Capricor Therapeutics (NASDAQ:CAPR) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below.

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Summary

Capricor Therapeutics' BLA for deramcicel is under FDA review with a PDUFA target action date of August 22, 2026, but the FDA Advisory Committee voted against the effectiveness of deramcicel for cardiomyopathy in DMD patients.

The company plans to submit an amendment to the BLA focusing on upper limb skeletal muscle indication, with the FDA agreeing to review this amendment and potentially extend the PDUFA date.

Financial results show no revenue with a net loss of $40.7 million for Q2 2026, an increase from $25.9 million in Q2 2025, primarily due to investments in clinical, regulatory, and manufacturing activities.

Capricor Therapeutics' pipeline work not related to deramcicel is on hold, pending regulatory clarity, and the company is focusing on commercial readiness with an operational manufacturing facility.

The dispute with NS Pharma will proceed to arbitration, and the company continues discussions with the FDA on regulatory pathways for deramcicel, with future plans for expansion into Europe and Japan.

Full Transcript

OPERATOR

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics second quarter 2026 conference call. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 13, 2026, and I would now like to turn the conference over to CFO A.J. Bergman for the forward-looking statement. Thank you. Please go ahead.

A.J. Bergman, CFO

Thank you very much. Before we begin, I'd like to remind you that any statements made during today's call that are not historical are considered to be forward-looking statements. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section of our company's most recent annual report on Form 10-K and our most recent quarterly reports on Form 10-Q as well as other reports filed with the SEC.

Any forward-looking statements may represent our views as of today, August 13, 2026, only. Replay of the call will be available on our website following its completion. With that I will turn the call over to Linda Marban, CEO.

Linda Marban, CEO

Good afternoon, everyone, and thank you for joining Capricor Therapeutics' second quarter 2026 earnings call. Our BLA for deramcicel remains under review with the FDA with a current PDUFA target action date of August 22nd. Because that review is ongoing, there is a limit to what I can say about our interactions with the agency, but I wanted to provide an update across three main topics: our regulatory status and pathway for deramcicel, our commercial and manufacturing readiness, and our dispute with NS Pharma.

I will then briefly address our pipeline programs before turning it back to A.J. On July 29, 2026, the FDA convened the Cellular, Tissue and Gene Therapies Advisory Committee to review our BLA. The committee was presented with a single voting question: does the available evidence provide substantial evidence of effectiveness of deramcicel for the treatment of cardiomyopathy in patients with DMD? The vote was three in favor, nine against, with no abstentions.

That is not the outcome we had planned for and we are of course disappointed, but we remain committed to working with the FDA on the next steps for this program. Our priority is and always has been to get deramcicel to those who need it most. I would like to provide some color and our perspective about why we continue to believe in the potential of deramcicel in DMD patients. First, the indication we originally requested in the BLA going back to 2024 was the treatment of cardiomyopathy in DMD.

Therefore, the focus of the FDA and the advisory committee was on whether deramcicel should be approved to treat cardiomyopathy. However, the measurement of deramcicel's effect on cardiomyopathy was a key secondary endpoint rather than the primary endpoint of the HOPE-3 study, and it measured change in ejection fraction across the full DMD population rather than in patients with established cardiomyopathy, the population the proposed indication addresses.

By contrast, HOPE-3 was actually designed with a skeletal functional primary endpoint and with power to assess efficacy in upper limb function. Importantly, the advisory committee was not asked to vote on whether they believe the data on the HOPE-3 primary efficacy endpoint could support approval of the product, nor whether the overall benefit-risk profile of deramcicel was favorable. We continue to believe that the data on the primary as well as multiple other endpoints support a finding of effectiveness on these measures.

It is worth noting that in a separate discussion on upper limb function during the AdCom, the committee's feedback was directionally supportive of the clinical evidence for the primary endpoint in upper limb function. The discussion was substantive and the full record is public for anyone who wants to review it. Now, this brings me to an update that I am very pleased to share. We are continuing to work closely with FDA on a potential path forward for deramcicel focused on an upper limb skeletal muscle indication reflected in the primary efficacy endpoint of HOPE-3.

To that end, following discussions with the agency subsequent to our advisory committee meeting, we plan to submit an amendment to our BLA that includes the 24-month open-label extension data from the HOPE-3 study along with additional analyses on the existing data package. In order to support a refined indication focused on the primary endpoint, FDA has indicated it is willing to review this amendment and, upon receipt, to extend the PDUFA action date.

Accordingly, we are finalizing the timing of that submission and will provide an update as appropriate. We appreciate the FDA's engagement throughout this process and its shared commitment to addressing the major unmet need in Duchenne muscular dystrophy. Now, there were two other developments in the review this quarter. In July, we were proud to report that the results of the HOPE-3 clinical trial were published in The Lancet following extensive and independent peer review, the first publication of the full Phase 3 data set—an important milestone for this program and for the field.

The publication highlights the efficacy of deramcicel and the supplement highlights the mechanism of action as well as the individual patient-level data. There is a lot of information available publicly and we are confident that this highly regarded publication will help support continued progress for our deramcicel program. In connection with that peer review and as part of our dialogue with the FDA and The Lancet, we identified an issue with the statistical model in the clinical study report and reverted back to the statistical analysis plan version 3.0 put in place prior to unblinding.

That model—the one underlying our top-line release—included an interaction term combining two independent variables, age and baseline, which were part of the pre-specified plan. The only endpoint directly impacted was left ventricular ejection fraction in all patients, the key secondary endpoint of the HOPE-3 study. At top line we reported a 2.4 percentage point treatment difference with a P value of 0.04. As published in The Lancet, under the pre-specified model, the measure of left ventricular ejection fraction in all patients was a 1.8 percentage point treatment difference with a P value of 0.09.

We took the most conservative approach available to us in the publication and in follow-up interactions with FDA. Nothing else changed in the data or its analysis. Let me remind you, in the pre-specified cardiomyopathy subgroup the result was unchanged at P = 0.02 with a 2.8 percentage point treatment difference. The endpoints below left ventricular ejection fraction in the testing hierarchy are characterized now as nominally significant with treatment effects unchanged.

Now let me be clear that the HOPE-3 primary endpoint was unaffected and remains significant both statistically and clinically. Deramcicel demonstrated a statistically significant slowing of upper limb disease progression as measured by PUL 2.0, with a mean difference of 4.55% in favor of deramcicel with a P value of 0.029, which corresponds to a 1.2-point absolute change in total PUL 2.0. We believe the efficacy and safety data supporting the potential for deramcicel is strong.

We have administered approximately 1,300 intravenous infusions across our clinical program to over 200 patients with DMD in three separate clinical trials. More than 80 patients are in our collective open-label extension studies, with some receiving continuous infusions for more than five years, and the long-term safety profile is consistent and well characterized. The open public hearing part of the advisory committee included testimony from patients, families, and clinicians living with Duchenne muscular dystrophy.

We were grateful that their experience is part of the record and we look forward to continuing with the FDA on a path forward for deramcicel. Also in July, as part of the review process, the FDA conducted a BioResearch Monitoring inspection, or BIMO, and issued a Form 483 citing one observation. We have submitted our responses and are currently awaiting feedback. Second, let me talk a little bit about our commercial readiness and manufacturing. We are continuing our commercial readiness activities but at a slower pace until we have further regulatory clarity, and although the scope and timing of some of them may change depending on the outcome of the review, we are controlling our cash against this. Our in-house GMP manufacturing facility in San Diego is operational and positioned to support an initial commercial launch if approved. The expansion to the second floor of that same facility continues and our goal remains full validation and FDA approval of the expanded space, estimated to be in 2027. The space is ideal for early commercialization and allows for the most flexibility as we continue to scale our CMC capacity to account for potential demand.

On the commercial side, Michael Moore joined us as our Chief Commercial Officer, bringing direct DMD and rare disease commercial experience, and he has judiciously been building out the launch organization alongside our market access leadership. Now let me talk for a minute about our dispute with NS Pharma. The state court was scheduled to hear our motion for preliminary injunction on August 10, ahead of the FDA's expected PDUFA date. However, we determined that resolving this contractual dispute in arbitration following the agency's decision would give the parties a more complete regulatory record to work from.

Therefore, we withdrew the motion without prejudice. In terms of timeline, we estimate the arbitration process to begin this fall to address the contract dispute while continuing to pursue commercial readiness activities for deramcicel. Now let me be clear that our position on the underlying dispute has not changed. We continue to believe that the pricing structure in the U.S. agreement is fundamentally flawed in a way that would impede patient access, and we continue to seek rescission.

What changed is the current process by which we are pursuing a remedy. Our view of the merits of the case has not changed. Now, very quickly turning to our pipeline, I would like to state that all pipeline work that is not directly related to deramcicel is on hold right now until we have further regulatory clarity. Having said that, in terms of life-cycle management of deramcicel, we have initiated regulatory engagement in Europe and Japan. Our expansion plans, including those for younger DMD patients and for Becker muscular dystrophy, remain priorities and the timing of those clinical trial initiations will be stage-gated by the timeline of our regulatory pathway for deramcicel in the USA to treat those with Duchenne muscular dystrophy later stage. With that I will now turn the call over to A.J. to review the financial results.

A.J. Bergman, CFO

Thank you, Linda. As of June 30, 2026, Capricor Therapeutics had cash, cash equivalents and marketable securities totaling approximately $237.9 million, and there was no revenue recognized for the second quarter of 2026 or 2025. Total operating expenses for the second quarter of 2026 were approximately $42.9 million, compared to approximately $27.7 million for the second quarter of 2025. The increase was primarily driven by continued investment in clinical, regulatory and manufacturing activities as well as commercial infrastructure supporting our Duchenne program.

Net loss for Q2 2026 was approximately $40.7 million, or $0.70 per share, compared to a net loss of approximately $25.9 million, or $0.57 per share, for the second quarter of 2025. And for the six months ended June 30, 2026, our net loss was approximately $74.7 million, compared to approximately $50.3 million for the same period in 2025. As of June 30, 2026, we had an accumulated deficit of approximately $379.6 million. Our expense profile this quarter reflects investment across our three main areas: regulatory and clinical activities in support of our DMD program, manufacturing capacity expansion efforts, and commercial readiness activities.

As Linda noted, we are pacing certain commercial expenditures as the regulatory timeline develops and becomes more clear, and we continue to have flexibility in how we deploy capital across the remainder of the year. With that, I will turn the call back over to Linda for a closing.

Linda Marban, CEO

Thank you, A.J. As all of you know, the last year has been one of highs and lows for Capricor Therapeutics. We were stunned by the CRL and pleased by the HOPE-3 data. We were encouraged by the acceptance of the HOPE-3 data for resubmission in response to the CRL and disappointed by the advisory committee's recommendation, although we understood it based on the narrow voting question and the disparity between the indication we had previously asked for and the data from HOPE-3, which was powered to assess skeletal muscle as its primary goal.

We have previously stated this. We were reassured by the strength of our data, by its publication in The Lancet, and we were amazed by the outpouring of support for deramcicel by the DMD community. We hear their voices as well and will continue to work tirelessly to try and get deramcicel to every eligible patient based on their physician's recommendation. We are grateful to FDA for their flexibility and for their collaborative approach. We will be submitting updated data to the FDA as soon as possible and look forward to their review.

Lastly, due to the sensitivity of our ongoing discussions with the Food and Drug Administration, we are not holding a Q&A today, and we look forward to providing updates to you as they become available. Thank you for your time. We look forward to positive updates in the future. I guess you may now disconnect.

OPERATOR

Thank you. And this concludes today's call. Thank you all for participating. You may now disconnect.

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