10-K
1
tm211144d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
xAnnual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for
the fiscal year ended December 31, 2020
or
̈ Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
Commission
File Number: 001-34058
CAPRICOR
THERAPEUTICS, INC.
(Exact Name Of Registrant As Specified
In Its Charter)
8840 Wilshire Blvd., 2nd Floor,
Beverly Hills, California 90211
(Address of principal executive offices
including zip code)
(310)
358-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of
the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share CAPR The Nasdaq Capital Market
Securities registered pursuant to Section 12(g) of
the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ̈
Yes x No
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
̈ Yes x No
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the past 90 days. x
Yes ̈ No
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes x No ̈
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ̈ Accelerated filer ̈
Non-accelerated filer x Smaller reporting company x
Emerging growth company ̈
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ̈
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 USC. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ̈
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ̈
Yes x No
The aggregate market value of the registrant’s
common stock held by non-affiliates of the registrant as of June 30, 2020 was approximately $86,525,913, based on the last
reported sale of the registrant’s common stock on The Nasdaq Capital Market on June 30, 2020 of $4.60 per share.
As of March 12, 2021, there were 22,797,930
shares of the registrant’s common stock, par value $0.001 per share, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of this Annual Report on
Form 10-K incorporates information by reference from the definitive proxy statement for the registrant’s 2021 Annual
Meeting of Stockholders.
TABLE OF CONTENTS
Page
Part I
Item 1. Business 3
Item 1A. Risk Factors 29
Item 1B. Unresolved Staff Comments 72
Item 2. Properties 72
Item 3. Legal Proceedings 73
Item 4 Mine Safety Disclosures 73
Part II
Item 6. Selected Financial Data 75
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 89
Item 8. Financial Statements and Supplementary Data 90
Item 9A. Controls and Procedures 116
Item 9B. Other Information 117
Part III
Item 10. Directors, Executive Officers and Corporate Governance 118
Item 11. Executive Compensation 118
Item 12. Security Ownership of Certain Beneficial Owners and Management 118
Item 14. Principal Accountant Fees and Services 118
Part IV
Item 15. Exhibits and Financial Statement Schedules 119
INDEX OF EXHIBITS FILED WITH THIS REPORT
References to “the
Company,” “Capricor Therapeutics,” “we,” “us” or “our” in this Annual Report
on Form 10-K refer to Capricor Therapeutics, Inc., a Delaware corporation, and its subsidiaries, unless the context indicates
otherwise. References to “Capricor” in this Annual Report on Form 10-K refer to our wholly owned subsidiary, Capricor, Inc.,
unless the context indicates otherwise.
FORWARD-LOOKING STATEMENTS
This
Annual Report on Form 10-K contains “forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act.
The forward-looking statements are only predictions and provide our current expectations or forecasts of future events and financial
performance and may be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,”
“anticipates,” “expects,” “plans,” “potential,” “projects,”
“intends,” “may,” “will” or “should” or, in each case, their negative, or other
variations or comparable terminology, though the absence of these words does not necessarily mean that a statement is not forward-looking.
Forward-looking statements include all matters that are not historical facts and include, without limitation, statements about
the development of our drug and vaccine candidates, including when we expect to undertake, initiate and complete clinical trials
of our product candidates; expectation of or dates for commencement of clinical trials, investigational new drug filings, similar
plans or projections; the regulatory approval of our drug and vaccine candidates; our use of clinical research centers, third party
manufacturers and other contractors; our ability to find collaborative partners for research, development and commercialization
of potential products; our ability to manufacture products for clinical and commercial use; our ability to protect our patents
and other intellectual property; our ability to market any of our products; our projected operating losses; the impact of taxes
on our business, including our ability to utilize net operating losses; our ability to utilize our ability to compete against other
companies and research institutions; the effect of potential strategic transactions on our business; acceptance of our products
by doctors, patients or payors and the availability of reimbursement for our product candidates; our ability to attract and retain
key personnel; the volatility of our stock price; our ability to continue as a going concern; and other risks and uncertainties
detailed in the section of this Annual Report on Form 10-K entitled “Risk Factors”. These statements are subject
to risks and uncertainties that could cause actual results and events to differ materially from those expressed or implied by such
forward-looking statements. We caution the reader not to place undue reliance on these forward-looking statements, which reflect
management’s analysis only as of the date of this Annual Report on Form 10-K.
We intend that all
forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are subject to many risks and uncertainties that could cause our actual results to differ materially from any future
results expressed or implied by the forward-looking statements. Pharmaceutical and biotechnology companies have suffered significant
setbacks in advanced clinical trials, even after obtaining promising earlier trial results and preclinical studies. Data obtained
from such clinical trials are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval.
Readers are expressly advised to review and consider certain risk factors, which include risks associated with (1) our ability
to successfully conduct clinical and preclinical trials for our product candidates, (2) our ability to obtain required regulatory
approvals to develop, manufacture and market our product candidates, either on an accelerated basis or at all, (3) our ability
to raise additional capital or to license our products on favorable terms, (4) our ability to execute our development plan
on time and on budget, (5) our ability to identify and obtain additional product candidates, (6) our ability to raise
enough capital to fund our operations, (7) our ability to protect our intellectual property rights, and (8) our compliance
with legal and regulatory requirements as a public company. Although we believe that the assumptions underlying the forward-looking
statements contained in this Annual Report on Form 10-K are reasonable, any of the assumptions could be inaccurate, and therefore
there can be no assurance that such statements will be accurate. In light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person
that the results or conditions described in such statements or our objectives and plans will be achieved. Furthermore, past performance
in operations and share price is not necessarily indicative of future performance. Except to the extent required by applicable
laws or rules, we do not undertake to update any forward-looking statements or to announce publicly revisions to any of our forward-looking
statements, whether resulting from new information, future events or otherwise.
The following discussion
should be read together with our consolidated financial statements and related consolidated notes contained in this Annual Report
on Form 10-K. Results for the year ended December 31, 2020 are not necessarily indicative of results that may be attained
in the future.
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PART I
ITEM 1. BUSINESS
Company Overview
Capricor
Therapeutics, Inc. is a biotechnology company focused on the development of transformative cell- and
exosome-based therapeutics for the treatment and prevention of a broad spectrum of diseases.
Cell Therapy (CAP-1002) Program
CAP-1002 - Duchenne Muscular Dystrophy
Program
We
have completed HOPE-2, a Phase II clinical trial in the United States with our product candidate, CAP-1002, a cardiac cell derived
therapy which was used to treat patients with late-stage Duchenne muscular dystrophy, or DMD. The 12-month final top-line
data showed improvements in multiple measures of upper limb, cardiac and respiratory functions. Following receipt of the 12-month
data, we discussed this program with the FDA in a Type B meeting focusing on the data, next steps and a pathway to approval of
a Biologics License Application, or BLA, for CAP-1002 in DMD. The FDA has continued to encourage us to conduct a Phase III study;
at this time, however, we are still discussing the pathway forward for this program with the FDA and have not initiated a Phase
III study. Additionally, we are actively seeking partners for this program.
CAP-1002 - COVID-19 Program
In 2020, under an Expanded
Access (or Compassionate Use) program, seven patients hospitalized with severe COVID-19 (also referred to sometimes as SARS-CoV-2)
symptoms, six of whom were ventilated, were treated with CAP-1002. Four of the seven patients were fully discharged and three died
between one- and two-months post-treatment. Previously published data has shown that COVID-19 patients on ventilators experience
higher mortality rates. While we are unable to definitively ascertain whether CAP-1002 improved patient outcomes, by analyzing
blood samples and other tests, it was determined that CAP-1002 was associated with identifiable improvements in certain patients
such as a decrease in white blood cell count, a decrease in IL-6, a decrease in C-reactive protein, and/or reduced reliance on
supplemental oxygen. However, the efficacy of CAP-1002 in treating COVID-19 was not demonstrated due to the small sample size,
the fact that seven patients were contemporaneously on other experimental medications, and the lack of an established control group,
among other factors.
In August 2020,
we received FDA acceptance of our IND application for a clinical study of CAP-1002 in patients with severe or critical COVID-19.
The INSPIRE trial is a Phase II, randomized, double-blind, placebo-controlled study that is enrolling up to 60 patients from several
trial sites in the United States. The study is enrolling patients who have a diagnosis of SARS-CoV-2 and require supplemental
oxygen. Various outcome measures will be analyzed including, but not limited to, safety, cytokine biomarkers, all-cause mortality,
cardiac biomarkers and hospitalization length. We expect to have top-line data available in the third quarter of 2021. Following
receipt of this data, we will discuss next steps for the program with FDA. Additionally, we are actively seeking partners for this
program.
Exosomes Program
Exosome-Based Vaccines
We
are currently engaged in the development of two vaccine candidates for the potential prevention of COVID-19. The first vaccine
candidate is a tripartite exosome-mRNA vaccine which is designed to elicit a protective, long-lasting immune response to SARS-CoV-2
by targeting multiple structural proteins of the virus. In December 2020, we announced positive preclinical data from
a study using our exosome-mRNA vaccine approach We recently met with the FDA in a pre-IND meeting and are planning on filing an
IND by the third quarter of 2021, subject to regulatory approval, for this vaccine for SARS-CoV-2. We have also been investigating
an exosomal antigen vaccine which is a vesicle-based, nucleic acid-free formulation carrying multiple structural proteins of SARS-CoV-2.
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Exosome-Based Therapeutics
We are also developing
our exosomes platform technology as a next-generation therapeutic platform. Our current focus is on the development of exosomes
loaded with nucleic acids, including mRNA, to treat a variety of diseases. mRNA medicines are not small molecules, like traditional
pharmaceutical drugs and they are not traditional biologics (such as recombinant proteins and monoclonal antibodies) – which
were the origins of the biotech industry. Instead, mRNA medicines are sets of instructions. And these instructions direct cells
in the body to make all the proteins required for life as well as to prevent or fight disease.
Our platform builds
on advances in fundamental RNA science, targeting technology and manufacturing, providing us the opportunity to build a broad pipeline
of potential new therapeutic candidates. At this time, we are developing therapeutics and vaccines for infectious diseases,
monogenic diseases and other indications.
CDC-Derived Exosomes (CAP-2003)
In April 2020,
we filed an IND with the FDA to investigate the use of CAP-2003 in patients with DMD. At this time, the FDA has requested more
information related to manufacturing and we are evaluating the next steps for this program. We need to submit further information
to FDA to support the potential acceptance of this IND.
Additionally, in July 2018,
we entered into a Cooperative Research and Development Agreement with the U.S. Army Institute of Surgical Research, or USAISR,
pursuant to which we agreed to cooperate in research and development on the evaluation of our CAP-2003 for the treatment of trauma
related injuries and conditions.
Aspects of our exosomes
pipeline have been supported through collaborations and alliances. We have entered into a Sponsored Research Agreement with Johns
Hopkins University, or JHU, pursuant to which researchers in the lab of Dr. Stephen Gould will perform certain research activities
in connection with our exosomes program and the further development of the platform. Additional collaborations include the Department
of Defense, the National Institutes of Health and Cedars-Sinai Medical Center, or CSMC.
Our
executive offices are located at 8840 Wilshire Blvd., 2nd Floor, Beverly Hills, California 90211. Our telephone number
is (310) 358-3200 and our Internet address is www.capricor.com.
Our Technologies
Cardiosphere-Derived Cells (CAP-1002)
Our core cell therapy
technology is based on cardiosphere-derived cells, or CDCs, a cardiac-derived cell therapy that was first identified in the academic
laboratory of Capricor’s scientific founder, Dr. Eduardo Marbán. Since the 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. CDCs have been shown to exert potent immunomodulatory activity and to alter the immune system’s
activity to encourage cellular regeneration. We have been developing allogeneic CDCs (CAP-1002) as a product candidate for the
treatment of DMD and investigating their effects on skeletal and cardiac function. Preclinical and clinical data support the therapeutic
concept of administering CDCs as a means to address conditions in which the heart or skeletal muscle has been damaged.
In a variety of preclinical
experimental models of heart injury, CDCs have been shown to stimulate cell proliferation and blood vessel growth and to inhibit
programmed cell death and scar formation. Published data by CSMC, which tested the effectiveness of CDCs in a mouse model of DMD,
showed for the first time that the skeletal and cardiac improvements could be directly attributed to treatment with CDCs. The data
also provide further evidence of the potential of CDCs to stimulate tissue repair and regeneration by first reducing inflammation,
which then enables new healthy muscle to form, as was shown in the mouse model of DMD.
CDCs are derived from
cardiospheres, or CSps, which are self-adherent multicellular clusters derived from the heart. CDCs are sufficiently small that,
within acceptable dose limits, they can be infused into a coronary artery or into the peripheral vasculature. Capricor has performed
clinical studies to establish the range of CDC dose levels that appear to be safe via intracoronary administration and peripheral
venous access.
While CDCs originate
from either a deceased human donor (allogeneic source) or from heart tissue taken directly from recipient patients themselves (autologous
source), the methods for manufacturing CDCs from either source are similar.
Capricor’s proprietary
manufacturing methods are focused on producing therapeutic doses of CDCs to boost the regenerative capacity of the heart and skeletal
muscles, with the goal of improving cardiac and skeletal muscle function. Capricor has exclusively licensed intellectual property
covering CDCs and CSps from three academic institutions and is also pursuing its own intellectual property rights relating to CDCs
as a product candidate.
4
Exosomes
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. They can signal through the binding and activation of membrane receptors
or through the delivery of their cargo into the cytosol of target cells. Our preclinical data has shown that CDCs mediate most
of their therapeutic activities through the secretion of extracellular vesicles.
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. Furthermore, preclinical research has shown that exogenously-administered exosomes can modify
cellular activities, thereby supporting their therapeutic potential. Their size, low or null immunogenicity and ability to communicate
in native cellular language potentially makes them an exciting new class of therapeutic agents with the potential to expand our
ability to address complex biological responses. Because exosomes are a cell-free substance, they can be stored, handled, reconstituted
and administered in similar fashion to common biopharmaceutical products such as antibodies.
The following table summarizes our active
product development programs:
Product Indication/Population Development Stage
HOPE-Duchenne Phase I/II completed**
CAP-1002 SARS-CoV-2 INSPIRE Phase II enrolling
Exosome-mRNA vaccine SARS-CoV-2 Preclinical
Engineered Exosomes (RNA delivery) Monogenic Diseases Discovery
CDC-Exosomes (CAP-2003) Duchenne Muscular Dystrophy IND submitted
Exosome-VLP vaccine SARS-CoV-2 Preclinical
Engineered Exosomes (biologics delivery) Evaluating Discovery
*
The U.S. Food and Drug Administration, or FDA, has granted Orphan Drug, Regenerative Medicine Advanced Therapies, or RMAT, and
Rare Pediatric Disease designations to CAP-1002 for the treatment of DMD.
**We completed an Open Label Extension, or OLE, for the usual
care only comparator arm of the HOPE-Duchenne trial.
***We are currently conducting an OLE of the HOPE-2 trial.
Background on Duchenne Muscular Dystrophy
DMD is a rare form
of muscular dystrophy which results in muscle degeneration and premature death. DMD affects approximately 1 in 3,600 male infants
worldwide, and it is estimated that approximately 15,000 to 20,000 boys and young men are living with the disease in the United
States. DMD results from the lack of functional dystrophin protein caused by a gene mutation. The lack of dystrophin, an important
structural component of muscle cells, causes them to have increased susceptibility to damage and to progressively die. Additionally,
the absence of dystrophin in muscle cells leads to significant cell damage and ultimately causes muscle cell death and fibrotic
replacement. In DMD patients, heart muscle cells progressively die and are replaced with scar tissue. This cardiomyopathy eventually
leads to heart failure, which is currently the leading cause of death among those with DMD.
5
Patients with DMD experience
progressive muscle weakness and degeneration starting at an early age. Generally, a loss of ambulation occurs after the first decade
of life and eventually the patients suffer respiratory and cardiac failure. Their lifespan is abbreviated and averages less than
three decades. The annual cost of care for patients with DMD is very high and increases with disease progression. We therefore
believe that DMD represents a significant market opportunity for our product candidate, CAP-1002.
CAP-1002 for the Treatment of Duchenne
Muscular Dystrophy
Based on our understanding
of the mechanism of action of CAP-1002 which has been seen in preclinical models of DMD, we believe that CAP-1002 has the potential
to decrease inflammation and slow muscle degeneration while exerting positive effects on muscle regeneration, all of which may
translate into patients retaining muscle function for a longer period of time. Data supporting peripheral intravenous route of
administration of CAP-1002 in the DMD setting has been provided by preclinical mouse studies where CDCs, the active ingredient
in CAP-1002, have been shown to increase exercise capacity and diaphragmatic function.
We
are currently developing CAP-1002 for the treatment of DMD. We completed the positive HOPE-Duchenne Phase I/II trial in 2017 and
then subsequently began the HOPE-2 Phase II trial in 2018. We reported positive interim 6-month results from HOPE-2 in 2019 and
we reported final top-line 12-month results in May 2020. Our further plans with respect to the clinical development of CAP-1002
in DMD, including our decision to conduct a Phase III trial, will be based on the final guidance received from the FDA, our ability
to secure funding necessary to conduct the trial should we decide to pursue that path, our ability to partner with another company
to advance the development of CAP-1002 for DMD, and/or our ability to manufacture the product through a contract manufacturer,
as well as other factors, some of which are not known at this time. Further, we have submitted a proposed Phase III protocol
to the FDA. The size of the proposed Phase III trial is estimated to be approximately 60 patients and in our continuing discussions,
FDA has indicated its acceptance of this potential study design.
Phase II HOPE-2 Clinical Trial
HOPE-2 is a randomized,
double-blind, placebo-controlled clinical trial which was conducted at multiple sites located in the United States. We randomized
20 patients in our HOPE-2 clinical trial. Approximately 80% of the patients were non-ambulant and all patients were on a stable
regimen of steroids. Demographic and baseline characteristics were similar between the two treatment groups. The clinical trial
was designed to evaluate the safety and efficacy of repeat, intravenous, or IV, doses of CAP-1002, in boys and young men with evidence
of skeletal muscle impairment regardless of ambulatory status and who are on a stable regimen of systemic glucocorticoids.
While there are many
clinical initiatives in DMD, HOPE-2 is one of the very few to focus on non-ambulant patients. These boys and young men are looking
to maintain what function they have in their arms and hands, and Capricor’s previous study of a single intracoronary dose
of CAP-1002 provided preliminary evidence of efficacy that CAP-1002 may be able to help DMD patients retain or slow the loss of
upper limb function.
The primary efficacy
endpoint of the HOPE-2 trial is the relative change in patients’ abilities to perform manual tasks that relate to activities
of daily living and are important to their quality of life. These abilities were measured through the Performance of the Upper
Limb, or PUL, test. In the HOPE-2 study we have evaluated these through both the PUL 1.2 and 2.0 versions. Although the PUL 1.2
version for the mid-level was the primary endpoint established for the trial, we also conducted an analysis using the PUL 2.0 version
as the FDA suggested the use of the updated PUL 2.0 version as the primary efficacy endpoint in support of a Biologics License
Application, or BLA. HOPE-2 assessed the mid-level dimension of the PUL which evaluates one’s ability to use muscles extending
from the elbow to the hand, which muscles are essential for operating wheelchairs and performing other daily functions. In HOPE-2,
additional secondary and exploratory endpoints such as cardiac function, pulmonary function, quality of life and additional measures
were included.
In July 2019,
we reported interim top-line results from a pre-specified interim analysis of 6-month data from the HOPE-2 trial, which showed
meaningful results across several independent clinical measures.
6
In May 2020, we
reported final top-line 12-month results. The data showed improvements in upper limb, cardiac and respiratory functions with
p-values of less than p=0.05 in multiple measures. The 12-month data showed statistically meaningful improvements in the PUL 2.0
in CAP-1002 treated patients (p=0.05) with a mean change of 2.4 points over placebo patients. We also came very close to significance
with the PUL 1.2 mid-level with all the data (p=0.08) with a mean change of 2.8 points over placebo patients. With the exception
of steroids, preservation of function in DMD is uncommon. The placebo patients declined consistent with natural history, but in
the treated group, most patients were stable or improved throughout the one-year treatment period.
The data also showed
global improvements in cardiac function as measured by ejection fraction (p=0.004) and indexed volumes (LVESV, p=0.01, LVEDV p=0.07).
These are surrogate measures of cardiac function and are considered significant in terms of relevance to long term outcomes. Additionally,
there was also a reduction in the biomarker CK-MB, an enzyme that is only released when there is cardiac muscle cell damage. In
normal human subjects, there is typically no CK-MB measurable in the blood. It is well accepted that continuous muscle cell damage
in DMD leads to pathologically high enzyme levels associated with cardiac muscle cell loss. In HOPE-2 treatment with CAP-1002 was
associated with a reduction in CK-MB levels as compared to placebo (p=0.006). This is the first ever study in DMD that correlates
cardiac functional stabilization with reduction of a biomarker of cell damage.
Study Results
12-month Top-Line Efficacy Data:
12-month Time-point
Upper Limb Function
Cardiac
Mean Change from baseline to 12 months (standard deviation)
shown.
ITT (intent to treat) population shown
P-values are nominal values unadjusted for multiple testing
Mixed model repeated measures analysis
Additionally, we are
conducting an open-label extension available to all patients who participated in the HOPE-2 study which includes those patients
who received placebo.
Safety
CAP-1002 was generally
safe and well tolerated throughout the study. With the exception of hypersensitivity reactions which were mitigated with a common
pre-medication regimen, no safety signals were identified in the HOPE-2 trial.
Regulatory Developments
In June 2017,
we had a meeting with the FDA to discuss potential clinical endpoints that could be used for registration strategies for CAP-1002
in the DMD indication. The minutes of the meeting indicated the FDA's willingness to accept Capricor's proposal to use the PUL
test as the basis for the primary efficacy endpoint for clinical studies in support of a BLA. The PUL test is an outcome instrument
that was specifically designed to assess upper limb function in ambulant and non-ambulant patients with DMD.
In December 2018,
we met with the FDA as part of the expedited review afforded under the RMAT designation. The agency stated that the trial would
need to provide evidence of clinically meaningful changes in the PUL, as well as other evidence supportive of CAP-1002 efficacy
for patients with advanced Duchenne muscular dystrophy, in order to potentially serve as a registration trial.
7
In October 2019,
we had a meeting with the FDA to discuss, among other things, the results of the 6-month interim analysis of the HOPE-2 trial and
our path forward with our DMD program. During the meeting, we proposed the possibility of accelerated approval. The FDA was
not supportive of an accelerated approval pathway at that time and noted that the HOPE-2 trial was designed as an exploratory trial
and that the 6-month data from the HOPE-2 trial did not provide substantial evidence of effectiveness to support a future BLA.
The FDA did, however, indicate its support for conducting a Phase III trial of CAP-1002 for the treatment of DMD. In addition,
the FDA reiterated that as part of our RMAT designation, they are willing to work with us to further the clinical development of
the therapy.
In a follow-up to the
October 2019 meeting, Capricor requested an additional meeting to clarify endpoints for future clinical trials. In a written
response, FDA supported the use of the full PUL 2.0 from baseline to twelve months as a primary efficacy endpoint as long as clinical
meaningfulness can be demonstrated. They suggested that a 1.0 point difference appears suitable to demonstrate product efficacy
to support a BLA.
In a Type B meeting
with the FDA in 2020, we focused on the 12-month results from the HOPE-2 trial and discussed next steps and a pathway to approval
of a BLA for CAP-1002 in DMD. The FDA has continued to encourage us to conduct a Phase III study; at this time, however, we are
still discussing the pathway forward for this program with the FDA and have not initiated a Phase III study.
Phase I/II HOPE-Duchenne Clinical Trial
We
have completed the randomized, controlled, multi-center Phase I/II HOPE-Duchenne clinical trial which was designed to evaluate
the safety and exploratory efficacy of CAP-1002 in patients with cardiomyopathy associated with Duchenne muscular dystrophy, or
DMD. 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. 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 California Institute for Regenerative Medicine, or CIRM. In January 2019, this
study was published in the online issue of Neurology, the medical journal of the American Academy of Neurology.
We
reported our 12-month data from the HOPE-Duchenne trial at a Late-Breaking Science session of the American Heart Association Scientific
Sessions 2017. 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. Among the lower-functioning patients, defined as patients with a baseline
mid-distal PUL score < 55 out of 58, investigators reported sustained or improved motor function at 12 months in 8 of 9 (89%)
patients treated with CAP-1002 as compared to none (0%) of the usual care participants (p=0.007). Additionally, we reported significant
improvements in systolic thickening of the left ventricular wall as well as reduction in scarring of the heart muscle among those
treated with CAP-1002 decreased relative to the control group.
CAP-1002 was generally
safe and well-tolerated in the HOPE-Duchenne trial. There was no significant difference in the incidences of treatment-emergent
adverse events in either group. There were no early study discontinuations due to adverse events.
Regulatory Designations for CAP-1002
for the treatment of DMD
In April 2015,
the FDA granted Orphan Drug Designation to CAP-1002 for the treatment of DMD. Orphan Drug Designation is granted by the FDA’s
Office of Orphan Drug Products to drugs intended to treat a rare disease or condition affecting fewer than 200,000 people in the
United States or a disease or condition that affects more than 200,000 people in the United States and for which there is no reasonable
expectation that the cost of developing and making available in the United States a drug for this type of disease or condition
will be recovered from sales in the United States for that drug. 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.
8
In July 2017,
the FDA granted Rare Pediatric Disease Designation to CAP-1002 for the treatment of DMD. The FDA defines a “rare pediatric
disease” as a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect
individuals aged from birth to 18 years and that affects fewer than 200,000 individuals in the United States, or a disease or condition
that affects more than 200,000 people in the United States and for which there is no reasonable expectation that the cost of developing
and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United
States for that drug. Under the FDA's Rare Pediatric Disease Priority Review Voucher program, upon the approval of a qualifying
New Drug Application, or 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. The
Priority Review Voucher may be sold or transferred an unlimited number of times.
In February 2018,
we were notified by the FDA Office of Tissues and Advanced Therapies, that we were granted the Regenerative Medicine Advanced Therapy,
or 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. 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. CAP-1002 is one of the few
therapies currently in development to help non-ambulant patients with DMD. To receive the RMAT designation, we submitted data from
the HOPE-Duchenne Trial.
CAP-1002 for the Treatment of SARS-CoV-2
Within the framework
of SARS-CoV-2 pathogenesis, multiple pathways known to be CAP-1002 sensitive may serve as therapeutic targets. These targets include
pro-inflammatory pathways (TNF-α, interferon γ, IL-1, and IL-6) and anti-inflammatory pathways (regulatory T cells
and IL-10) that have been explored with CAP-1002 in preclinical models of myocardial ischemia, myocarditis, heart failure, Duchenne
muscular dystrophy and pulmonary hypertension. Given that CAP-1002 polarizes macrophages to an anti-inflammatory (healing) immunomodulatory
phenotype, CAP-1002 may subsequently attenuate cytokine storm associated with SARS-CoV-2. Furthermore, as CAP-1002 directly targets
cardiac dysfunction, CAP-1002 potentially may also be an important tool in the treatment of the cardiac complications of SARS-CoV-2.
We are currently conducting the INSPIRE Phase II clinical trial in patients with a diagnosis of SARS-CoV-2.
CAP-1002 for the Treatment of Cardiac
Conditions:
In previous years,
we completed several trials investigating the use of CAP-1002 for the treatment of various cardiac conditions, including heart
failure (the DYNAMIC Trial) and post myocardial infarction (MI) with cardiac dysfunction (the ALLSTAR trial). Because of our decision
to focus our efforts on DMD, we have decided not to pursue those indications at this time, nor do we have any plans to continue
with the development of these programs although we are continuing to evaluate certain cardiac measures in our HOPE-2 trial. We
expect no further material expenses in connection with these programs.
CAP-1002 - Investigator Sponsored
Clinical Trials:
Capricor has agreed
to provide cells for investigational purposes in two clinical trials sponsored by CSMC. These cells were developed as part of the
Company’s past research and development efforts. The first trial is known as “Regression of Fibrosis and Reversal of
Diastolic Dysfunction in HFpEF Patients Treated with Allogeneic CDCs, or the REGRESS trial. Dr. Eduardo Marbán is the
named principal investigator under the study. The second trial is known as “Pulmonary Arterial Hypertension treated with
Cardiosphere-derived Allogeneic Stem Cells, or the ALPHA trial. In this trial, the investigational product is infused into the
venous system via catheter into the right atrium. This trial is currently ongoing. In both studies, Capricor is providing the necessary
number of doses of cells and will receive a negotiated amount of monetary compensation which was estimated to be approximately
$2.1 million over several years. Due to the current COVID-19 pandemic, additional testing in each of the ALPHA and REGRESS trials
has been delayed and as a result, purchases of additional doses of CAP-1002 have been delayed.
Exosomes Program
Our exosomes program
consists of exosome-based vaccines, engineered exosomes and exosomes derived from CDCs (CAP-2003), all of which are in various
stages of development. We have explored the use of our CDC-exosomes in preclinical studies of inflammation and intense immune activation
such as DMD, sepsis, Graft versus-host disease (GVHD) and trauma. While CDC-exosomes are the initial technology we have used in
preclinical development, we have expanded Capricor’s pipeline to include additional exosome technologies.
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We are now focused
on developing a precision-engineered exosome platform technology that has the ability to deliver defined sets of effector molecules
which exert their effects through defined mechanisms of action. We have begun work on our planned expansion of our exosome platform
technology that potentially may be used for vaccine development, vesicle mediated protein therapies and treatment of monogenic
diseases.
In conjunction with
these expansion efforts, we have entered into a Sponsored Research Agreement with JHU pursuant to which researchers in the lab
of Dr. Stephen Gould will perform certain research activities in connection with our exosomes program and the further development
of the platform.
Exosome-Based Vaccine Platform
We are now working
on developing exosome-based vaccines for COVID-19. The exosome-based vaccine platform technology will aim to combine the improved
protection that comes from immunizing individuals with multiple antigens in a manner that mimics the advantages of conventional
virus vaccines, with the superior safety profile of virus-free vaccines. We are currently designing exosome-based vaccines to elicit
strong humoral and cellular immune responses due to the simultaneous expression of antigens.
We
are developing two exosome vaccine candidates. The first vaccine candidate is a tripartite exosome-mRNA vaccine which is designed
to elicit a protective, long-lasting immune response to SARS-CoV-2 by targeting multiple structural proteins of the virus.
Recently, in collaboration with researchers at JHU, we announced positive data from a preclinical study in mice using our
exosome-based mRNA vaccine. The key findings of the data include the development of a safe exosome formulation capable of delivering
functional mRNA in vitro and in vivo. Furthermore, the potential vaccine induced both antibody responses and cellular
immunity to multiple proteins of SARS-CoV-2.
We recently met with
the FDA in a pre-IND meeting and are planning on filing an IND by the third quarter of 2021, subject to regulatory approval, for
this vaccine for SARS-CoV-2.
The second candidate
is an exosomal antigen vaccine which is a vesicle-based, nucleic acid-free formulation carrying multiple structural proteins of
SARS-CoV-2. We continue to assess this technology for potential uses within infectious diseases and potentially other uses.
Furthermore, we recently
entered into a non-exclusive license to intellectual property, know-how and data with JHU related to a new imaging-based serology
test platform for COVID-19. This platform, which is amenable to a vast array of serology applications, has been applied to the
analysis of patient antibodies to multiple SARS-CoV-2 proteins, including spike, nucleocapsid, and membrane. The development of
this companion diagnostic allows us to accurately evaluate the effects of our vaccines and therapeutics and we intend to explore
the potential for partnership opportunities for this technology.
Engineered Exosomes Platform
Building upon the natural
ability of exosomes for intercellular communication, we are focused on engineering exosomes to load them with different macromolecules.
We are actively developing an engineered exosomes platform for the delivery of nucleic acids (including mRNA) for a variety of
different diseases. In collaboration with researchers at JHU, we recently published data demonstrating exosome-mediated delivery
of mRNAs with enhanced expression and lower toxicity compared to lipid nanoparticles. Additionally, we showed functional enzyme
expression and real-time imaging of mRNA expression in live animals. Building on this platform, we have promising data for enhanced
targeting of exosomes. Our plan is to actively develop this platform for a broad spectrum of diseases.
CDC-Exosomes (CAP-2003)
We have promising preclinical
data in several indications from studies done in our labs as well as in collaboration with other companies and academic institutions.
Additionally, in July 2018, we entered into a Cooperative Research and Development Agreement with the USAISR pursuant to which
we agreed to cooperate in research and development on the evaluation of our CDC-Exosomes for the treatment of trauma related injuries
and conditions which are one of the leading causes of death in the U.S.
In April 2020,
we filed an IND with the FDA to investigate the use of CAP-2003 in patients with DMD. At this time, the FDA has requested more
information related to manufacturing and we are evaluating the next steps for this program. We need to submit further information
to FDA to support the potential acceptance of this IND.
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These programs represent
our core technology and products.
Intellectual Property and Proprietary
Know-How
Our goal is to obtain,
maintain and enforce patent rights for our products, formulations, processes, methods of use and other proprietary technologies,
preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States
and abroad. Our policy is to actively seek to obtain, where appropriate, the broadest intellectual property protection possible
for our current product candidates and any future product candidates, proprietary information and proprietary technology through
a combination of contractual arrangements and patents, both in the United States and abroad. 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. 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.
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 scalable manufacturing processes, formulations, delivery and
dosage regimens. As a result, biotechnology products are often protected by several families of patent filings that are made at
different times in the development cycle and cover different aspects of the product. Earlier filed broad patent applications directed
to the discovery of the platform technology thus usually expire ahead of patents covering later developments such as scalable manufacturing
processes 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. Our patents, or patent applications, if issued and upon payment of patent maintenance
fees, would expire as early as 2024 and as late as 2041. There are also limited opportunities to obtain extensions of patent terms
in certain countries.
Capricor’s Technology - CAP-1002
and Exosomes
Capricor has entered
into exclusive license agreements for intellectual property rights related to certain cardiac-derived cells with Università
Degli Studi Di Roma La Sapienza, or the University of Rome, JHU and CSMC. Capricor has also entered into an exclusive license agreement
for intellectual property rights related to exosomes with CSMC and a non-exclusive license agreement with JHU related to the imaging-based
serology technology for COVID-19. In addition, Capricor has filed patent applications related to the technology developed by its
own scientists.
University of Rome
License Agreement
Capricor and the University
of Rome entered into a License Agreement, dated June 21, 2006, or 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. Capricor has a right of first negotiation,
for a certain period of time, to obtain a license to any new and separate patent applications owned by the University of Rome utilizing
cardiac stem cells in cardiac care.
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. The minimum annual royalties are creditable against future royalty payments.
The Rome License Agreement
will, unless extended or sooner terminated, remain in effect until the later of the last claim of any patent or until any patent
application comprising licensed patent rights has expired or been abandoned. Under the terms of the Rome License Agreement, either
party may terminate the agreement should the other party become insolvent or file a petition in bankruptcy. Either party may terminate
the agreement upon the other party’s material breach, provided that the breaching party will have up to 90 days to cure its
material breach. Capricor may also terminate for any reason upon 90 days’ written notice to the University of Rome.
The Johns Hopkins University License
Agreements