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Capricor's New Shot on Goal

00:57 EDT 11 Aug 2017 | Biotech Watcher

On Thursday, August 10, 2017, Capricor Therapeutics (CAPR) reportedits Q2-2017 results and held a conference callwith associated slides. For a detailed look, you can also download its quarterly report filed with the SEC. Lastly, your BioWatch team recently met with members of the Capricor executive team.

The New Story

As we mentioned before, Capricor had more than one shot on goal. The ALLSTAR trial and its Duchenne muscular dystrophy (DMD) program.

The ALLSTAR trial fell short, and then Janssen declined its option to license. This shaved about 70% of the market cap from CAPR and it closed at $1.07. 

In late April 2017, CAPR  reportedpositive results from its Phase IIa trial with Duchenne muscular dystrophy. Capricor then acquired the FDA blessings for progressing with a potential registration quality trial design for treating Duchenne muscular dystrophy (DMD) patients.

Capricor is still in play..

Background Readings

If you haven’t been closely following the Capricor story, you may wish to skim these articles:

The DMD Market (September 8, 2016)

Financial Summary

Basic Facts for Quarter & Year Ending June 30, 2017
(In Thousands unless otherwise noted)

Q2-2017
Q1-2017
Q2-2016
  Collaboration Income
$      684
$      684
$         911
  Grants
313
197
218
Total Income
881
881
1,130
  R&D Expense
3,128
3,257
4,308
  G&A Expenses
1,247
1,189
1,435
Total Operating Expenses
4,375
4,446
5,742
Operating Income (Loss)
(3,379)
(3,565)
(4,612)
Net Income (Loss)
(3,472)
(3,667)
(4,689)
Comprehensive Income (Loss)
Inc. gains/losses on securities
(3,475)
(3,660)
(4,687)
Basic & diluted loss per share
(0.16)
(0.17)
(0.21)
Avg. Shares Outstanding
22,135
21,399
17,952
Recent Price (per share)
     $     1.07
(8/10/17)
     $     1.19
(5/15/17)
     $     3.66
(8/19/16)
Market Capitalization
24M
25M
66M
Cash & Equivalents
$    12,259
$    2,750
$   8,851
Marketable Securities
Update with 10-Q
8,993
2,500


























About the Failed ALLSTAR Results Revisited

If you need to refresh your memory, we previously summarized the disappointing ALLSTAR results. There were, however, solid evidence of biological activity. We wrote off-line to some of our readers: This was Capricor’s first attempt at managing several trial sites - the “best wrong” is to discover remediable problems related to scaling up the trial.

Scaling Up MRI Usage Across Sites

The MRI collection and analysis is key. It measured cardiac scar reduction. The company hoped it would be adequately standardized across sites, but in the end, the imaging data was “noisy”. It displayed unprecedented (impossible?) data in the placebo group, for example:

The placebo patients showed apparent robust improvement in scar tissue. This just doesn’t happen and is considered a biological contradiction.

This methodological failure has implications for creating the right “doable” primary endpoint for the upcoming registration trial for the DMD indication.

Duchenne Muscular Dystrophy Program

For important background reading, you can view our detailed summary of the FDA meeting. The key thought: :the FDA has enthusiastically “blessed” the functional metrics for primary and secondary endpoints.

This removed a big question mark. Capricor is now exempt from imaging and other noisy metrics as primary endpoints.

Capricor now has a doable registration pathway.

     The FDA has given its preliminary blessing on the RESTORE-DMD design
     With good results, Capricor may file for FDA approval
     The RESTORE-DMD trial will use functional primary endpoint(s)
     The RESTORE-DMD trial will use a redosing strategy

Don’t get us wrong, the negative ALLSTAR results still make us nervous. Does this presage more failure? Are the treatments robust enough?

Furthermore, while we think the systemic infusion with repeat dosing is now a must, it’s also new. As we mentioned before, Capricor operates on the cutting edge. It’s risky. Period.

RESTORE-DMD Trial

RESTORE-DMD will be a randomized, double-blind, placebo-controlled Phase IIb trial. If the results are “aces”, then the FDA should green light a regulatory submission.  

Instead of a coronary infusion, patients will receive a systemic infusion with repeated dosing. The redosing interval is 3-months, and we expect the dosage to be larger than used before. As a counterpoint, CEO Linda Marban stated that there is less risk with systemic infusions versus cardiac infusions.

Capricor’s current plan is to submit an IND at the end of Q3-2017. We also expect a trial launch before the end of 2017.

Special Incentives

The FDA has granted an orphan designation as well as a Rare Pediatric Disease designation. By the end of the year, we expect Capricor to receive feedback on an application for the FDA’s Regenerative Medicine Advanced Therapy (RMAT) Designation. This enables Capricor to accrue all sorts of financial and regulatory incentives.

Exosomes

For background reading, you may wish to skim our summary on CAP-2003, Capricor’s exosome-based treatment. Exosomes are the underlying mechanism of action for Capricor’s cellular treatment – CAP-1002. Exosomes should have all the treatment benefits minus some of the potential downsides of regenerative cells. It should also yield a superior cost of goods.

Capricor’s ongoing work continues to create increasingly potent versions of CAP-2003. Their affiliated scientists continue to isolate and extract a more powerful “regenerative soup of exosomes”.

Successful exosome work would ignite a Big Pharma partnership. Capricor has the intellectual property around certain cardiac derived exosomes.  It has broad implications for treatment across indications and therapeutic method. For example, we think it is (likely) superior to CAP-1002 for repeated dosing strategies.

We are therefore unsurprised that CEO Marban will continue to advance CAP-2003 into treating Hypoplastic Left Heart Syndrome (HLHS). Our guesstimate is for a Phase 1 trial launch to arrive in 2018.

This indication is currently covered by an NIH grant. HLHS occurs in about 1,000 patients in the United States. It is a serious, pediatric orphan disease. Japanese investigators reportedsuccess using cardiosphere-derived cells (CDCs) in HLHS patients and Capricor wants to use CDC-derived exosomes.

You read this right. The Japanese investigators have essentially delivered a proof of concept.

Unconventional Funds

Capricor has an amazing track record of finding nondilutive sources of income. CEO Marban hopes to draw upon similar sources of funding. This may include government and private foundation sources. If even 25% of the RESTORE-DMD trial expenses are covered, we’ll call it a win.

We still expect Capricor to have a public offering or private placement in 2018, even if it can totally cover the pivotal trial expenses through nondilutive grants.

Milestones

CAP-1002 – Heart Disease & Duchenne Muscular Dystrophy
Cardiac tissue is extracted from cadavers and then explants are extracted and cultured in the lab. The aggregated cells are cardiospheres. These cardiospheres are efficiently multiplied and implanted into the patients. These implanted cells are called “cardiosphere-derived cells” or CDCs. 

Janssen has an option for an exclusive license agreement with Capricor up to 60 days after six-month ALLSTAR Phase II results.
134-patient trial with a randomized, double-blind, placebo-controlled design. CAP-1002 is an allogeneic approach to providing regenerative cells. The primary endpoints include: safety metrics and efficacy (relative scar reduction at 6-months and 12-months post-infusion).

Capricor announcedthe one-year results of the Phase I portion of the trial in November 2014. The ejection fraction improved by 5.2% and the scar reduction was 20.7%.  Capricor will deliver 6-month results for its ALLSTAR trial during Q1-2017.

In May 2017, Capricor announcedthe 6-month results of the Phase II portion of the trial. No advantages were reported for scar reduction and ejection fraction.

Janssen declined the option to partner. This was no surprise.

Capricor is currently seeking other partners to advance the adult heart failure indication, especially in Asia.
  Top-line Phase II / 12-Month Results
Q4-2017
  Asian Partnership Discussions
Ongoing
  Formulate Redosing Strategy for Adult Heart Failure Program
Ongoing
For this indication, CAP-1002 received Orphan Drug status from the FDA. Intended to complement other DMD treatments in development. 13 boys randomized to CAP-1002 infusion and 12 boys randomized to ‘usual care’.  It involved a single dose of CAP-1002 and promising trends were viewed.  We expect the CAP-1002 patients to regress to baseline at the 12-month evaluation.
  Top-Line 12-month Results
Q4-2017
Duchenne Muscular Dystrophy – Repeat Dosing & Chronic Administration - Skeletal Muscles
Capricor is expanding from the heart to skeletal muscle recovery in DMD patients. This will require systemic infusion, and thus a greater dose. The recent interim study results finds that a single dose to the heart results provides measurable advantages at 3 months, and that it largely dissipates at 6 months.  The company will thus propose redosing intervals at 3 months.

The animal models did not display a meaningful immune response to the allogeneic cells. It will be interesting to see whether “booster shots” will prolong or increase the regenerative benefits.  

The next trial, RESTORE-DMD will be a randomized, double-blind, placebo-controlled trial intended to support FDA registration. The redosing interval will be 3-months. Furthermore, Capricor is submitting for an RMAT designation from the FDA.

Success with DMD suggests CAP-1002’s applicability to related indications, e.g. other muscular dystrophies, cystic fibrosis, and limb-girdle disorders.
  Submit IND for Phase IIb – RESTORE-DMD Trial
Sept. 2017
  Launch Phase IIb – RESTORE-DMD Trial in DMD Patients
Q4-2017
  Interim Results
Mid-2018
  Submit BLA to the FDA
Q4-2019
CAP-2003 (Exosomes) – Organ Diseases
Exosomes serve as a primitive, robust way for intercellular communication.  It is a lipid bilayer that is secreted by cells and in Capricor’s case, it contains some microRNA growth factors that transmit regenerative instructions to cells.  The goal is to recreate the rejuvenation and tissue repair of present stem-cell therapies without its associated hazards, potential immunogenicity, and regulatory hurdles.

Capricor scientists have established that the exosomes are the regenerative source within CAP-2003. Exosomes elicit a weaker immune response than CAP-2003 and have a lower cost of goods coupled with a greater ease of manufacturing. If CAP-2003 had been more advanced into clinical studies, then it would have been a strong candidate for retreatment dosing in the upcoming Phase IIb trial for treating DMD.

Further preclinical work has enabled Capricor to isolate and extract a more powerful “regenerative soup of exosomes”.
Inflammatory Disease TBA
   IND Submission
2018?
  Launch Phase 1 Trial
TBA
Hypoplastic Left Heart Syndrome
This indication is covered by an NIH grant of up to $4.2M. HLHS occurs in about 1,000 patients in the United States. It is a serious, pediatric orphan disease. In Phase I and II trials, Japanese investigators reportedsuccessusingcardiosphere-derived cells (CDCs) in HLHS patients. This acts as a good proof of concept as Capricor advances treatment with CDC-derived exosomes.
  IND Submission
2018
  Launch Phase 1 Trial*
2018






















































































     *Guesstimate

Our Thoughts

On September 8, 2016, we stated:
Capricor’s program for Duchenne cardiomyopathy provides a second shot on goal. It’s a wild card, even within the speculative arena of regenerative medicine…but it’s a good wild card.

When we made our original revenue estimates, we were extrapolating on the single coronary infusion (CAP-1002). We thought that the exosomes would bring Capricor to the promised land of repeat dosing. Furthermore, we lacked the animal model data for repeat dosing, we could only make conservative guesstimates for the redosing period.

Today, Capricor is using a systemic administration of its cell therapy treatment (CAP-1002) on a 3-month redosing period. Its revised DMD treatment has much larger market implications. 

On the downside, no one has used a retreatment model for CDCs in humans. While it may show some success, there’s a million unknown reasons for the FDA to require another trial before any approval.

To reach the promised land, the RESTORE-DMD trial results must reveal a clean safety and tolerability profile and reasonable efficacy. This would crush Sarpeta’s DMD drug results - and the FDA should grant a conditional approval.

Major Partnership

If Capricor produces positive results in the RESTORE-DMD trial and the exosomes Phase 1 trial, we fully expect potential suitors to knock on Capricor’s door. The DMD indication is large and the repeat dosing model is attractive. Furthermore, potential collaborators will demand that their license also covers exosomes.  Exosomes are built to eclipse CAP-1002 especially under systemic infusion and repeat dosing models.  

Final Comment

Capricor has reloaded for its “other shot on goal” and Wall Street isn’t paying attention …at least for now.

(At the time this was written, one or more BioWatch staff owned a long position in CAPR)
This blog post is fromThe Biotech Watcher
And about us, see http://alanhobbes.blogspot.com/2014/12/welcome-to-my-personal-thoughts-about.html

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