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What changed in CAPRICOR THERAPEUTICS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CAPRICOR THERAPEUTICS, INC.'s 2023 and 2024 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 2024 report.

+565 added−542 removedSource: 10-K (2025-03-26) vs 10-K (2024-03-11)

Top changes in CAPRICOR THERAPEUTICS, INC.'s 2024 10-K

565 paragraphs added · 542 removed · 427 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

133 edited+32 added−39 removed198 unchanged
Biggest changeThis includes, without limitation, issuing guidance on June 30, 2023 detailing the requirements and parameters of the first round of price negotiations, to take place during 2023 and 2024, for products subject to the “maximum fair price” provision that would become effective in 2026; on August 29, 2023, releasing the initial list of 10 drugs subject to price negotiations; and on December 14, 2023 releasing a list of 48 Medicare Part B products that had adjusted coinsurance rates based on the inflationary rebate provisions of the IRA for the time period of January 1, 2024 to March 31, 2024.
Biggest changeThis includes, without limitation, releasing the negotiated maximum prices, which will be effective in 2026, for the first ten drugs that were subject to the IRA’s negotiation process, releasing quarterly lists of Medicare Part B products that are subject to adjusted coinsurance rates based on the inflationary rebate provisions of the IRA, and announcing a list of fifteen additional drugs that will be subject to price negotiations during 2025.
We began to explore the therapeutic potential of exosomes as we learned that CDCs mediate most of their therapeutic activities through the secretion of exosomes. ​ We have assembled a scientific advisory board with cardiology and neurology experts, including DMD specialists. Our advisors include clinicians and researchers who are experts on DMD’s skeletal and cardiac aspects.
We began to explore the therapeutic potential of exosomes as we learned that CDCs mediate most of their therapeutic activities through the secretion of exosomes. ​ We have assembled a scientific advisory board with cardiology and neurology experts, including DMD specialists. Our advisors include clinicians and researchers who are experts on DMD’s cardiac and skeletal aspects.
There is no cure for DMD, and for the vast majority of patients, there are no satisfactory symptomatic or disease-modifying treatments. It is estimated that DMD occurs in approximately one in every 3,500 to 5,000 live male births and that the patient population is estimated to be approximately 15,000-20,000 in the United States.
There is no cure for DMD, and for the vast majority of patients, there are no satisfactory symptomatic or disease-modifying treatments. It is estimated that DMD occurs in approximately one in every 3,500 to 5,000 live male births and that the patient population is estimated to be approximately 15,000 to 20,000 in the United States.
Patients were observed over the course of 12 months. Efficacy was evaluated according to several exploratory outcome measures. This study was funded in part through a grant award from the CIRM. In 2019, this study was published in Neurology, the medical journal of the American Academy of Neurology.
Patients were observed over the course of 12 months. Efficacy was evaluated according to several exploratory outcome measures. This study was funded in part through a grant award from CIRM. In 2019, this study was published in Neurology, the medical journal of the American Academy of Neurology.
Capricor may also terminate 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.
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 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.
The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third-party for patent rights in connection with the royalty bearing product.
The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty bearing product.
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.
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, will 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.
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.
The development of complex biotechnology products such as ours typically includes the early discovery of a technology platform – often in an academic institution – followed by increasingly focused development around a product opportunity, including identification and definition of a specific product candidate and development of manufacturing processes, formulations, patient selection and treatment regimes, and delivery and dosage regimens.
The development of complex biotechnology products such as ours typically includes the early discovery of a technology platform – often in an academic institution – followed by increasingly focused development around a product opportunity, including identification and definition of a specific product candidate and development of manufacturing processes, formulations, patient selection and treatment regimens, and delivery and dosage regimens.
Further, in August 2022, 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.
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.
In the United States, the process for receiving such approval is long, expensive and risky, and includes the following steps: ● preclinical laboratory tests, animal studies, and formulation studies; ● submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin; ● approval by an IRB at each clinical site before each trial may be initiated; ● adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication; ● submission to the FDA of an NDA, for a drug, or BLA, for a biological product; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with cGMP; ● a potential FDA audit of the pre-clinical and clinical trial sites that generated the data in support of the NDA or BLA; ● the ability to obtain clearance or approval of companion diagnostic tests, if required, on a timely basis, or at all; ● FDA review and approval of the NDA or BLA prior to any commercial marketing or sale of the drug in the United States; and ● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”), and the potential requirement to conduct post-approval studies.
In the United States, the process for receiving such approval is long, expensive and risky, and includes the following steps: ● preclinical laboratory tests, animal studies, and formulation studies; ● submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin; ● approval by an Institutional Review Board (“IRB”) at each clinical site before each trial may be initiated; ● adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication; ● submission to the FDA of an NDA, for a drug, or BLA, for a biological product; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with cGMP; ● a potential FDA audit of the pre-clinical and clinical trial sites that generated the data in support of the NDA or BLA; ● the ability to obtain clearance or approval of companion diagnostic tests, if required, on a timely basis, or at all; ● FDA review and approval of the NDA or BLA prior to any commercial marketing or sale of the drug in the United States; and ● compliance with any post-approval requirements, including the potential requirement to implement a Risk Evaluation and Mitigation Strategy (“REMS”), and the potential requirement to conduct post-approval studies.
In addition, at this time, there are four FDA conditionally approved exon skipping drugs: EXONDYS 51 (eteplirsen), AMONDYS 45 (casimersen) and VYONDYS 53 (golodirsen), which are phosphorodiamidate Morpholino oligomers (PMOs) approved for the treatment of DMD patients amenable to Exon 51, Exon 45 and Exon 53 skipping, respectively, and are marketed by Sarepta Therapeutics, Inc., and VILTEPSO (vitolarsen), a PMO approved for the treatment of DMD patients amenable to Exon 53 skipping, which is marketed by Nippon Shinyaku (U.S. subsidiary: NS Pharma, Inc.).
In addition, at this time, there are four FDA conditionally approved exon skipping drugs: EXONDYS 51 (eteplirsen), AMONDYS 45 (casimersen) and VYONDYS 53 (golodirsen), which are phosphorodiamidate Morpholino oligomers (PMOs) approved for the treatment of DMD patients amenable to Exon 51, Exon 45 and Exon 53 skipping, respectively, and are marketed by Sarepta Therapeutics, Inc., and VILTEPSO (vitolarsen), a PMO approved for the treatment of DMD patients amenable to Exon 53 skipping, which is marketed by Nippon Shinyaku through its U.S. subsidiary, NS Pharma, Inc.
Placebo ​ ​ ​ ​ (n=8, n=12) p-value Skeletal-Muscle (Upper Limb Function) ​ ​ ​ ​ ​ Mid-level PUL (v1.2)* ​ ​ 2.6 ​ ​ 0.01 Shoulder + Mid + Distal PUL (v1.2) 3.2 0.02 Shoulder + Mid + Distal PUL (v2.0) 1.8 0.04 ​ ​ ​ ​ ​ ​ ​ Cardiac Function ​ ​ ​ ​ ​ ​ LV Ejection Fraction %* 4.0 0.002 LV End-Diastolic Volume, Indexed mL/m 2 -12.4‡ 0.03 LV End-Systolic Volume, Indexed mL/m 2 -4.2‡ 0.01 Creatine Kinase-MB (% of total CK) -2.2‡ 0.02 ​ ITT (intent to treat) population shown †Non-parametric mixed model repeated measures analysis with percentile ranked baseline, treatment, visit, visit-by-treatment interaction, PUL entry-item score at stratification, and site as model effects.
Placebo ​ ​ ​ ​ (n=8, n=12) p-value Skeletal-Muscle (Upper Limb Function) ​ ​ ​ ​ ​ Mid-level PUL (v1.2)* ​ ​ 2.6 ​ ​ 0.01 Shoulder + Mid + Distal PUL (v1.2) 3.2 0.02 Shoulder + Mid + Distal PUL (v2.0) 1.8 0.04 ​ ​ ​ ​ ​ ​ ​ Cardiac Function ​ ​ ​ ​ ​ ​ LV Ejection Fraction %* 4.0 0.002 LV End-Diastolic Volume, Indexed mL/m 2 -12.4‡ 0.03 LV End-Systolic Volume, Indexed mL/m 2 -4.2‡ 0.01 Creatine Kinase-MB (% of total CK) -2.2‡ 0.02 ​ ITT (intent to treat) population shown 5 Table of Contents †Non-parametric mixed model repeated measures analysis with percentile ranked baseline, treatment, visit, visit-by-treatment interaction, PUL entry-item score at stratification, and site as model effects.
As the world pivots from the kinds of responses needed during the pandemic, vulnerable populations need a vaccine strategy to provide protective durable immunity against current and emerging variants of SARS-CoV-2 to reduce the infection and disease burden for both the public and the health care systems globally.
As the world pivots from the kinds of responses needed during the COVID-19 pandemic, vulnerable populations need a vaccine strategy to provide protective durable immunity against current and emerging variants of SARS-CoV-2 to reduce the infection and disease burden for both the public and health care systems globally.
Our second manufacturing facility is located within our laboratory, research and manufacturing facilities at CSMC in Los Angeles pursuant to a Facilities Lease.
Our second manufacturing facility is located within our laboratory, research and manufacturing facilities at CSMC in Los Angeles, California pursuant to a Facilities Lease.
Under the terms of the Japan Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in Japan of CAP-1002 for the treatment of DMD. ​ 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 may 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 appointed Nippon Shinyaku as its exclusive distributor in Japan of deramiocel for the treatment of DMD. ​ 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 may 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.
Due to reduced functional dystrophin protein, affected individuals generally experience the following symptoms, although disease severity and life expectancy vary: ​ ● muscle damage characterized by inflammation and fibrosis beginning at an early age; ● muscle weakness and progressive loss of muscle function beginning in the first few years of life; ● decline of ambulation and respiratory function after the age of seven; ● total loss of ambulation in the pre-teenage or early teenage years; ● progressive loss of upper extremity function during mid- to late-teens; ● respiratory and/or cardiac failure, resulting in death before the age of 30; and ● cardiomyopathy eventually leads to heart failure, which is currently the leading cause of death among those with DMD. 5 Table of Contents ​ Glucocorticoid treatment, the current standard of care, has been shown to improve muscle strength temporarily, prolong the period of ambulation and slow the progression of DMD.
Due to reduced functional dystrophin protein, affected individuals generally experience the following symptoms, although disease severity and life expectancy vary: ​ ● muscle damage characterized by inflammation and fibrosis beginning at an early age; ● muscle weakness and progressive loss of muscle function beginning in the first few years of life; ● decline of ambulation and respiratory function after the age of seven; ● total loss of ambulation in the pre-teenage or early teenage years; ● progressive loss of upper extremity function during mid- to late-teens; and ● respiratory and/or cardiac failure, resulting in death before the age of 30 with cardiomyopathy leading to heart failure, which is currently the leading cause of death among those with DMD. ​ Glucocorticoid treatment, the current standard of care, has been shown to improve muscle strength temporarily, prolong the period of ambulation and slow the progression of DMD.
The results of preclinical testing, which include laboratory evaluation of product chemistry, formulation, toxicity and carcinogenicity animal studies to assess the potential safety and efficacy of the product and its formulations, details 18 Table of Contents concerning the drug manufacturing process and its controls, and a proposed clinical trial protocol and other information must be submitted to the FDA as part of an IND that must be reviewed and become effective before clinical testing can begin.
The results of preclinical testing, which include laboratory evaluation of product chemistry, formulation, toxicity and carcinogenicity animal studies to assess the potential safety and efficacy of the product and its formulations, details concerning the drug manufacturing process and its controls, and a proposed clinical trial protocol and other information must be submitted to the FDA as part of an IND that must be reviewed and become effective before clinical testing can begin.
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.
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.
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.
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.
Our ongoing research and development activities primarily concern CDCs 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.
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.
As HIPAA and HITECH requirements evolve, we may be required to update our compliance strategies or modify our business processes to comply. 25 Table of Contents The Federal Trade Commission (“FTC”) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the collection, use, dissemination and security of health-related and other personal information.
As HIPAA and HITECH requirements evolve, we may be required to update our compliance strategies or modify our business processes to comply. The Federal Trade Commission (“FTC”) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the collection, use, dissemination and security of health-related and other personal information.
Exosomes offer a new antigen delivery system that could potentially be utilized to rapidly generate multivalent protein-based vaccines. 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.
These may include price controls and cost-containment measures, or more restrictive policies in jurisdictions with existing controls and measures, any of which could limit the amounts that federal and state governments will pay for healthcare products 23 Table of Contents and services, and potentially could reduce demand for our products once approved, create additional pricing pressures, or ultimately limit our net revenue and results.
These may include price controls and cost-containment measures, or more restrictive policies in jurisdictions with existing controls and measures, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, and potentially could reduce demand for our products once approved, create additional pricing pressures, or ultimately limit our net revenue and results.
With regard to pharmaceutical products, among other things, the ACA contains provisions that may potentially affect the profitability of our products, including, for example, subjecting biologics potential competition by lower-cost biosimilars, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain products under Medicare Part D, expansion of entities eligible for discounts under the Public Health Service’s pharmaceutical pricing program, and a significant annual fee on companies that manufacture or import certain branded prescription drug products.
With regard to pharmaceutical products, among other things, the ACA contains provisions that may potentially affect the profitability of our products, including, for example, subjecting biologics potential competition by lower-cost biosimilars, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, expansion of entities eligible for discounts under the Public Health Service’s pharmaceutical pricing program, and a significant annual fee on companies that manufacture or import certain branded prescription drug products.
If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter, which authorizes commercial marketing of the product with specific prescribing information for specific indications, and sometimes with specified post-marketing commitments and/or distribution and use restrictions imposed 19 Table of Contents under a Risk Evaluation and Mitigation Strategy program.
If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter, which authorizes commercial marketing of the product with specific prescribing information for specific indications, and sometimes with specified post-marketing commitments and/or distribution and use restrictions imposed under a Risk Evaluation and Mitigation Strategy program.
Our current strategy is focused on securing partners who will provide capital and additional resources to enable us to bring this program into the clinic. ​ 4 Table of Contents Objectives and Business Strategy ​ We believe that our cell therapy and exosome-based platforms can be used to develop novel therapeutics to treat a broad range of diseases.
Our current strategy is focused on securing partners who will provide capital and additional resources to enable us to bring this program into the clinic. ​ Objectives and Business Strategy ​ We believe that our cell therapy and exosome-based platforms can be used to develop novel therapeutics to treat a broad range of diseases.
Twenty-five patients were randomized in a 1:1 ratio to receive either CAP-1002 on top of usual care or usual care only. In patients receiving CAP-1002, 25 million cells were infused into each of their three main coronary arteries for a total dose of 75 million cells. It was a one-time treatment, and the last patient was infused in September 2016.
Twenty-five patients were randomized in a 1:1 ratio to receive either deramiocel on top of usual care or usual care only. In patients receiving deramiocel, 25 million cells were infused into each of their three main coronary arteries for a total dose of 75 million cells. It was a one-time treatment, and the last patient was infused in September 2016.
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.
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.
In 2018, we were granted the Regenerative Medicine Advanced Therapy (“RMAT”) designation for CAP-1002 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 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.
This designation confers special incentives to the drug developer, including tax credits on the clinical development costs and prescription drug user fee waivers and may allow for a seven-year period of market exclusivity in the United States upon FDA approval. In 2017, the FDA granted Rare Pediatric Disease Designation to CAP-1002 for the treatment of DMD.
This designation confers special incentives to the drug developer, including tax credits on the clinical development costs and prescription drug user fee waivers and may allow for a seven-year period of market exclusivity in the United States upon FDA approval. In 2017, the FDA granted Rare Pediatric Disease Designation to deramiocel for the treatment of DMD.
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 26 Table of Contents 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 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.
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 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”).
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”).
The RMAT designation makes therapies eligible 16 Table of Contents for the same actions to expedite the development and review of a marketing application that are available to drugs that receive fast track or breakthrough therapy designation – including increased meeting opportunities, early interactions to discuss any potential surrogate or intermediate endpoints and the potential to support accelerated approval.
The RMAT designation makes therapies eligible for the same actions to expedite the development and review of a marketing application that are available to drugs that receive fast track or breakthrough therapy designation – including increased meeting opportunities, early interactions to discuss any potential surrogate or intermediate endpoints and the potential to support accelerated approval.
The Inflation Reduction Act of 2022 (“IRA”) extended this increased tax credit assistance and removal of the 400% federal poverty limit through 2025. Moreover, on June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
The Inflation Reduction Act of 2022 (“IRA”) extended this increased tax credit assistance and removal of the 400% federal poverty limit through 2025. Moreover, on June 17, 2021, the U.S. Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
There are many pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations that compete with us in developing various approaches to the treatment of DMD, which includes competitors both in the United States and internationally. With CAP-1002, we expect to face competition from existing products and products in development.
There are many pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations that compete with us in developing various approaches to the treatment of DMD, which includes competitors both in the United States and internationally. With deramiocel, we expect to face competition from existing products and products in development.
We continue to file patents on processes, indications, dosage forms and formulations directed to extend the patent portfolio related to CAP-1002 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. 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.
Left ventricular ejection fraction (LVEF), a global measure of cardiac pump function, decreased in the placebo group over time, but improved in the CAP-1002 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 (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).
There can be no assurance that existing or future therapies developed by others will not render our potential products obsolete or noncompetitive. In addition, companies pursuing 17 Table of Contents different but related fields represent substantial competition. These organizations also compete with us to attract patients for clinical trials, qualified personnel and parties for acquisitions, joint ventures, or other collaborations.
There can be no assurance that existing or future therapies developed by others will not render our potential products obsolete or noncompetitive. In addition, companies pursuing different but related fields represent substantial competition. These organizations also compete with us to attract patients for clinical trials, qualified personnel and parties for acquisitions, joint ventures, or other collaborations.
The clinical trial was designed to evaluate the safety and efficacy of repeated, intravenous doses of CAP-1002, in boys and young men with evidence of skeletal muscle impairment regardless of ambulatory status. Approximately 90% of the patients in the study were non-ambulant and all patients were on a stable regimen of steroids.
The clinical trial was designed to evaluate the safety and efficacy of repeated, intravenous doses of deramiocel, in boys and young men with evidence of skeletal muscle impairment regardless of ambulatory status. Approximately 90% of the patients in the study were non-ambulant and all patients were on a stable regimen of steroids.
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 logo.
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.
Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the 20 Table of Contents complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees.
Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees.
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.
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.
As shoulder function had already been lost in most of the HOPE-Duchenne participants, investigators used the combined mid-distal PUL subscales to assess changes in skeletal muscle function and found significant improvement in those treated with CAP-1002 in a defined post-hoc analysis.
As shoulder function had already been lost in most of the HOPE-Duchenne participants, investigators used the combined mid-distal PUL subscales to assess changes in skeletal muscle function and found significant improvement in those treated with deramiocel in a defined post-hoc analysis.
CAP-1002 is cryo-preserved, enabling us to produce large lots that can be frozen and then administered to patients as needed. ​ Manufacturing Process for Engineered-Exosome Technologies We have also made significant progress planning the next steps for the manufacturing process for our exosome product candidates.
Deramiocel is cryo-preserved, enabling us to produce large lots that can be frozen and then administered to patients as needed. ​ Manufacturing Process for Engineered-Exosome Technologies We have also made significant progress planning the next steps for the manufacturing process for our exosome product candidates.
To this end, we require all of our employees, consultants, advisors and 15 Table of Contents other contractors to enter into confidentiality agreements that prohibit the disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions relevant to our technologies and important to our business.
To this end, we require all of our employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions relevant to our technologies and important to our business.
Even patent protection, however, may not always afford us with complete protection against competitors who seek to circumvent our patents. If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish.
Even patent protection, however, may not always afford us with complete protection against competitors who seek to circumvent our patents. If we fail to adequately protect or enforce our intellectual property rights or secure rights to own or otherwise use the patents of others, the value of our intellectual property rights would diminish.
Since late 2021, infections have been dominated by subvariants of the Omicron strain which continue to displace previous circulating strains by evading immunity and spreading more efficiently resulting in an increased risk of breakthrough infection among the vaccinated.
Since late 2021, infections have been dominated by subvariants of the Omicron strain especially the XEC variant, which continue to displace previous circulating strains by evading immunity and spreading more efficiently resulting in an increased risk of breakthrough infection among the vaccinated.
The Priority Review Voucher may be sold or transferred an unlimited number of times. If Capricor were to receive market approval for CAP-1002 by the FDA, Capricor would be eligible to receive a Priority Review Voucher based on its designation as a rare pediatric disease.
The Priority Review Voucher may be sold or transferred an unlimited number of times. If Capricor were to receive market approval for deramiocel by the FDA, Capricor would be eligible to receive a Priority Review Voucher based on its designation as a rare pediatric disease.
We therefore believe that DMD represents a significant market opportunity for our product candidate, CAP-1002. ​ SARS-CoV-2 : Coronaviruses are a large family of viruses that can cause illness in animals or humans. In humans, several known coronaviruses cause respiratory infections.
We therefore believe that DMD represents a significant market opportunity for our product candidate, deramiocel. ​ SARS-CoV-2 : Coronaviruses are a large family of viruses that can cause illness in animals or humans. In humans, several known coronaviruses cause respiratory infections.
DMD pathophysiology is driven by the impaired production of functional dystrophin, which normally functions as a structural protein in muscle. The reduction of functional dystrophin in muscle cells leads to significant cell damage and ultimately causes muscle cell death and fibrotic replacement.
DMD pathophysiology is driven by the impaired production of functional dystrophin, which normally functions as a structural protein in muscle. The reduction of functional dystrophin in muscle cells leads to significant cell 3 Table of Contents damage and ultimately causes muscle cell death and fibrotic replacement.
The results of the placebo patients were consistent with natural history, but in the treated group, most patients were stable or improved on these endpoints throughout the one-year treatment period. CAP-1002 was generally safe and well tolerated throughout the study.
The results of the placebo patients were consistent with natural history, but in the treated group, most patients were stable or improved on these endpoints throughout the one-year treatment period. Deramiocel was generally safe and well tolerated throughout the study.
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.
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.
CAP-1002 is one of the few therapies currently in development to help late-stage patients with DMD. To receive the RMAT designation, we submitted data from the HOPE-Duchenne Trial. Trademarks Our trademarks are generally filed to protect our corporate brand, our products and our platform technologies.
Deramiocel is one of the few therapies currently in development to help late-stage patients with DMD. To receive the RMAT designation, we submitted data from the HOPE-Duchenne clinical trial. Trademarks Our trademarks are generally filed to protect our corporate brand, our products and our platform technologies.
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 will use in connection with the development of our exosomes platform.
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.
Our patents, or patent applications, if issued and upon payment of patent maintenance fees, would expire as early as 2024 and as late as 2044 or beyond depending on any patent term adjustment or patent term extension. There are also limited opportunities to obtain extensions of patent terms in certain countries.
Our patents, or patent applications, if issued and upon payment of patent maintenance fees, would expire as early as 2025 and as late as 2045 or beyond depending on any patent term adjustment or patent term extension. There are also limited opportunities to obtain extensions of patent terms in certain countries.
Percentile ranked change from baseline converted back to original scale ‡Negative value favors CAP-1002 *Graphed figures below ​ PUL v1.2 mid-level dimension (1) ​ Left ventricular ejection fraction % (LVEF) (1) ​ (1) Images from HOPE-2 Lancet Publication (March 2022) ​ Phase 2 HOPE-2-Open Label Extension (“OLE”) Clinical Trial : We are currently conducting an OLE clinical trial available to all patients who participated in the HOPE-2 study which includes those patients who received placebo. 8 Table of Contents 12 patients elected to continue treatment.
Percentile ranked change from baseline converted back to original scale ‡Negative value favors deramiocel *Graphed figures below ​ PUL v1.2 mid-level dimension (1) ​ Left ventricular ejection fraction % (LVEF) (1) ​ (1) Images from HOPE-2 Lancet Publication (March 2022) ​ Phase 2 HOPE-2-Open Label Extension (“OLE”) Clinical Trial : We are currently conducting an OLE clinical trial available to all patients who participated in the HOPE-2 study which includes those patients who received placebo. 12 patients elected to continue treatment.
The earlier expiring patents are generally directed to precursor cell populations or early non-DMD indications and administration methods. We have patents directed to CAP-1002 for the treatment of DMD that expire in 2038 unless otherwise extended under Hatch-Waxman.
The earlier expiring patents are generally directed to precursor cell populations or early non-DMD indications and administration methods. We have patents directed to deramiocel for the treatment of DMD that expire in 2038 unless otherwise extended under the Hatch-Waxman Act.
The study protocol and informed consent information for patients in clinical trials must also be submitted to an independent Institutional Review Board (“IRB”) for approval covering each institution at which the clinical trial will be conducted. Once a sponsor submits an IND, the sponsor must wait 30 calendar days before initiating any clinical trials.
The study protocol and informed consent information for patients in clinical trials must also be submitted to an independent IRB for approval covering each institution at which the clinical trial will be conducted. Once a sponsor submits an IND, the sponsor must wait 30 calendar days before initiating any clinical trials.
Additionally, on December 21, 2020, Congress passed a $900 billion U.S. coronavirus relief and government appropriations legislation, the Consolidated Appropriations Act of 2021, which contains several important new drug price reporting and transparency measures that could result in additional transparency with respect to manufacturers’ prescription drug prices.
For example, on December 21, 2020, Congress passed a $900 billion U.S. coronavirus relief and 25 Table of Contents government appropriations legislation, the Consolidated Appropriations Act of 2021, which contains several important new drug price reporting and transparency measures that could result in additional transparency with respect to manufacturers’ prescription drug prices.
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. ​ 12 Table of Contents 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.
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.
CAP-1002 is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, 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 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.
Capricor Therapeutics was listed on the Nasdaq Capital Market shortly thereafter and currently trades under the symbol “CAPR”. Capricor Therapeutics and Capricor have together raised approximately $145.0 million in equity capital (both privately and publicly) as well as approximately $90.0 million in non-dilutive funding from our partners including Nippon Shinyaku Co.
Capricor Therapeutics was listed on the Nasdaq Capital Market shortly thereafter and currently trades under the symbol “CAPR”. Capricor Therapeutics and Capricor have together raised approximately $300 million in equity capital (both privately and publicly) as well as approximately $100 million in non-dilutive funding from our collaboration partners including Nippon Shinyaku Co.
With the exception of hypersensitivity 7 Table of Contents 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, CAP-1002 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 DSMB. HOPE-2 Study Results - 12-Month Efficacy Data ​ ​ ​ ​ ​ ​ ​ 12-Month Difference in Change from Baseline† ​ ​ ​ Δ, deramiocel vs.
Our core cell therapy technology was first identified in the academic laboratory of Dr. Eduardo Marbán while he was Chief of Cardiology at Johns Hopkins. Since its initial publication in 2007, CDCs have been the subject of over 100 peer-reviewed scientific publications and have been administered to over 200 human subjects across several clinical trials.
Our core cell therapy technology was first identified in the academic laboratory of Dr. Eduardo Marbán while he was Chief of Cardiology at JHU. Since their initial publication in 2007, CDCs have been the subject of over 200 peer-reviewed scientific publications and have been administered to over 250 human subjects across several clinical trials.
In pursuit of this objective, we intend to focus on the following activities: ​ ● continuing the development of our CAP-1002 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 and in other select territories; ● 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.
In 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.
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.
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.
This tissue is then taken to the lab where the cells are isolated, expanded, and processed through a series of proprietary unit operations. After expanding, processing, release testing and quality review, the CAP-1002 product becomes available for administration to patients participating in clinical trials.
This tissue is then taken to the lab where the cells are isolated, expanded, and processed through a series of proprietary unit operations. After expanding, processing, release testing and quality review, the deramiocel product becomes available for administration to patients.
Regulatory Designations Regulatory Designations for CAP-1002 for the treatment of DMD In 2015, the FDA granted orphan drug designation to CAP-1002 for the treatment of DMD.
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.
The next milestone is triggered upon successful completion of a full Phase 3 study for which a payment of $500,000 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 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.
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 six months of the fiscal year 2032 sequestration order (with the exception of a temporary suspension due to the COVID-19 pandemic from May 1, 2020 through March 31, 2022 and a subsequent reduction to 1% from April 1, 2022 until June 30, 2022).
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).
Technology and Platforms Cell Therapy Platform Our core program is focused on the development and commercialization of a cell therapy (referred to herein as CAP-1002) comprised of cardiosphere-derived cells (“CDCs”), which are a population of stromal cells isolated from donated cells of healthy human hearts currently being developed for the treatment of DMD.
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.
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 $13,946 and $27,894 per false claim or statement for penalties assessed after January 15, 2024 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 January 15, 2025 with respect to violations occurring after November 2, 2015.
We cannot predict whether the IRA, or any of its component parts, will be overturned, repealed, replaced, or amended nor can we predict the likelihood, nature, or extent of other health reform initiatives that may arise from future legislation, administrative, or other action.
We cannot predict whether the IRA, or any of its component parts, will be overturned, repealed, replaced, or amended nor can we predict the likelihood, nature, or extent of other health reform initiatives that may arise from future legislation, administrative, or other action. However, we expect these initiatives to increase pressure on drug pricing.
In that portion of the leased premises where we manufacture CAP-1002 and may manufacture our exosome products for potential clinical use, 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 at this time.
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.
At this time, we are exploring the use of our proprietary StealthX™ exosome platform for a broad range of therapeutic applications including targeted RNA, protein and small molecule therapeutics to treat or prevent a variety of diseases. Exosome Platform: CDC-Derived Exosomes (CAP-2003) : CAP-2003 is the name of our exosomes product candidate which are derived from CDCs.
At this time, we are exploring the use of our proprietary StealthX™ exosome platform for a broad range of therapeutic applications including targeted RNA, protein and small molecule therapeutics to treat or prevent a variety of diseases.
We cannot predict how, or to what extent, the Biden administration’s drug pricing policies will affect our products. We cannot predict what other healthcare reforms will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation. Accordingly, we face uncertainties that might result from additional reforms.
We cannot predict what other healthcare reforms will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation. Accordingly, we face uncertainties that might result from additional reforms.
While there are many clinical initiatives in DMD, Capricor’s program is one of the very few to focus on predominantly non-ambulant patients. These boys and young men are looking to maintain their function in their arms and hands and slow the progression of cardiomyopathy.
While there are many clinical initiatives in DMD, Capricor’s program is one of the very few to focus on predominantly older patients. These boys and young men are looking to slow the progression of cardiac and skeletal muscle function.
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. Third-party payors are increasingly challenging the prices charged for medical products and services.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe 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. 40 Table of Contents 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.
Biggest changeWe 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.
The approval process may also be delayed by changes in government regulation, future legislation, administrative action or changes in FDA policy that occur prior to or during our regulatory review. Even if we comply with all FDA requests, the FDA may ultimately reject one or more of our NDAs or BLAs, as applicable.
The approval process may also be delayed by changes in government regulation, future legislation, administrative action or changes in FDA policy that occur prior to or during our regulatory review. Even if we comply with all FDA requests, the FDA may ultimately reject one or more of our BLAs or NDAs, as applicable.
Any delay in, or termination of, our clinical trials will delay or cause us to refrain from the filing of our NDAs and/or BLAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues. In addition, our clinical trials to date involve small patient populations.
Any delay in, or termination of, our clinical trials will delay or cause us to refrain from the filing of our BLAs and/or NDAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues. In addition, our clinical trials to date involve small patient populations.
FDA may withdraw approval of a drug or indication approved under the accelerated approval pathway if any of the following were to occur: a trial required to verify the predicted clinical benefit of the product fails to verify such benefit; other evidence demonstrates that the product is not shown to be safe or effective under the conditions of use; the applicant fails to conduct any required post-approval trial of the drug with due diligence; or the applicant disseminates false or misleading promotional materials relating to the product.
The FDA may withdraw approval of a drug or indication approved under the accelerated approval pathway if any of the following were to occur: a trial required to verify the predicted clinical benefit of the product fails to verify such benefit; other evidence demonstrates that the product is not shown to be safe or effective under the conditions of use; the applicant fails to conduct any required post-approval trial of the drug with due diligence; or the applicant disseminates false or misleading promotional materials relating to the product.
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 NDA or BLA, 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 an BLA or NDA, the FDA must approve any replacement contractor.
In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a “first to file” system in which the first inventor to file a patent application will be entitled to the patent. Third parties are allowed to submit prior art before the issuance of a patent by the U.S.
In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a “first inventor to file” system in which the first inventor to file a patent application will be entitled to the patent. Third parties are allowed to submit prior art before the issuance of a patent by the U.S.
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 activities.
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.
All of the Company’s employees will be employed “at will” and, therefore, each employee may leave the employment of the Company at any time. If we are unable to retain our existing employees, including qualified scientific and manufacturing personnel, and attract additional qualified candidates, the Company’s business and results of operations could be adversely affected.
All of the Company’s employees are and will be employed “at will” and, therefore, each employee may leave the employment of the Company at any time. If we are unable to retain our existing employees, including qualified scientific and manufacturing personnel, and attract additional qualified candidates, the Company’s business and results of operations could be adversely affected.
If any of our other product candidates are cleared for commercialization, we intend to pursue collaborative arrangements regarding the sales and marketing of such products, however, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or if able to do so, that such collaborators will have effective sales forces.
If any of our other product candidates are cleared for commercialization, we intend to pursue collaborative arrangements regarding the sales and marketing of such products, however, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or if we are able to do so, that such collaborators will have effective sales forces.
Additionally, we cannot predict with any certainty if, or when, we might commence any additional clinical trials of our 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 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 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.
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; 60 Table of Contents ● 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 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.
Risks Related to the Manufacturing of our Product Candidates ● the manufacturing of our product candidates is heavily reliant on supply chain requirements 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 for the expansion of our manufacturing capabilities for later-stage clinical trials and for ultimate commercialization; ● we may not have adequate manufacturing facilities required for any scale-up of manufacturing which may be required in the future; ● we may not be able to replicate our manufacturing processes; ● we may not be able to comply with cGMP regulations; 30 Table of Contents ● we may not be able to identify or retain necessary manufacturing personnel; ● the FDA may not accept the viability or comparability of our manufacturing processes; and ● the FDA may not approve our manufacturing facilities for the manufacture of commercial products .
Risks Related to the Manufacturing of our Product Candidates ● the manufacturing of our product candidates is heavily reliant on supply chain requirements 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 for the expansion of our manufacturing capabilities for later-stage clinical trials and for ultimate commercialization; ● we may not have adequate manufacturing facilities required for any scale-up of manufacturing which may be required in the future; ● we may not be able to replicate our manufacturing processes; ● we may not be able to comply with cGMP regulations; ● we may not be able to identify or retain necessary manufacturing personnel; 28 Table of Contents ● the FDA may not accept the viability or comparability of our manufacturing processes; and ● the FDA may not approve our manufacturing facilities for the manufacture of commercial products .
Risks Related to Competitive Factors ● our products 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 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.
Our commercial viability will depend, in part, on obtaining and maintaining patent protection and trade secret protection of our product candidates, and the methods used to manufacture them, as well as successfully defending these patents against third-party challenges.
Our commercial viability will depend, in part, on obtaining and maintaining patent protection and trade secret protection of our product candidates, and the methods used to manufacture and utilize them, as well as successfully defending these patents against third-party challenges.
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 COVID-19 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: 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.
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.
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.
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 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.
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 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.
Proving invalidity, in particular, is difficult since it requires a proof by clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
Proving invalidity, in particular, is difficult since it requires proof by clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.
Distribution Agreement and Japan Distribution Agreement with Nippon Shinyaku; ● failure to satisfy licensing obligations, including our ability to meet milestone requirements under our license agreements; ● market conditions in the pharmaceutical, biotechnology and other healthcare related sectors; ● actual or anticipated fluctuations in our quarterly financial and operating results; ● developments or disputes concerning our intellectual property or other proprietary rights; ● introduction of technological innovations or new commercial products by us or our competitors; ● issues in manufacturing our drug candidates or drugs; ● issues with the supply or manufacturing of any devices or materials needed to manufacture or utilize our drug candidates; ● FDA or other U.S. or foreign regulatory actions affecting us or our industry; ● the risks and costs of increased operations, including clinical and manufacturing operations, on an international basis; ● market acceptance of our drugs when they enter the market; ● third-party healthcare coverage and reimbursement policies; ● litigation or public concern about the safety of our drug candidates or drugs or the operations of the Company; ● issuance of new or revised securities analysts’ reports or recommendations; ● additions or departures of key personnel; ● potential delisting of our stock from the Nasdaq Stock Market; or ● volatility in the stock prices of other companies in our industry.
Distribution Agreement and Japan Distribution Agreement with Nippon Shinyaku; ● failure to satisfy contractual obligations, including our ability to meet milestone requirements under our license agreements; ● market conditions in the pharmaceutical, biotechnology and other healthcare related sectors; ● actual or anticipated fluctuations in our quarterly financial and operating results; ● developments or disputes concerning our intellectual property or other proprietary rights; ● introduction of technological innovations or new commercial products by us or our competitors; ● issues in manufacturing our drug candidates or drugs; ● issues with the supply or manufacturing of any devices or materials needed to manufacture or utilize our drug candidates; ● FDA or other U.S. or foreign regulatory actions affecting us or our industry; ● the risks and costs of increased operations, including clinical and manufacturing operations, on an international basis; 67 Table of Contents ● market acceptance of our drugs when they enter the market; ● third-party healthcare coverage and reimbursement policies; ● litigation or public concern about the safety of our drug candidates or drugs or the operations of the Company; ● issuance of new or revised securities analysts’ reports or recommendations; ● additions or departures of key personnel; ● potential delisting of our stock from the Nasdaq Stock Market; or ● volatility in the stock prices of other companies in our industry.
Even if we do complete the clinical trial, the study may not meet its prespecified endpoints, and even if it does, the FDA may still disagree with our determination that the trial is sufficient to support the submission and approval of a BLA application. We obtain the donor hearts from which our CDCs are manufactured from organ procurement organizations (“OPOs”).
Even if we do complete the clinical trial, the study may not meet its prespecified endpoints, and even if it does, the FDA may still disagree with our determination that the trial is sufficient to support the approval of our BLA application. We obtain the donor hearts from which our CDCs are manufactured from organ procurement organizations (“OPOs”).
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; ● 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, CAP-1002; 43 Table of Contents ● 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; 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.
Some of our own or in-licensed patents may be subject to challenge and subsequent invalidation in a variety of post-grant proceedings, before the Patent Trial and Appeal Board (the PTAB) of the USPTO or in litigation under the revised legal standards, which make it more difficult to defend the validity of claims in already issued patents.
Some of our own or in-licensed patents may be subject to challenge and subsequent invalidation in a variety of post-grant proceedings, before the Patent Trial and Appeal Board of the USPTO or in litigation under the revised legal standards, which make it more difficult to defend the patentability or validity of claims in already issued patents.
Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. If any of our product candidates fail to demonstrate attractive efficacy profiles, they may not qualify for coverage and reimbursement.
Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available. If any of our product candidates fail to demonstrate sufficient efficacy profiles, they may not qualify for coverage and reimbursement.
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 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 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.
This demonstration requires significant research and animal testing, which are referred to as preclinical studies, as well as human testing, which are referred to as clinical trials. Satisfaction of the FDA’s regulatory requirements typically takes many years, depends upon the type, complexity, and novelty of the product candidate, and requires substantial resources for research, development, testing and manufacturing.
This application requires significant research and animal testing, which are referred to as preclinical studies, as well as human testing, which are referred to as clinical trials. Satisfaction of the FDA’s regulatory requirements typically takes many years, depends upon the type, complexity, and novelty of the product candidate, and requires substantial resources for research, development, testing and manufacturing.
The commercial viability of our product candidates for which we may obtain marketing approval from the FDA or other regulatory authorities will depend upon their acceptance among physicians, the medical community, patients, and coverage and reimbursement of them by third-party payors, including government payors.
The commercial viability of our product candidates for which we may obtain marketing approval from the FDA or other regulatory authorities will depend upon their acceptance among physicians, the medical community, patients, and the availability of coverage and reimbursement by third-party payors, including government payors.
Our manufacturing capabilities could be affected by cost-overruns, unexpected delays, equipment failures, labor shortages, operator error, 53 Table of Contents 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, 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.
Eduardo 59 Table of Contents Marbán, who is the Director of the Smidt Heart Institute at CSMC) are under no obligation to conduct, continue, or conclude either current or future studies utilizing our cell therapy or exosomes technology, and they are not compelled to license any further technologies or intellectual property rights to us except as may be stated in the applicable licensing agreements or research agreements between those institutions and us.
Eduardo Marbán, who is the Director of the Smidt Heart Institute at CSMC) are under no obligation to conduct, continue, or conclude either current or future studies utilizing our cell therapy or exosomes technology, and they are not compelled to license any further technologies or intellectual property rights to us except as may be stated in the applicable licensing agreements or research agreements between those institutions and us.
We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing, distribution and sales efforts of any future collaborator.
We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing, distribution and sales efforts of our partner or of any future collaborator.
The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products, manufacturing processes or methods of use. The coverage of patents is subject to claim construction by the courts, which is not always predictable or reasonable.
The biotechnology industry has produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products, manufacturing processes or methods of use. The coverage of patents is subject to claim construction by the courts, which is not always predictable or favorable.
Further, changing plans or priorities within the FDA or the regulatory authorities in other jurisdictions, including changes based on new knowledge of COVID-19 or other infectious diseases, and new variants of the virus, may significantly affect the regulatory timeline for further authorizations or approvals.
Further, changing plans or priorities within the FDA, other government departments, or the regulatory authorities in other jurisdictions, including changes based on new knowledge of COVID-19 or other infectious diseases, and new variants of the virus, may significantly affect the regulatory timeline for further authorizations or approvals.
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.
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.
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.
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.
Such effects include the risks that our product candidates may not be approved for all indications requested, which could limit the uses of our product candidates and have an adverse effect on product sales and potential royalties, 48 Table of Contents and that such approval may be subject to limitations on the indicated uses for which the product may be marketed or require costly, post-marketing follow-up studies.
Such effects include the risks that our product candidates may not be approved for all indications requested, which could limit the uses of our product candidates and have an adverse effect on product sales and potential royalties, and that such approval may be subject to limitations on the indicated uses for which the product may be marketed or require costly, post-marketing follow-up studies.
Among policy makers and payors in the United States there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality of care and/or expanding access to care and 50 Table of Contents the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
Among policy makers and payors in the United States there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality of care and/or expanding access to care and the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
We believe that a substantial portion of our revenue for the foreseeable future will depend on milestones and other payments received from our distributor, Nippon Shinyaku. Nippon Shinyaku has exclusive distribution rights for CAP-1002 in the United States and Japan for a significant period of time, with only limited rights of either party to terminate these agreements.
We believe that a substantial portion of our revenue for the foreseeable future will depend on milestones and other payments received from our distributor, Nippon Shinyaku. Nippon Shinyaku has exclusive distribution rights for deramiocel in the United States and Japan for a significant period of time, with only limited rights of either party to terminate these agreements.
Pursuant to terms of the CIRM Award, disbursements were tied to the achievement of specified operational milestones. The CIRM Award is further subject to the conditions and requirements set forth in the CIRM Grants Administration Policy for Clinical Stage Projects.
Pursuant to the terms of the CIRM Award, disbursements were tied to the achievement of specified operational milestones. The CIRM Award was further subject to the conditions and requirements set forth in the CIRM Grants Administration Policy for Clinical Stage Projects.
Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties. Our product candidates, if approved, will also be subject to ongoing FDA requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug.
Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties. 54 Table of Contents Our product candidates, if approved, will also be subject to ongoing FDA requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug.
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 CAP-1002 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 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 CAP-1002 product if and to the extent it is approved; ● our ability to establish or maintain collaborations, licensing or other arrangements, including strategic partnerships for CAP-1002 outside of DMD and our exosomes 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. 33 Table of Contents The Company’s technology is not yet proven and each of our product candidates is still in clinical or preclinical development .
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.
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; 63 Table of Contents ● 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; ● lower demonstrated clinical safety and efficacy compared to other products; ● prevalence and severity of adverse effects; ● ineffective marketing and distribution efforts; ● lack of availability of reimbursement from managed care plans and other third-party payors; ● lack of 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; ● availability of alternative therapies at similar costs; and ● potential product liability claims.
Additionally, RMAT designation can be revoked if the criteria for eligibility cease to be met as clinical data emerges. Even if we were to obtain approval for CAP-1002 for the treatment of DMD with the rare pediatric disease designation, the Rare Pediatric Disease Priority Review Voucher Program may no longer be in effect at the time of such approval.
Additionally, RMAT designation can be revoked if the criteria for eligibility cease to be met as clinical data emerges. Even if we were to obtain approval for deramiocel for the treatment of DMD with the rare pediatric disease designation, the Rare Pediatric Disease Priority Review Voucher Program may no longer be in effect at the time of such approval.
The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval, if at all, expose the Company to the risk of product liability claims. Product liability claims might be brought against the Company by consumers, health care providers or others using, 65 Table of Contents administering or selling our products.
The use of our product candidates in clinical trials and the sale of any products for which we obtain marketing approval, if at all, expose the Company to the risk of product liability claims. Product liability claims might be brought against the Company by consumers, health care providers or others using, administering or selling our products.
A potential risk of an allogeneic therapy such as that being tested by the Company with CAP-1002 is that patients might develop an immune response to the cells being infused. Such an immune response may induce adverse clinical effects which would impact the safety and efficacy of the Company’s products and the success of our trials.
A potential risk of an allogeneic therapy such as that being tested by the Company with deramiocel is that patients might develop an immune response to the cells being infused. Such an immune response may induce adverse clinical effects which would impact the safety and efficacy of the Company’s products and the success of our trials.
We do not have control over third-party manufacturers’ compliance with these regulations and standards. 54 Table of Contents Each of these risks could delay our clinical trials, the approval, if any, of our product candidates by the FDA, or the commercialization of our product candidates, or result in higher costs or deprive us of potential product revenues.
We do not have control over third-party manufacturers’ compliance with these regulations and standards. Each of these risks could delay our clinical trials, the approval, if any, of our product candidates by the FDA, or the commercialization of our product candidates, or result in higher costs or deprive us of potential product revenues.
Furthermore, there can be no assurance that others will not independently develop substantially equivalent technologies not covered by patents to which we have rights or obtain access to our know-how. In addition, the laws of certain countries 55 Table of Contents may not adequately protect our intellectual property.
Furthermore, there can be no assurance that others will not independently develop substantially equivalent technologies not covered by patents to which we have rights or obtain access to our know-how. In addition, the laws of certain countries may not adequately protect our intellectual property.
There is no assurance that if research injuries are sustained, any insurance carrier will compensate Capricor for any liabilities or other losses sustained by Capricor arising out of these injuries. We have been informed by CSMC that both of the CAP-1002 (REGRESS and ALPHA) trials have ceased enrollment and that the trials have been concluded.
There is no assurance that if research injuries are sustained, any insurance carrier will compensate Capricor for any liabilities or other losses sustained by Capricor arising out of these injuries. We have been informed by CSMC that both of the deramiocel (REGRESS and ALPHA) trials have ceased enrollment and that the trials have been concluded.
Patent and Trademark Office (“USPTO”), and may become involved in derivation, post-grant review, or inter partes review, proceedings challenging our patent rights or the patent rights of our licensors. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our or our licensors’ patent rights, which could adversely affect our competitive position.
Patent and Trademark Office (“USPTO”), and may become involved in derivation, post-grant review, or inter partes review, proceedings challenging our patent rights or the patent rights of our licensors. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or render unpatentable, our or our licensors’ patent rights, which could adversely affect our competitive position.
Any of those options would involve a significant monetary investment, time delays, and increased risk and may impact the progress of our clinical trials and regulatory approvals. Further, we have entered into the Japanese Distribution Agreement with Nippon Shinyaku for the distribution of CAP-1002 in Japan.
Any of those options would involve a significant monetary investment, time delays, and increased risk and may impact the progress of our clinical trials and regulatory approvals. Further, we have entered into the Japanese Distribution Agreement with Nippon Shinyaku for the distribution of deramiocel in Japan.
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 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. 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.
In addition, at this time, there are four FDA conditionally approved exon skipping drugs: EXONDYS 51 (eteplirsen), AMONDYS 45 (casimersen) and VYONDYS 53 (golodirsen), which are PMOs approved for the treatment of DMD patients amenable to Exon 51, Exon 45 and Exon 53 skipping, respectively, and are marketed by Sarepta Therapeutics, Inc., and VILTEPSO (vitolarsen), a PMO approved for the treatment of DMD patients amenable to Exon 53 skipping, which is marketed by Nippon Shinyaku (U.S. subsidiary: NS Pharma, Inc.).
At this time, there are four FDA conditionally approved exon skipping drugs: EXONDYS 51 (eteplirsen), AMONDYS 45 (casimersen) and VYONDYS 53 (golodirsen), which are PMOs approved for the treatment of DMD patients amenable to Exon 51, Exon 45 and Exon 53 skipping, respectively, and are marketed by Sarepta Therapeutics, Inc., and VILTEPSO (vitolarsen), a PMO approved for the treatment of DMD patients amenable to Exon 53 skipping, which is marketed by Nippon Shinyaku through its U.S. subsidiary, NS Pharma, Inc.
CAP-1002 has received rare pediatric disease designation from the FDA for the treatment of DMD. The FDA generally define a "rare pediatric disease" as a serious or life-threatening disease that affects fewer than 200,000 individuals in the U.S. primarily under the age of 18 years old.
Deramiocel has received rare pediatric disease designation from the FDA for the treatment of DMD. The FDA generally define a "rare pediatric disease" as a serious or life-threatening disease that affects fewer than 200,000 individuals in the U.S. primarily under the age of 18 years old.
We have limited experience in conducting late-stage clinical trials, which are complex and subject to strict regulatory oversight. We have limited late-stage clinical trial experience with respect to its product candidates.
We have limited experience in conducting late-stage clinical trials, which are complex and subject to strict regulatory oversight. We have limited late-stage clinical trial experience with respect to our product candidates.
Thus, even if we succeed in bringing one or more products to the market, these products may not be considered medically necessary or cost-effective, and the amount reimbursed for any products may be insufficient to allow us to sell our products on a competitive basis.
Thus, even if we succeed in bringing one or more products to the market, these products may not be considered medically necessary or cost-effective, and the amount reimbursed for any products may be insufficient to allow our products to be sold on a competitive basis.
Risks Related to Our Relationships with Third Parties We will depend on our exclusive distributor, Nippon Shinyaku, for the commercial sale of our lead product CAP-1002 in DMD in the United States and Japan, if we receive regulatory approval in those territories.
Risks Related to Our Relationships with Third Parties We will depend on our exclusive distributor, Nippon Shinyaku, for the commercial sale of our lead product deramiocel in DMD in the United States and Japan, if we receive regulatory approval in those territories.
If CAP-1002 or any of our exosome technologies receives FDA approval, we may need to ultimately rely on one or more third-party contractors to manufacture supplies of these products which may cause delays in our ability to sell commercially.
If deramiocel or any of our exosome technologies receives FDA approval, we may need to ultimately rely on one or more third-party contractors to manufacture supplies of these products which may cause delays in our ability to sell commercially.
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.
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.
The success of our product candidates will depend on several factors, including the following: ● successful and timely completion of our clinical trials; ● initiation and successful patient enrollment and completion of additional clinical trials on a timely basis; ● the impact of COVID-19 or some other infectious disease outbreak 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 demonstrate our products’ safety, tolerability and efficacy to the FDA or any comparable foreign regulatory authority for marketing approval; ● 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; ● establishment of scaled production arrangements with third-party manufacturers to obtain finished products that are compliant with cGMP and appropriately packaged for sale; ● 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; 34 Table of Contents ● 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; ● 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; ● 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.
Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. However, there may be significant delays in obtaining coverage 49 Table of Contents for newly-approved drugs.
Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. However, there may be significant delays in obtaining coverage for newly-approved drugs.
If material weaknesses or other 69 Table of Contents significant deficiencies occur, these weaknesses or deficiencies could result in misstatements of our results of operations, restatements of our consolidated financial statements, a decline in our stock price, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.
If material weaknesses or other significant deficiencies occur, these weaknesses or deficiencies could result in misstatements of our results of operations, restatements of our consolidated financial statements, a decline in our stock price, or other material adverse effects on our business, reputation, results of operations, financial condition or liquidity.
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.
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.
In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used, misappropriated or disclosed confidential information of these third parties or our employees’ former employers.
In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used, misappropriated or disclosed confidential information of these third parties or our employees’ former employers. Litigation may be necessary to defend against these claims.
Under the FDA's Rare Pediatric Disease Priority Review Voucher program, upon the approval of a 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 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.
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.
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.
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.
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.
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.
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.
The U.S. government, state legislatures, and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement, and requirements for substitution by generic products. We anticipate additional state and federal healthcare reform measures will be adopted in the future.
The U.S. government, state legislatures, and foreign governments 65 Table of Contents have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement, and requirements for substitution by generic products. We anticipate additional state and federal healthcare reform measures will be adopted in the future.
Under our Amended and Restated Exclusive License Agreement with CSMC and our Exclusive License Agreement with CSMC, as the same have been amended, we have assumed, in coordination with CSMC, financial responsibility for the prosecution and maintenance of certain patents and patent applications 56 Table of Contents thereunder.
Under our Amended and Restated Exclusive License Agreement with CSMC and our Exclusive License Agreement with CSMC, as the same have been amended, we have assumed, in coordination with CSMC, financial responsibility for the prosecution and maintenance of certain patents and patent applications thereunder.
Distribution Agreement and the Japan Distribution Agreement with Nippon Shinyaku, we will depend upon Nippon Shinyaku’s strategic interest in our CAP-1002 product candidate and Nippon Shinyaku’s ability to successfully market and sell any such products, if and when approved.
Distribution Agreement and the Japan Distribution Agreement with Nippon Shinyaku, we will depend upon Nippon Shinyaku’s strategic interest in our deramiocel product candidate and Nippon Shinyaku’s ability to successfully market and sell any such products, if and when approved.
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.
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.
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 revenues; and ● 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.
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.
For example, the loss of 35 Table of Contents 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 significantly increase our costs to recover or reproduce the data.
Any such determinations 46 Table of Contents would delay or deny the introduction of our product candidates to the market and have a material adverse effect on our business, financial condition, and results of operations.
Any such determinations would delay or deny the introduction of our product candidates to the market and have a material adverse effect on our business, financial condition, and results of operations.
There is intense competition for qualified personnel in our fields of research and development, and there can be no assurance that we will be able to continue to attract additional qualified personnel necessary for the development and commercialization of our product candidates or retain our current personnel.
There is intense competition for qualified personnel in our fields of research and development, as well as manufacturing and quality assurance, and there can be no assurance that we will be able to continue to attract additional qualified personnel necessary for the development and commercialization of our product candidates or retain our current personnel.
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 President Biden’s 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 any impact which the actions of the current Trump administration and the U.S. Congress may have on the federal budget.
Recent global market and economic conditions have been unpredictable and challenging. These conditions and any adverse impact on the financial markets may adversely affect our liquidity and financial condition, including our ability to access the capital markets to meet our liquidity needs.
Market and economic conditions may adversely affect our industry, business and ability to obtain financing. Recent global market and economic conditions have been unpredictable and challenging. These conditions and any adverse impact on the financial markets may adversely affect our liquidity and financial condition, including our ability to access the capital markets to meet our liquidity needs.
Developing biopharmaceutical products, including conducting preclinical studies and clinical trials and establishing manufacturing capabilities, is expensive. As of December 31, 2023, we had cash, cash equivalents, and marketable securities totaling approximately $39.5 million. Additionally, we received a milestone payment of $10.0 million in the first quarter of 2024 under the terms of our U.S.
Developing biopharmaceutical products, including conducting preclinical studies and clinical trials and establishing manufacturing capabilities and commercialization infrastructure, is expensive. As of December 31, 2024, we had cash, cash equivalents, and marketable securities totaling approximately $151.5 million. Additionally, we received a milestone payment of $10.0 million in the first quarter of 2025 under the terms of our U.S.
Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of worldwide revenue, whichever is higher.
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.
We have licensed certain patent and other intellectual property rights that cover cardiospheres (CSps), and cardiosphere-derived cells (CDCs), (including our CAP-1002 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 extracellular vesicles, such as exosomes and microvesicles.
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.
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.
These 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 of our product candidates; ● 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; ● our exosome technologies are unproven in their ability to achieve sufficient biological activity or scale in development to date; ● 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 use our facilities to manufacture CAP-1002 product for commercial purposes; ● we may be required to obtain consent from CSMC in order to sell commercial product from our Los Angeles facility; ● we may not be able to satisfy clinical and/or regulatory requirements necessary for the approval of our product in the U.S. or Japan; ● 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; and ● our partners may not perform as expected and therefore deny us the financial benefits of those agreements.
These 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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSuch 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. The company is currently in the process of implementing a more formalized cybersecurity program. ​
Biggest changeSuch 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
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We have implemented a risk-based approach to identify and assess the cybersecurity threats that could affect our business and information systems. We use various tools and methodologies to manage cybersecurity risk that are tested on a regular cadence to the best of our ability.
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We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services , communications systems, hardware and software, and our critical data, including intellectual property, as well as confidential information that is proprietary, strategic or competitive in nature.
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We also monitor and evaluate our cybersecurity posture and performance on an ongoing basis through regular vulnerability scans and penetration tests. Our business depends on the availability, reliability, and security of our information systems, networks, data, and intellectual property.
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The Company’s information technology department helps identify, assess and manage Capricor’s cybersecurity threats and risks.
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The information technology department , in coordination with the finance and/or legal departments, identifies and assesses risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example, evaluating threats reported to us, conducting audits, performing threat assessments, and conducting vulnerability assessments to identify vulnerabilities.
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We use third-party service providers to assist us to identify, assess, and manage material risks from cybersecurity threats, including for example: professional service firms, including legal counsel, and cybersecurity software providers.
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Our cybersecurity risk management program shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational and financial risk areas, including the involvement of cross-functional teams and, depending on the nature and severity of an incident, an escalation path to notify our executive and senior management teams and our board of directors.
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For 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.
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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.
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For a description of the risks from cybersecurity threats that may materially affect us and how they may do so, see our risk factors included in Part I, Item 1A.
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“Risk Factors” of this Annual Report on Form 10-K, including “Risk Factors — Risks Related to our Business — A breakdown, corruption or breach of our information technology systems or computer systems, or those used or hosted by our CROs, contractors, consultants or third-party vendors could subject us to liability or interrupt the operation of our business.” Our business depends on the availability, reliability, and security of our information systems, networks, data, and intellectual property.
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As of the date of this report, we have not experienced a cybersecurity incident that has materially affected or is reasonably likely to materially affect our business strategy, results of operations, or financial condition .

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, 2026 Corporate Headquarters: Laboratory, manufacturing and office space 12,161 10865 Road to the Cure, Room 7, San Diego, California October 31, 2024 Laboratory space 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 (1) Certain leases have specific options for potential renewal or extensions. ​ ITEM 3.
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. ​
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LEGAL PROCEEDINGS We are not involved in any material pending legal proceedings and are not aware of any material threatened legal proceedings against us by any governmental authority.
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We draw your attention to the disclosure in Item 1A. above under “Risk Factors -- Risks Related to Our Relationships with Third Parties -- We are dependent on our relationships with our licensors and collaborators and there is no guarantee that such relationships will be maintained or continued.” ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePerformance Graph We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide a performance graph. Recent Sales of Unregistered Securities and Use of Proceeds Not applicable. Issuer Purchases of Equity Securities None. ​ ITEM 6. RESERVED ​ ​ 72 Table of Contents
Biggest changeSecurities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12, for the information required by this item. Performance Graph We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide a performance graph.
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 7, 2024, we had 126 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 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.
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Securities Authorized for Issuance Under Equity Compensation Plans The information required by this item is set forth in the section entitled “Securities Authorized for Issuance Under Equity Compensation Plans” in our Definitive Proxy Statement for our 2024 Annual Meeting of Stockholders, to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2023, and is incorporated herein by reference.
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Recent Sales of Unregistered Securities and Use of Proceeds None. Issuer Purchases of Equity Securities None. ​

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe increase was primarily driven by the following: ● $3.8 million increase in compensation and other personnel expenses primarily due to increases in headcount; ● $11.2 million increase in DMD (CAP-1002) program primarily due to the enrollment of our HOPE-3 clinical program, our HOPE-2 OLE clinical trial and our expanded manufacturing production efforts for CAP-1002; ● $0.4 million increase in facility expenses primarily related to increased lease expenses due to our expansion efforts of our research and manufacturing facility in San Diego; ● $1.1 million increase in stock-based compensation expense primarily due to increases in headcount and risk-free rate, which resulted in an increase in fair value of option issued; and ● $0.2 million increase in depreciation expense primarily related to increased equipment purchases and capital improvements related to expansion efforts of our research and manufacturing facility in San Diego. ​ This increase was partially offset by a $1.5 million decrease in exosomes research primarily due to reduced expenses related to completion of certain research projects and a $0.6 million decrease in research and other primarily due to the completion of activities related to our INSPIRE clinical program in 2022. ​ General and Administrative Expenses .
Biggest changeThe 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 .
We expense the fair value of stock options and warrants over their vesting period as applicable. When more precise pricing data is unavailable, we determine the fair value of stock options using the Black-Scholes option-pricing model. The terms and vesting schedules for share-based awards vary by type of grant and the employment status of the grantee.
We expense the fair value of stock awards and warrants over their vesting period as applicable. When more precise pricing data is unavailable, we determine the fair value of stock options using the Black-Scholes option-pricing model. The terms and vesting schedules for share-based awards vary by type of grant and the employment status of the grantee.
Generally, the 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 development (“R&D”) expenses, as applicable. We expect to record additional non-cash compensation expense in the future, which may be significant.
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 and manufacturing, 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.
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.
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. ​ 79 Table of Contents Liquidity and Capital Resources for the fiscal years ended December 31, 2023 and 2022 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, 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.
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 CAP-1002 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. ​ 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.
We have issued stock options 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 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”).
If we generate product sales or enter into licensing agreements or strategic collaborations, or further distribution relationships, we expect that any revenue we generate will fluctuate from quarter-to-quarter and year-to-year as a result of the timing and amount of any product sales, license fees, milestone payments and other payments.
If we generate product sales or enter into licensing agreements or strategic collaborations, or further distribution relationships, we expect that any revenue we generate will fluctuate from quarter-to-quarter and year-to-year as a result of the timing and amount of any product sales, milestone payments and other payments.
The change in cash flow by investing activities for the year ended December 31, 2023 as compared to the same period of 2022 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, 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.
At this time, the Company only issues options under the 2020 Plan and the 2021 Plan and no longer issues options 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 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.
When more precise pricing data is unavailable, we determine the fair value of stock options using the Black-Scholes option-pricing model. This valuation model requires us to make assumptions and judgments about the variables used in the calculation.
For stock options, when more precise pricing data is unavailable, we determine the fair value using the Black-Scholes option-pricing model. This valuation model requires us to make assumptions and judgments about the variables used in the calculation.
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 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.
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.
The increase in cash provided by financing activities for the year ended December 31, 2023 as compared to the same period of 2022 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, 2024 as compared to the same period of 2023 is primarily due to the net proceeds from the sale of common stock.
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 our 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. Depending on the timing of Capricor’s election, additional funds may be owed.
Certain CRO and significant clinical trial vendors provide an estimate of costs incurred but not invoiced at the end of each quarter 85 Table of Contents for each individual trial. These estimates are reviewed and discussed with the CRO or vendor as necessary, and are included in R&D expenses for the related period.
Certain CRO and significant clinical trial vendors provide an estimate of costs incurred but not invoiced at the end of each quarter for each individual trial. These estimates are reviewed and discussed with the CRO or vendor as necessary, and are included in R&D expenses for the related period.
Phase 3 (HOPE-3) Clinical Trial: HOPE-3 is a Phase 3, multi-center, randomized, double-blind, placebo-controlled clinical trial comprised of two cohorts evaluating the safety and efficacy of CAP-1002 in participants with DMD and impaired skeletal muscle function who are on a stable regimen of systemic glucocorticoids.
Phase 3 (HOPE-3) Clinical Trial: HOPE-3 is a Phase 3, multi-center, randomized, double-blind, placebo-controlled clinical trial comprised of two cohorts evaluating the safety and efficacy of deramiocel in participants with DMD and impaired skeletal muscle function who are on a stable regimen of systemic glucocorticoids.
They can signal through the binding and activation of membrane receptors or the delivery of their cargo into the cytosol of target cells. Exosomes act 74 Table of Contents as messengers to regulate the functions of neighboring or distant cells and have been shown to regulate functions such as cell survival, proliferation, inflammation and tissue regeneration.
They can signal through the binding and activation of membrane receptors or the delivery of their cargo into the cytosol of target cells. Exosomes act as messengers to regulate the functions of neighboring or distant cells and have been shown to regulate functions such as cell survival, proliferation, inflammation and tissue regeneration.
Our expenditures on current and future clinical development programs, particularly our CAP-1002 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 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.
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.
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.
The Company performs this assessment at the onset of its distribution agreements. Typically, a significant financing component does not exist because the customer is paying for services in advance with 84 Table of Contents an upfront payment.
The Company performs this assessment at the onset of its distribution agreements. Typically, a significant financing component does not exist because the customer is paying for services in advance with an upfront payment.
Our current strategy is focused on securing partners who will provide capital and additional resources to enable us to bring this program into the clinic. As of December 31, 2023, we had cash, cash equivalents, and marketable securities totaling approximately $39.5 million.
Our current strategy is focused on securing partners who will provide capital and additional resources to enable us to bring this program into the clinic. As of December 31, 2024, we had cash, cash equivalents, and marketable securities totaling approximately $151.5 million.
All shares issued pursuant to the ATM Program were issued pursuant to our shelf registration statement on Form S-3 (File No. 333-254363), which was initially filed with the SEC on March 16, 2021, amended on June 15, 2021 and declared effective by the SEC on June 16, 2021.
All shares issued pursuant to the ATM Program were issued pursuant to our shelf registration statement on Form S-3 (File No. 333-254363), which was initially filed with the Securities and Exchange Commission (the “SEC”), on March 16, 2021, amended on June 15, 2021 and declared effective by the SEC on June 16, 2021.
Our ability to eventually generate any product revenue sufficient to achieve profitability will depend on the successful development, approval and eventual commercialization of CAP-1002 for the treatment of DMD and our other product candidates.
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.
Further, Capricor has entered into two Commercialization and Distribution Agreements with Nippon Shinyaku appointing Nippon Shinyaku as its exclusive distributor of CAP-1002 in the United States and Japan. ● Exosome-Based Platform (Preclinical): Extracellular vesicles, including exosomes and microvesicles, are nano-scale, membrane-enclosed vesicles which are secreted by most cells and contain characteristic lipids, proteins and nucleic acids such as mRNA and microRNAs.
Further, Capricor has entered into two Commercialization and Distribution Agreements with Nippon Shinyaku appointing Nippon Shinyaku as its exclusive distributor of deramiocel in the United States and Japan. 75 Table of Contents ● Exosome-Based Platform (Preclinical): Extracellular vesicles, including exosomes and microvesicles, are nano-scale, membrane-enclosed vesicles which are secreted by most cells and contain characteristic lipids, proteins and nucleic acids such as mRNA and microRNAs.
To date, most of our development expenses have related to our product candidates, consisting of CAP-1002 and our exosome technologies. As we proceed with the clinical development of CAP-1002, and as we further develop our exosome technologies, our expenses will further increase.
To date, most of our development expenses have related to our product candidates, consisting of deramiocel and our exosome technologies. As we proceed with the clinical development of deramiocel, and as we further develop our exosome technologies, our expenses will further increase.
This practical expedient is not elected for manufacturing facilities and equipment embedded in product supply arrangements. ​ Revenue Recognition The Company applies 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 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.
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 $0.6 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 1/2 HOPE-Duchenne clinical trial investigating CAP-1002 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 Duchenne muscular dystrophy-associated cardiomyopathy.
If successfully developed and approved, we intend to commercialize CAP-1002 in the United States and Japan with our partner, Nippon Shinyaku Co., Ltd., a Japanese corporation (“Nippon Shinyaku”), and may enter into licensing agreements or strategic collaborations in other markets.
If successfully developed and approved, we intend and plan to commercialize deramiocel in the United States and Japan with our partner, Nippon Shinyaku Co., Ltd., a Japanese corporation (“Nippon Shinyaku”). Capricor may enter into licensing agreements or strategic collaborations in other markets.
Since our inception, we have devoted substantial resources to developing CAP-1002 and our other product candidates including our exosomes platform, developing our manufacturing processes, staffing our company and providing general and administrative support for these operations. We do not have any products approved for sale.
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.
CAP-1002 is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, 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 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.
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 regulatory approvals.
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.
We expect to spend approximately $3.0 million to $5.0 million during 2024 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 $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.
Under the terms of the Japan Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in Japan of CAP-1002 for the treatment of DMD.
Under the terms of the Japan Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in Japan of deramiocel for the treatment of DMD.
Stock-Based Compensation Our results include non-cash compensation expense as a result of the issuance of stock, stock options and warrants, as applicable.
Stock-Based Compensation Our results include non-cash compensation expense as a result of the issuance of stock options and restricted stock awards, as applicable.
We may be unable to raise additional funds or enter into such agreements or arrangements when needed on favorable terms, if at all.
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.
The increase was primarily driven by the following: ● $1.8 million increase in stock-based compensation expense primarily due to increases in headcount; ● $0.4 million increase in compensation and other personnel expenses primarily due to increases in headcount and recruiting costs; ● $0.3 million increase in depreciation related to leasehold improvements to our San Diego corporate headquarters; and 78 Table of Contents ● $0.1 million increase in other corporate expenses primarily related to increased travel and payroll processing costs due to increased headcount. ​ This increase was partially offset by a $0.3 million decrease in professional service expenses primarily due to a decrease in business development related expenses. ​ Other Income Other Income .
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 CIRM Award is further subject to the conditions and requirements set forth in the CIRM Grants Administration Policy 82 Table of Contents for Clinical Stage Projects.
The CIRM Award is further subject to the conditions and requirements set forth in the CIRM Grants Administration Policy for Clinical Stage Projects.
We had cash flow provided by investing activity of approximately $5.1 million for the year ended December 31, 2023 and cash flow used in investing activities of approximately $35.1 million for the year ended December 31, 2022.
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.
In March 2022, we announced that the final one-year results from HOPE-2 were published in The Lancet showing that the trial met its primary efficacy endpoint of the mid-level dimension of the Performance of the Upper Limb (“PUL”) v1.2 (p=0.01) and additional positive endpoints 73 Table of Contents of full PUL v2.0 (p=0.04) and a cardiac endpoint of left ventricular ejection fraction (p=0.002).
In March 2022, we announced that the final one-year results from HOPE-2 were published in The Lancet showing that the trial met its primary efficacy endpoint of the mid-level dimension of the Performance of the Upper Limb (“PUL”) v1.2 (p=0.01) and additional positive endpoints of full PUL v2.0 (p=0.04) and a cardiac endpoint of left ventricular ejection fraction (p=0.002). deramiocel was generally safe and well-tolerated throughout the studies.
During 2023 we received net proceeds from the sale of stock of approximately $25.5 million compared to approximately $4.8 million over the same period of 2022. 80 Table of Contents From inception through December 31, 2023, 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 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.
While we pursue our preclinical and clinical programs, we continue to explore potential partnerships for the development of one or more of our product candidates in the US and in other territories across the world. ​ Our results have included non-cash compensation expense due to the issuance of stock options and warrants, as applicable.
While we pursue our preclinical and clinical programs, we continue to explore potential partnerships for the development of one or more of our product candidates in the U.S. and in other territories across the world, subject to the rights of Nippon Shinyaku. ​ Our results have included non-cash compensation expense due to the issuance of stock awards and warrants, as applicable.
Results of Operations for the fiscal years ended December 31, 2023 and 2022 Revenue Clinical Development Income. Clinical development income for the years ended December 31, 2023 and 2022 was approximately $25.2 million and $2.6 million, respectively.
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.
Furthermore, 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.
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.
The Sales Agreement provides that Wainwright will be entitled to compensation for its services at a commission rate of 3.0% of the gross sales price per share of common stock sold.
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.
In the fourth quarter of 2023, we announced a positive outcome of the interim futility analysis for HOPE-3, which was reviewed by the Data Safety Monitoring Board. This resulted in a favorable recommendation to continue the HOPE-3 trial as planned, and in accordance with our U.S.
In the fourth quarter of 2023, we announced a positive outcome of the futility analysis for Cohort A of HOPE-3, which was reviewed by the Data Safety Monitoring Board (“DSMB”). This resulted in a favorable recommendation to continue the HOPE-3 trial as planned.
We had cash flow provided by financing activities of approximately $25.6 million and $4.9 million for the years ended December 31, 2023 and 2022, respectively.
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.
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. ​ 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.
The net loss of approximately $22.3 million for the year ended December 31, 2023 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, 2024 was driven by the increased R&D expenses in connection with our clinical program in DMD.
Further, there are various potential sales-based milestones, if commercialized, tied to the achievement of certain sales thresholds for annual net sales of CAP-1002 of up to $605.0 million. Further, pursuant to the U.S.
Distribution Agreement. Further, there are various potential sales-based milestones, if commercialized, tied to the achievement of certain sales thresholds for annual net sales of deramiocel of up to $605.0 million.
The maximum royalty on net commercial revenue that Capricor may be required to pay to CIRM is equal to nine times the total amount awarded and paid to Capricor.
The maximum royalty on net commercial revenue that Capricor could have been required to pay to CIRM was equal to nine times the total amount awarded and paid to Capricor.
These variables and assumptions include the weighted-average period of time that the options granted are expected to be outstanding, the volatility of our common stock, and the risk-free interest rate. We account for forfeitures upon occurrence.
These variables and assumptions include the weighted-average period of time that the options granted are expected to be outstanding, the volatility of our common stock, and the risk-free interest rate. We account for forfeitures upon occurrence. For restricted stock awards, we determine the fair value using the Company’s stock price at the grant date.
A summary description of our key product candidates, is as follows: ● CAP-1002 for the treatment of DMD (Phase 3): Our core program is focused on the development and commercialization of a cell therapy technology (referred herein as CAP-1002) comprised of CDCs, which are a population of stromal cells isolated from donated cells of healthy human hearts, for the treatment of DMD.
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.
To date, we have completed two promising clinical trials investigating CAP-1002 for DMD. Data from the first trial, a Phase I/II trial named HOPE-Duchenne, suggested improvements in skeletal and cardiac endpoints. In HOPE-2, a Phase II clinical trial conducted in the United States, CAP-1002 was used to treat patients with late-stage DMD.
Data from the first trial, a Phase I/II trial named HOPE-Duchenne, suggested improvements in skeletal and cardiac endpoints. In HOPE-2, a Phase II clinical trial conducted in the United States, deramiocel was used to treat patients with late-stage DMD.
The Company evaluates whether it is probable that the consideration associated with each milestone or shared revenue payments will not be subject to a significant reversal in the cumulative amount of revenue recognized.
The milestones are generally categorized into two types: development milestones and sales-based milestones. The Company evaluates whether it is probable that the consideration associated with each milestone or shared revenue payments will not be subject to a significant reversal in the cumulative amount of revenue recognized.
Cash used in operating activities was approximately $25.6 million for the year ended December 31, 2023 and cash provided by operating activities was approximately $4.9 million for the year ended December 31, 2022. The net change of approximately $30.5 million in cash from operating activities is due to the milestone payment of $10.0 million from Nippon Shinyaku and deferred revenue.
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.
The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when, or as, each performance obligation is satisfied. ​ The Company’s distribution agreements may entitle it to additional payments upon the achievement of milestones or shares of product revenue. The milestones are generally categorized into three types: development milestones, regulatory milestones and sales-based milestones.
The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when, or as, each performance obligation is satisfied. 84 Table of Contents ​ The Company’s distribution agreements may entitle it to additional payments upon the achievement of milestones or shares of product revenue.
Nippon Shinyaku will be responsible for the distribution of CAP-1002 in Japan. Capricor will be responsible for the conduct of clinical development in Japan, as may be required, as well as the manufacturing of CAP-1002. Subject to regulatory approval, Capricor will sell commercial product to Nippon Shinyaku in Japan.
Nippon Shinyaku will be responsible for the distribution of deramiocel in Japan. Capricor will be responsible for the conduct of clinical development and regulatory approval in Japan, as may be required, as well as the manufacturing of deramiocel.
Furthermore, there was an increase of approximately $2.9 million in stock-based compensation and a decrease in net loss of approximately $6.7 million for the year ended December 31, 2023 as compared to the same period in 2022.
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.
Non-ambulatory and ambulatory boys who meet eligibility criteria are randomly assigned to receive either CAP-1002 or placebo every 3 months for 4 doses during the first 12-months of the study. Approximately 102 eligible study subjects will participate in this dual-cohort study.
Non-ambulatory and ambulatory boys who meet eligibility criteria are randomly assigned to receive either deramiocel or placebo every 3 months for a total of 4 doses during the first 12-months of the study. Approximately 105 eligible study subjects are currently enrolled in the dual-cohort study (comprised of Cohorts A and B).
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.
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) .
As of December 31, 2023, we had approximately $36.1 million in total liabilities, of which approximately $24.3 million relates to deferred revenue and approximately $2.2 million related to lease liabilities in connection with our operating lease right-of-use assets. As of December 31, 2023, we had approximately $19.6 million in net working capital.
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.
If we elect to do so, Capricor would be required to repay the amounts awarded by CIRM, therefore the Company accounts for this award as a liability rather than income. In 2019, Capricor completed all milestones and close-out activities associated with the CIRM Award and expended all funds received.
In 2019, Capricor completed all milestones and close-out activities associated with the CIRM Award and expended all funds received. The Company accounts for this award as a liability rather than income.
Clinical Trial Expense As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses. 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, CROs and clinical site agreements in connection with conducting clinical trials.
This mechanism of action, consistent with the changes observed in clinical studies to date in circulating inflammatory biomarkers, contrasts with that of exon-skipping oligonucleotides and gene therapy approaches, which aim to restore dystrophin expression. DMD is a rare form of muscular dystrophy which results in muscle degeneration and premature death.
This mechanism of action, consistent with the changes observed in clinical studies to date in circulating inflammatory biomarkers, contrasts with that of exon-skipping oligonucleotides and gene therapy approaches, which aim to restore dystrophin expression. DMD pathophysiology is driven by the impaired production of functional dystrophin which normally functions as a structural protein in muscle.
In addition, the Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants. ​ The interest rate implicit in lease contracts is typically not readily determinable.
Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. In addition, the Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants. ​ The interest rate implicit in lease contracts is typically not readily determinable.
The regulatory pathway for CAP-1002 is supported by RMAT designation as well as orphan drug designation. In addition, if Capricor were to receive FDA marketing approval for CAP-1002 for the treatment of DMD, Capricor would be eligible to receive a Priority Review Voucher (“PRV”) based on its previous receipt of a rare pediatric disease designation.
In addition, if Capricor were to receive FDA marketing approval for deramiocel for the treatment of DMD, Capricor would be eligible to receive a Priority Review Voucher (“PRV”) based on its previous receipt of a rare pediatric disease designation. Capricor retains full rights to the PRV, if received.
Distribution Agreement, Capricor has the obligation to sell commercial product to Nippon Shinyaku, subject to regulatory approval, and Capricor will have the right to receive a meaningful mid-range double-digit share of product revenue. 81 Table of Contents 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 with Nippon Shinyaku (Territory: Japan) On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku.
For clinical study sites which are paid periodically on a per-subject basis to the institutions performing the clinical study, we accrue an estimated amount based on subject screening and enrollment in each quarter. All estimates may differ significantly from the actual amount subsequently invoiced, which may occur several months after the related services were performed.
For clinical study sites which are paid periodically on a per-subject basis to the institutions performing the clinical study, we accrue an estimated amount based on subject screening and enrollment in each quarter.
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.
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.
The ATM Program was established under a Common Stock Sales Agreement (the “Sales Agreement,”), with Wainwright, under which we may, from time to time, issue and sell shares of our common stock through Wainwright as sales agent.
The ATM Program was established under a Common Stock Sales Agreement (the “Sales Agreement,”), with H.C. Wainwright & Co. LLC (“Wainwright”), under which the Company issued and sold shares of our common stock through Wainwright as sales agent.
CAP-1002 was generally safe and well-tolerated throughout the studies. Additionally, we are currently conducting an open label extension (“OLE”) study of the HOPE-2 trial in which 12 patients have elected to continue treatment of CAP-1002. We announced positive one-year and two-year results from this ongoing OLE study.
Additionally, we are currently conducting an open label extension (“OLE”) study of the HOPE-2 trial in which 12 patients have elected to continue treatment of deramiocel. We announced positive one-year and two-year results from this ongoing OLE study. The HOPE-2-OLE study previously met its primary endpoint at the one-year timepoint on the PUL v2.0 scale (p=0.02).
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 appointed Nippon Shinyaku as its exclusive distributor in the United States of CAP-1002 for the treatment of DMD.
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.
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. ​ 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 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.
Each share of common stock offered was sold with a warrant to purchase one share of common stock at an exercise price of $5.70 per share. Each warrant will be exercisable beginning six months after issuance and will expire seven years from the date of issuance.
Each share of common stock offered was sold with a warrant to purchase one share of common stock at an exercise price of $5.70 per share.
The expenses for our DMD program will include costs for personnel, clinical, regulatory and manufacturing-related expenses, including expenses related to the scale-up for potential commercial scale manufacturing if our CAP-1002 product is approved. Exosome-Based Therapeutics and Vaccines – Our exosome platform is in early-stage preclinical development.
Products Under Active Development Deramiocel for the treatment of DMD – The expenses for our DMD program include costs for personnel, clinical, regulatory and manufacturing-related expenses, including expenses related to the scale-up for potential commercial scale manufacturing if our deramiocel product is approved.
Financing Activities by the Company October 2023 Financing ​ On October 3, 2023, the Company entered into Securities Purchase Agreements with its commercial partner, Nippon Shinyaku and funds associated with Highbridge Capital Management, LLC (the “Investors”), pursuant to which the Company agreed to issue and sell to the Investors, 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. ​ 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.
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.
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.
The increase in investment income in 2023 as compared to 2022 is due to increased interest rates and the higher principal balance in our marketable securities, savings and money market fund accounts.
Investment income for the years ended December 31, 2024 and 2023 was approximately $2.2 million and $1.7 million, respectively. The increase in investment income in 2024 as compared to 2023 is due to a higher principal balance in our marketable securities, savings and money market fund accounts.
R&D expenses consist primarily of compensation and other related personnel costs, supplies, clinical trial costs, patient treatment costs, rent for laboratories and manufacturing facilities, consulting fees, costs of personnel and supplies for manufacturing, costs of service providers for preclinical, clinical and manufacturing, certain legal expenses resulting from intellectual property prosecution, stock-based compensation expense and other expenses relating to the design, development, testing and enhancement of our product candidates. 77 Table of Contents The following table summarizes our R&D expenses by category for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Change ($) Change (%) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Compensation and other personnel expenses ​ $ 11,272,356 ​ $ 7,450,879 ​ $ 3,821,477 ​ ​ 51 % Duchenne muscular dystrophy (CAP-1002) ​ 18,667,993 ​ 7,470,558 ​ 11,197,435 ​ 150 % Exosomes platform research ​ ​ 2,090,999 ​ 3,600,916 ​ (1,509,917) ​ (42) % Facility expenses ​ ​ 1,457,097 ​ ​ 1,070,598 ​ ​ 386,499 ​ ​ 36 % Stock-based compensation ​ ​ 1,916,245 ​ ​ 805,089 ​ ​ 1,111,156 ​ ​ 138 % Depreciation ​ ​ 626,514 ​ ​ 420,581 ​ ​ 205,933 ​ ​ 49 % Research and other ​ ​ 416,835 ​ ​ 998,328 ​ ​ (581,493) ​ ​ (58) % Total research and development expenses ​ $ 36,448,039 ​ $ 21,816,949 ​ $ 14,631,090 ​ ​ 67 % ​ R&D expenses for 2023 increased by approximately $14.6 million, or 67%, compared to 2022.
R&D expenses consist primarily of compensation and other related personnel costs, supplies, clinical trial costs, patient treatment costs, rent for laboratories and manufacturing facilities, consulting fees, costs of personnel and supplies for manufacturing, costs of service providers for preclinical, clinical and manufacturing, certain legal expenses resulting from intellectual property prosecution, stock-based compensation expense and other expenses relating to the design, development, testing and enhancement of our product candidates. 77 Table of Contents The following table summarizes our R&D expenses by category for each of the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Change ($) 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.
At this time, we have submitted an Investigational New Drug Application (“IND”) to the FDA for our StealthX™ vaccine, which is currently under review and we anticipate that once the IND is approved, that NIAID plans to initiate this trial in late 2024.
At this time, manufacturing is underway for our StealthX™ vaccine and we have submitted an Investigational New Drug Application (“IND”) to the FDA, which is currently under review. At this time, NIAID is planning for regulatory approval in the second quarter of 2025 with the clinical study initiated soon thereafter.

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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, 2023, the fair value of our cash, cash equivalents, and marketable securities was approximately $39.5 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, 2024, the fair value of our cash, cash equivalents, and marketable securities was approximately $151.5 million.
Additionally, as of December 31, 2023, 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, 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.

Other CAPR 10-K year-over-year comparisons