​ ​ 69 % ​ R&D expenses for 2025 increased by approximately $34.5 million, or 69%, compared to 2024.
The duration and cost of clinical trials may vary significantly over the life of a project as a result of unanticipated events arising during manufacturing and clinical development and as a result of a variety of other factors, including: ● the number of trials and studies in a clinical program; ● the number of patients who participate in the trials; ● the number of sites included in the trials; ● the rates of patient recruitment and enrollment; ● the duration of patient treatment and follow-up; ● the costs of manufacturing our product candidates; ● the availability of necessary materials required to make our product candidates; and ● the costs, requirements and timing of, and the ability to secure, regulatory approvals. ​ Liquidity and Capital Resources for the fiscal years ended December 31, 2024 and 2023 The following table summarizes our liquidity and capital resources as of and for each of our last two fiscal years, and our net increase (decrease) in cash, cash equivalents, and marketable securities as of and for each of our last two fiscal years and is intended to supplement the more detailed discussion that follows.
The duration and cost of clinical trials may vary significantly over the life of a project as a result of unanticipated events arising during manufacturing and clinical development and as a result of a variety of other factors, including: ● the number of trials and studies in a clinical program; ● the number of patients who participate in the trials; ● the number of sites included in the trials; ● the rates of patient recruitment and enrollment; ● the duration of patient treatment and follow-up; ● the costs of manufacturing our product candidates; ● the availability of necessary materials required to make our product candidates; and ● the costs, requirements and timing of, and the ability to secure, regulatory approvals. ​ Liquidity and Capital Resources for the fiscal years ended December 31, 2025 and 2024 The following table summarizes our liquidity and capital resources as of and for each of our last two fiscal years, and our net increase (decrease) in cash, cash equivalents, and marketable securities as of and for each of our last two fiscal years and is intended to supplement the more detailed discussion that follows.
Subject to regulatory approval, Capricor will have the right to receive a share of product revenue which falls between 30 and 50 percent. ​ Commercialization and Distribution Agreement with Nippon Shinyaku (Territory: Japan) On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku.
Subject to regulatory approval, Capricor will have the right to receive a share of product revenue which falls between 30 and 50 percent. ​ Commercialization and Distribution Agreement (Nippon Shinyaku - Japan) On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku.
At this time, the Company only issues stock options and restricted stock awards under the 2020 Plan and the 2021 Plan and no longer issues stock awards under the 2006 Stock Option Plan, the 2012 Plan, or the 2012 Non-Employee Director Plan. We expense the fair value of stock-based compensation over the vesting period.
At this time, the Company only issues stock options and restricted stock awards under the 2020 Plan, the 2021 Plan, and the 2025 Plan and no longer issues stock awards under the 2006 Stock Option Plan, the 2012 Plan, or the 2012 Non-Employee Director Plan. We expense the fair value of stock-based compensation over the vesting period.
As we seek to develop and commercialize deramiocel or any other product candidates including those related to our exosomes program, we anticipate that our expenses will increase significantly and that we will need substantial additional funding to support our continuing operations.
As we seek to develop and commercialize Deramiocel or any other product candidates including those related to our exosomes program, we anticipate that our expenses will increase significantly and that we will need additional funding to support our continuing operations.
Except for certain capitalized intangible assets, R&D costs are expensed as incurred. ​ 85 Table of Contents Our cost accruals for clinical trials and other R&D activities are based on estimates of the services received and efforts expended pursuant to contracts with numerous clinical trial centers and contract research organizations (“CROs”), clinical study sites, laboratories, consultants or other clinical trial vendors that perform activities in connection with a trial.
Except for certain capitalized intangible assets, R&D costs are expensed as incurred. 87 Table of Contents ​ Our cost accruals for clinical trials and other R&D activities are based on estimates of the services received and efforts expended pursuant to contracts with numerous clinical trial centers and contract research organizations (“CROs”), clinical study sites, laboratories, consultants or other clinical trial vendors that perform activities in connection with a trial.
After completing the CIRM funded research project and at any time after the award period end date (but no later than the ten-year anniversary of the date of the award), Capricor has the right to convert the CIRM Award into a loan, the terms of which will be determined based on various factors, including the stage of the research and development of the program at the time the election is made.
After completing the CIRM funded research project and at any time after the award period end date (but no later than the ten-year anniversary of the date of the award), Capricor had the right to convert the CIRM Award into a loan, the terms of which will be determined based on various factors, including the stage of the research and development of the program at the time the election is made.
Under the terms of the Japan Distribution Agreement, Capricor received an upfront payment of $12.0 million in the first quarter of 2023 and in addition, Capricor will potentially receive additional development and sales-based milestone payments of up to approximately $89.0 million, subject to foreign currency exchange rates, and a meaningful double-digit share of product revenue.
Under the terms of the Japan Distribution Agreement, Capricor received an upfront payment of $12.0 million in 2023 and in addition, Capricor will potentially receive additional development and sales-based milestone payments of up to approximately $89.0 million, subject to foreign currency exchange rates, and a meaningful double-digit share of product revenue.
The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to Wainwright, as well as legal and accounting fees in the aggregate amount of approximately $2.4 million. ​ CIRM Grant Award On June 16, 2016, Capricor entered into an award (the “CIRM Award”) with the California Institute for Regenerative Medicine (“CIRM”) in the amount of approximately $3.4 million to fund, in part, Capricor’s Phase I/II HOPE-Duchenne clinical trial investigating deramiocel for the treatment of Duchenne muscular dystrophy-associated cardiomyopathy.
The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to Wainwright, as well as legal and accounting fees in the aggregate amount of approximately $2.4 million. ​ CIRM Grant Award On June 16, 2016, Capricor entered into an award (the “CIRM Award”) with the California Institute for Regenerative Medicine (“CIRM”) in the amount of approximately $3.4 million to fund, in part, Capricor’s Phase I/II HOPE-Duchenne clinical trial investigating Deramiocel for the treatment of DMD-associated cardiomyopathy.
The Company is currently evaluating the impact this guidance will have on its financial statement disclosures. ​ Other recent accounting pronouncements issued by the Financial Accounting Standards Board, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures. ​
The Company is currently evaluating the impact this guidance will have on its financial statement disclosures. ​ 89 Table of Contents Other recent accounting pronouncements issued by the Financial Accounting Standards Board, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures. ​
Generally, the stock awards vest based upon time-based conditions. Stock-based compensation expense is included in the consolidated statements of operations under general and administrative (“G&A”) or research and development (“R&D”) expenses, as applicable. We expect to record additional non-cash compensation expense in the future, which may be significant.
Generally, the stock awards vest based upon time-based conditions. Stock-based compensation expense is included in the consolidated statements of operations under general and administrative (“G&A”) or research and 79 Table of Contents development (“R&D”) expenses, as applicable. We expect to record additional non-cash compensation expense in the future, which may be significant.
Such requirements include, without limitation, the filing of quarterly and annual reports with CIRM, the sharing of intellectual property pursuant to Title 17, California Code of Regulations (“CCR”) Sections 100600-100612, and potentially the sharing with the State of California of a fraction of licensing revenue received from a CIRM funded research project and net commercial revenue from a commercialized product which resulted from the CIRM funded research as set forth in Title 17, California Code of Regulations Section 100608.
Such requirements include, without limitation, the filing of quarterly and annual reports with CIRM, the sharing of intellectual property pursuant to Title 17, CCR Sections 100600-100612, and potentially the sharing with the State of California of a fraction of licensing revenue received from a CIRM funded research project and net commercial revenue from a commercialized product which resulted from the CIRM funded research as set forth in Title 17, CCR Section 100608.
The net loss for the year ended December 31, 2024 was driven by the increased R&D expenses in connection with our clinical program in DMD.
The net loss for the year ended December 31, 2025 was driven by the increased R&D expenses in connection with our clinical program in DMD.
The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts.
The financial terms of these contracts are subject to negotiations, which vary from contract 88 Table of Contents to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts.
We may need to obtain additional funds sooner than planned or in greater amounts than we currently anticipate. 80 Table of Contents The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control.
We may need to obtain additional funds sooner than planned or in greater amounts than we currently anticipate. The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control.
This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those set forth under Item 1A., “Risk Factors” or elsewhere in this annual report, our actual results may differ materially from those anticipated in these forward-looking statements.
This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including, but not limited to, those set forth under Item 1A., “Risk Factors” or elsewhere in this annual report, our actual results may differ materially from those anticipated in these forward-looking statements.
The change in cash flow by investing activities for the year ended December 31, 2024 as compared to the same period of 2023 is due to the net effect from purchases, sales, and maturities of marketable securities as well as purchases of property and equipment and leasehold improvements.
The change in cash flow by investing activities for the year ended December 31, 2025 as compared to the same period of 2024 is due to the net effect from purchases, sales, and maturities of marketable securities as well as purchases of property and equipment, leasehold improvements and construction in progress.
We have issued stock options and restricted stock awards to employees, directors and consultants under our five stock option plans: (i) the 2006 Stock Option Plan, (ii) the 2012 Restated Equity Incentive Plan (which superseded the 2006 Stock Option Plan) (the “2012 Plan”), (iii) the 2012 Non-Employee Director Stock Option Plan (the “2012 Non-Employee Director Plan”), (iv) the 2020 Equity Incentive Plan (the “2020 Plan”), and (v) the 2021 Equity Incentive Plan (the “2021 Plan”).
We have issued stock options and restricted stock awards to employees, directors and consultants under our six stock option plans: (i) the 2006 Stock Option Plan, (ii) the 2012 Restated Equity Incentive Plan (which superseded the 2006 Stock Option Plan) (the “2012 Plan”), (iii) the 2012 Non-Employee Director Stock Option Plan (the “2012 Non-Employee Director Plan”), (iv) the 2020 Equity Incentive Plan (the “2020 Plan”), (v) the 2021 Equity Incentive Plan (the “2021 Plan”), and (vi) the 2025 Equity Incentive Plan (the “2025 Plan”).
Research and Development Expenses and Accruals R&D expenses consist primarily of salaries and related personnel costs, supplies, clinical trial costs, patient treatment costs, rent for laboratories and manufacturing facilities, consulting fees, costs of personnel and supplies for manufacturing, costs of service providers for preclinical, clinical, manufacturing and commercial activities, and certain legal expenses resulting from intellectual property prosecution, stock compensation expense and other expenses relating to the design, development, testing and enhancement of our product candidates.
R&D expenses consist primarily of compensation and other related personnel costs, supplies, clinical trial costs, patient treatment costs, rent for laboratories and manufacturing facilities, consulting fees, costs of personnel and supplies for manufacturing, costs of service providers for preclinical, clinical and manufacturing, certain legal expenses resulting from intellectual property prosecution, stock-based compensation expense and other expenses relating to the design, development, testing and enhancement of our product candidates.
The Subscription Agreement also includes lock-up provisions restricting Nippon Shinyaku from selling or otherwise disposing of shares of Common Stock until the six-month anniversary of the Closing Date. ​ In connection with the Private Placement, the Company also entered into a Registration Rights Agreement with Nippon Shinyaku on September 16, 2024 (the “Registration Rights Agreement”).
The Subscription Agreement also includes lock-up provisions restricting Nippon Shinyaku from selling or otherwise disposing of shares of the Company’s common stock until the six-month anniversary of the Closing Date which occurred on March 15, 2025. ​ In connection with the Private Placement, the Company also entered into a Registration Rights Agreement with Nippon Shinyaku on September 16, 2024 (the “Registration Rights Agreement”).
We expect to spend approximately $5.0 million to $7.5 million during 2025 on development expenses related to our exosomes program, which includes personnel, preclinical studies and manufacturing related expenses for these technologies.
We expect to spend approximately $7.0 million to $10.0 million during 2026 on development expenses related to our exosomes program, which includes personnel, preclinical studies and manufacturing related expenses for these technologies.
We had cash flow used in investing activity of approximately $116.2 million for the year ended December 31, 2024 and cash flow provided by investing activities of approximately $5.1 million for the year ended December 31, 2023.
We had cash flow provided by investing activity of approximately $97.5 million for the year ended December 31, 2025 and cash flow used in investing activities of approximately $116.2 million for the year ended December 31, 2024.
In 2025, we expect to spend approximately $40.0 million to $50.0 million primarily consisting of CMC expansion, product inventory buildout, clinical, regulatory and pre-commercial expenses for our deramiocel program. Exosome-Based Therapeutics and Vaccines – Our exosome platform is in early-stage preclinical development.
In 2026, we expect to spend approximately $100.0 million to $125.0 million primarily consisting of CMC expansion, product inventory buildout, clinical, regulatory and pre-commercial expenses for our Deramiocel program. Exosome-Based Therapeutics and Vaccines – Our exosome platform is in early-stage preclinical development.
We may be unable to raise additional funds or enter into such agreements or arrangements when needed on 76 Table of Contents favorable terms, if at all.
We may be unable to raise additional funds or enter into such agreements or arrangements when needed on favorable terms, if at all.
Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors, consultants, CROs and clinical site agreements in connection with conducting clinical trials.
Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors, consultants, contract research organizations (“CROs”), and clinical site agreements in connection with conducting clinical trials.
The increase in cash provided by financing activities for the year ended December 31, 2024 as compared to the same period of 2023 is primarily due to the net proceeds from the sale of common stock.
The increase in cash provided by financing activities for the year ended December 31, 2025 as compared to the same period of 2024 is primarily due to the net proceeds from the sale of common stock and from exercises of warrants and stock options.
Results of Operations for the fiscal years ended December 31, 2024 and 2023 Revenue Clinical Development Income. Clinical development income for the years ended December 31, 2024 and 2023 was approximately $22.3 million and $25.2 million, respectively.
Results of Operations for the fiscal years ended December 31, 2025 and 2024 Revenue Clinical Development Income. Clinical development income for the years ended December 31, 2025 and 2024 was zero and approximately $22.3 million, respectively.
Investment income for the years ended December 31, 2024 and 2023 was approximately $2.2 million and $1.7 million, respectively. The increase in investment income in 2024 as compared to 2023 is due to a higher principal balance in our marketable securities, savings and money market fund accounts.
Investment income for the years ended December 31, 2025 and 2024 was approximately $6.3 million and $2.2 million, respectively. The increase in investment income in 2025 as compared to 2024 is due to a higher principal balance in our marketable securities, savings and money market fund accounts. Interest expense .
As of December 31, 2024, we had approximately $25.0 million in total liabilities, of which approximately $12.0 million relates to deferred revenue and approximately $1.5 million related to lease liabilities in connection with our operating lease right-of-use assets. As of December 31, 2024, we had approximately $142.4 million in net working capital.
As of December 31, 2025, we had approximately $50.2 million in total liabilities, of which approximately $12.0 million relates to deferred revenue and approximately $14.5 million related to lease liabilities in connection with our operating lease right-of-use assets. As of December 31, 2025, we had approximately $287.1 million in net working capital.
We had cash flow provided by financing activities of approximately $152.8 million and $25.6 million for the years ended December 31, 2024 and 2023, respectively.
We had cash flow provided by financing activities of approximately $248.9 million and $152.8 million for the years ended December 31, 2025 and 2024, respectively.
These factors include the following: ● the progress of our clinical and research activities; ● the number and scope of our clinical and research programs; ● the progress and success of our preclinical and clinical development activities; ● the progress of the development efforts of parties with whom we have entered into research and development agreements; ● our ability to successfully manufacture product for our clinical trials and potential commercial use; ● the availability of materials necessary to manufacture our product candidates; ● the costs of manufacturing our product candidates, and the progress of efforts with parties with whom we may enter into commercial manufacturing agreements, if necessary; ● our ability to maintain current research and development programs and to establish new research and development and licensing arrangements; ● additional costs associated with maintaining licenses and insurance; ● the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and ● the costs and timing of obtaining marketing approval both in the United States and in countries outside of the United States.
These factors include the following: ● the progress of our clinical, regulatory, commercial, and research activities; ● the number and scope of our clinical and research programs; ● the costs involved in preparation for the potential commercialization of our Deramiocel product for the treatment of DMD; ● the progress and success of our preclinical and clinical development activities; ● the progress of the development efforts of parties with whom we have entered into research and development agreements; ● our ability to successfully manufacture product for our clinical trials and potential commercial use; ● the availability of materials necessary to manufacture our product candidates; ● the costs of manufacturing our product candidates, and the progress of efforts with parties with whom we may enter into commercial manufacturing agreements, if necessary; ● our ability to maintain current research and development programs and to establish new research and development and licensing arrangements; ● additional costs associated with maintaining licenses and insurance; ● the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and ● the costs and timing of obtaining marketing approval both in the United States and in countries outside of the United States. 83 Table of Contents Collaborations Commercialization and Distribution Agreement (Nippon Shinyaku - United States) On January 24, 2022, Capricor entered into the U.S.
The increase was primarily driven by the following: ● $5.1 million increase in compensation and other personnel expenses primarily due to increases in headcount; ● $4.4 million increase in DMD (deramiocel) program-related expenses primarily related to our HOPE-3 clinical trial, our HOPE-2 OLE clinical trial and expanded manufacturing production efforts for deramiocel in preparation for potential commercial launch; ● $1.3 million increase in facility expenses primarily related to expanded leased space; ● $1.7 million increase in stock-based compensation expense, driven primarily by increased headcount and higher grant prices, which led to a higher fair value of granted options; and ● $0.1 million increase in depreciation expense primarily related to increased equipment purchases and capital improvements related to expansion efforts of our leased space. ​ General and Administrative Expenses .
The increase was primarily driven by the following: ● $11.9 million increase in compensation and other personnel expenses primarily due to increases in headcount; ● $11.2 million increase in our DMD program-related expenses primarily related to our HOPE-3 clinical trial, our HOPE-2 OLE clinical trial and expanded manufacturing production efforts for Deramiocel in preparation for potential commercial launch; ● $2.3 million increase in research expenses related to our exosomes platform, primarily related to our collaboration with NIAID; ● $3.2 million increase in facility expenses primarily related to expanded leased space; and ● $5.3 million increase in stock-based compensation expense, driven primarily by increased headcount and higher stock prices, which led to a higher fair value of granted options. ​ General and Administrative Expenses .
At this time, Capricor and Nippon Shinyaku have entered into various amendments to the Term Sheet, pursuant to which the parties agreed to extend the date during which the parties shall negotiate the definitive agreement to April 30, 2025. ​ Financing Activities by the Company October 2024 Underwritten Public Offering On October 16, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Piper Sandler and Oppenheimer as representatives of the underwriters (the “Underwriters”), pursuant to which the Company agreed to sell and issue, in a public offering, an aggregate of 5,073,800 shares of common stock, including the exercise in full of the underwriters’ option to purchase additional shares to cover over allotments, at a public offering price of $17.00 per share for total gross proceeds of approximately $86.3 million, before deducting underwriting commissions and other offering expenses payable by the Company.
October 2024 Underwritten Public Offering On October 16, 2024, the Company entered into an underwriting agreement (the “2024 Underwriting Agreement”) with Piper Sandler and Oppenheimer as representatives of the underwriters (the “Underwriters”), pursuant to which the Company agreed to sell and issue, in a public offering, an aggregate of 5,073,800 shares of common stock, including the exercise in full of the underwriters’ option to purchase additional shares to cover over allotments, at a public offering price of $17.00 per share for total gross proceeds of approximately $86.3 million, before deducting underwriting commissions and other offering expenses payable by the Company.
From June 21, 2021 through October 1, 2024, the Company sold an aggregate of 9,228,383 shares of common stock under the ATM Program at an average price of approximately $8.13 per share for gross proceeds of approximately $75.0 million which represents all amounts that were available to be sold. Effective October 1, 2024, the ATM Program was closed and terminated.
Wainwright was entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold plus reimbursement of certain expenses. ​ From June 21, 2021 through October 1, 2024, the Company sold an aggregate of 9,228,383 shares of common stock under the June 2021 ATM Program at an average price of approximately $8.13 per share for gross proceeds of approximately $75.0 million which represents all amounts that were available to be sold under the June 2021 ATM program.
Due to our significant research and development expenditures, and general administrative costs associated with our operations, we have generated substantial operating losses in each period since our inception. Our net losses were $40.5 million and $22.3 million, for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, we had an accumulated deficit of $199.8 million.
Due to our significant research and development expenditures, and general administrative costs associated with our operations, we have generated substantial operating losses in each period since our inception. Our net losses were approximately $105.0 million and approximately $40.5 million, for the years ended December 31, 2025 and 2024, respectively.
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low for any particular period. ​ Recently Issued or Newly Adopted Accounting Pronouncements ​ In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) .
Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low for any particular period.
We are focused on developing a precision-engineered exosome platform technology that has the ability to deliver defined sets of effector molecules that exert their effects through defined mechanisms of action. Aspects of our exosome pipeline have been supported through collaborations and alliances.
Exosome Platform: Engineered Exosome-Based Therapeutics: We are focused on developing a precision-engineered exosome platform technology that has the potential to deliver defined sets of effector molecules that exert their effects through defined mechanisms of action.
(its wholly-owned U.S. subsidiary) will be responsible for the distribution of deramiocel in the United States. Pursuant to the U.S. Distribution Agreement, Capricor received an upfront payment of $30.0 million in 2022. The first milestone payment of $10.0 million was paid upon completion of the futility analysis of the HOPE-3 trial whereby the outcome was determined to be not futile.
Distribution Agreement, Capricor received an upfront payment of $30.0 million. The first milestone payment of $10.0 million was paid upon completion of the futility analysis of the HOPE-3 trial whereby the outcome was determined to be not futile.
Recently, we were selected to be part of Project NextGen, an initiative by the U.S. Department of Health and Human Services to advance a pipeline of new, innovative vaccines providing broader and more durable protection for COVID-19.
Exosomes offer a new antigen delivery system that could potentially be utilized to rapidly generate multivalent protein-based vaccines. In 2024, we were selected to be part of Project NextGen, an initiative by the U.S. Department of Health and Human Services to advance a pipeline of new, innovative vaccines providing broader and more durable protection for COVID-19.
Developing biological products is a lengthy and very expensive process. Even if we obtain the capital necessary to continue the development of our product candidates, whether through a strategic transaction or otherwise, we do not expect to complete the development of a product candidate for several years, if ever.
Even if we obtain the capital necessary to continue the development of our product candidates, whether through a strategic transaction or otherwise, we do not expect to complete the development of a product candidate for several years, if ever. To date, most of our development expenses have related to our product candidates, consisting of Deramiocel and our exosome technologies.
If the definitive agreement is entered into on the same economic terms as the term sheet, Capricor will receive an upfront payment of $20.0 million upon execution of the definitive agreement, with potential additional development and sales-based milestone payments of up to $715.0 million.
Subject to regulatory approval, Capricor would receive a double-digit share of product revenue and additional development and sales-based milestone payments. If the definitive agreement is entered into, Capricor will receive an upfront payment of $20.0 million upon execution of the definitive agreement, with potential additional development and sales-based milestone payments of up to $715.0 million.
Our expenditures on current and future clinical development programs, particularly our deramiocel and exosomes programs, cannot be predicted with any significant degree of certainty as they are dependent on the results of our current trials and our ability to secure additional funding and a strategic partner.
Our expenses for this program are primarily focused on the expansion of our engineered exosomes platform including the manufacturing of our StealthX™ vaccine to be used in connection with our collaboration with NIAID. 81 Table of Contents Our expenditures on current and future clinical development programs, particularly our Deramiocel and exosomes programs, cannot be predicted with any significant degree of certainty as they are dependent on the results of our current trials and our ability to secure additional funding and a strategic partner.
As part of Project NextGen, the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health, will conduct a Phase 1 clinical study with our StealthX™ vaccine, subject to regulatory approval.
As part of Project NextGen, the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health, is conducting a Phase 1 78 Table of Contents clinical study with our StealthX™ vaccine which is currently ongoing.
Accordingly, our success depends not only on the safety and efficacy of our product candidates, but also on our ability to finance the development of our products and our clinical programs.
As we proceed with the clinical development and potential commercialization of Deramiocel, and as we further develop our exosome technologies, our expenses will further increase. Accordingly, our success depends not only on the safety and efficacy of our product candidates, but also on our ability to finance the development of our products and our clinical programs.
Our 86 Table of Contents objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by matching the appropriate expenses with the period in which services are provided and efforts are expended.
Our objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by matching the appropriate expenses with the period in which services are provided and efforts are expended. We account for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial.
Collaborations Commercialization and Distribution Agreement with Nippon Shinyaku (Territory: United States) On January 24, 2022, Capricor entered into a Commercialization and Distribution Agreement (the “U.S. Distribution Agreement”) with Nippon Shinyaku, a Japanese corporation. Under the terms of the U.S. Distribution Agreement, Capricor will be responsible for the clinical development and manufacturing of deramiocel. Nippon Shinyaku and NS Pharma, Inc.
Distribution Agreement with Nippon Shinyaku, a Japanese corporation. Under the terms of the U.S. Distribution Agreement, Capricor will be responsible for the clinical development and manufacturing of Deramiocel. Nippon Shinyaku and NS Pharma, Inc. (its wholly-owned U.S. subsidiary) will be responsible for the distribution of Deramiocel in the United States. Pursuant to the U.S.
Furthermore, there was an increase of approximately $2.4 million in stock-based compensation and an increase in net loss of approximately $18.2 million for the year ended December 31, 2024 as compared to the same period in 2023. Furthermore, there was a net change of approximately $0.6 million in accounts payable and accrued expenses.
Furthermore, there was an increase of approximately $7.2 million in stock-based compensation, approximately $3.0 million in accrued interest liability, approximately $10.3 million in receivables, approximately $12.3 82 Table of Contents million in deferred revenue, and approximately $4.0 million in accounts payable and accrued expenses for the year ended December 31, 2025 as compared to the same period in 2024.
We may seek to raise additional funds through various potential sources, such as equity and debt financings, government grants, or through strategic collaborations and license agreements or other distribution agreements.
From inception through December 31, 2025, we financed our operations primarily through private and public sales of our equity securities, government grants, and payments from distribution agreements and collaboration partners. We may seek to raise additional funds through various potential sources, such as equity and debt financings, government grants, or through strategic collaborations and license agreements or other distribution agreements.
The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.
This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.
Company Overview Capricor Therapeutics, Inc. is a clinical-stage biotechnology company focused on the development of transformative cell and exosome-based therapeutics for treating Duchenne muscular dystrophy (“DMD”), a rare form of muscular dystrophy which results in muscle degeneration and premature death, and other diseases with high unmet medical needs.
Company Overview Capricor Therapeutics, Inc. is a biotechnology company focused on the development and potential commercialization of cell and exosome-based therapeutics for the treatment of Duchenne muscular dystrophy (“DMD”), a rare genetic disorder characterized by progressive muscle degeneration and premature death, as well as other diseases with significant unmet medical need.
A summary description of our key product candidates, is as follows: ● Deramiocel for the treatment of DMD: Our core program is focused on the development and commercialization of a cell therapy technology (referred to herein as deramiocel) comprised of cardiosphere-derived cells (“CDCs”), which are a rare population of cardiac cells isolated from donated cells of healthy human hearts, for the treatment of DMD.
Cell Therapy (Deramiocel) Our core program is focused on the development and commercialization of Deramiocel, a cell therapy product candidate comprised of cardiosphere-derived cells (“CDCs”), a population of cardiac-derived stromal cells isolated from qualified donated human hearts, for the treatment of Duchenne muscular dystrophy.
Subject to regulatory approval, Capricor or its designee will hold the Marketing Authorization in Japan if the product is approved in that territory. 81 Table of Contents Binding Term Sheet with Nippon Shinyaku (Territory: Europe) ​ On September 16, 2024, Capricor entered into a Binding Term Sheet (the “Term Sheet”) with Nippon Shinyaku for the commercialization and distribution of deramiocel for the treatment of DMD in the European region, as defined in the Term Sheet.
European Region Binding Term Sheet ​ On September 16, 2024, Capricor entered into a Binding Term Sheet (the “Term Sheet”) with Nippon Shinyaku for the commercialization and distribution of Deramiocel for the treatment of DMD in the European region, as defined in the Term Sheet.
The increase in cash, cash equivalents and marketable securities from December 31, 2024 as compared to December 31, 2023 is primarily due to an underwritten public offering in October 2024, equity financings through our at-the-market offering and a $15.0 million private placement with Nippon Shinyaku, which is partially offset by our net loss of approximately $40.5 million.
The increase in cash, cash equivalents and marketable securities from December 31, 2025 as compared to December 31, 2024 is primarily due to an underwritten public offering in December 2025, equity financings through our at-the-market offering and proceeds received from warrants and options exercised, which is partially offset by our net loss of approximately $105.0 million, as well as investment made in purchases of property and equipment, and payments made for construction in progress.
If we fail to raise capital or other potential funding or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of deramiocel or our other product candidates. ​ Financial Operations Overview We have no commercial product sales to date and will not have the ability to generate any commercial product revenue until after we have received approval from the FDA or equivalent foreign regulatory bodies to begin selling our product candidates.
If we fail to raise capital or other potential funding or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development or commercialization of Deramiocel or our other product candidates.
The assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. ROU assets are evaluated for impairment using the long-lived assets impairment guidance. ​ Leases will be classified as financing or operating, which will drive the expense recognition pattern.
ROU assets and lease liabilities are recognized at lease commencement based on present value of fixed lease payments over the lease term. ​ Leases are classified as either financing or operating leases. The Company’s leases are primarily operating leases.
We account for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. We determine accrual estimates through financial models that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed.
We determine accrual estimates through financial models that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates.
The Sales Agreement provided that Wainwright would be entitled 82 Table of Contents to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold.
The Agents are entitled to compensation for their services at a commission rate of 3.0% of the gross sales price per share of common stock sold plus reimbursement of certain expenses.
During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on the facts and circumstances known to us at that time.
We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on the facts and circumstances known to us at that time. Our clinical trial accrual and prepaid assets are dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors.
Cash used in operating activities was approximately $40.0 million and $25.6 million for the years ended December 31, 2024 and 2023, respectively. The net change of approximately $14.4 million in cash from operating activities is due to the milestone payment of $10.0 million from Nippon Shinyaku and reduction of deferred revenue.
Cash used in operating activities was approximately $69.8 million and $40.0 million for the years ended December 31, 2025 and 2024, respectively. The net change of approximately $29.8 million in cash from operating activities is due to an approximately $64.6 million increase in net loss for the years ended December 31, 2025 as compared to the same period in 2024.
Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates. We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our financial statements and accompanying notes.
We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of our financial statements and accompanying notes.
Leases Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842”), requires lessees to recognize most leases on the balance sheet with a corresponding right-to-use (“ROU”) asset. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.
We estimate our current cash, cash equivalents, and marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements into 2027. ​ ​ ​ ​ ​ ​ ​ ​ Liquidity and capital resources December 31, 2024 December 31, 2023 Cash and cash equivalents ​ $ 11,287 ​ $ 14,695 Marketable securities ​ $ 140,229 ​ $ 24,793 Working capital ​ $ 142,359 ​ $ 19,586 Stockholders’ equity ​ $ 145,462 ​ $ 22,601 ​ 79 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, Cash flow data 2024 2023 Cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities ​ $ (39,996) ​ $ (25,596) Investing activities ​ ​ (116,184) ​ ​ 5,108 Financing activities ​ ​ 152,772 ​ ​ 25,580 Net increase (decrease) in cash and cash equivalents $ (3,408) $ 5,092 ​ Our total cash, cash equivalents, and marketable securities as of December 31, 2024 were approximately $151.5 million compared to approximately $39.5 million as of December 31, 2023.
We believe that our current cash, cash equivalents, and marketable securities are sufficient to fund our operating capital requirements for at least the next twelve months from the issuance date of these consolidated financial statements. ​ ​ ​ ​ ​ ​ ​ ​ Liquidity and capital resources ​ ​ ​ December 31, 2025 ​ ​ ​ December 31, 2024 Cash and cash equivalents ​ $ 287,847 ​ $ 11,287 Marketable securities ​ $ 30,282 ​ $ 140,229 Working capital ​ $ 287,103 ​ $ 142,359 Stockholders’ equity ​ $ 305,792 ​ $ 145,462 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, Cash flow data ​ ​ ​ 2025 ​ ​ ​ 2024 Cash provided by (used in): ​ ​ ​ ​ ​ ​ Operating activities ​ $ (69,811) ​ $ (39,996) Investing activities ​ ​ 97,479 ​ ​ (116,184) Financing activities ​ ​ 248,892 ​ ​ 152,772 Net increase in cash and cash equivalents $ 276,560 $ (3,408) ​ Our total cash, cash equivalents, and marketable securities as of December 31, 2025 were approximately $318.1 million compared to approximately $151.5 million as of December 31, 2024.
Interest shall be compounded annually on the outstanding New Loan Balance commencing with the loan date and the interest shall be payable, together with the New Loan Balance, upon the due date of the loan. Depending on the timing of Capricor’s election, additional funds may be owed.
Interest shall be compounded annually on the outstanding New Loan Balance commencing with the loan date and the interest shall be payable, together with the New Loan Balance, upon the due date of the loan. In 2019, Capricor completed all milestones and close-out activities associated with the CIRM Award and expended all funds received.
Off-Balance Sheet Arrangements During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. 83 Table of Contents Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with generally accepted accounting principles.
As of December 31, 2025, approximately $3.0 million was recorded as accrued interest. 86 Table of Contents Off-Balance Sheet Arrangements During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
The increase was primarily driven by the following: ● $0.7 million increase in stock-based compensation expense primarily due to increases in headcount; ● $0.7 million increase in compensation and other personnel expenses related to increases in headcount and recruiting costs; ● $0.2 million increase in depreciation related to leasehold improvements to our San Diego corporate headquarters; and ● $0.5 million increase in other corporate expenses primarily related to increased overhead costs related to travel and corporate expenses due to increased headcount. ​ This increase was partially offset by a $0.1 million decrease in professional service expenses primarily due to a decrease in business development related expenses. ​ 78 Table of Contents Other Income Investment Income .
The increase was primarily driven by the following: ● $2.1 million increase in stock-based compensation expense primarily due to increased headcount and higher stock prices, which led to a higher fair value of granted options; ● $2.8 million increase in compensation and other personnel expenses related to increases in headcount and recruiting costs; ● $1.3 million increase in professional services largely attributable to elevated legal and consulting costs related to our continuing regulatory initiatives; ● $1.9 million increase in other corporate expenses primarily related to increased overhead costs related to travel and corporate expenses due to increased headcount. ​ Other Income (Expense) Investment Income .
The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis, including research and development and clinical trial accruals, and stock-based compensation estimates.
Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures.
Our ability to eventually generate any product revenue sufficient to achieve profitability will depend on the successful development, approval and eventual commercialization of deramiocel for the treatment of DMD and our other product candidates.
Our ability to generate product revenue and achieve profitability will depend on the successful development, regulatory approval and commercialization of Deramiocel and any other product candidates we may develop. If approved, we intend to commercialize Deramiocel in the United States and may seek commercialization through strategic partners in other select international markets.
NIAID's Division of Microbiology and Infectious Diseases (“DMID”) would oversee the study. If NIAID finds that our StealthX™ vaccine meets its criteria for safety and efficacy, they may consider our program for a funded Phase 2. At this time, we are developing exosome-based vaccines and therapeutics for infectious diseases, monogenic diseases and other potential indications.
If NIAID finds that our StealthX™ vaccine meets its criteria for safety and efficacy, they may consider our program for a funded Phase 2 study, for which we are actively preparing should that trial be initiated.
Deramiocel is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, pro-angiogenic and anti-fibrotic actions of CDCs, which are mediated by secreted exosomes laden with bioactive cargo. Among the cargo elements known to be bioactive in CDC-exosomes are microRNAs.
Deramiocel is designed to slow disease progression through the immunomodulatory, anti-inflammatory, pro-angiogenic and anti-fibrotic activities of CDCs. These effects are mediated in part by exosomes secreted by CDCs that contain bioactive molecules, including microRNAs and other signaling factors, which may influence gene expression and cellular pathways involved in inflammation, fibrosis, and tissue repair.
The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses.
The Company is currently evaluating the impact this guidance will have on its financial statement. ​ In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) . The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions.
Depending on these discussions, accrued interest on the CIRM Award could range from zero to approximately $7.1 million, and will continue to accrue over time until the final payout, if it is determined that interest is due.
Depending on the results of these discussions and based on our reasonable best estimate for the anticipated loan terms, accrued interest on the CIRM Award could reach up to approximately $7.7 million, and may continue to accrue over time until the final payout. The estimate is dependent on many factors, some of which have yet to be determined.
Pursuant to the terms of the Registration Rights Agreement, the Company has filed with the SEC a registration statement to register for resale the shares sold in the Private Placement, which registration statement was declared effective on November 8, 2024. ​ September 2023 Financing ​ On September 29, 2023, the Company entered into Securities Purchase Agreements, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 4,935,621 shares of its common stock, par value $0.001 per share, at a price per share of $4.66 for an aggregate purchase price of approximately $23.0 million.
Pursuant to the terms of the Registration Rights Agreement, the Company has filed with the SEC a registration statement to register for resale the shares sold in the Private Placement, which registration statement was declared effective on November 8, 2024. ​ ATM Programs ​ September 2025 ATM Program ​ On September 10, 2025, the Company established an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $150.0 million (the “September 2025 ATM Program”), pursuant to an Equity Distribution Agreement with Piper Sandler and Oppenheimer (collectively, the “Agents”), by which the Agents may sell our common stock at the market prices prevailing at the time of sale.
During 2024 we received net proceeds from the sale of stock of approximately $152.3 million compared to approximately $25.5 million over the same period of 2023. From inception through December 31, 2024, we financed our operations primarily through private and public sales of our equity securities, government grants, and payments from distribution agreements and collaboration partners.
During 2025 we received net proceeds from the sale of stock of approximately $237.0 million compared to approximately $152.3 million over the same period of 2024. During 2025 we received net proceeds from exercises of warrants and stock options of approximately $11.9 million compared to approximately $0.5 million in 2024.
Each warrant became exercisable beginning six months after issuance and will expire seven years from the date of issuance. ​ ATM Program ​ On June 21, 2021, the Company initiated an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $75.0 million (the “ATM Program”), with the common stock to be distributed at the market prices prevailing at the time of sale.
Subsequent to December 31, 2025, no additional shares have been sold under the September 2025 ATM Program through the date of this filing. ​ 85 Table of Contents June 2021 ATM Program ​ The Company established an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $75.0 million (the “June 2021 ATM Program”) on June 21, 2021, pursuant to a Common Stock Sales Agreement with H.C.
The following table summarizes our G&A expenses by category for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ($) Change (%) ​ Stock-based compensation ​ $ 6,159,497 ​ $ 5,476,151 ​ $ 683,346 ​ ​ 12 % Compensation and other personnel expenses ​ 4,446,897 ​ 3,702,469 ​ 744,428 ​ 20 % Professional services ​ ​ 1,641,256 ​ 1,700,852 ​ (59,596) ​ (4) % Facility expenses ​ ​ 310,342 ​ ​ 294,841 ​ ​ 15,501 ​ ​ 5 % Depreciation ​ ​ 651,229 ​ ​ 442,368 ​ ​ 208,861 ​ ​ 47 % Other corporate expenses ​ ​ 1,657,501 ​ ​ 1,191,205 ​ ​ 466,296 ​ ​ 39 % Total general and administrative expenses ​ $ 14,866,722 ​ $ 12,807,886 ​ $ 2,058,836 ​ ​ 16 % ​ G&A expenses for 2024 increased by approximately $2.1 million, or 16%, compared to 2023.
G&A expenses consist primarily of compensation and other related personnel expenses for executive, finance and other administrative personnel, stock-based compensation expense, accounting, legal and other professional fees, consulting expenses, rent for corporate offices, business insurance and other corporate expenses. ​ 80 Table of Contents The following table summarizes our G&A expenses by category for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ Change ($) ​ ​ ​ Change (%) ​ Stock-based compensation ​ $ 8,307,733 ​ $ 6,159,497 ​ $ 2,148,236 ​ ​ 35 % Compensation and other personnel expenses ​ 7,224,517 ​ 4,446,897 ​ 2,777,620 ​ 62 % Professional services ​ ​ 2,915,501 ​ 1,641,256 ​ 1,274,245 ​ 78 % Facility expenses ​ ​ 695,480 ​ ​ 310,342 ​ ​ 385,138 ​ ​ 124 % Depreciation and amortization ​ ​ 938,889 ​ ​ 651,229 ​ ​ 287,660 ​ ​ 44 % Other corporate expenses ​ ​ 3,605,415 ​ ​ 1,655,901 ​ ​ 1,949,514 ​ ​ 118 % Total general and administrative expenses ​ $ 23,687,535 ​ $ 14,865,122 ​ $ 8,822,413 ​ ​ 59 % ​ G&A expenses for 2025 increased by approximately $8.8 million, or 59%, compared to 2024.
The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that the Company determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved.
Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved. ​ Revenue is recognized either at a point in time or over time, depending on when control of the promised goods or services is transferred to the customer.
This practical expedient is not elected for manufacturing facilities and equipment embedded in product supply arrangements. ​ Revenue Recognition The Company applies Accounting Standards Update (“ASU”) 606, Revenue for Contracts from Customers , which amended revenue recognition principles and provides a single, comprehensive set of criteria for revenue recognition within and across all industries.
This practical expedient is not elected for manufacturing facilities and equipment embedded in product supply arrangements. ​ Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), using a five-step model to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled.
As of December 31, 2024, Capricor’s principal liability balance for the CIRM Award was approximately $3.4 million, excluding any accrued interest as the Company had not elected to convert the CIRM Award into a loan. Subsequently, on February 26, 2025, Capricor notified CIRM of its election to convert the CIRM Award into a loan.
On February 26, 2025, Capricor notified CIRM of its election to convert the CIRM Award into a loan. The terms of the loan agreement are currently under discussion with CIRM.
We expect to incur significant expenses and operating losses for the foreseeable future. During the year ended December 31, 2024, we sold 6,252,229 shares of common stock at an average price of approximately $9.34 per share pursuant to a sales agreement by and between us and H.C. Wainwright & Co.
As of December 31, 2025, we had an accumulated deficit of approximately $304.9 million. We expect to incur significant expenses and operating losses for the foreseeable future.
Removed
Since our inception, we have devoted substantial resources to developing deramiocel and our other product candidates including our exosomes platform technology, developing our manufacturing processes, staffing our company and providing general and administrative support for these operations. We do not have any products approved for commercial sale.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Sensitivity Our exposure to market risk for changes in interest rates relates primarily to our marketable securities and cash and cash equivalents. As of December 31, 2024, the fair value of our cash, cash equivalents, and marketable securities was approximately $151.5 million.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Sensitivity Our exposure to market risk for changes in interest rates relates primarily to our marketable securities and cash and cash equivalents. As of December 31, 2025, the fair value of our cash, cash equivalents, and marketable securities was approximately $318.1 million.
Due to our policy of making investments in U.S. treasury securities with primarily short-term maturities, we believe that the fair value of our investment portfolio would not be materially impacted by a hypothetical 100 basis point increase or decrease in interest rates. ​ 87 Table of Contents
Due to our policy of making investments in U.S. treasury securities with primarily short-term maturities, we believe that the fair value of our investment portfolio would not be materially impacted by a hypothetical 100 basis point increase or decrease in interest rates. ​ 90 Table of Contents
Additionally, as of December 31, 2024, Capricor’s investment portfolio was classified as cash, cash equivalents and marketable securities which consisted primarily of money market funds and bank money market accounts, which included short term U.S. treasuries, bank savings and checking accounts.
Additionally, as of December 31, 2025, Capricor’s investment portfolio was classified as cash, cash equivalents and marketable securities which consisted primarily of money market funds and bank money market accounts, which included short term U.S. treasuries, bank savings and checking accounts.

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