Capricor Therapeutics Inc (CAPR) 2014 Q4 法說會逐字稿

Good afternoon, and welcome to the Capricor Therapeutics 2014 fourth-quarter conference call. (Operator Instructions) As a reminder, this presentation contains forward-looking statements and information that are based on the beliefs of the management of Capricor Therapeutics, Inc. as well as assumptions made by and information currently available to Capricor.

All statements other than statements of historical fact included in this presentation are forward-looking statements, including but not limited to statements identified by the words anticipates, believes, estimates, and expects, and similar expressions. Such forward-looking statements also include any expectation of or dates for commencement of clinical trials, IND filings, similar plans, or projections and other matters that do not relate strictly to historical facts. These statements reflect Capricor's current views with respect to future events based on what we believe are reasonable assumptions. However, the statements are subject to a number of risks, uncertainties, and assumptions.

There are number of important factors that could cause actual results or events to differ materially from those indicated by such forward looking statements. More information about these other risks that may impact our business are set forth in our annual report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission on March 16, 2015, and in our registration statement on Form S-1 as filed with the Securities and Exchange Commission on March 6, 2015.

Should more one of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those in the forward-looking statements. Further, Capricor's management does not intend to update these forward-looking statements and information after the date of this presentation.

It is now my pleasure to introduce your host, Dr. Linda Marban, CEO of Capricor Therapeutics, and AJ Bergmann, Vice President of Finance. AJ, you may begin.

Thank you, and good afternoon, everyone. I am AJ Bergmann, the Vice President of finance for Capricor Therapeutics. Thank you for joining today's call.

If you do not have a copy of the press release issued earlier this afternoon, it is available on the Capricor website at www.Capricor.com. The call is expected to last approximately 30 minutes. For the benefit of those who may be listening to the replay, this call was held and recorded on March 18, 2015. Since then Capricor Therapeutics may have made announcements related to the topics discussed, so please reference the Company's most recent SEC filings and press releases.

With that, I'll turn the call over to Linda.

Good afternoon, everyone. Thank you for joining us. I look forward to updating you on the progress we have made over the last quarter. Slide 2 -- as mentioned a moment ago this presentation will include forward-looking statements.

On slide 3, I'm going to review today's agenda. Over the next few slides, I'm going to review some of our upcoming milestones; then I'll provide a financial in update, clinical update including a glimpse into our new program in DMD cardiomyopathy. And finally, we will look at our 2015 plan deliverables.

On slide 4, I highlight Capricor's heart failure program. Just to review, we are clinical stage company with a very diversified pipeline focusing on cardiovascular disease, including orphan indications. Our first product is our regenerative medicine CDC, cardiosphere-derived cell product. Second in our pipeline and in the clinic now is Cenderitide in a class of drugs called natriuretic peptide, which we are developing for heart failure. And finally, in preclinical development we have microRNA delivery platform based on exosomes. Exosomes are nanoparticles which are microRNA delivery vehicles that effectuate cell function.

This next slide, five, reviews our recent milestones and accomplishments. On the financial side, earlier this month we were pleased to have received approval to uplist to the NASDAQ exchange. As most of you know, in the early part of this year be completed to pipe transactions netting approximately $17 million of new capital. These financings included investments from Cedars-Sinai Medical Center, CureDuchenne Ventures; and two highly respected institutions, Broadfin Capital on Sabby Capital as well as participation from members of our management team and Board of Directors. Additionally, the Company has filed an S-1 registration statement for these shares, and we hope that it will become effective soon. In addition, we've expanded our management team by adding an experienced Vice President of Regulatory Affairs.

With respect to our cell therapy programs, we continue to make progress. We presented positive one-year safety results on the ALLSTAR Phase I clinical trial at ACC and AHA in 2014. That data is available on our website. We were pleased that the cells were safe, and initial data showed reduction in infarct size and improvements in ejection fractions in the Phase II eligible patient population.

Another important milestone was the initiation of the DYNAMIC clinical trial for treating advanced heart failure patients. This is important for the Company in that is the first time we are treating relatively sick advanced heart failure patients.

Additionally, we've recently announced we are developing a new clinical program for Duchenne muscular dystrophy using our CDCs, based on positive clinical data showing that CDCs can improve cardiac function and exercise capacity in the cardiomyopathy associated with Duchenne muscular dystrophy.

Now, let's talk about Cenderitide, our second therapeutic to treat heart failure. We are excited about the initiation of the Cenderitide program. As you may recall, Cenderitide is a very potent natriuretic peptide dual-receptor agonist that we got access to with part of the merger with Nile. Recently, we initiated a Phase II, first in kind, combining the Cenderitide drug with the with the Insulet delivery system in patients with heart failure. This is, in essence, an early proof-of- concept study to look at the pharmacokinetics and pharmacodynamics of longer subcutaneous delivery via the Insulet patch pump.

Further, you may recall that we have acquired IP rights to the combination of natriuretic peptides and their use of subcutaneous pumps by Medtronic. This represents a potentially critical piece of intellectual property that is as yet a work in progress.

On slide 6, I'm going to review our financial highlights, our annual financial highlights. We ended 2014 with $11 million in cash on our balance sheet, but earlier this quarter, as you know and I just stated, we added another $17 million in cash. Our year-end 2014 numbers include revenue of $4.8 million, which is a combination of grant revenue and the ratable recognition of the Janssen option fee, which you may recall was $12.5 million.

Our R&D expenses were approximately $7.8 million, mostly related to the expansion of our clinical activities. Our G&A expenses were approximately $3 million, and our total operating expenses were approximately $10.8 million, yielding a net loss per share of $0.53. Please be advised that these numbers do not include the expected funding from the CIRM loan program slated to fund the ALLSTAR trial, which should include approximately another $10 million.

Okay, now I'm going to provide a clinical program update. Moving to slide 8, I'd like to review the status of our CDC program. As you know the ALLSTAR trial, which is designed to determine if our CDCs can reduce the size of the scar caused by myocardial infarction in patients 30 days to one year following moderate to large heart attack, is currently enrolling in the Phase II randomized portion. We continue to expect data release from that trial at the end of 2016 for the beginning of 2017.

The DYNAMIC clinical trial, as I mentioned before, is enrolling relatively sick patients including Class III or ambulatory Class IV patients who have had heart failure from a variety of problems. We have almost completed the enrollment of the first 14 patients in the study. Just to reiterate, the purpose of this trial is to demonstrate the safety and feasibility of triple vessel direct coronary infusion of CDC and as a dose escalation trial with up to 25 million cells infused into each coronary artery. We believe that triple vessel delivery will be beneficial to deliver cells globally for all areas of the myocardium, which is diffusely damaged and later stages of heart failure in patients with the generalized left ventricular dysfunction. We anticipate reporting top-line results late in 2015.

Finally, we want to update you on our Duchenne muscular dystrophy cardiomyopathy program. We are extremely excited about this program directed at boys and young men but this fatal orphan disease. To remind you, cardiomyopathy is ubiquitous finding in these boys with DMD, especially as they enter their teens and early adulthood, as marked by progressive cardiac fibrosis and frank heart failure. At present, there are no good therapeutic options for these patients, and it is now considered to be the number one cause of death in these young men.

Earlier this month, we had a pre-IND meeting with the FDA, and we are targeting to submit our IND for this indication in the first half of this year.

Slide number 9 reviews the rationale for use of CDCs in Duchenne cardiomyopathy. To remind you, there's a well-established literature from multiple sources that demonstrate CDCs to be anti-oxidative, anti-inflammatory, anti-apoptotic, which means programmed cell death, anti-remodeling, and pro-regenerative. The pathophysiology of DMD cardiomyopathy is known to be related to excess oxidative and nitrosative stress, increased inflammation, progressive apoptosis, and adverse cardiac remodeling. The thesis is that CDC administration will be beneficial in retarding or reversing the cardiac dysfunction caused by DMD. And this is been tested and validated in the standard mdx mouse model, which is considered to be a good model to study DMD prior to human clinical trial.

Slide 10 demonstrates some of the important global cardiac function improvement seen after treating the mdx mouse with the CDCs. Moving from left to right, let's look at the indices of the cardiac function, first with respect to ejection fraction. In blue we have controlled healthy mice. In yellow we have the mdx mice, treated only with the vehicle that is the basic delivery solution. In red we have the MDX mice treated with a single infusion of our CDCs. We see that there's dramatic improvement in the ejection fraction which persists but drops off toward month three. Remember that in mice everything is dramatically accelerated, and the lifespan of these mice is actually only approximately two years.

The middle panel shows the effect on diastolic volume and the panel on the right shows the effect on systolic volume, demonstrating that in the mdx mice treated with CDCs the volume reversed after three months, somewhere between the normal mice and the sick mice that received no treatment other than vehicle.

Slide 11 -- this slide shows some very interesting data. An increased maximal exercise capacity in the CDC-treated mice. The mice represented in the blue line, again, are normal mice; they are able to exercise on the treadmill and run approximately 700 meters week after week. Whereas the sick mice that received no therapy other than the vehicle have limited functional capacity and are able to exercise just over 200 meters on average. The treated mice, in fact, are able to exercise between 400 meters and 500 meters, more than doubling the exercise capacity, and this effect persists for weeks on end. This is quite a remarkable finding. And whether it is strictly related to an increase in cardiac function and capacity or, if in addition to this, there's some systemic effect, we do not yet know.

Slide 12 -- in summary, our data on the use of CDCs in MDX cardiomyopathy in mice shows improved global function; decreased fibrosis, that is, the amount of scar on the heart; and improved exercise capacity. There is data that we do not show here that suggests that we can reverse some of the negative oxidation effects that are going on in these hearts, as well as reversal of abnormalities in mitochondrial abundance, structure, and function. Remember that the mitochondria are the power generators of the sale of the cell and therefore responsible for making the energy that the cell consumes and drive the heart and the muscles to work.

Finally, the data has shown increases in cardiomyocyte proliferation and activation, as well as recruitment of endogenous repair mechanisms. There is a fairly large body of detailed scientific information that I don't have time to present on this call, but I encourage you to go to our website where this data is fully available for your review.

On slide 13, I want to talk a little bit about our recently initiated enrollment in our Cenderitide trial for outpatients in ambulatory heart failure. Just to reiterate, what we're doing is taking her natriuretic peptide, which is, again, a dual-receptor agonists -- the only one available in the clinic -- and we are combining it with the Insulet patch pump was used in ambulatory patients. Our target indication are patients who have recently been hospitalized with either recent or acute heart failure, including potentially the very problematic group of heart failure with preserved ventricular function, as well as other potential indicators.

The goal of this clinical program will be to keep people out of the hospital. I want to highlight that we are particularly bullish on treating the subgroup of patients who have heart failure with preserved left ventricular function, otherwise known as HF-PSF for which there are no established therapeutic guidelines. These patients represent approximately one-half of all hospital admissions for heart failure; therefore, they represent a huge unmet clinical need opportunity.

Our current Phase II trial is enrolling up to 14 patients with chronic heart failure using a dose escalation paradigm in each individual patient via the Insulet Corporation patch pump. The study is primarily designed as a pharmacodynamic and pharmacokinetic study, and we expect the results of this study to lead to the design and execution of a subsequent Phase II study using Cenderitide. We anticipate providing top-line results during the second half of 2015.

Just to provide you with a little primer on the role of natriuretic peptides, natriuretic peptides are extremely potent molecules. They act both on the kidneys, the blood vessels, and the heart. They have previously been used only in decompensated heart failure, that is, upon or shortly after the admission to the hospital, where they have the proven to be relatively effective and safe.

For this indication, there are a number of therapeutic options. What we are doing just we are moving this very potent class of molecules into the outpatient chronic therapeutic setting. Just to remind you, recent data from the Novartis LCZ696 drug showed a dramatic reduction in hospitalization and even mortality in patients who had mostly Class I and class II heart failure. The Novartis drug worked in part by inhibiting the enzyme that raises the local endogenous level of natriuretic peptide at the cell. Therefore, we are hopeful that providing the actual agonist with the patch pump and thus having the ability to very precisely control the dosage and administration, as to optimize the effect on patients, that we may have a very new, powerful therapeutic approach to chronic heart failure and a variety of causes.

On slide 14, we talk about our pipeline program using exosomes as a therapeutic. We are excited about exosomes, the endogenous microRNA delivery system. But they remain somewhat off in the future. These are the particles that are released by cells that are responsible in part for cell-cell communication, and are in fact in some measure -- potentially large measure in fact -- responsible for the potency of our CDC cells. Our goal is to eventually develop a biologic but non-cell-based therapeutics that can have many salutatory effects. This work remains in progress, and we will have more color for you in the next several quarters.

On slide 15, we present some of our upcoming expected milestones. In the first half of the year, we intend to submit IND for DMD-associated cardiomyopathy. We will anticipate completing the first phase of the DYNAMIC trial, and we will complete enrollment in the 14 patients Phase II Cenderitide trial.

In second half of this year, we would expect to have initial results from the DYNAMIC trial. Again, to reiterate, this is primarily a proof-of-concept and safety trial in a small number of patients to hopefully allow us to move to the next level. We will report the initial results from the Cenderitide cohort that is currently enrolling and, if all is well, we will initiate therapy on the Duchenne cardiomyopathy trial with the CDCs that we are calling HOPE-DUCHENNE.

So to summarize, we have four clinical programs and three products in our pipeline, are now a NASDAQ uplisted company. We are looking forward to a productive 2015.

And with that, I finish up my summary and will open up the lines to Q&A. Thank you for your time today.

(Operator Instructions)

Ted Tenthoff, Piper Jaffray.

Great. Thank you very much for the thorough update, Linda. It's really exciting the progress and also the expansion of the opportunities with the CDCs. I guess, looking at delivery, you started to talk about exosomes. Can you tell us a little bit more about sort of how these cells are -- what is happening when the cells localize in the heart and what's happening as they get there? How broadly are they able to get either through the heart fissures or really just the sites of injury? How do you think about delivery there?

So the exosomes are really exciting to us because they are our first therapeutic that we really truly consider a platform therapeutic. We are by no means limiting the indications that we will go after to the heart itself. And so, one of the things we're working on in the lab is understanding delivery of exosomes, not only to the heart but to other places as well. And we will provide more color on that probably over the next year or so.

And then in terms of the cells actually through the myocardium, how do they distribute when they are there?

So, of course, we don't really know in humans, but we've published extensively in animals. And what happens is a process called extravasation. And that's why we're sticking very closely to into the intracoronary delivery method. There's a little bit of magic that happens when the cells probably lodge in the microvessels somewhere, and then they're taken up into the tissue in a natural way, the way that any other molecule would get into the myocardium. And we feel that this is the powerful way that the cells can work even in small numbers.

Okay, cool. Thank you very much.

Reni Benjamin, H.C. Wainwright.

Good afternoon, and thanks for taking the questions. And congratulations on all the progress. Just a couple questions, I guess one, an enrollment update on, I guess, both DYNAMIC and ALLSTAR. I think you mentioned, Linda, that ALLSTAR is expected to complete enrollment by the second half of 2016, maybe early 2017. Can you give us any additional color on the enrollment of both trials?

Yes, so we tend to stay away a little bit from enrollment numbers. We just get caught in that. And there's slow periods and fast periods in all of these trials. We expecting data out in late 2016, early 2017 for ALLSTAR, and that's the top-line data that will be passing on to Janssen. And then, in terms of DYNAMIC, I think we've said that were going to complete enrollment in the first half of 2015, and we are definitely on track to do that.

Okay, and in terms of the data presentation this year, should we be targeting something like AHA, or do you have a sense as to how either preclinical and clinical data might come out this year, and at what conference?

Yes, so we always target the major meetings. We like to have a presence at them, both with the preclinical and clinical data. And we are strategizing now how and when to release the data and where to go with that. And so, we will let you know at the time where we're presenting and what we're presenting.

Okay. Just switching gears real quick to DMD, can you give us any color on if it was a pre-phase I or pre-IND meeting that you had with FDA? And have there been any changes to the HOPE trial design? And can you just review with us the HOPE trial design?

Well, I don't -- we're not talking about the trial design just yet. We're very excited about it. We had a good meeting with the FDA, and what I can tell you is a strategy that we went in with is pretty much the strategy we walked out with. And we will be announcing that trial soon. We don't want to compromise our information that was given to us by the FDA which was given in confidence. And so we are -- suffice it to say we have enough data to prepare an IND, which were actively doing at this time.

Fair enough, fair enough. Just one final question, kind of piggybacking off of Ted's, regarding the exosomes as a platform technology. Can you -- I know it's very early, and hopefully we'll see some data, some preclinical data later this year. But could you expand about how it might be used as a platform, more than something just specific to, let's say, cardiovascular indications?

Yes, so basically what we're looking at are indications where some of the presentations would be inflammation; fibrosis, in other words, scar; apoptosis, which is programmed cell death. So the types of injuries that you see for sure in a heart, in a damaged heart. And you can think about many of those types of diseases and disorders. Were also targeting orphan indications. We feel like that there's a real opportunity here for us to take what we know. And we have the cells that are making these exosomes, both of which are powerful therapeutics and will likely be able to be used in different types of injuries, in different types of healing processes.

Is there a potential to generate, I don't know, call them designer exosomes where maybe you're working in collaboration with other biotechnology companies in order to -- in gene therapy or some other type of technology to make this more custom-designed? Or is that not really in the cards?

You know, one of the strengths of Capricor is our really strong connection to the academic labs of Eduardo at Cedars-Sinai. And so, a lot of these questions are under investigation in the lab right now, and certainly something that everybody's looking at is designer exosomes and whether we can pack them full of things that we want to deliver and how to get them there. So it's something we are actively working on, and will be able to provide more information about that as we learn more about them ourselves. So very exciting to us.

Perfect. Thanks very much, and good luck in 2015.

Thank you. And we have no further questions in queue at this time. I would like to turn the floor back over to Dr. Marban for closing remarks.

Thank you very much for attending our call this afternoon. I look forward to updating you on our progress in the next quarter, and we look forward to continuing to deliver on our milestones. Thank you.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.