Capricor Therapeutics(US:CAPR)2022-05-11 21:04PART I. FINANCIAL INFORMATION Financial Statements This section presents Capricor Therapeutics' unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows, with notes detailing a significant $30.0 million upfront payment Condensed Consolidated Financial Statements The financial statements reflect a substantial increase in cash to $58.3 million and liabilities to $40.3 million due to a $30.0 million upfront payment, alongside a wider net loss of $7.8 million for the quarter Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $58.3 million | $34.9 million | | Total Assets | $64.9 million | $41.3 million | | Deferred Revenue (Current & Long-term) | $30.0 million | $0 | | Total Liabilities | $40.3 million | $10.0 million | | Total Stockholders' Equity | $24.6 million | $31.4 million | Condensed Consolidated Statements of Operations (Unaudited) | Account | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Total Revenue | $0 | $40.8 thousand | | Research and development | $5.1 million | $3.3 million | | General and administrative | $2.7 million | $1.9 million | | Net Loss | ($7.8 million) | ($5.2 million) | | Net loss per share, basic and diluted | ($0.32) | ($0.23) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Account | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $24.0 million | ($3.3 million) | | Net cash used in investing activities | ($625.4 thousand) | ($36.9 thousand) | | Net cash provided by financing activities | $27.5 thousand | $12.6 million | Notes to Condensed Consolidated Financial Statements The notes clarify the company's business, accounting policies, equity, and significant agreements, including the Nippon Shinyaku partnership and government grant liabilities - The company is a clinical-stage biotechnology company focused on the development of transformative cell and exosome-based therapeutics for treating Duchenne muscular dystrophy ("DMD") and other diseases32 - In January 2022, the company entered into an Exclusive Commercialization and Distribution Agreement with Nippon Shinyaku for CAP-1002 in the U.S. It received an upfront payment of $30.0 million, which is recorded as deferred revenue to be recognized over the course of the HOPE-3 clinical study. The agreement includes potential for up to $705.0 million in additional milestone payments153154156 - The company carries a liability of approximately $3.4 million for a CIRM grant award related to the HOPE-Duchenne clinical trial, as it has the right to convert the grant into a loan104105106 - No shares were sold under the company's "at-the-market" (ATM) equity program during the first quarter of 202283 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, and business strategy, highlighting CAP-1002 development, increased operating expenses, and improved liquidity from the Nippon Shinyaku deal Company Overview and Key Developments Capricor is advancing CAP-1002 into a Phase 3 trial for DMD, secured a $30.0 million upfront payment from Nippon Shinyaku for U.S. commercialization, and discontinued CAP-1002's COVID-19 clinical development - The company is initiating the HOPE-3, Phase 3 pivotal clinical study for CAP-1002 in late-stage DMD patients, with the first patient enrollment anticipated in Q2 2022168169 - Entered into an exclusive commercialization and distribution agreement with Nippon Shinyaku for CAP-1002 in the U.S., receiving a $30.0 million upfront payment with potential for up to $705.0 million in additional milestones175 - Final one-year results from the HOPE-2, Phase 2 clinical trial were published in The Lancet, showing the trial met its primary efficacy endpoint176 - Following a review of topline data from the INSPIRE Phase 2 study, the company will not pursue further clinical development of CAP-1002 for COVID-19172 Results of Operations The company reported a net loss of $7.8 million for the quarter, an increase from $5.2 million in the prior year, primarily due to increased R&D and G&A expenses Operating Expenses Comparison (Unaudited) | Expense Category | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | General & Administrative | $2.7 million | $1.9 million | | Research & Development | $5.1 million | $3.3 million | - R&D expenses increased by approximately $1.8 million, mainly due to a $1.0 million increase for the exosomes program and a $0.5 million increase for CAP-1002 clinical development activities188 - G&A expenses increased by approximately $0.8 million, primarily from a $0.3 million rise in headcount, salaries, and recruiting costs, and a $0.2 million increase in stock-based compensation187 Liquidity and Capital Resources Cash and cash equivalents significantly improved to $58.3 million from $34.9 million due to a $30.0 million upfront payment, providing funding into at least Q2 2024 Liquidity and Capital Resources Summary (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $58.3 | $34.9 | | Working capital | $46.4 | $32.3 | - Cash provided by operating activities was $24.0 million in Q1 2022, a major shift from the $3.3 million used in Q1 2021, driven by the $30.0 million upfront payment from Nippon Shinyaku196 - The company estimates its cash of $58.3 million will fund its operating expenses and capital expenditure requirements into at least the second quarter of 2024174 Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $58.3 million cash and equivalents, managed through short-term, high-credit-quality investments to mitigate significant impact - The company's market risk is primarily related to interest rate sensitivity on its $58.3 million in cash and cash equivalents244 - The investment policy focuses on capital preservation through high credit quality, short-term maturity investments, mitigating significant impact from interest rate changes245 Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective at the reasonable assurance level as of the end of the reporting period249 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls250 PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material pending legal proceedings - We are not involved in any material pending legal proceedings252 Risk Factors There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes in our risk factors from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021253 Other Required Disclosures This section confirms no unregistered equity sales, senior security defaults, mine safety disclosures, or other material information for the quarter ended March 31, 2022 - The report indicates "Not applicable" or "None" for Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, Mine Safety Disclosures, and Other Information255257259261 Exhibits This section lists exhibits filed with the quarterly report, including corporate governance documents, CEO/CFO certifications, and iXBRL-formatted financial statements - A list of all exhibits filed with the Form 10-Q is provided, including required CEO and CFO certifications and financial data formatted in iXBRL263