Capricor Therapeutics(CAPR) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The financial statements for the period ended June 30, 2025, reflect a significant increase in net loss, no revenue, and a strong cash position of $122.8 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $23,241,199 | $11,286,996 | | Marketable securities | $99,559,482 | $140,228,881 | | Total Assets | $133,569,011 | $170,481,086 | | Total Liabilities | $28,591,955 | $25,018,750 | | Total Stockholders' Equity | $104,977,056 | $145,462,336 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $0 | $3,971,438 | $0 | $8,878,315 | | Research and development | $22,047,254 | $12,504,769 | $40,962,826 | $23,605,782 | | General and administrative | $5,671,880 | $3,057,888 | $11,739,256 | $7,129,654 | | Net Loss | ($25,910,791) | ($10,999,782) | ($50,302,385) | ($20,793,855) | | Net loss per share | ($0.57) | ($0.35) | ($1.10) | ($0.66) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (Six Months Ended June 30) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($26,555,731) | ($13,556,939) | | Net cash provided by investing activities | $38,440,000 | $5,193,130 | | Net cash provided by financing activities | $69,934 | $4,357,315 | | Net increase (decrease) in cash | $11,954,203 | ($4,006,494) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the FDA's Complete Response Letter for deramiocel, ongoing HOPE-3 trial, and the exosome platform, while reporting a $50.3 million net loss and $122.8 million in liquidity - In July 2025, the company received a Complete Response Letter (CRL) from the FDA for its deramiocel BLA, stating that the application did not meet the requirement for substantial evidence of effectiveness and required additional clinical data. A Type A meeting with the FDA is scheduled for August 2025[159][160] - The company expects to report topline results from its ongoing Phase 3 HOPE-3 clinical trial in the fourth quarter of 2025. The study protocol was amended to designate left ventricular ejection fraction (LVEF) as the primary endpoint to focus on cardiac efficacy, in alignment with FDA feedback[164] - As of June 30, 2025, the company had approximately $122.8 million in cash, cash equivalents, and marketable securities. Management estimates these funds are sufficient to support operations and capital expenditures into the fourth quarter of 2026[173][197] Financial Performance Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | $0 | $8.9 million | | R&D Expenses | $41.0 million | $23.6 million | | G&A Expenses | $11.7 million | $7.1 million | | Net Loss | ($50.3 million) | ($20.8 million) | Company Overview and Product Pipeline Capricor, a clinical-stage biotech, focuses on cell and exosome therapies, with lead candidate deramiocel receiving an FDA CRL and StealthX™ entering Phase 1 trials - The company's lead program, deramiocel, is an allogeneic cell therapy for treating cardiomyopathy in DMD patients. Its therapeutic effect is primarily mediated by secreted exosomes that are immunomodulatory, anti-inflammatory, and anti-fibrotic[155] - Following a rolling BLA submission in December 2024, the FDA granted Priority Review but later issued a CRL in July 2025, requesting additional clinical data to demonstrate substantial evidence of effectiveness[157][159] - The company's StealthX™ exosome platform is being developed for vaccines and other therapies. A Phase 1 trial for its COVID-19 vaccine, sponsored by NIAID under Project NextGen, initiated in August 2025[170][171] Results of Operations The company reported no revenue for Q2 2025, with R&D expenses increasing 76% to $22.0 million and G&A expenses rising 85% to $5.7 million due to higher operational costs - The company recognized no clinical development income in Q2 2025, as the $50.0 million in development milestone payments from the U.S. Distribution Agreement with Nippon Shinyaku had been fully recognized by the end of 2024[180] Research & Development Expenses Breakdown (Three Months Ended June 30) | Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Compensation & personnel | $7,510,545 | $3,596,825 | 109% | | DMD program (deramiocel) | $9,838,927 | $5,965,495 | 65% | | Stock-based compensation | $1,930,467 | $852,472 | 126% | | Total R&D Expenses | $22,047,254 | $12,504,769 | 76% | General & Administrative Expenses Breakdown (Three Months Ended June 30) | Category | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Compensation & personnel | $2,139,615 | $837,474 | 155% | | Stock-based compensation | $1,716,687 | $1,300,321 | 32% | | Other corporate expenses | $1,043,895 | $328,363 | 218% | | Total G&A Expenses | $5,671,880 | $3,057,888 | 85% | Liquidity and Capital Resources Capricor held $122.8 million in liquidity as of June 30, 2025, projected to fund operations into Q4 2026, despite increased cash usage in operating activities Liquidity and Capital Resources Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $23,241 | $11,287 | | Marketable securities | $99,559 | $140,229 | | Working capital | $95,729 | $142,359 | - Cash used in operating activities increased to $26.6 million for the six months ended June 30, 2025, compared to $13.6 million for the same period in 2024, primarily due to a higher net loss[201] - In February 2025, the company elected to convert its approximately $3.4 million CIRM grant award into a loan. The terms are under discussion, and accrued interest could reach up to approximately $7.1 million[220] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's market risk primarily stems from interest rate sensitivity on its $122.8 million cash and marketable securities portfolio, with minimal impact from rate changes due to short-term investments - The company's market risk is primarily from interest rate sensitivity on its $122.8 million portfolio of cash, cash equivalents, and marketable securities[248] - The investment policy focuses on high credit quality issuers and short-term maturities to mitigate default and market risk. The company does not currently hedge interest rate exposure[249] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at the reasonable assurance level[251] - No material changes to the company's internal control over financial reporting occurred during the quarter ended June 30, 2025[252] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company faces new legal challenges, including a securities class action filed July 17, 2025, and a derivative action filed August 1, 2025, both alleging federal securities law violations or fiduciary duty breaches - A putative securities class action was filed on July 17, 2025, against the company and its CEO, alleging violations of U.S. federal securities laws[255] - A derivative action was filed on August 1, 2025, against the company's Board of Directors, alleging breaches of fiduciary duties[256] Item 1A. Risk Factors A new risk factor highlights the potential for significant costs and management distraction from recently filed securities class action and derivative lawsuits, which could harm the business - A new risk factor has been identified concerning the costs and management distraction associated with defending against the recently filed securities class action and derivative claims[258] Item 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025 - No directors or executive officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[262]