Capricor Therapeutics Inc (CAPR) Announces Q4 2017 Operating Results and Corporate Update

Capricor Therapeutics Inc (NASDAQ:CAPR) reported its fourth quarter and full year 2017 financial results. It also provided a corporate update. Investors are literally buying into management’s focus on building shareholder value, sending shares nearly 7% in after-hours trading Wednesday.

“This has been an exciting year for Capricor as we have made significant inroads in the clinical development of CAP-1002, our lead cell therapy product, to treat Duchenne muscular dystrophy,” said Linda Marbán, Ph.D., Capricor president and chief executive officer. “We have achieved several important milestones that facilitate our progress in the research, development and potential commercialization of CAP-1002. We will soon be initiating the HOPE-2 clinical trial designed to test CAP-1002 in boys and young men whose ability to walk has been impaired by Duchenne muscular dystrophy. This trial is one of the very few to focus on those patients that are non-ambulant and in the later stages of the disease process.”

Fourth Quarter Highlights and Recent Clinical and Operational Developments

  • In November, Capricor reported the one-year results of its first clinical trial of CAP-1002, the HOPE-Duchenne trial, at the American Heart Association Scientific Sessions 2017. The study found that a single intracoronary dose of CAP-1002 produced significant and sustained improvement in cardiac and skeletal muscle functions in boys and young men in advanced stages of Duchenne muscular dystrophy, a serious x-linked genetic disorder for which there is no cure and treatment options are limited.
  • The Food and Drug Administration (FDA) cleared Capricor’s Investigational New Drug (IND) application to conduct the HOPE-2 trial which is a randomized, double-blind, placebo-controlled study in later stage Duchenne muscular dystrophy patients.
  • A newly published study in “Stem Cell Reports” from the Smidt Heart Institute at Cedars-Sinai Medical Center reported that CAP-1002 improved skeletal, diaphragm and cardiac muscle function in a mouse model of Duchenne muscular dystrophy.
  • Capricor secured two additional FDA designations that may potentially expedite reviews and regulatory approval of CAP-1002 for Duchenne muscular dystrophy: the Regenerative Medicine Advanced Therapy (RMAT) designation, which makes therapies eligible for expedited review, and the Rare Pediatric Disease Designation, which means that if CAP-1002 is approved first for use in Duchenne muscular dystrophy, the company may secure a priority review voucher to fast-track a potential future therapy. These two designations are in addition to the Orphan Drug Designation Capricor secured in February 2017.
  • Capricor added seven new patent applications to its existing Exclusive License Agreements with Cedars-Sinai Medical Center, giving Capricor worldwide, exclusive rights to inventions related to cardiosphere-derived cells (CDCs, CAP-1002) and CDC-derived extracellular vesicles, including exosomes.
  • Capricor hosted a Key Opinion Leaders Lunch in New York City on March 9 which included four distinguished speakers discussing the emerging paradigms in gene and cellular therapies to treat Duchenne muscular dystrophy. The speakers included Craig McDonald, M.D., professor and chair of the Department of Physical Medicine and Rehabilitation and Director of the Neuromuscular Disease Clinics at the University of California, Davis. He is the national principal investigator of the Capricor HOPE-2 trial. Other speakers were Jeffrey Chamberlain, Ph.D., professor in the departments of Neurology, Medicine and Biochemistry and director of the Seattle Wellstone Muscular Dystrophy Center, and Michelle Eagle, Ph.D., the managing director of ATOM International LTD and one of the creators of, and who has published extensively on, the Performance of the Upper Limb (PUL) test, a validated test for skeletal muscle function in Duchenne muscular dystrophy. PUL is the primary efficacy endpoint for the HOPE-2 trial. The fourth speaker was Pat Furlong, the founding president and CEO of the Parent Project Muscular Dystrophy (PPMD), the largest non-profit organization in the U.S. focused solely on Duchenne.

Anticipated Events and Milestones in 2018

  • Plan to treat the first patients in the HOPE-2 clinical trial.
  • Continue to conduct pre-clinical research for Capricor’s investigational exosome-based therapy, CAP-2003, to treat various diseases of inflammation and fibrosis, including hypoplastic left heart syndrome.
  • Continue preparations for manufacturing scale-up and technology transfer of CAP-1002.

Fourth Quarter and Full Year Financial Results

For the fourth quarter of 2017, after giving effect to the forgiveness of the California Institute of Regenerative Medicine (CIRM) loan payable, the company reported net income of approximately $12.3 million, or $0.42 per diluted share, compared to a net loss of approximately $(4.5) million, or $(0.21) per diluted share, for the fourth quarter of 2016.

For the year ended December 31, 2017, after giving effect to the forgiveness of the CIRM loan payable, the company reported net income of approximately $2.4 million, or $0.09 per diluted share, compared to a net loss of approximately $(18.8) million, or $(1.01) per diluted share for the year ended December 31, 2016. As of December 31, 2017, the company’s cash, cash equivalents and marketable securities totaled approximately $14.1 million compared to approximately $16.2 million on December 31, 2016.

In the fourth quarter of 2017, the company notified CIRM of its election to abandon the ALLSTAR (CIRM-funded) project pursuant to the Loan Agreement and entered into an Amendment whereby the total loan balance was forgiven by CIRM, thereby terminating the company’s obligation to repay the loan balance. The company classified the forgiveness of the loan payable, a non-cash income, of approximately $15.7 million as “other income” in its Consolidated Statement of Operations.

Financial Outlook

Based on current plans and projections, Capricor expects that its cash, cash equivalents and marketable securities will fund its research and development programs and other operations through the fourth quarter of 2018.

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