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Operator: Good afternoon, ladies and gentlemen and welcome to the Capricor’s Third Quarter 2024 Financial Results and Corporate Update Call. At this time, all participant lines are in a listen-only mode. Following the presentation, we’ll conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Wednesday, November 13, 2024. I would now like to turn the conference over to our host, Mr. A.J. Bergmann, Capricor’s Chief Financial Officer, for the forward-looking statement. Please go ahead.

A.J. Bergmann: Thank you and good afternoon, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today’s presentation. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments, our financial position and our possible uses of existing cash and investment resources.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements and we disclaim any obligation to update such statements. With that, I’ll turn the call over to Linda Marbán, CEO.

Linda Marbán: Thanks, A.J. Good afternoon, everyone and thank you for joining today’s third quarter conference call. I am extremely proud of the progress we have made in the last quarter. As you know, we have been working to develop deramiocel, formerly known as CAP-1002 for the treatment of DMD for the last 8 years. We have shown in multiple clinical trials, the solutory benefits of deramiocel in attenuating the consequences of the skeletal muscle myopathy and improving the cardiomyopathy associated with this devastating disease. We have consistently presented the data as it has become available to the FDA and the data has shown clinically meaningful as well as statistically significant improvements. Based on the strength of the data as well as the large unmet medical need of the cardiac implications, we have decided after conferring with the FDA to file a BLA for full approval for the cardiomyopathy associated with DMD.

To say that we are proud and excited about our progress here is an understatement. For the new listeners and supporters of Capricor on this call, I will walk you through some of the developments that have brought us here today and outline the steps Capricor is taking as we position our organization to become a revenue-generating commercial stage company should we receive FDA approval for which I am very optimistic. Now first, I’d like to provide a regulatory update. 2024 has been an extraordinary year for Capricor. We have taken the opportunity to work in collaboration with the FDA to prepare for the potential approval and commercialization of deramiocel to treat the cardiomyopathy associated with DMD. Our BLA will be based on existing cardiac data from our Phase II HOPE-2 and HOPE-2 open-label extension clinical studies compared to patient level natural history data from the DMD Cardiac Consortium led by Dr. Jonathan Soslow at Vanderbilt University.

I will now take a few minutes to explain how we got to this point from a regulatory perspective. As I have stated previously, we have been presenting clinical data as it becomes available to FDA. And as part of our pre-BLA meeting in August, when we show them the cardiac data from the HOPE-2 open-label extension study compared to the natural history data set, it became clear that deramiocel was slowing the trajectory of cardiac dysfunction in DMD measured by ejection fraction and measurements of end systolic and end diastolic index volumes. FDA noted the strength of our data and also noted that there were no approved therapies for cardiomyopathy associated with DMD. Based on that meeting and subsequent meetings with FDA, we have decided to move forward to file for full approval.

The opportunity here is to focus initially on the cardiomyopathy as it addresses a major unmet medical need of those with DMD, is supported by significant clinical data. And most importantly, it is derisked in that, that data is already available. No more clinical data is theoretically necessary and the label for the cardiomyopathy which I will provide details on the projected economics of in a few minutes, is broad and ultimately will encompass a large proportion of those with DMD. Now, let me explain the next steps for HOPE-3 Cohort A which was originally slated to be unblinded by year-end of 2024. HOPE-3 was designed to show that deramiocel attenuates upper limb skeletal muscle disease progression. And as you may recall, the primary efficacy endpoint of HOPE-3 is the pull or performance of the upper limb 2.0. Therefore, the approval based on HOPE-3 will be to treat the skeletal muscle myopathy.

And while we are pleased thus far with the effect of deramiocel on upper limb function, it is not as important for the first indication which will now be cardiomyopathy and which presents a greater initial market opportunity for deramiocel. Therefore, we have decided after conferring with FDA to combine cohorts A and B and use that data to serve as a post-approval supplement and add skeletal muscle myopathy to the label in the future. Furthermore, Capricor may elect to use this data set to support marketing authorizations outside of the U.S.A. should that be necessary which we will have more clarity on in 2025. So let me summarize. We are filing for full approval for DMD cardiomyopathy with a substantially derisked and previously analyzed data.

We expect to hear from FDA by the end of the first quarter of 2025 regarding the status of the application. And if the FDA review goes well, we anticipate a potential PDUFA date set for the second half of 2025. We will combine Cohort A and B together, increasing the power of the trial and use that data when unblinded to add the treatment of skeletal muscle myopathy to the label. It is a clear strategy which gives Capricor the opportunity to achieve potential approval for a first-in-class treatment for one of the most devastating consequences of DMD. I am pleased to report that the first module of the BLA was submitted and we are on track to fully submit our BLA package by year-end 2024. I want to thank my team for their extraordinary efforts to this point and reiterate that we are focusing all of our efforts on this endeavor.

This includes preparations for CMC inspection, pre-commercial activities and market access work with our distribution partner, NS Pharma. While we believe that an AdCom may not be necessary, we are preparing internally for that eventuality. Now, I would like to spend the next few minutes highlighting the patient population we are targeting with this first label. Cardiac disease is a standard feature of DMD and most individuals with DMD will eventually have cardiomyopathy. For many, the insidious breakdown of cardiac muscle begins very young. Some patients will have evidence of cardiac dysfunction before 10 years of age, most by age 16. The pathogenesis is not like any standard cardiac disease process and has taken nearly a decade of careful imaging and evaluation to understand why these patients have what appears to be normal cardiac function and then they fall off the cliff of reduced ejection fraction from which recovery is not likely.

Please keep in mind, there are currently no approved therapies for DMD cardiomyopathy and the data suggests that standard cardiac medications do not have a significant impact on progression in most cases. If approved, we are anticipating that approximately 50% to 60% of the overall DMD population in the United States or around 8,000 people with DMD would be eligible for treatment with deramiocel. Because deramiocel would be a first-in-class therapeutic for an aspect of DMD that has no approved medicines, our initial discussions with payers have been very positive. We expect reimbursement would be consistent with other recently approved DMD therapies such as exon skippers. Our treatment is administered intravenously every 3 months and is designed to be used chronically to slow cardiac disease progression in those with DMD.

The opportunity for deramiocel has great promise, both in terms of revenue generation and in treating one of the most devastating aspects of DMD which is the heart disease. If approved, we are anticipating entering the market with approximately 100 patients transferring from open-label extension groups to commercial products. Based on market research and discussions with advocacy groups, we anticipate rapid adoption of deramiocel. We are actively focusing on scaling our manufacturing capacity as well as supporting NS Pharma and working with payers as we prepare for robust patient and physician demand. Now let’s turn to CMC or chemistry manufacturing and controls. Based on those predictions of demand, front and center in our minds is preparing for commercial manufacturing in order to meet sales forecast.

As you know, we manufacture deramiocel in-house at our GMP facility. And while we know that our current facility can meet initial demand, we are currently in late-stage planning for scaling up manufacturing. We built a small commercial manufacturing plant in San Diego to mirror the clinical one in Los Angeles. Nonclinical comparability between manufacturing at our San Diego and Los Angeles facilities was achieved which aid in future manufacturing expansion activities. Our goal is to have another facility online within a year of launch to meet the demand we anticipate. Deramiocel is made from transplant qualified human hearts that cannot be used for transplant for technical reasons and which we source across the United States from a consortium of OPOs or organ procurement agencies and a carefully curated process.

From one heart, we are able to generate thousands of doses of deramiocel. While not necessary at this time, product development activities are underway to increase the yield further. The product is manufactured on a modular basis with each individual clean room capable of deramiocel production. Our operations team at Capricor is experienced in building, staffing and qualifying these clean rooms so we can continue to expand our manufacturing capabilities to meet demand. The clinical shelf life of the frozen product is currently 5 years, so we are able to stockpile doses in order to meet increasing demand clinically and commercially. Currently, as we reported last quarter, our San Diego manufacturing facility is fully operational and actively underway generating doses.

In addition, we are also actively preparing for pre-licensing inspection otherwise referred to as PLI and anticipate that being a successful endeavor. Please stay tuned for more color on these important milestones as they become available. Now turning to the corporate and commercial front. In October, we completed an oversubscribed public offering of common stock, raising approximately $86 million with participation from some of the top health care funds in the world. We believe this institutional validation was fundamental to our story and a testament to the scientific development to this point. I am very appreciative of our new investors in this deal as well as our legacy shareholders who have positioned themselves as strong supporters of Capricor throughout our history.

Factoring this raise in our Q3 cash balance, we have approximately $165 million in cash which gives us a strong runway into 2027. These funds will be used to expand our manufacturing capabilities, the plans for which are already underway for a new facility and will also be used to enhance our management and commercial operations team to support a successful launch. Nippon Shinyaku is fully engaged with Capricor as we prepare for a potential launch. Their team in the United States is comprised of 125 people with market access, reimbursement, medical affairs and advocacy programs actively preparing for the launch of deramiocel. We continue to work in close collaboration with them. Furthermore, earlier this quarter, we entered into a term sheet with Nippon Shinyaku for the marketing, sales and distribution of deramiocel in the European region.

subject to finalization of a definitive agreement. If this agreement is executed, it would be similar to the U.S. agreement. Based on our current agreements with Nippon Shinyaku, if we enter into a definitive agreement for the European region on the anticipated terms, we would have the potential for milestone payments totaling $1.5 billion payable to Capricor. In addition, in the U.S., we are entitled to between 30% to 50% of revenue share based on sales of the product, inclusive of cost of goods sold. This capital will continue to fuel future product development, strengthen our commercial organization and enable us to build the organization into a world-class revenue-generating cash flow positive company with a commercial product on the market and a robust pipeline of expansion opportunities, leveraging cell and exosome-based therapeutics.

In addition and as we have been guiding, we are now actively exploring the opportunity to potentially expand into Becker muscular dystrophy with deramiocel as the cardiac manifestations are very similar to that of DMD. We continue to believe in deramiocel’s potential to be a transformational treatment for DMD cardiomyopathy and beyond. And our current plan is to make indication expansion an important goal for 2025. Now, I’d like to give you a little bit of an update on our exosomes program. While our primary focus has been on advancing deramiocell, we remain committed to our StealthX exosome platform technology as part of our next-generation drug delivery platform. We have been planning to build a pipeline of exosome products which are engineered to enhance drug delivery and can be targeted.

We are able to capitalize on our years of building cell-based products with the goal of bringing exosomes to the clinic. Our program focuses on the use of our StealthX technology developed here at Capricor which will allow us to develop therapeutics and vaccines by harnessing exosomes as delivery vehicles. The goal is not only to have efficacious products but to create a delivery vehicle that could outperform a lipid nanoparticle and also be cost effective. We have achieved this goal in preclinical studies and we can now focus on translating these fundamental properties into therapeutic opportunities. We recently presented preclinical data showing that a PMO can be loaded into our StealthX platform and targeted using a TFR moiety on the surface for enhanced exon skipping.

We also have been able to show life-extending enzyme replacement in an ARG1 knockout mouse using nanogram doses of protein, suggesting successful uptake and utilization of the protein. We are planning for an IND for a therapeutic exosome program based on some of this exciting data. Please stay tuned for more updates on this front. Regarding our StealthX vaccine, we are collaborating with the United States government’s Project NextGen which aims to test vaccine candidates for COVID-19 prevention and to prepare for future pandemics. Currently, our StealthX vaccine candidate is in the manufacturing phase with plans to deliver to NIAID which is the National Institute of Allergy and Infectious Disease in the first quarter of 2025. The NIAID will then conduct and fully fund a Phase I clinical trial.

We expect to have some preliminary data available in the second quarter of 2025, subject to NIAID’s evaluation. Further, if NIAID decides that our vaccine meets their criteria for safety and efficacy, they will consider further support for a Phase II study. This presents a tremendous opportunity to generate proof-of-concept first-in-human safety and efficacy data and we see this collaboration as a chance to showcase the power of our exosome platform for the broader scientific and business development communities. To remind you, the StealthX vaccine platform will not only serve as a clinical proof of concept for the StealthX technology but our vaccine is comprised of native proteins and not reliant on mRNA which enables us to rapidly adapt the protein to a new pandemic or to changes in viral epitopes.

If successful, our vaccine would continue — combine the speed and adaptability of mRNA vaccines with the known greater efficacy of protein vaccines. Further, our vaccine uses no adjuvant. Recently, there has been much ado about the potential toxicity of certain adjuvants in existing vaccines. In conclusion, this has been a transformational quarter for Capricor. We have made significant strides in our regulatory pathway, getting closer to potential approval of deramiocel. Patients and families are fully supportive of our efforts and see the lasting power of deramiocel in helping those with DMD to feel and function better. Our recent financing has secured our path forward to execute on our milestones for the foreseeable future. Over the next several months, we will be presenting at various medical scientific and investor-related conferences, including the Piper Sandler Global Healthcare Conference and the Oppenheimer Rare Disease Mover Day.

Most importantly, we are on track to complete the submission of our BLA later this year. Finally, I want to thank the patients, their families and our investors for their continued support. Capricor’s goal is to continue to meet its milestones and deliverables as we have set forth as we continue to focus our efforts on bringing deramiocel towards potential commercialization and are investing judiciously across the organization to prepare for that endeavor. I will now turn the call over to A.J. Bergmann to run through our financials. A.J.?

A.J. Bergmann: Thanks, Linda. This afternoon’s press release provided a summary of our third quarter 2024 financials on a GAAP basis. You may also refer to our quarterly report on Form 10-Q which we expect to become available shortly and will be accessible on the SEC website as well as the financial section of Capricor’s website. Let me start with our cash position. As of September 30, 2024, cash, cash equivalents and marketable securities totaled approximately $85 million. Subsequent to September 30, 2024, we completed a public offering of common stock for approximately $80.8 million in net proceeds. On a pro forma basis, after accounting for the net offering proceeds, our cash, cash equivalents and marketable securities would total approximately $166 million.

Turning to the financials. Revenues for the third quarter of 2024 were approximately $2.3 million compared with approximately $6.2 million for the third quarter of 2023. The source of the revenue is the ratable recognition of the $40 million that we have received from our U.S. exclusive commercialization and distribution agreement with Nippon Shinyaku. Moving now to our operating expenses for the third quarter of 2024, excluding stock-based compensation, our research and development expense was approximately $11 million compared to approximately $9.5 million in Q3 2023. Turning now to G&A, excluding stock-based compensation, was approximately $2.2 million in Q3 2024 and approximately $1.8 million in Q3 2023. Net loss for the third quarter of 2024 was approximately $12.6 million compared to a net loss of approximately $6.4 million for the third quarter of 2023 and net loss for the 9 months ended September 30, 2024, was approximately $33.4 million compared to a net loss of approximately $21.5 million for the 9 months ended September 30, 2023.

I will now open up the line for questions.

Operator: [Operator Instructions] Your first question comes from the line of Ted Tenthoff from Piper Sandler.

Ted Tenthoff: Really exciting to be on the call and congrats on all the progress. Can you hear me okay?

Operator: Please stay on the line. The conference will begin momentarily. Now back to the conference. Your first question comes from the line is from Ted Tenthoff from Piper Sandler.

Ted Tenthoff: Congrats on all the progress. So I wanted to get a sense. Obviously, there’s a lot to do behind the scenes here with the filings and with the regulatory approval that you’re seeking with the FDA. What are you and Nippon Shinyaku doing to prepare this market and to get ready for launch? And I guess coupled in that question is, you mentioned some of the work that you’re doing on the manufacturing front. How can you also sort of prepare to scale up to meet that potential commercial demand?

Linda Marbán: Ted, always great to hear from you. So in terms of your first question which is what’s going on with Nippon Shinyaku. So one of the advantages of our deal with Nippon Shinyaku and a pharma U.S. branch is that they are already on the market with VILTEPSO which is exactly penetrating into the same basic community, Duchenne muscular dystrophy. So they already have a sales team, a med affairs team, a market access team, a reimbursement team that has already gone ahead and done this with VILTEPSO. So it really is just a plug-and-play model. they’re very comfortable. They have a team of about 125 people, specifically now working almost primarily on preparing for launch of deramiocel. And so these are seasoned pharma executives that have been carefully curated and prepared for this role.

Now Capricor has joined in on the fact that we know CAP-1002 or deramiocel better than anybody else. So now we have put several of our people basically into the daily mix with Nippo Shinyaku to make sure that deramiocel has breeded in launch the way that it’s supposed to. So that the product is ready, delivery is ready, the centers are ready, infusion centers are ready. All of the bells and whistles have been managed. Market access has been assessed. KOLs have been brought on board. Physicians are ready to prescribe it. It is all underway at this time in regular standard meetings and opportunities. So that’s going great and we have great opportunities ahead for launch. In terms of your second question with manufacturing, we have been preparing for this day for a long time.

So we started thinking about the commercialization of deramiocel, let’s call it, a decade ago when we entered into the clinic. And so we knew what we had to do. The good thing is that we have done is we have kept manufacturing in-house all this time. So it’s a derisked manufacturing procedure because nobody knows it better than we have. When we built the San Diego manufacturing facility, it’s small but it’s commercial scale. So we know exactly how to do it. We’ve been preparing for PLI really for about 2 years since we designed and opened that facility. So that one is ready to go. We have high confidence that we should be able to pass inspection. And now because we are anticipating great adoption of deramiocel by Duchenne patients, we’re also planning and executing a build-out of a new manufacturing facility.

But again, the nice part of this is that it’s not like a gene therapy where the manufacturing for scale-up is much more complicated, exponentially more difficult, trying to deal with empty capsids. This is a modular plug-and-play manufacturing paradigm where we just add more clean rooms to the mix. So instead of 2 clean rooms, we have 8 or 10 or 20 or 100. And we have a great experience with this. So overall, I think we’re in pretty good shape working on getting ready for market.

Operator: And your next question comes from the line of Leland Gershell from Oppenheimer.

Leland Gershell: Great to see all the progress and a few questions from us. Just teeing off from Ted’s question about expanding manufacturing. I just wanted to drill in a bit further, particularly given the potential European option for commercialization, you could have many more patients you could serve with deramiocel. So as we think about your capabilities for serving the market with your current manufacturing versus what you might be able to do as you build out, how should we think about that as it runs along in parallel to what could be Japan as well as European approvals in the not-too-distant future?

Linda Marbán: Right. Yes. So again, this has all been in the planning for a while. The facilities that we are building and manufacturing, in San Diego will be capable of serving the European community as well as the Japanese community. We have paradigms in place for shipping already set up and are working with European authorities as we speak in order to get ready for penetration into the European market. Same thing with Japan. So all of this was factored into our thinking regarding manufacturing scaling up and as part of the planning for the expansion of deramiocel into global markets.

Leland Gershell: Great. And once you have the cardiomyopathy label in hand and you’re pursuing a label expansion with skeletal muscle improvement in the upper limb. I’m just wondering, since these children were affected by DMD tend to get cardiomyopathy by the age of 10 or not that much beyond. And you, Linda had expected that 50% to 60% may be addressable by the product. What would be the incremental gain, I guess, to commercial size that you would get from having an expanded label? Or is that somewhat academic since presumably the cardiomyopathy label would be sort of the large factor here?

Linda Marbán: Yes, Leland, great to hear from you. And that’s a really important question. And I’d like to address on several levels. One, 100% of the people with DMD get cardiomyopathy. It is not related to the progression of the skeletal muscle myopathy. So you find sometimes little kids very young, sometimes 7 years of age with pretty significant heart disease with preserved skeletal muscle function. And conversely, you’ll sometimes find older guys with pretty attenuated skeletal muscle function with good preservation of cardiac function. And this has been observed sort of throughout the time of evaluation of cardiac function in Duchenne muscular dystrophy. So we think the TAM for the cardiomyopathy will be our broadest possible label.

It’s really the reason that we’re so excited about this opportunity in addition to the fact that it’s essentially derisked with already available clinical data. But we really think that it spreads across the life course of those with Duchenne also opens the opportunity for other skeletal muscle — I mean, other muscular dystrophy such as Becker muscular dystrophy or myotonic dystrophy and other ones that have cardiomyopathy as a feature. To go to your other question regarding the increase in market size with the skeletal muscle label, it is possible theoretically and perhaps practically that somebody would need deramiocel to attenuate skeletal muscle dysfunction if they have relatively preserved cardiac function. As I said, there are those outliers.

And so we would then scoop those in under the expanded label. But in reality, the cardiomyopathy label is quite broad and we’re quite happy with it as our potential first indication.

Leland Gershell: Great. And then lastly, just a quick one. Of your second half ’25 guidance for the approval, that captures what could be a priority review or a standard review but presumably given your RMAT designation, do you generally expect to have priority review? Did you request it? Did you need to request it or as you submit the BLA?

Linda Marbán: Yes. It’s part of the RMAT. So it comes with the RMAT designation. So we are expecting a priority review and are building our timelines around it. We don’t see that, that’s going to be an issue.

Operator: [Operator Instructions] Your next question is from Kristen Kluska from Cantor Fitzgerald.

Rick Miller: This is Rick Miller on for Kristen. And maybe just first, thinking about the world muscle data you presented, what constitutes a clinically meaningful benefit on cardiac function like left ventricular ejection fraction, specifically in the more severe patients with a baseline LVEF, excuse me, under 45%? And how does this relate to what you saw in this subset in that data set?

Linda Marbán: Yes. Really, really good and important question again. So thanks, Rick, for asking it. So we saw improvement in all of the patients in the HOPE-2 open-label extension treated with deramiocel. What we found is that those that had more attenuated cardiac function below 45%, the improvement was less was less than those that had above 45%. The theory and rationale for that is that there is more scar, more damaged tissue in the later-stage patients with reduced ejection fraction below 45%. So there’s less cardiac muscle to preserve and to recruit in order to sustain cardiac function. But all patients showed a benefit. So while we think that greater than 45% is extremely important in terms of marketing because we want to get in these kids young, let’s get it into their and let’s keep their cardiac function high because unequivocally, we saw benefits in those patients that were above 45%.

So the takeaway from the World Muscle Society data is very clear which is let’s get deramiocel started early and young and let’s preserve that cardiac muscle and cardiac function while they have it.

Rick Miller: And maybe just a follow-up from that. From a patient journey perspective, can you kind of help us to better understand how these patients are monitored for cardiac decline? Do they undergo cardiac MRI often? And what age are physicians starting to think about seriously monitoring cardiac function in DMD patients? And is this something that you think the field could do better if there is an approved therapy?

Linda Marbán: Yes. So actually, that’s very true. So I’m going to start at the end of your question because it’s so important. The cardiologists that we’re working with and we have the benefit of working with the real leaders in the space and we have for a while and have been part of sort of the development of the ethos around developing a treatment for the cardiomyopathy because we are currently farthest ahead in developing a therapeutic for the cardiomyopathy associated with Duchenne. So yes, the last — the answer to your last question is, yes, we think that the approval of deramiocel will actually accelerate measurements and aggressive treatment of the cardiac disease associated with Duchenne. To that end, we plan not only on marketing to cardiologists who may or may not be involved in early stage of care but to the pediatric neurologists, the rehab med docs, even some of the pediatricians so that they are aware of the signs and symptoms of cardiac dysfunction.

Now what we know is that many of these kids have silent cardiac disease until they’re pretty old. So let’s go back to the beginning of your question which is how is it going to be monitored and determined? What is the patient’s journey. So now most kids get an MRI before the age of 10, cardiac MRI to evaluate cardiac function and structure. And what we’re doing is we’re sort of beginning to build the idea that it can be the start of deramiocel would be based on either aggregation of cardiac scar. You’ve got some scar in your heart. And if you ask a cardiologist, how much scar is enough to start treatment, they say any. So any cardiac scar in the heart would trigger treatment with deramiocel on a quarterly basis for life or — and so it could be both cardiac dysfunction.

So the ejection fractions that start to drop below 55%, those kids are starting to show evidence that there’s something not quite right in the heart. Remember, these kids are not typically as active as a typical kid. So a drop in ejection fraction signals cardiac dysfunction. And so either or both, the measurement of scar, the measurement of cardiac dysfunction which could be by MRI or echo would be a trigger to start deramiocel on that patient journey. Now how physicians go about prescribing it will be up to us and Pharma to educate them to be aware that this exists. It’s a treatment that not only has been shown to be effective but there are literally no side effects, can be given 4 times a year for life and can be used in conjunction with any and all cardiac medications, steroids and any of the therapies for skeletal muscle myopathy.

So it’s a win-win for everybody to get a patient started on deramiocel.

Operator: And your next question comes from the line of Aydin Huseynov from Ladenburg.

Aydin Huseynov: Congratulations with the progress this quarter. I’ve got a couple of questions that I want to ask. So first commercial question. So you still have several geographies that you haven’t out-licensed China, South America, rest of the world, Eastern Europe, Australia. So what happens is that if some patients from these regions would like to have a drug, so would you sell it directly or you would sell it through your partners?

Linda Marbán: Yes. So currently, Nippon Shinyaku has rights to sell, market and distribute in Europe, the United States and Japan. All other areas of the world are still owned by Capricor. And so our current plan would be to market directly.

Aydin Huseynov: Okay. And another question I have is about potential label opportunities for deramiocel. So would you expect any limitations in terms of the using it after gene therapies or exon skippers on the label? Or you would think that the FDA will give you sort of open label and I’ll leave it to physicians, how they’re going to use it?

Linda Marbán: Our current conversations with FDA have encompassed some of those questions. And the current guidance that we have is that the use of deramiocel would be independent of any of the other therapeutics available, gene therapies or exon skippers. We have had people in our clinical trials that have gotten exon skippers. We have people in our clinical trials that have received gene therapy. And so our current guidance is that we would use it in an open fashion available to anybody with DMD cardiomyopathy.

Aydin Huseynov: Would you expect AdComs based on your conversations and based on what you’ve seen with prior Duchenne drugs, would you expect the advisory committee meeting?

Linda Marbán: I can’t — there are no tea leaves to read. What I can tell you that our relationship with FDA has been extremely collaborative. They seem favorable to receiving the data. I’m sure they’ll evaluate the data with all of the seriousness with which we provide it. It’s a strong data package using natural history data of age and function matched patients. We have strong open-label extension data. Cardiac data, as I’ve said, in multiple venues cannot be pretended to be better or wished away. So there’s a lot of objectivity implied in the data itself. So I don’t think we’ll need an AdCom but we are preparing for an AdCom should we need one and we will be ready should that become an eventuality.

Aydin Huseynov: Got it. Very helpful. Another question I have is about HOPE-3 readout potential in the future. So just a sort of commercial question. Do you think the HOPE-3 readout a potential label change would add actual dollars to deramiocel sales given that, as you said, this 100% of DMD patients have cardiomyopathy, so everyone will be eligible. So do you think the readout would actually add dollar sales to potential future sales of deramiocel?

Linda Marbán: Well, I guess the answer to that question is any patient that we can treat would add dollars, right? So if there’s a patient that either a physician thinks would benefit because of the skeletal muscle myopathy and may have missed the cardiac opportunity, that patient would roll in and bring in dollars or in any other way that we can expand the opportunity, expand the label, it’s beneficial for any therapeutic. So yes, I do think it would be beneficial on some level. But I also think that the opportunity to be the first-in-class only treatment approved for the cardiomyopathy in situations where 100% of the kids get it and is life attenuating gives great opportunity not only for an expanded TAM but also to really encourage payers to cover the expense of that. So it’s not another skeletal muscle therapeutic. It’s really the only thing to be able to treat the cardiac disease.

Aydin Huseynov: Very helpful. And the last one for me. So can we discuss your development plans for 2025? I know you’re in a sort of different situation now. You’ve got the cash right now, $165 million or so. You’ll fill your PRV, it’s almost $150 million. Then you have a milestone payment from Nippon. So this does actually give you opportunity to develop something on your own. And I think we discussed in the past that you may have a trial in Becker muscular dystrophy. So could we talk a little bit about this, about potential trial design? How would you start? Would you design it as HOPE-2, etcetera, if you could elaborate a little bit on this?

Linda Marbán: Yes. So one of our goals has been to begin to discuss Becker with the agency. Our KOLs, especially our cardiology KOLs tell us that Becker cardiomyopathy is completely indistinguishable from Duchenne cardiomyopathy. So if you hand them an MRI, they can’t tell if it’s a Becker patient or a Duchenne patient. And furthermore, the Becker cardiomyopathy starts very young. These guys live longer and have better skeletal muscle function. So dealing with their cardiac disease is very important for them as well. We don’t want their life to be attenuated or shortened in any way based on the cardiac disease. In terms of trial design, I can’t answer that question yet. We are now working with the key opinion leaders, working with the agency, working with our own regulatory team in order to design the trial that is necessary to get this across the line.

We anticipate it could be a very small clinical trial that would just add a little bit to the database of knowledge but I don’t have clarity and probably won’t until after the first quarter.

Aydin Huseynov: Congrats on the progress.

Operator: There are no further questions at this time. I will now turn the call back to Capricor management for any closing remarks.

Linda Marbán: I just would like to say thank you very much for joining today’s call. We look forward to updating all of you on our progress as we continue through 2024. Have a nice evening and stay safe out there. Thank you.

Operator: Thank you. And that concludes our conference for today. Thank you all for participating. You may now disconnect.