Capricor Therapeutics, Inc. Aktie

Everyone. Thank you for joining. By way of quick introduction, I'm Will Han, Senior VP of Biotech Investment Banking. I'm thrilled today to welcome Linda Marbán, CEO of Capricor and A.J. Bergmann, CFO of Capricor.

As a quick background on Linda and A.J. as well as Capricor, Linda is Co-Founder of Capricor, has served as CEO since 2010. Linda has been in the biotech field for over 20 years and prior to Capricor held various senior roles at Excigen, a gene therapy biotech company. A.J. has served as Capricor's CFO since 2018 and has been in the biotech industry for 15 years, joined the company in 2011. Capricor is a late-stage biotech company developing deramiocel, allogeneic cardiac-derived cell therapy that has filed for approval for the treatment of Duchenne's muscular dystrophy, PDUFA date of August 22, 2026.

Maybe to start, let's start with the regulatory pathway. Can you provide an update on your interactions with FDA, including any feedback of recent meetings, maybe any upcoming labeling discussions?

Yes, yes. So it's been a really tumultuous year for Capricor from a regulatory perspective, but we feel like we are coming out on top. As people may remember, last year, our AdCom was canceled at the last minute. We then got a CRL after filing for approval based on the feedback from the FDA of exactly what they wanted.

They upon review, decided they wanted more clinical evidence. We were lucky, but also well prepared in having the HOPE-3 Phase III pivotal trial, which had seen last patient, last visit around the time of the CRL. We were able to meet with the FDA in a Type A meeting, confirmed that the HOPE-3 data would suffice for approval. They turned down the opportunity for left ventricular ejection fraction as the primary efficacy endpoint, asked us to keep the performance of the Upper Limb 2.0 as the primary efficacy endpoint.

That trial read out in early December of 2025. As many recall, we hit our primary efficacy endpoint, our key secondary endpoint of ejection fraction and then our 3 type 1 error controlled secondary endpoints to have probably the best clinical data that's ever been presented in the Duchenne muscular dystrophy space in a randomized, double-blind, placebo-controlled trial.

We filed the new HOPE-3 data with the FDA. It allowed us to reopen our BLA. Our PDUFA date is August 22, so 10 weeks and 3 days from today, and we're very much in active conversations with the FDA now regarding information requests, regarding clinical opportunities, confirming all of the CMC data, which we had previously presented and all going very smoothly. And then, of course, discussing labeling opportunities, which we anticipate will go into a more serious mode in the next few weeks.

That's very helpful. And maybe kind of the other piece in terms of key recent developments, you recently filed legal action against NS Pharma. Can you just talk through that really quick in terms of the dynamics that you're focused on pricing structure, the private label distribute model, any other kind of aspects of that?

Yes. So it's been -- it was very disconcerting to us to find out that the partner that we had worked with so closely was really intractable in coming to terms in a new type of agreement or partnership that would be reflective of what is needed for a contractual situation to work.

So basically, what happened is in the original contract that was signed, they built -- we had all built in a concept of a transfer price. This would allow us to have some small stake in the ground financially from them when they went to distribute our product. Upon negotiations or discussions -- not negotiations, but discussions with consultants that worked primarily on reimbursement and pricing, it became clear that the structure as stated would not work, that it would then establish the average sale price well below any number that would be reflective of what would be considered appropriate for deramiocel.

NS Pharma acknowledged that it was the wrong structure. Capricor acknowledged it was the wrong structure. We all agreed that we needed to negotiate a new agreement. And we went into a year of negotiations with them that failed because the only structure that they agreed to would be called a private label distributor, which has never ever been done on a labeled product in the biopharma industry in the U.S. because it really eviscerates the company that gives those rights away and turns them into a contract manufacturer.

As of March 27, 2026, so just a few months ago, we tried one last time to get NS to agree to a different type of structure that would work for both companies. They would not agree. So we filed the litigation. And that's going very smoothly. Right now, we have a really strong legal team that are working to defend the rights really to the patients with DMD who deserve deramiocel. Capricor's plan is to launch deramiocel independent of Nippon Shinyaku or NS Pharma at this point so that we provide rapid access to those that needed the most and those are the patients. The legal stuff kind of goes on in the background, and we look forward to a peaceful resolution, hopefully, rescission, which allows both parties to kind of go back to ground zero. You keep your drugs, we keep ours.

That makes sense. Do you anticipate any impact to regulatory timing around the legal action?

Around the lawsuit?

Yes.

No. So they kind of operate on separate arms. So the regulatory pathway, in fact, the FDA maintains a very strong dogma that they don't pay attention to anything that happens out in the marketplace. Their job is to decide if something is safe and efficacious for an indication and then help you decide who that should go to. And so they really don't have any interest in what's going on outside in terms of sales and marketing.

Sense. Maybe just talking about the data you guys announced. Can you walk through the key efficacy and safety findings from the HOPE-3 trial, how they compare to the prior HOPE-2 results? Maybe start there.

Yes. So we have had 5 clinical trials, all showing approximately the same thing, which is the attenuation of skeletal muscle dysfunction as measured by the Performance of the Upper Limb first in HOPE-Duchenne and then in HOPE-2 with the performance of the Upper Limb 1.2, primarily the mid-level pull in HOPE-2, which is the use of the arms and would be considered potentially the Goldilocks measure of upper limb function, which I can go through in more detail in a little bit.

And then in HOPE-3, we use the performance of the Upper Limb 2.0 sort of like your smartphone, this is the newer better version with less redundancy and less floor and ceiling effect. And so that's the primary efficacy endpoint of the HOPE-3 clinical trial. We hit that with a statistically significant results as well as a clinically significant result. We saw on an absolute value change of 1 point, 2 point change in the Performance of the Upper Limb. And FDA had stated previously and is in writing that a 1-point change would be considered relevant for clinical meaningfulness.

So we were really excited not only for ourselves as a company, but also for the patients. This was the first clinical trial in Duchenne muscular dystrophy, where a primary efficacy endpoint was not only hit from a clinical standpoint, but also a statistical standpoint and also has been felt meaningfully by the patients. So we're excited about that.

The secondary endpoint of ejection fraction, we also hit. That was a key secondary endpoint. We had asked FDA consistently since 2015 to allow us to use cardiac function ejection fraction as the primary efficacy endpoint. They had denied that because they felt that the pathophysiology of the cardio function or cardiomyopathy of Duchenne had not been well delineated or understood. I think that's changing now.

But in regard to that, we have now both the only drug that I'm aware of in the Duchenne space that has demonstrated clinical relevance as well as statistical significance in skeletal as well as cardiac muscle function as defined by the statistical measures that were used and defined in the protocol and the analysis plan presented to FDA.

We've had the HOPE-2 open-label extension trial that -- HOPE-2 trial, the HOPE-2 open-label extension, the 3-year data has been presented publicly and both HOPE-3 and the HOPE-2 open-label extension, 3-year data are under review for publication at this point. We will present the 5-year HOPE-2 open-label extension data at the Parent Project Muscular Dystrophy meeting.

This is unprecedented. We can't even find a natural history data set that goes out to 5 years and assessing function in Duchenne patients because nobody has that data. We will be the first. It's a small study, but what I can say is that the results suggest long-term efficacy of deramiocel. But what makes deramiocel even a better option for patients is the safety profile.

So it's a quarterly infusion of 150 million cells. They don't need a port. They don't need anything fancy. It's a simple butterfly needle, about an hour infusion. Most patients tolerate it really, really well. There's been no long-term or even short-term safety events that are of any critical significance.

Early-stage clinical development, we saw some anaphylaxis and sometimes we still see some hypersensitivity that's well managed with simple drugs such as steroids, antihistamines, sometimes acetaminophen. So in general, the kids love it. They feel and function better and there's a strong safety profile. We know that all of our long-term OLE patients show up literally the day that they qualify for their infusion because they start to feel the effects of the drug wearing off and they want to get that boost again, and they can literally start to feel it work again. So we're very excited.

The other piece of deramiocel that's really powerful is that we're a good player in the sandbox. So deramiocel is designed to address the inflammation and the fibrosis associated with Duchenne muscular dystrophy. So it should provide support to gene therapies, exon skippers, other drugs that might work to mediate the draconian effects of the genetic disease. So 2 sides of the same coin, let's work on fixing whatever the mutation that causes the problem, the lack of dystrophin and then the sequelae of inflammation and fibrosis, which is deramiocel.

That's very helpful. Maybe you could just expand a little bit more on the competitive landscape, just again, kind of where specifically you see just given the fantastic efficacy so far and kind of how you see it with other key assets?

So we don't feel that we really have any competitors. There's an antifibrotic drug that's been approved, givinostat that's being used. It does not seem to have the cardiac benefit and also does not seem to have the long-term antifibrotic effects that we see with deramiocel, although anything that can be done for these boys and young men should be tried.

We're focusing hard on the fact that we attenuate the inflammation and the fibrosis and the skeletal muscle realm, especially in the patients that we've studied most effectively, which are the later-stage nonambulant guys. And let's remember, those guys really have no options left, right? So even the gene therapies, I think they're going to start trying them again. Exon skippers, those guys, some of them have been on them for a very long time. So whatever disease attenuation they've gotten from those dystrophin-modifying types of therapeutics is already in place, and this is an added benefit with deramiocel.

So we feel like rather than being competitive, as I mentioned a moment ago, we go well with nearly any other therapy. And I think it's also worth mentioning that diseases -- genetic diseases seem so simple, right? Oh, you have just a mutation, have a little mutations, have a little exon that's just not working quite right in this genetic disease. We should be able to fix that, right? Take our toolbox of biology and let's fix it.

And it's so tantalizing even diseases like cystic fibrosis. You should be able to fix this, right? It's so simple. It's one amino acid on a chloride channel. But in general, these diseases are very hard to fix. So it's going to be a polypharmacy approach with Duchenne and all these other diseases. And we're excited not only for Duchenne, but in the expansion of our pipeline, we expect to be able to make impact in Becker muscular dystrophy. We're looking at FSHD, we're looking at limb-girdle, other types of pathologies that are similar to Duchenne that have cardiac complications that we'll be addressing as well.

Yes. that makes sense. And I know, obviously, you're still in discussions with the FDA, so may be limited in terms of what you can say. But as you think about the label going forward, just given obviously what we just talked about around competitive landscape or rather synergistic landscape. Just kind of curious how you look at the potential label and then also potential...

So the label that we're asking for is for attenuation of -- or improvement in upper limb dysfunction as demonstrated in HOPE-3. So anybody that has sort of loss of upper limb function even in early-stage, late-stage ambulant patients that have an attenuated 10-meter walk time, those will be our sweet spot patients. The youngest boy that we've treated thus far with deramiocel is 10 years old.

And so we're not anticipating going much younger than that, but we'll see how far the FDA will let us push that envelope towards the younger guys. And we think that the earlier that they get on to deramiocel, the best impact it will have. And I know our key opinion leaders, a lot of the physicians would love to see those young boys on deramiocel. So we'll work hard on that.

And then we're also going to ask for a cardiomyopathy label. What we see and it's absolutely phenomenal is that -- and you'll see this actually, I'll give you kind of a hint that we're going to be presenting this data at Parent Project Muscular Dystrophy. But there really is a line in preservation of cardiac function of ejection fractions above 45% versus those below 45%. It literally is a dividing line that is unequivocal.

And so it's going to be critical to give deramiocel while they still have preservation of cardiac function. Because remember, unlike skeletal muscle where you can drive skeletal muscle back into the cell cycle, make new muscle, with the heart, once the cardiac muscle cell is lost, that cell is lost. And the replacement of cardiac muscle cells at this most liberal understanding is about 1% per year. So we don't get a lot of chance to fix cardiac muscle.

So we have to get in there and preserve it. And that's where we're going to be focusing hard in our labeling discussions with the agency is that we've got to get early with these guys. And so the way that you would do that is attenuation of left ventricular ejection fraction, even on some basic level, but then also measurement of scar. So a lot of these guys now are getting MRIs as part of standard of care, especially at certified Duchenne care centers starting pretty early on, 6, 7 years of age.

And as soon as the clinicians start to see scar, they'd like to see them on deramiocel because we want to slow that process down. Because remember, the more scar tissue you have in your heart, the more burden you put on your heart, the more risk you are for cardiac dysfunction. And ultimately, that's what happens to these kids. They end up getting so much scar that their hearts can't function normally, and that's when their ejection fraction start to drop.

And unlike an adult heart disease where you can sort of have a slow, steady decline of cardiac function. What we see in these Duchenne kids is sort of a paradoxic aggregation of scar and they're almost asymptomatic, nobody really knows what's going on. And a lot of that's because they're nonambulant. So there's not a lot of burden on their heart.

And so their hearts really kind of fail almost in a falling off the cliff way, which is different than an adult disease. So if you see an adult that's had a heart attack and cardiac dysfunction and they end up with an ejection fraction of 25%, they probably got a lot of life left in them. With a Duchenne kid, when they start to drop below 30%, they really go very quickly. So we have to get in there early.

So I'd imagine some of the feedback you've heard from KOLs or neuromuscular specialists have been kind of the same in terms of areas that they would want to see therapy being used.

Yes, yes. So the KOLs love deramiocel because it's safe. It works. It is easy to administer and the benefits are clear to see. So the other thing that's really nice and the benefit of deramiocel is the mechanism of action, which we've talked about and has been the subject of really several hundred academic papers now, both by our labs, our labs of our collaborators and others shows that deramiocel works primarily by anti-inflammatory, antifibrotic mechanisms.

Our potency assay, which has been accepted by the FDA, is an antifibrotic potency assay as well as an identity criteria, which identifies deramiocel is very unique from any other cell type. So the KOLs really like that the story is clean. We know what it's supposed to do. It measures that. It works like a drug. It's easy to deliver. It's safe and it works. So yes, they're very supportive, and we look forward to rapid adoption on the commercial side.

Fantastic. And maybe kind of talking about the commercial side. You obviously recently hired a new commercial -- Chief Commercial Officer. Just kind of curious what steps you're planning to take as you gear up for commercial launch.

So this is really an exciting time. I'm a scientist, and I decided to go into biotech now, as you mentioned, several decades ago because I wanted to bring the idea of we can make improvements in human health and therapies to people, medicines to people, I'm actually going to be able to do this. I'm really excited both on a personal and professional level.

And so building the commercial team at Capricor is a dream come true. We have hired Mike Maurer as our Chief Commercial Officer. He comes to us from the rare disease space specifically. He has experience in Duchenne muscular dystrophy. He was at Sarepta, was participating in launching ELEVIDYS.

So he knows our patients. He knows our community. He knows how the world of Duchenne muscular dystrophy commercialization works. And then we're building the team with him. And so I think most people know that in a rare disease, especially one like Duchenne, where patients are well informed, tied to each other, Facebook groups, advocacy groups. The whole key is market access. Market access, patient services and reimbursement strategies, and so those are our 3 pillars that we're putting in place right now. and building actively for launch.

We expect our PDUFA to be coming very soon. The #1 focus of Capricor is commercial preparation and launch, and we intend to do it with APAM. The good news is we have over 100 patients that are on open-label extension at this point that will likely roll over into commercial product. We'll be able to help them get there again by sort of making sure that we get reimbursement strategies in place and payer engagement. Payers are excited about deramiocel. The cardiac benefits are the only that have been demonstrated in Duchenne muscular dystrophy. So we expect to have a good road with our payers. And as a result of that, things are looking up in terms of getting ready for launch and getting this product to the people that really need it the most, those with Duchenne.

Yes. That's great. And then on that payer point, maybe not -- I guess how are you thinking about pricing? I don't know if you're giving that guidance now, but just relative to some of the other therapies out there, given obviously the potential synergistic use with some of the other.

Yes. So since I'm joined by my CFO, A.J. Bergmann, I'll let you take that pricing question.

Yes. Thanks. Well, obviously, we're thinking and engaging really hard on the payer front right now, speaking with multiple payers, developing our decks that are needed to get out there. But what we've guided to is that to be at or above the approved exon skipping therapies. I think those are slightly different that they're weight-based, but that's our aim in terms of the current price. This is a chronic therapy, so it will be administered over many years, 4 doses a year. And we feel fairly confident with the data that we presented and the data that we're going to continue to generate should be able to...

Got it. Very helpful. In terms of MFN, obviously, it would assume, that just given it's a rare disease, maybe it's a little bit lower impact. But just kind of curious if you have thought about that so far.

Yes. So obviously, we've thought about that a lot. We are focused on U.S. approval, primarily for multiple reasons. One, we've done our clinical trials in the U.S. Two, we're a U.S.-based company. And so we have almost 350 U.S. employees, which obviously, we feel a tremendous responsibility to them, but also because getting into Europe independent of MFN is complicated. And so we want to make sure that we have the right partner.

And the right partner will likely be one that understands not only that we got approval in the United States, but that what the EMA is going to ask us. And so we're actively engaging with the EMA now. That's always been part of our goal. Once we have clarity, which I think we'll know what they want. We've had some preliminary discussions with them, and we think that the HOPE-3 clinical trial might suffice for EMA approval. We'll then actively seek a partner in Europe.

MFN has been a headache for all of us because everybody has been trying to figure out how we fit, right? And rare disease, orphan designation technically can get around the MFN. We have ATMP, which is orphan designation in Europe. But because of the focus on the U.S., we realize that we need to get offline there and then find a European partner that knows how to negotiate MFN as well as all the other regulatory opportunities and commercialization opportunities in Europe, which...

Yes. And I guess the other kind of part of just prepping for commercial launch is really around manufacturing, given it's a cell-based product, can you just speak to kind of some of the prep work you are doing to make sure you're ready to hit the ground running day 1.

Yes. So Capricor made a commitment to ourselves a long time ago that we were going to maintain manufacturing as part of our core capabilities and ability to drive deramiocel to commercialization. It is a cellular therapy. The good news is we really have fine-tuned the manufacturing into a very strategically driven, very efficient process. It's led by my Chief Operating Officer, Dr. Kristi Elliott, her background in cell biology and long term in manufacturing and she's just absolutely a star.

And so she was able to design and build a small commercial manufacturing facility in our Torrey Pines location that will meet the needs of the initial launch, about 200, 250 patients annually. And then we're in late-stage construction in our exact same building of more plug-and-play clean rooms that will come on sequentially in 2027. Ultimately, by the end of the year, able to meet the needs of about 2,000 or 2,500 patients, which should be more than adequate for the first year or 2 post launch.

And then we have a new facility that we've identified in close in La Jolla, close to our current facilities in Torrey Pines that is ready to be built out should we decide that, that's an opportunity that we should take, which we're actively designing and planning right now.

Maybe kind of switching gears a little bit. You had mentioned a little bit earlier deramiocel and kind of ability to go into potential other muscular dystrophies, other diseases. Maybe just expanding a little bit more on that, kind of the scientific rationale for that, kind of where you might be focused in the next...

Yes. So as a perfect jump up from our last question, which is we have fine-tuned manufacturing. We have a potency assay identity criteria, like we have a cell therapy that is a drug product. And it's very exciting to me. I just sort of as a sidebar, I've been in science for a long time, and I remember the advent of the antibody world where nobody thought antibodies could be commercialized, nobody thought they could be made, manufactured, costs could be controlled, whatever. And now we know where antibody therapies are. They're as common as breathing.

We're going to see cell therapies do the same thing in the next 10 years, and we're at the forefront of that. So I'm very excited about that opportunity. DMD is our first path in terms of approval and commercialization of our cell-based deramiocel. But then we look at other diseases of inflammation and fibrosis with both skeletal as well as cardiac implications. Becker is obviously one of our first targets. We'll be going after Becker very shortly after we achieve PDUFA for Duchenne. And then after that, there'll be other ones that are on the similar dystrophic or dystrophinopathy type paradigm, so limb-girdle, FSHD. We're looking at other types of rare cardiomyopathies that would be beneficial to preservation of cardiac muscle structure and function.

Maybe just kind of talk a bit more broad about the platform, the StealthX, exosome platform, some of the key advantages you might have, how you might think about utilizing that as well.

Yes. So our exosome technologies have been coming behind for the last multiple years, 6, 7 years. We discovered the exosomes mediate the benefit of StealthX, and that's actually been part of our potency assay profile. The exosomes that are released by the cells are what drive the mechanism of action.

So we became interested in exosomes as therapeutic mediators themselves quite a while ago. We decided not to pursue that in lieu of the cells because the cells are great for releasing exosomes, why mess with what works. But now that we have identified that as sort of the API, we've now taken exosomes both from our cells, CDC-based exosomes as well as StealthX, which is a generic exosome made by a standard cell line.

And we're doing 2 different things with them. We're looking at biodistribution. We're looking at targeting and we're looking at sort of the indications that would be appropriate for utilization of an exosome-based therapeutic. Following sort of behind in a lot of the footsteps of those that have pioneered bringing new therapies forward, our first indication that we use our exosomes was in the vaccine. And that program has been funded and actually operated by the National Institute of Allergy and Infectious Disease.

It's an exosome-based vaccine that has the spike protein of COVID [indiscernible] product will be the N+S, so the nucleocapsid as well as spike protein. It's safe. We'd like to sort of go up in dosing and sort of continue our work with NIAID, continue to build this vaccine platform forward. I think as everybody knows, there has been a lot of negative implications of vaccine development and even vaccine utilization in the United States in the past few years. We think those times will pass soon. And so we'll continue to keep our vaccine program alive with -- on a low simmer so that we can ultimately take it forward and then also build therapeutics for the exosome-based technologies, which, again, will be an exciting opportunity in '27 and '28.

Got it. No, very exciting. Maybe one final question just to close it out. Obviously, a lot to do ahead of you across the platform, pipeline, commercial launch. Can you just speak to maybe your cash balance now and kind of how you're thinking about funding all of this going forward?

Yes, sure. So Capricor has obviously built this deramiocel program and the pipeline of exosomes very strategically over this last 15 years as we've continued to mature. We have $278 million in the bank at the end of the first quarter, super strong balance sheet. We're growing, but we're investing very judiciously, as Linda pretty much articulated in the CMC expansion as well as the commercial development and then very judiciously in our pipeline, but we have strong conviction that building that pipeline behind the scenes is a huge value driver as we bring deramiocel to the market.

Secondarily to that, at approval, we're eligible for a priority review voucher. I think everybody knows those sell for quite significant sums of money. I think the last one was $190 million. We would look to sell that and monetize that in short order, which would give us an even stronger balance sheet as we move into the commercial launch. So we feel very, very good about the cash position we're in, the hiring we're doing, it's going right to the right areas. And then, of course, you add in the revenue element, hopefully, post launch, of course, and that presents a whole new range of opportunities this pipeline, we feel good about it.

Great. Listen, it sounds like you obviously guys have a very, very exciting next 12, 24 months ahead of you. Very much look forward to watching your success.

Well, thank you so much for having us. Thank you for the insightful questions, and we look forward to getting to know you better as well.

Absolutely.

All right. Thank you.

Thanks.

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics First Quarter 2026 Conference Call. [Operator Instructions] This call is being recorded on Tuesday, May 12, 2026.

I would now like to turn the conference over to our CFO, AJ Bergmann, for the forward-looking statements.

Thank you, and good afternoon, everyone.

Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, potential regulatory developments involving our product candidates, our future R&D plans, our anticipated conduct and timing of preclinical and clinical studies, enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory inspections, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, our financial position, our possible uses of existing cash and investment resources and statements regarding our litigation with Nippon Shinyaku and NS Pharma Inc., including the nature of the dispute, our expectations regarding any legal proceedings and our ability to commercialize deramiocel independent of our existing distribution agreement.

These forward-looking statements are based on our current information, assumptions, and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

These and other risks are described in our periodic filings with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

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

Good afternoon, everyone, and thank you for joining Capricor's First Quarter 2026 Earnings Call.

To our investors, collaborators, the Capricor team, and especially the Duchenne patient community, thank you for your continued support and belief in our mission. We are at a truly defining moment in this company's history, and I want to take a few minutes to give you a clear picture of where we stand across our three most important priorities, our regulatory path to approval, our commercial readiness, and our legal action against NS Pharma and Nippon Shinyaku.

I'll start with the most significant development. Our biologics license application, or BLA, for deramiocel is currently under active review by the FDA with a PDUFA target action date of August 22, 2026.

As a reminder, following the receipt of the complete response letter in July of 2025, we moved quickly and decisively. We submitted our response based on the HOPE-3 Phase III trial results, which we believe represent one of the most compelling data sets generated for DMD to date. The FDA accepted our response as complete and classified the resubmission as Class II, resuming its full review of the BLA.

There has been a significant number of information requests from the FDA to Capricor, all of which we have been able to provide answers to. We look forward to continuing our active dialogue with the FDA and are looking forward to labeling discussions in the very near future. As this is a BLA resubmission review, there will not be a mid-cycle review meeting.

Now, the data submitted as a response to the CRL, the HOPE-3 data, demonstrated statistical as well as clinical significance across a variety of endpoints. To remind you, HOPE-3 was a pivotal Phase III multicenter, randomized, double-blind, placebo-controlled study that enrolled 106 patients in a 1:1 randomization scheme.

The trial met its primary efficacy endpoint, which was the performance of the upper limb, otherwise known as the PUL version 2.0, with an approximate 54% reduction in disease severity at 12 months and a p-value of 0.029, as well as all type 1 error-controlled secondary endpoints also hitting significance.

As the current BLA was for the indication of cardiomyopathy, it was very important that the key secondary endpoint of left ventricular ejection fraction demonstrated an approximate 91% slowing of disease progression in all evaluable patients. Further, in a subset of patients with a confirmed diagnosis of cardiomyopathy, the LVEF effect showed an approximate 120% slowing of disease and achieved a p-value of 0.01, further supporting deramiocel's potential to address the DMD-associated cardiomyopathy.

We are also pleased that we presented additional HOPE-3 data at the 2026 MDA, Muscular Dystrophy Association Clinical and Scientific Conference, also with the American Academy of Neurology and the American Society of Cell and Gene Therapy, being held this week.

Two highlights are worth emphasizing. The Duchenne Video Assessment of eat 10 bites measures a home-based caregiver's captured video assessment of upper limb function. These showed statistically significant improvement in treated patients versus placebo. This is a real-world home-based outcome measure that directly reflects independence and quality of life.

In addition, the cardiac MRI data demonstrated a significant stabilization in the progression of cardiac fibrosis in treated patients versus placebo. Fibrosis is cumulative and irreversible. Its attenuation before functional symptoms appear is one of the most clinically meaningful things we can demonstrate. These data will be central to labeling discussions and support the case for early treatment initiation.

The full HOPE-3 data set has been submitted for publication in a major peer-reviewed journal, and we look forward to that publication following acceptance in due course.

On safety, we have now completed more than 800 intravenous infusions across multiple clinical studies. Deramiocel continues to demonstrate a consistent and well-tolerated safety profile. Several of our young men in the HOPE-2 open-label extension have been receiving continuous infusions for up to five years, with approximately 90 patients in our collective OLE studies. Importantly, the long-term safety profile of deramiocel is supported by these five years of open-label extension data. This is reassuring for the DMD community as well as supportive of regulatory approval.

Lastly, we also expect to be eligible to receive a priority review voucher upon potential approval. PRVs are transferable and can be monetized through sale, representing a meaningful potential source of non-dilutive capital. We will continue to provide updates to the market on the progress toward the path to approval for deramiocel to treat DMD.

Now I'd like to turn your attention to directly address our legal action against Nippon Shinyaku and its U.S. subsidiary, NS Pharma, which we announced last week on May 7, 2026. We filed suit seeking rescission of our U.S. distribution agreement through an expedited process, requesting a preliminary injunction that would allow Capricor to distribute deramiocel to patients either on our own or through other distributors pending FDA approval.

Now let me be clear about what drove this decision and why we believe it is both necessary and correct. The core problem is related to pricing. The pricing structure embedded in our commercialization and distribution agreement with NS Pharma contains a fundamental flaw that if left unaddressed, would make it economically impossible to deliver deramiocel to patients covered by Medicare, Medicaid or private insurance.

Providers would face potentially hundreds of thousands of dollars in reimbursement shortfalls per dose. This is not a commercial preference. It is a structural barrier to patient access. We tried to fix the pricing structure, but NS Pharma refused to address the flaw on acceptable terms.

After we identified this issue, we engaged in good faith negotiations with senior leaders at NS Pharma to find a resolution acceptable to both parties that NS Pharma refused to compromise and demanded that Capricor agreed to a structure that would result in Capricor seeding all control of the products we developed, our regulatory relationships and our commercial and brand identity as a condition for resolution. That arrangement was just not acceptable to us.

At the point of the CRL in July of 2025, it was clear that NS Pharma failed to continue the commercial investments needed to ensure a successful launch of deramiocel upon regulatory approval. NS Pharma did not provide status updates to inform Capricor on their launch planning efforts specific to the commercial interest of deramiocel, patients, caregivers, HCPs and payers. These were core requirements of our partnership that they did not uphold.

With the PDUFA date of August 22, 2026, approaching, we could not allow a flawed contractor and a distributor who is unwilling to fix it stand between DMD patients and deramiocel. Every month of delay for boys and young men with DMD means irreversible loss, muscle destroyed, cardiac function permanently diminished or independence that may never be returned.

We did not rush this decision. After exhausting every alternative to address NS Pharma is in action, we concluded that litigation was our only acceptable option. The FDA review process and the PDUFA date are unaffected by this lawsuit. And as I mentioned earlier, our BLA remains under active review.

Capricor has hired and continues to hire key individuals to support the successful commercialization of deramiocel. We have been working to ensure that our commercial readiness and a product launch plan that considers patients, health care providers and payers with a focus on seamless patient access. We are thoughtfully scaling our manufacturing capacity to meet the needs of those patients, exiting our clinical trials and in preparation for commercialization.

Now our regulatory pathway is only meaningful when we deliver the therapy directly to patients, and that is exactly what we are building towards with the same discipline and urgency we have applied to the science over the past two decades. Now let me walk you through some of the respect of -- specifics with respect to manufacturing.

First, our in-house GMP manufacturing facility in San Diego successfully completed its FDA pre-license inspection or PLI, last year. All Form 483 observations were addressed. The facility is operational and positioned to support initial commercial launch for approximately 200 to 250 patients per year.

Additionally, we are also well underway with our expansion to the second floor of that same facility, adding several additional clean rooms. At full capacity, this expansion will support treatment of approximately 2,000 to 2,500 patients per year, roughly 10,000 doses annually. We are staging the build-out deliberately. My goal is to have the facility fully validated and approved by the FDA in the first half of 2027. During the FDA review period, we will continue to produce material and increased capacity as we move through 2027.

Finally, our primary manufacturing priority will begin stockpiling commercial doses once we have guidance on the label from the FDA. Since deramiocel is an ultra-cold chain product, it has to be labeled before it is frozen. FDA has been appraised of this and is working with us on a temporary label solution so that we can begin production of commercial doses. Based on current planning, we will have ample product to support our future launch, if approved.

While the litigation against NS Pharma probably came as a surprise to many of you, we have become increasingly aware that not only was the deal structure impossible from an economic perspective, but they were seriously lagging behind in commercial planning, as I just mentioned. I have guided multiple times that we were building a small commercial team to provide support to NS when they were going to be the sole distributor.

Now that we are gearing up to launch on our own, subject to the court's decision, we have accelerated those efforts and are in the process of building a fully functional commercial team. We already have a Senior Vice President of Market Access with significant rare disease experience who is actively preparing the market for deramiocel.

In addition, I am pleased to inform you that we have now secured a Chief Commercial Officer, who will join us in the next few weeks. This executive brings direct DMD and rare disease commercial experience and will be an integral member of our launch leadership team. We look forward to introducing him to the investment and DMD community shortly.

To that end, we are actively working towards approval and commercialization of deramiocel, and our current deliverables are to continue to work on hiring key individuals to support the successful commercialization of deramiocel to support patients and their caregivers.

We are building to ensure commercial readiness and a product launch plan that considers all with a focus on seamless patient access across all payer segments. We are rapidly building the physician education and disease awareness infrastructure required to support responsible and rapid adoption, consistent with our expected labels in other rare disease patient populations.

And lastly, the building of our patient support and distribution services is underway with a strong commitment to patients and their families while enabling access across all channels for as many eligible patients as possible. The DMD community is small, defined and engaged, and we know who the prescribers are.

Now turning to our pipeline. Over many years, Capricor has been focused on translating the science of deramiocel into a potential commercial therapy, marshaling the majority of our resources to advance it from discovery to this pivotal stage. We have developed deep expertise in product development, manufacturing and clinical development.

While we are proud of these accomplishments, pipeline expansion has not been our first priority. However, we have worked at a slow but steady pace in developing exosomes as therapeutic agents, taking advantage of their biological role as cellular delivery vehicles.

We continue to explore and develop opportunities for pipeline expansion with CDC-based exosomes and our patented StealthX technology made from HEK293 cell exosomes and now being used in vaccine studies in collaboration with the National Institutes of Allergy and Infectious Disease, NIAID, for COVID prevention.

It is important to note that there has been a lot of instability in vaccine development over the past year. And so, this program has moved a bit more slowly than originally planned. However, the most important milestones for reach, which were manufacturing of clinical-grade vaccine exosomes and an approved CMC from FDA for large-scale manufacturing as well as showing that an exosome-based vaccine is safe.

We are moving away now from vaccine development at this time, and we'll focus on developing therapeutics with both classes of exosomes. We are actively presenting and publishing our rapidly expanding pipeline of exosome-based therapeutics and look forward to providing updates on the clinical development program as they become available throughout this year.

In terms of life cycle management of deramiocel, we have spent 20 years developing our therapy and now we'll be actively looking to expand into other indications. Our first target will likely be expansion to the younger DMD patients we are working on now. In addition, we plan to initiate the clinical pathway for Becker muscular dystrophy, which we plan to begin discussing with the FDA immediately following PDUFA for DMD.

Expansion of deramiocel outside the United States is also underway, and we expect to meet with the EMA and PMDA later this year. We believe deramiocel should be available to all patients worldwide, and that will be a goal that we actively work towards this year. In addition, we are evaluating opportunities in other rare neuromuscular diseases where inflammation and fibrosis are the primary pathologies.

And now with that, I will turn the call over to AJ to review our financial results. AJ?

Thanks, Linda.

As of March 31, 2026, we maintained a strong balance sheet with approximately $279 million in cash, cash equivalents and marketable securities. We believe our current capital is sufficient to fund anticipated operating expenses and capital expenditures into the fourth quarter of 2027. That expectation excludes potential product revenue or a priority review voucher monetization upon potential approval. There was no revenue recognized for the first quarter of 2026 or 2025.

Our total operating expenses for the first quarter of 2026 were approximately $36.8 million compared to approximately $25 million for the first quarter of 2025. The increase was primarily driven by continued investment in clinical, regulatory and manufacturing activities as well as infrastructure expenditures supporting our Duchenne program.

Net loss for the first quarter of 2026 was approximately $33.9 million or $0.59 per share compared to a net loss of approximately $24.4 million or $0.53 per share for the first quarter of '25.

Our operating expense profile reflects a calibrated investment across our three priority areas of regulatory and clinical activities in support of our BLA, manufacturing capacity expansion and commercial infrastructure build-out, all aligned with our path towards potential approval and our balance sheet provides the runway for us to execute.

With that, operator, let's please open up the line for questions.

[Operator Instructions] Your first question comes from Leland Gershell with Oppenheimer.

Linda, as we continue to digest the news on the lawsuit, wondering if you could share more color. Nippon Shinyaku, a large company with many products, but NS Pharma is a much more focused company with one product, which is for Duchenne and is complementary to deramiocel. So, they would seem to be very well set up to enter the market with your products and would be motivated to do so given the money is being made.

So, I'm just curious if you could share more color or insight on your discussions with NS Pharma as to their reluctance to move at all toward what could be a resolution that would enable deramiocel to be sold in such a way that the ASP-based pricing would work for the system. Again, given that NS Pharma would not be able to have any return on deramiocel until that's worked out. And a follow-up.

Thank you, Leland. I think that was your longest question ever. So, I appreciate the clarity and the depth to which it's gone.

So, the answer is a little bit of a head scratcher for us as well. As I've been guiding since the filing of the suit on May 7, we actually entered negotiations with them regarding this very issue in March of 2025. So it's been over a year that we went back and forth and proposed a variety of solutions that we believe in several sets of lawyers, including some of the lawyers that represented NS Pharma believed would be a reasonable structure that would allow us to keep the economics essentially in place the way that they have been divided in the original agreement.

We don't have a clear answer as to why they were so intransient on accepting any of these other opportunities. But what I can tell you is that within about one week before we filed the suit, they confirmed by e-mail that the structure that they proposed, which essentially eviscerated Capricor's brand and deramiocel and future indications was the only structure that they would accept. So, they really left us with no opportunity.

Now having said that, while we would never break an agreement that was being enacted upon appropriately, this gives a great opportunity for Capricor to become the distributor of deramiocel. And I think all of you know how passionate we are about deramiocel, spending more than 20 years developing it. We know the patients, we know the community, we know the doctors, we know the networks. And so, I'm excited by this opportunity as well as respectful of the terms of the original agreement, which are no longer applicable.

In your statements, you said that Capricor determined that this would be a non-viable pricing structure. Do you have evidence or admission on NS Pharma's part or Nippon Shinyaku's part that they also did not -- they were not aware of the implications of this when they signed the agreement?

Well, I'm assuming that they didn't know the implications of it because they signed the agreement. So, I think I don't know what was in their head or most people don't typically go into an agreement that is non-transactable if they know that there is sort of a killer clause in there.

Having said that, we were all made aware of this problem based on the ASP at the exact same time by an independent consultant in the field. So, we know that they knew that this was a problem, as I said, starting from March of 2025. So, there's definitely not an ignorance-is-bliss kind of opportunity here.

All right. And lastly, in terms of your planning for commercial. So, you're getting going. You do have a few months until a presumed approval, but most companies would be well ahead of that in terms of time to market for these various preparations. Could you maybe share kind of where you expect to be assuming approval in August in terms of launch readiness relative to where you would ideally be to be launching a rare disease product to deramiocel?

Yes. So, thanks, Leland. So, I think I stated pretty clearly that we were very disappointed with NS Pharma's approach to launch planning over the past few months, especially since the CRL. They had stated that they were putting pencils down. They didn't pick them back up theoretically again until March of this year, just a few months ago. They were egregiously behind in some of the very critical launch activities, which typically take place 12 to 18 months before and also pave the way whether or not you have responses from FDA.

Having said that, we, at Capricor, knew launch was coming. I have been laying the groundwork quietly behind the scenes for many months now. We're building out not only a commercial team with a newly hired Chief Commercial Officer, but we've been working on market access, advocacy, planning, the patient journey, the product journey, getting a distributor, which we believe that we'll be able to secure very quickly. And so, I have high hopes for a very strong launch.

Most importantly, we have nearly 100 open-label extension patients that we will be actively working to get over to commercial product and working with the payers to do so. And we remain committed to providing deramiocel to as many eligible patients as possible as soon as possible post-PDUFA.

Your next question comes from Ted with Piper Sandler.

I appreciate all the color on the priorities to get approval launch and then the lawsuit. I have a question just sort of what the steps are from here with respect to the lawsuit. I know you mentioned that you had requested an expedited lawsuit or I forget the exact word you used. How does that play out? And if it should go past PDUFA approval or the approval comes ahead of PDUFA, you're in a position where you're manufacturing the drug and you're putting your own sales force in place. So, you're just going to launch it yourselves. Is that accurate?

So our current plan is to launch deramiocel. Yes, we have the drug. Yes, we manufacture it, and that is what we're working towards here at Capricor. In terms of the timing, it is dependent upon the court for which we have very little -- in fact, we have no control. Having said that, the reason our lawyers filed a motion for preliminary injunction, courts typically act very quickly on those and will give us some guidance and hopefully will be heard on an expedited basis.

We can't provide any other details on the litigation, but what we can tell you is that my plan now is to distribute deramiocel on time in a well thought out and strategic fashion while this is continuing either in the background or has been resolved.

Great. Well, I wish you all the luck because I do think this drug is best served to patients in your hands. So, thank you for that update.

Thank you, Ted.

Your next question comes from Kristen with Cantor.

Thanks for the transparency today. So, when the press release first came out last week, I think some investors initially read it as they weren't preparing for a commercial launch appropriately because they didn't have conviction in an approval. But then on the other hand, myself and others read it as, well, if they truly believe that, they would happily just give deramiocel back to you and move on their way. I guess, can you just clarify that in no way is this, in your opinion, based on them lacking conviction in an approval?

Yes. Thanks. That's sort of icing on the cake in the sense that we were disappointed in the progress they were making. We believe that it shows a lack of belief in deramiocel from their perspective and the lack of focus on their part.

Having said all that, that would not have been the foundation nor the basis of an action at this point. We would have tried to work with them. And I think as I guided and have answered in a previous question, we would have shadowboxed behind them with our own commercial efforts, trying to support and help them get this to patients as quickly as possible. I think all of you know that we have great connections within the Duchenne space and relationships with patients and advocates and providers.

So no, the foundation of the lawsuit is really this contractual basis, which really gives us good potential evidence for rescission, which is a decision that each party sort of went about the contract in good faith, it didn't work out and everybody goes back to square one and does their own thing, which would then allow us to have the rights back and we would be fully engaged as the sole distributor of deramiocel. But stay tuned. We don't have any answers from the court yet. Obviously, this is material, so we will provide updates as soon as they become available.

Okay. And then maybe just on the review side, you made the comment that you're nearing potential labeling discussions. It seems a little bit quick. It's usually like a month or two before the PDUFA. I recognize we're three months out here. So, is that just kind of based on the trajectory of the questions that you've been getting? Have they told you one way or another whether these labeling discussions are happening?

And then again, I appreciate the transparency around the information requests FDA has been giving you. Can you just provide more color? Is that on like understanding the data? Anything specific you can give us there?

Yes. So, thanks, Kristen. It's always a pleasure to hear from you.

So, my regulatory lead advises us that information around labeling should be coming within the next few weeks. We are already in an interim label conversation with them because, as I mentioned in my prepared remarks, when you use an ultra-cold chain product, you have to put a label on before you freeze it. We want to start stockpiling for commercial. So, they know that this is something we're interested in and working on, and we look forward to providing updates as those labeling conversations come to fruition.

In terms of the information request, they have been quite prolific coming from the CMC side. Most of them sort of standard form types of things, asking for extra data or asking for extra clarification. On the clinical side and the statistical side as well, additional data clarification, when analyses were done, blinding protocols, that kind of information that you would expect FDA to be digging into at this time. So, we remain very optimistic about the review process for deramiocel.

Your next question comes from Madison with B. Riley Securities.

Maybe a couple from us. Maybe could you help us understand any commercial readiness activities that you have either started or plan to start rather that were previously being conducted by your partner? For example, payer discussions, has Capricor engaged any third-party logistics distributors, things like that? And then maybe a follow-up afterwards.

Yes, Madison, absolutely. Great to hear from you.

Yes. So, as I mentioned, because we were concerned about the speed and efficiency at which NS was going about commercial planning, we were shadow boxing behind them the whole time. So yes, we have a 3PL identified. We could enter into an independent contract with them and that we're in the process of doing that at this time. Most of the other parameters of launch preparation were being either birddogged by Capricor or, in fact, led by Capricor.

So, there's not really any areas right now that we've identified where NS had really taken the lead and we were sort of running behind or need to play some catch-up ball. My general hunch is that we're up to speed and moving as quickly as possible with PDUFA coming right up.

Got it. Understood. And then on the, I guess, internal label related to the cold storage. So, if you're able to manufacture around 250 doses per year currently, do you have a sense of how many you could complete between finalizing that interim label and the actual PDUFA date?

Yes. We haven't disclosed that number. We are actively working now starting to prepare for commercial manufacturing. The lag in time will be that each lot has to be reviewed and approved by FDA, and we expect to do that prior to and getting ready for launch.

And so, what's most important is we will not delay dosing on any level of our open-label extension patients, and we will continue to make sure that we provide access to them and have no plans on delaying baseline commercial manufacturing. We're up to speed there. Just one quick correction. It's 200 to 250 patients who each received four doses. So, it will be 1,000 doses per year from our downstairs facility here in San Diego.

Your next question comes from Michael with Maxim Group.

I mean lots of interesting stuff going on here. I would like to see if you could just provide a bit more color on what the basis for a suspension or an injunction of the commercial agreement would be? And then if there's any sort of precedent for a court issuing an injunction to allow the manufacturer to distribute the drug while the IP or the some sort of licensing agreement is under dispute.

Yes. Thanks. Those are really clear questions. I'm going to take the second one, and I might ask you to repeat the first one because the second one was kind of intense.

So yes, so there are precedent cases of precision, not exactly similarly where you have a product, a drug product that is allowed to be manufactured and distributed while the other one is not able to. Part of the reason for that is the structure that NS proposed to us has literally never been done in U.S. biopharma. It's only been done in generics once the drugs are off patent. So, a patented product has never been in this type of agreement that NS had proposed. Our current plan is to continue to wait to hear the results of the injunction.

Typically, in situations like this where the drug is potentially life-saving, life extending or certainly disease modifying, the lawyers think that the courts pretty much would not stop the distribution of the drug because of the need by patients, and we provided up to five affidavits with our lawsuit from patients and physicians stating that deramiocel should be available to patients regardless of who distributes it because of its importance to patients. So, we don't anticipate being shut down on that level, and we look forward to the results of the preliminary injunction and also to potential decision. That was your second question.

What was your first one again, Michael? I'm sorry, I forgot.

I'm not sure if you could hear me. I think my connection might be a little bit bad here. But I just -- I think you actually answered the first part of that question with the second part of the question. So, I think we're clear on that.

Okay. Well, I'll take it as a two-for-one special.

Your next question comes from Catherine with Jones.

I guess -- can you expand on the definition of the private label distributor? What would that entail for Capricor, whether this would, in your view, constitute a breach of contract on their part?

So, we don't have a private label distributor agreement in place. We never did. The agreement that we have in place was a sales, marketing and distribution agreement. And the foundational aspect of it, which has led to this lawsuit is the transfer price that was originally built into the deal where NS Pharma would give Capricor a portion and just a portion, by the way, of the COGS in order to defray expenses and then NS pharma would take X number of doses, distribute them and then give us back our share of the royalties minus that small transfer price.

So pretty clear opportunity, seem like a rational deal structure at the time, except this transfer price would then set the average sale price, which would be disastrous, as I've said many times. So, there is no PLD relationship or agreement in place, and therefore, there's no breach. The problem is that we can't agree on the structure. They want a PLD and we would have liked a co-commercial agreement.

Okay. Got it. And then I recall there were some milestone payments that they were or owed to you on approval. If they're unwilling to walk away from the contract, are they still required to pay those milestones? What happens if they choose not to if the lawsuit is going on?

And I'm not a lawyer. So, I will say that please take my answer not from the perspective of a lawyer, but from a CEO guiding the company through this very challenging but exciting time. And so, what we have been made to understand from the lawyers is that the agreement as it stands is non-transactable. That means everything in the agreement is, at this point, not able to be acted upon. So, we are assuming that they're not going to be paying the milestones. We're not expecting them to pay the milestones.

And in fact, one of the things that we have actively considered is if there is rescission, we will probably pay them back the $50 million that they've paid us in initial upfront payments and then the two milestone payments. So, we're ready to do that. Happy to do that, actually, if that becomes necessary, and we're not expecting any future payments from them at this time.

Your next question comes from Matthew with AGP Global Partners.

So, first, is $60 million kind of a fair estimate of what would need to be paid back to NS Pharma in the event that both of you guys just kind of shake hands, as you put it, divorce and walk away? Or would it maybe be a little bit less? I know they've already paid you the $50 million. So, the color on that would be great.

We're expecting that if we have to pay something back, it would be the $50 million. But we don't know. We don't know what agreement we're going to come to. We don't know what the court is going to say. We stand ready to do so, certainly if that becomes part of the ruling in the case.

Understood. And then just pivoting a little bit to the opportunity in Becker. If you could give us just an idea of the market size, what your work has already been in reaching out, maybe to patients or providers for Becker, and the sevasemten, it's in Phase III clinical studies right now for Becker. Would deramiocel be an additive onto this potentially approvable drug? And has that been something that you guys have been looking into in Becker?

Yes. So, we're very much looking forward to the opportunity in Becker muscular dystrophy. I've been kind of eyeballing it for a bit. The pathophysiology of Becker is literally identical to DMD. It's just a slower progressor. The primary cause of death in those men with Becker is cardiomyopathy. And our cardiology key opinion leaders tell us that if you give them an MRI of a Becker patient and of a Duchenne patient, you can't tell them apart. So, we have a drug that treats the cardio as well as the skeletal muscle myopathy, and therefore, think it would be ideal for Becker.

The market size in the U.S. is about 5,000 patients per year. So, I think it's considered an ultra-rare group, and it's a very slow progressor. So, I have some idea of what I'd like to go after with the FDA. One of my first goals post-PDUFA will be to meet with them on Becker.

The reason that I'm waiting until after PDUFA is strategic because we qualify for a PRV and for a PRV, a priority review voucher, you have to be treating solely a pediatric condition. So, I don't want to sort of cloud it with an adult-based disease until we have clarity on our PDUFA for Duchenne and get our PRV and are able to use that to provide a source of non-dilutive capital to the company.

Great. And just on the sevasemten question, very quickly. Is that something you guys are looking at? Or is that part of the plan right now?

Yes. We feel like deramiocel is additive to literally any of the other products that are on the market right now or could be on the market in the clinical evaluation stage, given its activity, bioactivity, and efficacy in the heart. And that's in patients, by the way, with a diagnosed cardiomyopathy, not just healthy hearts.

And then, in addition to that, the ability to control inflammation and fibrosis can only help those other therapies be more effective. So, we look forward to partnering with the other drugs that will become part of the polypharmacy to treat DMD and, of course, Becker in the future.

Your next question comes from Boobalan with ROTH Capital Partners.

So maybe a couple of us. Firstly, I wanted to start or maybe delve a little deeper between MSP and ASP. So, maybe can you provide some context in terms of what the difference is between average selling price and the maximum sale price for a drug like deramiocel or maybe for rare disease drugs in general?

Yes. We haven't really been disclosing any of that information yet. We're still working on gathering that information. As I said, we are working actively now to build our commercial planning strategies. And so please stay tuned for more information on ASP, MSP, that kind of thing, as it becomes available.

All right. And then I think somewhere in your press release, it states that NS Pharma demanded that Capricor give up the control of regulatory relationships. So, my understanding is that NS Pharma was brought in to sell, market, or distribute deramiocel in the hospital setting. So why are they heavy-handed on the regulatory relationship? Because it looks like -- I mean, I don't know whether they just woke up one day and decided to meddle in regulatory aspects of deramiocel as well. So maybe any color on that?

Yes. So, it was really a situation where -- AJ can take this question.

Yes. I think they were focused, thanks, Boobalan, on with respect to the PLD that they were looking to propose for us, some of the regulatory relationships would fall under the guise of that potential agreement, which, of course, we're not comfortable with. So that's kind of the root of your question, I believe. And so that's fundamentally one of the reasons why, of course, it didn't work for us.

And then maybe one last. I think somewhere in the 8-K, it says that although the distribution agreement is no longer binding, blah, blah, blah, then the distributor may interfere with Capricor's relationship with third parties. So, I just feel that this, it appears NS Pharma has been in the driver's seat towards the process, and Capricor is playing a defensive game, even though Capricor is the innovator of the drug. So curious why, if the distribution agreement is no longer binding, what is the concern of interference coming from?

Yes. First of all, we don't feel like we're on the defensive. We feel like we're equal-weighted partners who are actively interested in commercializing deramiocel together, each of us playing to our individual strengths. Unfortunately, that relationship is no longer possible based on the existing agreement, and we're prepared now to launch on our own.

In terms of interaction with vendors, of course, in an 8-K, it's incumbent upon the company to put forth all of the potential risk factors. Boots on the ground, we haven't really had any problems with any vendors. In fact, they like working with us. We're efficient, we're smart. We're well-informed and strategic.

So, in practice, we're not seeing any problems with vendors. In theory, if one occurred, we would just find a different vendor to work with. There are lots of different vendors out there to take advantage of for commercializing products.

Your next question comes from Michael with Maxim Group.

Sorry, I got bumped off there before. I just had one follow-up I wanted to ask. You seem to be making great progress on prepping the commercial force, but there's a pretty quick time window that you have before the PDUFA date.

So, my question is, first, are you expecting that you will be able to hit the ground running, assuming this gets approved right on time and launches shortly thereafter? And then what gives you confidence that you will be able to build a sales force capable of addressing this market?

I'll take the second part first. The sales force becomes a relatively easy question to answer. In a rare disease, especially like Duchenne, with a very connected set of patients, physicians, and providers, it really becomes less about getting a big sales force, and we're not going after adult heart disease. But what we are going after is efficiency. And so, I have a lot of confidence that we'll be able to build a good sales force. We have a good reputation in the community and get it out there.

In terms of the distribution of deramiocel, we are the ones who have been getting ready to do so. We expect that we will launch in a time-efficient manner. We hadn't announced a date for launch. And by the way, neither had been. So, we're not gearing or guiding towards an actual launch date as yet.

We're working towards PDUFA. We're guaranteeing drug in an uninterrupted format to the open-label extension patients and perhaps other patients as the information becomes available, and we'll update the Street on our potential launch date as we get some clarity there.

All right. Thank you very much and best of luck. I think it's abundantly clear to anyone who's seen the data just how important getting access to this as quickly as possible.

Thank you so much, Michael. That means a lot. We feel the same way.

I will now turn the call back to Capricor management for final thoughts.

Yes. Thank you again for joining us today and for your continued support.

Again, for the boys and young men living with Duchenne and their families who have waited alongside them, we are eagerly anticipating the approval of daramiocel to treat DMD. The science is strong. The data are strong and before the FDA, and we are wholly focused on ensuring that when approved, deramiocel will be made available to every eligible patient as quickly and as broadly as possible.

For our investors, the thesis is straightforward: a potential first-in-class approval in defined rare disease populations, proprietary in-house manufacturing, a growing pipeline, and a leadership team with the conviction and capital to execute. We believe that we are building something that will create meaningful value for patients, for this company, and for shareholders who have believed in this mission. We look forward to a transformational summer. Thank you. You may now disconnect.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] This call may be recorded today. Thursday, March 12, 2026. I would now like to turn the conference over to CFO, A.J. Bergmann, for the forward-looking statement. Please go ahead, sir.

Thank you, and good afternoon, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. Statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, revenue and reimbursement estimates projected terms of definitive agreements, manufacturing capabilities, potential milestone payments and our financial position and our possible uses of existing cash and investment resources.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC between our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

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

Good afternoon, everyone, and thank you for joining us on Capricor's quarterly conference call. For our investors, collaborators, the team here at Capricor and especially the Duchenne muscular dystrophy patient community, thank you for your continued support and belief in our mission. We entered 2026 with a clear focus as we work to advance Deramiocel for potential approval for Duchenne muscular dystrophy in the United States. As we announced earlier this week, we were very pleased to report that the U.S. Food and Drug Administration has stated that our response to our complete response letter is complete and has therefore been accepted our previously submitted biologics license application or BLA for review. The agency assigned a PDUFA target action date of August 22, 2026. Clearly, this represents a significant regulatory milestone for Capa core and, of course, for all of those who have DMD. The BLA seeks full approval of Deramiocel. And while we have not yet had detailed label discussions with the FDA, our goal will be to position Deramiocel to treat as many eligible patients as possible consistent with the clinical data generated over more than a decade of development where both skeletal and cardiac muscle function have shown stabilization.

If approved, Deramiocel has the potential to become the first therapy designed to address both skeletal and cardiac disease manifestations of Duchenne muscular dystrophy. We believe that distinction is highly meaningful, particularly given that cardiomyopathy remains one of the most serious and life-limiting aspects of this disease. Our highest priority as an organization is execution, working closely with the FDA, preparing for a potential commercial launch and continuing to build the capabilities required of a world-class commercial stage biotechnology company. We believe the strength of our data, our manufacturing readiness as well as strong balance sheet position us for well -- position us well for this next phase of growth. Our current corporate vision is to build an infrastructure to support launch and commercialization of Deramiocel as well as to expand our pipeline to treat other indications.

Now let me turn to a brief summary of the HOPE-3 trial, the top line results of which were released in late 2025 and is one of the strongest data sets generated in this disease to date. The entire HOPE-3 data set was submitted to the FDA as the response to our CRO and was contained in our CSR. These data will now serve as the foundation for potential approval as well as for the preparation for commercial launch. For those of you who haven't been following our story, here is a brief recap of the HOPE-3 clinical trial. HOPE-3 is a pivotal Phase III multicenter, randomized, double-blind, placebo-controlled study evaluating Deramiocel and the treatment of Duchenne muscular dystrophy cardiomyopathy. The study enrolled 106 patients and met its primary efficacy endpoint on the performance of the upper limb, otherwise known as the pull as well as all Type 1 error controlled secondary endpoints.

The key secondary endpoint of left ventricular ejection fraction showed a 91% slowing of disease progression in all evaluable patients regardless of cardiac disease status and importantly, achieved statistically significant results. Furthermore, the results were even stronger in specific patients with a diagnosis of cardiomyopathy, achieving a p value of 0.01. Over the last decade, it has become apparent, the cardiomyopathy is one of the leading causes of mortality in Duchenne and stabilizing cardiac function has remained a major unmet need with current guideline directed care to include standard cardiac medications, which are somewhat effective, but do not work long term and certainly are not addressing some of the root causes of the cardiac dysfunction. The statistically and clinically significant preservation of left ventricular ejection fraction in patients treated with Deramiocel observed in hope underscores the potential of Deramiocel to address the DMG associated cardiomyopathy.

In addition to the earlier reporting of the positive top line results, which I just highlighted, yesterday, we presented additional data from the HOPE-3 trial in a late-breaking oral presentation at the 2026 Muscular Dystrophy Association Clinical and Scientific Conference. This data was of great significance, not only from a clinical trial perspective, but to the patient community because it highlights the effectiveness of Deramiocel in multiple endpoints all pointing to the direction of stabilization of the disease process associated with DMD. I would like to provide a few highlights here. One of the most important was improvement in a direct activity of daily living and one that is also correlated with quality of life. We show that there was a statistically significant improvement in a measure of upper limb function analyzing a home-based setting using a validated and published patient reported outcome measure, the DVA or Duchenne video assessment. The DVA was developed by frustrated caregivers and professionals who are considered a clinic-based assessments didn't tell the whole story, especially in a pediatric population. So they developed the DVA to track their sons at home.

The measure we specifically use was called eat 10 bite, and it is manifested exactly at the towns and represents not only the ability to self-feed but also to move one arm between table and mouth. Caregivers would video their sense during the prescribing the task at prescribed time post infusion of Deramiocel and then the videos were analyzed by a core lab and scored based on ability and compensatory measures. The DDA assessment of E10 bite supports the clinic-based measure of the performance of the upper limb and is supportive of the observed efficacy of Deramiocel that we have seen clinically. These data will also support payer discussions as it is a measure of fields, functions and survive. We also showed images of the heart of a treated patient as opposed to a placebo patient in the analysis of cardiac fibrosis. This is measured by MRI using a dye called gadolinium that can distinguish between healthy tissue and scar tissue. The data showed that there was significant reduction in fibrosis and the hearts of those that were treated with Deramiocel compared to placebo. For cardiologists, this is one of the most encouraging aspects of the HOPE-3 data because it's the aggregation of scar that ultimately leads the heart to fail and life to end for those with DMD. These data will also be used in our labeling negotiations it's important to begin treating the fibrosis as soon as it is evidence, which can be many years before there are functional implications.

Remember, the heart is a terminally differentiated organ -- so once a cardiac myocyte is lost, it cannot be easily replaced. Therefore, preservation of functional muscle and attenuation of fibrosis is one of the main goals in treating Duchenne cardiomyopathy, we were delighted to share these results with the Duchenne community as one of only 4 late-breaking presentations at the Muscular Dystrophy Association conference yesterday in Orlando. The full HOPE-3 data set has now been submitted for publication and a major peer-reviewed academic journal. One of the most important features of Deramiocel is, of course, a safety profile. To date, we have completed more than 800 intravenous infusions of Deramiocel across multiple clinical studies and the therapy continues to demonstrate a consistent safety profile. There is evidence of long-term safety and our open-label extension studies. Some of our young men participating in our HOPE-2 open-label extension study have been receiving continuous infusions for up to 5 years. I'm over 100 patients in our collective open-label extension studies at this time.

Deramiocel offers the potential opportunity for functional stabilization and also a well-tolerated safety profile. Taken together, we believe Deramiocel will become an important and foundational therapy in the treatment of Duchenne muscular dystrophy. We believe the hope 3 results provide compelling evidence supporting Deramiocel's potential benefit in Duchenne and further strengthen our confidence in the therapeutic profile of this product candidate. The consistency of the data across both cardiac and skeletal muscle related matters supports our view that Deramiocel may offer a differentiated and meaningful therapeutic approach for patients living with this devastating disease.

Turning now to the regulatory pathway. Following peak of the Complete Response Letter in July 2025, we were able to complete our response based on the results from the already completed HOPE-3 trial. Through both formal and informal interactions with the FDA, we aligned that the HOPE-3 data would be sufficient to support resubmission, and we have now submitted that data set in its entire team. The FDA classified the submission as a Class II resubmission and a signed a PDUFA target action date of August 22, 2026. Importantly, at this stage, the FDA has not identified any potential review issues and its communication to the company, which we view as encouraging. We also expect to be eligible to receive a priority review voucher upon approval of dermis. As these vouchers are transferable and can be monetized through sale, they represent a potential source of meaningful nondilutive capital that could further strengthen our financial position as we execute on our strategy. At the same time, we continue to make meaningful progress operationally.

Our in-house GMP manufacturing facility located in San Diego, successfully completed its FDA pre-license inspection in connection with the BLA review process last year. All Form 483 observations were addressed and the facility is operational and positioned to support a potential initial commercial launch. That facility can meet the commercial demand of approximately 250 patients per year. However, our current plan is to begin stockpiling commercial doses as soon as we finalize our label with the FDA. In addition, we are now well underway with an expansion to the second floor of that same facility which will add approximately 6 additional clean rooms. At full capacity, this expansion is expected to support treatment of approximately 2,500 patients per year or roughly 10,000 doses annually. Our current projections are that the new facility will come online and be able to support commercial manufacturing in late 2027. Commercial readiness activities are also continuing to advance. We are cognizant that the DMD community is anxiously waiting for approval and launch.

Due to the unmet need and our desire to have product to those who needed our hiring plan is based on preparing across key areas relevant to launch, including patient support, market access, reimbursement planning and physician education. Capricor is at a transformational point and as a result, we are not simply preparing for only the launch of Deramiocel for DMD, we are building Capricor to operate as a world-class commercial biotech company. That means maintaining a disciplined approach to execution, investing in our pipeline and ensuring that our infrastructure can support both potential commercialization for DMD and beyond. On the scientific front, we continue to strengthen the foundation supporting Deramiocel. In the fourth quarter of last year, we published a peer-reviewed paper in biomedicine describing Deramiocel's antifibrotic and immunomodulatory mechanisms of action including the release of exosomes and soluble factors that suppressed by broader gene expression. These findings were produced across more than 100 manufacturing lots, supporting the biologic, consistency and potency of the product.

As we move toward approval in Duchenne, we are also beginning to lay the groundwork for potential expansion into other diseases focusing initially on [indiscernible] muscular dystrophy, while engaging with regulatory authorities in Europe and Japan with the goal of bringing Deramiocel to as many patients as possible globally. Please stay tuned for more updates on this as we move through 2026. Now let me turn briefly to our exosome platform. The Phase 1 COVID vaccine study under Project NextGen with the National Institutes of Allergy and Infectious Diseases remain underway. Preliminary results indicate the StealthX vaccine has been well tolerated and demonstrated a favorable safety profile across all doses tested thus far. However, limited neutralization was observed in early results at the tested dose levels, which may reflect prior vaccination or infection and trial participants. Preclinical data in naive and primed animal models continue to support the efficacy of the StealthX COVID vaccine.

Final results from the trial, including the cellular response data are expected in the second quarter of 2026. NIAD has requested expiration of expanded dosing range at higher dose levels and the potential use of adjuvants. At this time, we are evaluating how these options may fit with our broader pipeline development strategy and will provide additional updates as they become available. Importantly, this program demonstrated the safety of StealthX exosomes and supported the continued development of our broader engineered exosome delivery platform. It also enables us to expand our manufacturing capabilities to support future exosome programs. We are continuously advancing our StealthX platform focusing on muscle targeting and capable of delivering multiple payloads, including siRNA, proteins and small molecules. The platform is being applied across several therapeutic programs currently progressing towards IND-enabling studies with a target IND filing in 2027.

From a financial perspective, we ended this year in a very -- last year in a very strong position. As of December 31, 2025, our cash position was approximately $318 million. This balance was significantly strengthened in the fourth quarter through a successful financing completed in late December, which included participation from dozens of new institutional health care-focused investors who we believe share our long-term vision for the company. Based on our current operating plan, we believe this capital is sufficient to support the business into the fourth quarter of 2027. Importantly, this outlook does not include any additional sources of capital including potential product revenue or the potential monetization of a priority review voucher, should we receive one upon approval. Earlier this week, Capricor's common stock was approved for uplifting to the NASDAQ Global Select market, NASDAQ's highest listing tier. We believe this milestone further enhances our visibility within the institutional investment community as we move into what we believe could be a transformational period for the company.

Overall, we believe Capricor entered this next chapter from a position of strength with our BLA under review, positive pivotal clinical trial data, manufacturing commercial readiness underway, additional pipeline opportunities beyond Deramiocel and the capital required to execute on our priorities. Most of all, we remain focused on what matters most, bringing forward a potentially transformative therapy for patients and families affected by Duchenne muscular dystrophin. With that, I will now turn the call over to A.J. to review the financial results. A.J.?

Thanks, Linda. For a brief overview of our financial position, which Linda summarized somewhat a moment ago, cash, cash equivalents and marketable securities totaled approximately $318.1 million as of December 31, 2025, and compared to approximately $151.5 million as of December 31, 2024. In December 25, we completed a public offering resulting in net proceeds of approximately $162 million, -- and in addition, the company drew down approximately $75 million under our ATM program in December 2025. Revenue for the fourth quarter of '25 was 0 compared to approximately $11.1 million for the fourth quarter '24. Revenue for the full year ended December 31, 2025, was also 0 compared to approximately $22.3 million for the full year ended December 31, 2024. As a reminder, our prior year revenue was primarily derived from the ratable recognition of our upfront and developmental milestone payments under our U.S. distribution agreement with Nippon Shinyaku all of which has now been fully recognized and was recognized as of December 31, 2024. I Total operating expenses for the fourth quarter of $25 million were approximately $29.2 million compared to approximately $18.8 million for the fourth quarter of $24 million.

Total operating expenses for the full year ended December 31, 25 were approximately $108.1 million compared to approximately $64.8 million for the full year ended December 31, 2024. The year-over-year increase was primarily driven by continued investment in clinical, regulatory and manufacturing activities as well as infrastructure expenditures supporting our Duchenne program. Net loss for the fourth quarter of '25 is approximately $30.2 million compared to a net loss of approximately $7.1 million for the fourth quarter of $2 million and net loss for the full year ended December 31, 25, was approximately $105 million compared to a net loss of approximately $40.5 million for the full year ended December 31, '24. Based on our current operating plan, as Linda mentioned a moment ago, our financial resources, we believe are available cash, cash equivalents and marketable securities will be sufficient to fund anticipated operating expenses and capital expenditures into the fourth quarter of 2027 and this expectation does exclude potential milestone payments under our agreements with Nipon Shinyaku as well as any strategic uses of capital that are not included in our current base case assumptions. And with that, we are ready to open the line up for questions.

[Operator Instructions] Our first question comes from the line of Ted [indiscernible] from Piper Sandler.

Sorry about that. I was on -- so firstly, congrats on a really exciting progress this year, this week. Great to see you down that NDA, excited about some new data coming out of that and obviously, the BLA acceptance. Are you guys anticipating any outcome, anything along those lines? And what commercial prep are you doing in preparation for potential Deramiocel approval?

Ted, I have to say it was great to see you in Orlando and you and I have been tracking each other for more than a decade on this. And so I'm very proud of what we're accomplishing together. Thank you so much for your years of good support. To answer your question, in terms of an AdCom, I've been getting a lot of questions about that. certainly, they haven't made any moves towards that at this point. I don't think anybody has had an AdCom in about a year. And I don't know if they're going to be putting one in place. I think with the departure of [indiscernible]. It's a little bit up in the air as to what's happening within [indiscernible] and what their manifest will be. Either way, we'll be prepared. The good news about the HOPE-3 data is it's so very strong. that I really would be delighted, whether I presented at an ADCOM or we proceed directly to PDUFA without it.

In terms of your second question, in terms of commercial readiness, look, Deramiocel has been in development for a long time. This data is extraordinary. Skeletal and cardiac disease attenuation and even improvement in those with cardiomyopathy and a product that's very safe and can be foundational and used with pretty much anything else that we can think of that is approved or coming along for DMD. So we are going to be building our own commercial program to support NS at this point so that we make sure that everything from market access payers and all of the other aspects of commercial planning is done with the same precision that we have done the development of Deramiocel to this point.

That's great. And one quick clarification, if I may. When it comes to the actual label, I know this is something that will be negotiated later in the review process. Do you believe the current label would be for the original DMD cardiomyopathy submission? Or would this be now for DMD more broadly? Just appreciate any clarity on that.

Thanks, Ted. So I think this again is the biggest question that we all have. We broached this with FDA both in formal and infra meetings really since the issuance of the CRO last July. They've been relatively noncommittal, saying that they'll discuss it during labeling. We certainly believe that the data supports the label both for DMD in terms of some of the skeletal muscle ramifications related primarily, I would guess to upper limb loss, which starts very young and/or to the treatment and attenuation of Duchenne cardiomyopathy that's our plan internally. Obviously, we'll keep the Street updated as we enter into those conversations with FDA. Currently, we believe that, that would be the best path toward both the therapeutic and also for the regulatory pathway.

It's great either way, a big win for the boys and for Capricor

Our next question comes from the line of Leland Gershell from Oppenheimer.

Appreciate the updates yesterday at. Just wanted to ask, could you Linda refresh us on the import of the 2 different cohorts of hope 3 as you had material that was made at 2 different facilities. I think in the past, you said that Cohort B may have been more of a regulatory focus. I just wondered where we stand today in terms of how the FDA will consider those 2 different cohorts and in the context of the pooled analysis, as they go through their review. And I also want to ask if you have an expectation around the timing that we should see a preview publication of the HOPE-2 data.

Well, thanks. I haven't thought about the 2 cohorts in a while. So the FDA has not mentioned in any conversations since probably 2024 when we decided to, under their recommendation file, the biologic license application for the cardiomyopathy based on the [indiscernible] natural history data. they then agree that we would prepare Cohort A and Cohort B and consider them as 1 trial because of the nonclinical comparability of the products. So they haven't talked about it, and we haven't talked about it. They have all of the raw data now. The good news is, and why I feel very confident is that cohort B independent of Cohort A was statistically significant in both skeletal muscle performance reforms to the upper limb and in the cardiomyopathy ejection fraction. So that would be the more important cohort to look at because that was what they're question was originally was that product comparable? It certainly is comparable in terms of its biologic activity. So we'll keep everybody updated if there's any more questions on the cohorts, but as far as we know, they consider 1 clinical trial, 1 cohort and the manufacturing facility here in San Diego, past PLI and so we're manufacturing ready.

In terms of an update on an academic publication, I know you are an academic scientists as well as I was, and we both know that One of the reasons people are in academic because the time is not of essence. So the academic review is ongoing, and we'll keep the community updated as soon as it's ready to be published or published.

Our next question comes from the line of Joe Pantginis from H.C. Wainwright.

So 2 questions, if you don't mind, Linda. So first, I know you haven't had labeling discussions yet, but do you -- could you just sort of describe a before and after snapshot of did you have prior labeling discussions ahead of the CRL and how you think that may be similar or different? And then second, and this is strictly from a devil's advocate standpoint. Could you envision any scenario where this might be a conditional approval?

So I can answer your second question first because it's easy. No. There's no way this would be a conditional approval. There there'll be no need for a confirmatory trial on a randomized double-blind, placebo-controlled trial that has its primary case secondary and type 1 error controlled end points. I can't imagine any scenario or they would make it conditional upon, but I will keep you updated on that.

In terms of labeling conversations, we did not get that far before the CRL was issued last time, it was actually right before we would have begun them, so we don't have clarity there. The only tea leaves I can read is that they knew the HOPE-3 was powered and the primary efficacy endpoint was performance of the upper limb. They knew that we had filed a cardiomyopathy BLA under the existing data. when I gave the CRL and then we had the Type A meeting, they wanted to see the HOPE-3 data unaltered in terms of its primary, so we believe that they will consider both the skeletal muscle aspects of the disease as well as the cardiomyopathy in the labeling. I suppose they can ask for anything. It's the FDA. And so we will keep the Street informed as we get information ourselves. But my current belief is that the data is very strong. It supports labeling for both cardiomyopathy and skeletal mussel myopathy and that's what we're planning for internally at this point.

Appreciate the comments and here's to the end of the potential FDA drama.

Our next question comes from the line of Kristen Kluska from Cantor.

Nice to spend time with the broad Capricor team this week in Orlando. So the Class II resubmission, can you just help us understand what parts of the review are going to be new versus what part are already considered checked off with the first process. So for example, like on manufacturing, mid and lead cycle review meetings, et cetera.

Yes. So thanks. So this is obviously our first go around with the CRL and a resubmission. What I can tell you is that -- we know the manufacturing facility pass prelicensing inspection, all 43 were signed off on and so we are good to go there. We anticipate there'll be several CMC-related questions that come across as we go through this resubmission process just because there were a few loose ends. None of them that were areas that would be a major concern or slow things down. They just want clarification. We think that the noncritical and other aspects of the BLA have already been signed up on, so we don't anticipate any changes there. Obviously, the only thing that was really cited in this complete response letter that was now officially resubmitted was the HOPE-3 data. So we assume that clinical and stats will be the focus of the new review.

Okay. And then just on capacity, I wanted to confirm in your prepared remarks, you said it could support 250 patients per year with potential stockpiling, but then you are expanding to reach 2,500 patients per year. What will you need to show to the FDA to get the expansion up and running? Like is there any comparability work or runs that you have to do to show them it's to see material, et cetera?

Yes. So we very strategically built the new clean rooms in the same building as the 250 capacity clean room. So it does reduce the regulatory requirements if it is on the same street address as the original facility. You obviously have to demonstrate in PPQ runs that the product is the same and passes all of your requirements. I think they come and do another inspection, but they would be slated to do an inspection in early 2027 anyway as part of there's general maintenance on manufacturing plants. So I'm not anticipating a long run in terms of getting approval of the site based on sort of those components or that situation, but we'll obviously keep you updated as to how that goes. I know Marty [indiscernible] has spoken publicly, and I know [indiscernible] prior to His exit also spoke publicly that they were thinking it would reduce the number of PPQ runs that are necessary from 3 to 1, which obviously, if that actually was put into place, could significantly reduce the time that a manufacturing facility would need to come online. So we're going very fast and anticipate getting those doses out to the commercial community as quickly as the FDA will allow us.

Okay. And then last question for me, just on MDA. Obviously, a lot of doctors there. We talked to plenty of ourselves. But curious what your takes were from these communications. This is really your big showing of the HOPE-3 data since it came out in December. So curious what the feedback is. Were there people even that were skeptical in the past that now that you have this data we're willing to take a closer look? Anything you could share would be really helpful.

Yes. Thanks, Kristen. And let me just say it was wonderful to see you in Orlando, and I appreciate you turning out and spending some time with our team. The event we hosted was exactly what I had hoped for, which is that physicians and investors and new patients than everybody could be together and learn about Deramiocel. And you're correct, you did speak to physicians who I think are echoing now what you just alluded to, which is that the HOPE-3 data has solidified belief in this product. across physicians, across patients really across the entire community is as I've said now a few times, randomized, double-blind, placebo-controlled trial. This primary endpoint had secondary end points hits Duchenne video assessments, which went along with the performance of the upper limb, as I said in my prepared remarks. And so yes, I think physicians who before were hopeful are now convinced and looking forward to putting their patients on and we're getting a lot more questions about prescribing availability launch that we -- than we ever have. So we're on fire here getting this product ready for approval and to launch.

Our next question comes from the line of Madison El-Saadi from B. Riley Securities.

Linda team. Congratulations on the data. Your partner has previously said that they expect to transition all clinical trial patients to commercial drug within 1 quarter of launch. So should we think of the, call it, 100 patients as kind of the base case for how many patients may be treated with Deramiocel in 2026, assuming approval? And then kind of to follow that. As you know, there are 7,000, 8,000 DMD pots maybe more with cardiomyopathy and just given the data we saw in the subgroup, it's hard to imagine there being a circumstance in which a patient does not go on this drug. I guess how do you scale beyond the 2.5 2,500 capacity? Is that stuff that you guys are thinking about? What would it cause -- do you have the cash -- maybe if you could just kind of help illustrate what that road map may look like.

Yes. Madison, thanks so much and also great seeing you and Orlando, thanks for making the trip. Always great to spend time together. So in terms of the OLE patients, yes, we have over 100 OLE patients on Deramiocel now. They all will be anxious to continue. We've seen that from the HOPE-2 OLE guys that have gone on for years. We anticipate all of them wanting to come over to commercial product. We haven't figured out a launch date yet. We just got the PDUFA date. So I don't want to give a year or a time line as to when, but yes, we will transfer all of them over seamlessly as possible is why we're focusing internally on market access at this point so that, that can happen seamlessly. There are Madison, a lot of young men that have been waiting in the wings for Deramiocel that didn't qualify for our trials for whatever reason. And I am getting a lot of calls now from them. So we will prioritize getting Deramiocel to any and all of those that either want it as quickly as possible. And I will say that, that is my mandate and why we are taking on manufacturing as aggressively as we are.

To that end and pertinent to your question, yes, we are now poised and in fact, ready to go forward with another manufacturing build-out in San Diego County very close to our current footprint that we'll be able to accommodate up to many more thousands of patients per year. We wanted to make sure that we completed our response. We want to make sure that we are proceeding well towards PDUFA before we invest that capital. But we now have internal confidence that, that will happen. And so we are actively planning to expand manufacturing to accommodate the needs of any and all of those that would like to have Deramiocel.

Our next question comes from the line of Catherine Novack from JonesTrading.

One thing we heard over and over at the meeting was about how patients with DMD do better with earlier intervention. Just thinking about how you can make the case based on hope the that its benefit to treat even before the development of cardiomyopathy, thinking that virtually all DMD patients will then tally develop cardiomyopathy not and not thinking of it as then a separate indication, but as part of DMD as a whole, what in the application supports that?

Yes. Thanks. We, of course, are laser focusing on those younger kids and those earlier in the disease process. As we've said and sort of have been gave for a long time. It's very safe. The infusion protocol is really easy. Even a little guy could sustain it very well. And yes, the data that we've seen has been highly supportive of starting as young as possible. Getting a prevention label is very difficult until you can show prevention, which takes years. So we're comfortable right now with the treatment of cardiomyopathy. The good news is because these kids now most of them start getting MRI at a very young age, as soon as they see one segment of scars, a cardiologist want to get them on Deramiocel. And so that will be a way that we will get more and more active in sort of the younger kids and moving towards that prevention target. Of course, if they go on for the attenuation of skeletal muscle function, myopathy, then we'll be able to track their hearts and be able to ultimately physicians will use it with skeletal muscle as well as cardio muscle myopathy, independent of progression of the disease.

And then can you remind us of the status of the European rights deal?

Yes. So we've been negotiating with NS Pharma for a while for rights to Europe. Honestly, we haven't been focusing on it internally. There was clearly a lot going on here with the CRL and getting HOPE-3 data ready and submitted. And now that we have a PDUFA date, and I feel like we're on a good pathway there. I can take a little bit of a breath and start focusing on our outside of U.S. activities. They do have the rights to Japan, so we're going to start working with PMDA and getting that going in 2026. And then in terms of Europe, we're evaluating those opportunities now, and we'll see sort of where the road map takes us and we'll provide updates as they become available.

Got it. It was great seeing you and great hearing all these updates looking forward to the year.

It was great to see you as well, stay well and see soon.

Our next question comes from the line of Boobalan Pachaiyappan from ROTH Capital.

So a couple from us. Firstly, so you mentioned about the Duchenne video assessment. Can you maybe tell us how many patients were included in the ceramic and how many in the placebo arm -- and also related to that, can you also comment on the inter-rater reliability of DDA -- because it is -- my understanding is that it's weighted by both care givers and professionals.

That's right. So the GBA is actually a qualified and validated assessment tool that has been published and not only been used by us, but by others and not only by those with Duchenne muscular dystrophy, but in other disease states. So it really is quite rigorous in its measurements. The recorders or the video takers are trained and how to do it, what to do, then they are sent to a facility where they are read by a blinded trained reader and the data has been delivered blinded to the company and ultimately treated like any other data set. So really a highly valuable data that is collected in a home-based setting. In terms of the number of patients that were in the DVA was about 50 patients in each group. So 50 in the Deramiocel group and then 50 in the placebo group.

Okay. And then is there a reason why the sample size is low for the late gadolinium enhancement secondary end point?

Yes. So we added LGE measurement for Cohort B only. When we were designing cohort A, there had been some press around gadolinium and the fact that it might aggregate in the brain, especially any children and could be a safety risk. And so we decided not to look at scar in Cohort A. During the time between Cohort A and the initiation of Cohort B, that was considered not to be a safety risk and the value of the data collected would be highly necessary to sort of show the correlation between function and scar. The data is dutiful and having been somebody that's worked in MRI for many decades. I'm really excited by the state as or the cardiologist. So it was only those in Cohort B that were eligible for the gadolinium [indiscernible] and then they also had to have certain levels of kidney function. So that's why those numbers are relatively small. But that data set is small but mighty.

Okay. All right. Maybe 1 last question from me. So the most recent PRV, as you probably know, it was sold for a very high price of $205 million. And we are also aware that there is a new sunset date, which is September 30, 2029. But do you think because this -- the new sunset date is 3 years from now, a little longer than 3 years. Is this going to ease up some pressure from the buyers, maybe that could maybe impact the price that you will be selling your PRV for, any thoughts on that?

Yes. If I had a crystal ball, I would be a really wealthy woman. But all that being aside, I don't know. I certainly know that PRBs tend to be valuable. It really depends on how motivated the buyer is to get it when they come available. And we certainly are going to get the maximum price for our PRV should we be able to receive one.

Our next question comes from the line of Matthew Venezia from Alliance Global Partners.

Congrats on the progress. First, I think I asked this question about 6 months ago. But how have the conversations at the FDA with you guys changed, if at all, since [indiscernible] left the agency once again?

Thanks, Matthew. Good to talk to you. So far, nothing. We got our letter reopening the file setting our PDUFA date, and that was almost in conjunction with his leaving -- so really, we have had no change in any interaction whatsoever at this point.

Okay. Got it. And another, talking about the age of the patient, it seems to be a drug where early intervention and these are early intervention is paramount to treatment. Is there -- do you expect a specific age on your label? Do you expect that to come up in labeling discussions with the FDA? I know like [indiscernible] had 4-plus on their label. But is that something that you expect to be ironing out with the FDA in your labeling discussions?

Yes. I don't know. We did never have a 4 plus center to that wasn't us. Age is a possibility we have treated down to A in our clinical trials. So we haven't gone younger than that. We don't know. Again, I know everybody's hypothesizing our labeling discussions to build their models. And I certainly am doing the same myself. I don't know if there'll be an age cutoff or a function cutoff as soon as we have clarity, though, we'll let you know. I would say, in building your models that the youngest we have actually treated to this point are those that are ambulant and down to age 8.

Okay. Great. And the 4 plus was for the device, not you guys. And just the final question. Yes. Just final question. The StealthX platform. Is there a specific time within the second quarter when we can expect Q1 trial results? Or is that kind of just up to NIAID.

Yes. I was just going to say you take the words from my mouth. It's an NIAID situation. So data trickles in really slowly. We're super anxious to see the cellular response. We're really interested to see if there's a T cell response. COVID is kind of a crazy virus to try and get on top of these days because pretty much everybody has either had it or been vaccinated multiple times. And so we're looking forward to seeing that data to continue to work with NIAT. But most importantly, I'll take -- thank you so much for asking me, we are very excited about our pipeline right now. We now have the opportunity to deploy on it. We were able to build out manufacturing for this vaccine. We know how to do it now. We know how to load the exosomes target the exosomes. And so while the vaccine program is important, it really was about learning experience that is now driving it towards the therapeutic exosome platform and stay tuned for more information on that as we progress through 26.

All right. Wonderful and congrats on the progress.

. I will now turn the call back to Capricor management for closing remarks. Please go ahead.

Thank you so much for joining us today. Thank you for those of you that attended the Musco Dystrophy Association and took some time to be with Capricor at that event. I will say that it gave me incredible joy and pride to be at that event and see how prominently Capricor was featured at MDA, but also in the hearts and minds of those with DMD. We really feel like we have the opportunity now to meaningfully improve their lives and look forward to continuing that journey with them and with all of you. So we look forward to seeing you out in the community, and thank you so much.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

So hi, everyone. Welcome to today's webinar with PPMD, where we're joined by Capricor Therapeutics, who are providing a community update on their Phase 3 trial, HOPE-3, which was evaluating their investigational product, deramiocel for treatment of Duchenne muscular dystrophy.

I'm Eric Camino, I'm PPMD's Vice President of Research and Clinical Innovation. I'm also joined on the call today by one of our regulatory consultants, Steve Zook, who's the Chair at Faegre Drinker Consulting. Also on the line, we have Dr. Craig McDonald from UC Davis and Dr. Jon Soslow, from Vanderbilt Children's Hospital. And then from the Capricor team, we are joined by their CEO, Linda Marban, their Chief Medical Officer, Michael Binks; and their Chief Development Officer, Mark Awadalla.

As we go through the presentation, if you have any questions, we will have an open Q&A at the end. So there is a chat function at the bottom of your screen. You can submit questions to that. We also had some questions submitted ahead of the webinar. We'll try to get to as many of those as we can during that portion. We are also recording this webinar. So if you have to step away or if there's someone who this would be relevant to, it will be posted to PPMD's websites. You can always come back and take another look or share it with someone who this might be relevant to. But I think with that, we can get started.

So I'm going to hand it over to Linda to start the presentation.

Thank you so much, Eric. This is -- I don't know. I think this might be the sixth time we've done a webinar with PPMD. We started our clinical journey, a full -- I don't know 10 years ago with the HOPE-Duchenne study, which I'll talk about in a few minutes.

I just want to give a minute shout out to Pat Furlong, who has been a mentor and a guide to Capricor from before 2016 where we met in a small room at Cedars-Sinai Medical Center and reviewed MDX mouse data and she shared the story of her boys and her hope of using cell therapy to make them better. And I'm really proud, Pat, this is dedicated to you and your efforts and to all those boys and young men that have come before and after.

Next slide, please. We're a public company. I won't read this forward-looking statement, but our filings are up to date with the SEC. And if you have any questions, please feel free to reach out to our legal team or to any of us.

Next question. Next slide. Eric just went through the attendees, so we can skip to the next slide. Thank you. So today, I'm going to provide data that has previously been presented primarily as our topline data of the HOPE-3 clinical study. First, I'm going to go through deramiocel and talk a little bit about how it works, why it works, in the previous clinical experience. We're going to talk a little bit about the overview of HOPE-3 who the patients were and how they came in. And of course, the most important concern of every person with Duchenne safety of the trial and then who the patients were in the trial.

Finally, we'll get to the part that many of you are so interested and curious about, which is the efficacy, which will be co-presented by Dr. McDonald, who will present the skeletal muscle and performance of the Upper Limb data; and Dr. Jon Soslow will follow up with the cardiac data. And finally, I will come and talk to you about our next steps with the regulatory filings and bring you up to date. This is a very proud day for us and you are the community that I most want to talk to.

So I'm excited to share with you. And with that, let's start the program. Next slide, please. So I just confirmed about 5 minutes ago, and I stated in my intro remarks that our clinical journey with Duchenne muscular dystrophy started literally 10 years ago in January of 2016 with the HOPE-Duchenne clinical study. There was a study done primarily at Cincinnati Children's Hospital, where we looked at potentially reducing the amount of scar in the heart as well as looking for cardiac functional improvements in a patient population that has a significant amount of cardiac scar already in their heart.

This was our first foray into Duchenne dystrophy treatment, especially the cardiomyopathy, 13 patients were in the treated group and 12 were followed as natural history. And what that study showed was that we had a reduction in scarring in the heart, just with 75 million cells than once over the course of 12 months. And we also saw improvements in skeletal muscle function, primarily in the first quarter.

Why am I spending time on HOPE-Duchenne, which was 10 years ago because the data that I'm going to share with you today shows the connection of all of the clinical development that deramiocel has undergone in those 10 years with consistent clinical data across the time frame. We saw a reduction in scar. Therefore, now in HOPE-3, we saw a reduction in scar. We went ahead with HOPE-Duchenne, the open-label extension to show that multiple dosing was safe. We had never considered multiple dosing before. Those patients allowed us to test that, and that was very safe. So we were able to then go forward with HOPE-2.

As you know, HOPE-2 was published in the Lancet. We showed significant improvements in skeletal muscle function, as well as preservation in cardiac function across multiple endpoints. You guys have all seen this data over time or it's available for your [indiscernible] by looking at the Lancet article or any of our slide decks.

Again, let's just go on the journey. So a reduction in scar transnfunction, improving cardiac function, skeletal muscle function in HOPE-Duchenne, multiple dosing and the open-label extension of HOPE-Duchenne. Significant improvements once we've gone to multiple dosing and Hope-2 4 times a year, 150 million cells intravenous, now we're seeing improvement in skeletal muscle function, extension of functional ability that is literally double what would be expected and then preservation of cardiac structure and function as well. And generally, it was well tolerated. The open-label extension of HOPE-2 has probably been the most important study that we have ever been able to be part of in Duchenne. We have treated these 13 young men for over 4 years, some of them going into their fifth year.

We've shown the data at your conference as well as at multiple other conferences where we show a sustained reduction in skeletal muscle dysfunction, sustained reduction in cardiac muscle dysfunction as well measured by ejection fraction and a very favorable long-term safety profile.

Talk to the guys in open-label extension, and they will tell you that they show up literally on the day that their infusion is allowed to be scheduled next because they have already started to feel a decline in their function and they want to come back and get that boost again. So very safe and very effective.

Now finally, I'm not going to waste any more time. I'm going to talk to you about the HOPE-3 clinical study. As I said, many of these data slides have been shown before, but I wanted to make them very specific for this community. And with that, we'll go to the next slide. So I'll just take one more second to tell you how does deramiocel work. It is a multimodal mechanism of action. Our potency assays, which is designed to measure lot-to-lot consistency batch to batch, ability to induce the same biology over and over again. So it would be the same as you expect the same dose of ibuprofen and [indiscernible]. We want to give you the same dose of bioactivity in deramiocel. The active ingredient is called the CDC, the cardiosphere-derived cell. The 3 studies that are highlighted here are also reflected in our mechanism of action, which is antifibrotic immunomodulatory and anti-inflammatory.

Today, we're primarily talking about clinical data, but if you're interested in digging more deeply into our mechanism of action. On the Capricor website, our Chief Operating and Scientific Officer, Dr. Christi Elliott has done a really nice YouTube video, discussing how the mechanism of action was determined and how it's measured and how it impacts clinical function and performance, and that's available for your perusal at any time, as I said, on our website.

Next slide, please. So the HOPE-3 pivotal trial design, it's a randomized, double-blind, placebo-controlled trial, we randomized 106 patients 105 patients were part of the ITT, the one patient withdrew consent prior to his first infusion. It was a 1:1 randomization, which as you know, which means half the patients got deramiocel and half the patients got placebo, and they did not know what they were getting.

We measured baseline function as far as the performance of the upper limb, which is the primary efficacy endpoint. We did a screening measurement using cardiac MRI of our secondary endpoint, so we can measure blood ventricular ejection fraction and then in addition to that, what we did is measure certain other types of way of sort of belts and [suspending] are being careful to understand that the data is very consistent.

So it's not just the performance of the upper limb is the primary a type 1 error controlled secondary is the mid-level pool, the global statistical test, which encompasses cardiac, skeletal and a patient reported outcome, LGE, which is a measurement of cardiac scar. Taken together, what we have seen is that when you look for statistical significance or how likely the data that you are seeing is due to chance what you're seeing and HOPE-3 is unequivocal clinical benefit for those patients that received deromiocel compared to placebo.

Next slide, please. So I'm going to ask Mark Awadalla, our Chief Development Officer, to run through the demographics with you briefly and talk a little bit about the patients who are in the HOPE-3 clinical study. Mark?

Thank you, Linda. As Linda said, we randomized 106 patients into the HOPE-3 trial. 105 patients of the trial were dosed with deramiocel with investigational product. The study was well balanced across factors such as age, PUL entry item score and the baseline full score. We had 83 patients that were part of the second key secondary endpoints that had evaluable MRIs, and it was also well balanced with starting LVEF. Out of those 83 patients, 65 of those patients had documented cardiomyopathy. The majority of the patients that were enrolled in the trial were non-ambulatory and the majority of patients are currently on study.

Yes. So thank you, Mark. Now I would like to ask Dr. Michael Binks, our Chief Medical Officer, to discuss perhaps the most important aspect of deramiocel for long-term utilization, and that is the safety profile. Dr. Binks?

TThanks, Linda. Yes. So this is the largest study that's been conducted with deramiocel. So it's a good opportunity to see what the safety profile is likely to look like in broader use. And of course, it's in a blinded setting, so we can see the adverse event rates with placebo. It's clear that with deramiocel, there are more adverse events that the investigator thought was due to the infusion. These were mostly mild in grade or moderate. And almost all occurred within hours of the infusion and resolved spontaneously or with the use of antihistamines. And there were -- there was complete resolution at 24 hours in by far the majority of cases.

Now the symptoms were things like headache, fever, an increased heart rate in some, some nausea, a little bit of vomiting and some. That's the sort of picture of the symptoms that we saw. There was only one serious adverse events relative to 5 in the placebo arm. And this was of a severe infusion reaction, but again, resolved within 24 hours with no sequelae, no long-term consequence. So overall, we're pleased to see that there was no new safety observation. And of course, that's in the context of the previous HOPE-2 study data, but importantly, the HOPE-2 open-label extension data following patients out for 4 years of treatment. And in that time, we saw no new safety finding. So overall, we believe this is really a safe and well-tolerated drug.

So with that, I'm going to take 1 minute and introduce Dr. Craig McDonald to present the skeletal muscle data. None of you need a real introduction to Dr. McDonald. He's probably one of the most visible proponents of developing therapeutics for Duchenne muscular dystrophy and has therefore been on many of these webinars as well as in front of the FDA multiple times to try and make life better and longer for those with Duchenne. Dr. McDonald?

Great. Thank you very much, Linda, and it's really my pleasure to participate here and present the skeletal muscle data. I want to just really focus on the target population here that was included in the HOPE-3 trial. This -- much of this was really based on our key learnings from the HOPE-2 trial. But if you look in that upper diagram, this gives you the performance of upper limb entry score. And historically, a very similar evaluation called the Brooke score has been done for decades in Duchenne patients. This was really adapted from the Brooke score. And patients that have actually complete really overhead reach without any type of compensation are considered a PUL entry score of 6, that's shown in the upper right.

Those that can get their hands above their scalp with compensation would be a PUL entry score of 5. Those that get their hand up to the shoulder height level and above pole entry score 4. Those that can get a weighted object to the mouth. And what we do essentially in the Brooke score, it was an 8-ounce glass of water, which is about 240 grams of weight. And the clinical evaluators here actually put a weight, a cooking weight in the cup, and we get the patient to get the cup up to the mouth. And that pole entry score of 2 is an unweighted hand up to the mouth level. So it's really these pole entry scores of 2 to 6 that comprise the target population for the HOPE-3 trial. And from our previous learnings, we know that most of the progression in the total pulse score typically occurs in those patients that have poll entry scores of 2 to 5.

But those that have some initial decrement in the upper limb even with a poll entry score of 6 also were included. We also included some patients who were in the late ambulatory phase of the disease because what we've learned in natural history study, and these are 2 graphs that have actually been developed from our published natural history study with the CTAP group. This was based on natural history data provided by Kure Duchenne and had been derived from patients in the Prosensa Duchenne natural history study. But the data on the left actually shows that patients that have a 10-meter walk run test time of greater than 10 seconds.

Actually, if you follow those patients over time, this is the Kaplan-Meier survival curve, essentially 100% of those patients will lose ambulation over the next 2-year period of time. And so we've actually defined that 10-second, 10-meter time as approaching loss of ambulation. And what we learned importantly in the data shown on the right is that if you take patients in that late ambulatory phase defined as 10-meter walk run time greater than 10 seconds, essentially 100% of them will actually lose upper limb function over the next 2 years. So 100% will actually transition from a pole entry score of 6 to a pole entry score of 5 or lower. And so that really -- that natural history data really informed the inclusion criteria for this trial. We included actually ambulatory patients that were destined to lose upper limb function that had a 10-meter walk run time of 10 seconds or greater.

And these patients, as many of you know, with Duchenne patients, these are patients that are historically never included in ambulatory clinical trials because they're felt to be of too great a risk to lose ambulation. And they're really sort of in no man's land as far as being able to participate in a clinical trial. So we purposely included those late ambulatory patients as well as the non-ambulatory patients with poll entry scores of 2 to 6 in this trial. Next slide. So this is, again, the data on the primary endpoint, the total Pulse score, the most up-to-date version of the poll was utilized, the version 2.0. And I think what is important that the FDA really hones in on is what's the primary prespecified clinical endpoint in a clinical trial? And does the trial meet that clinical endpoint with statistical significance.

And this actually shows data in terms of the mean percent change from baseline in the deramiocel-treated patients shown in the blue versus the placebo patients shown in the gray. And what you can see there is there was much greater decline in the total Pulse score in the placebo-treated patients versus the patients receiving cell therapy and essentially a 54% slowing of progression of upper limb deterioration. This was highly statistically significant with a p-value of 0.029. And so again, this was prespecified. The statistical analysis plan was sent to the FDA several months prior to the unblinding of the data. I think we have perhaps either next slide or next window on this slide, if you advance here, if we could.

Yes. So with that, I'm going to turn the discussion over to the key secondary endpoint, which was cardiac function and measures of structure. So Dr. John Soslow from Vanderbilt is going to go over the objective measure of cardiac MRI. John?

Thanks, Greg. So I'm going to talk about cardiac MRI as an outcome measure. And as many of you probably know already, cardiac MRI is really our best outcome measure in patients with Duchenne muscular dystrophy when we're looking at the effect on cardiomyopathy. And this is because there's no concerns with acoustic windows. It's the gold standard for measurement of ventricular ejection fraction and volumes in adults and children. And it has significantly improved reproducibility compared with echocardiography, which means that we get a much tighter evaluation of function, and that means that we can enroll less patients and really detect a smaller change using cardiac MRI. If you go to the next slide, we and others have shown that left ventricular ejection fraction, left ventricular end diastolic volume and end systolic volume all associate strongly with mortality.

So at the top here, LVEF for every 3% decrease, there's a significant increase in the association with mortality. So the idea of preserving or stopping or slowing that left ventricular ejection fraction progression is really the most important thing that we can do in these patients when we're talking about treating the cardiomyopathy. You go to the next slide.

This is the data from the secondary endpoint, LVEF in all patients. And this is on the left, the mean change from baseline in left ventricular ejection fraction at month 12. And you can see that there's a significant difference between those on deramiocel in blue and those on placebo in gray. So that the deramiocel patients had a 91% slowing of their progression of disease. And I think this is really well illustrated in the figure on the right, which is the raw mean change from baseline. And as you can see, between baseline and month 12, these patients had almost a complete arrest of their cardiomyopathy progression. So they really stabilized. And there was a significant difference between the patients on deramiocel and the placebo patients of almost 2.5 percentage points, which is about what we see in terms of progression of disease, which is 2% to 3% per year in almost every study that has been published.

If you go to the next slide. So I'm going to talk a little bit about the pathogenesis of disease, so the underlying cause of what causes cardiomyopathy. On the left, you see an old autopsy specimen of a patient with Duchenne muscular dystrophy. And those arrowheads are pointing to white areas, which are scar and fibro fatty infiltration of the heart. And what happens in DMD, and so the circle right here is the left ventricle. And what happens is that the myocytes, so the muscle cells in the heart undergo chronic inflammation and then resolution of that inflammation and healing.

And then eventually, that inflammation leads to cell death. And the cells die and are replaced by scar and by fat. And so we see that fibro fatty infiltration. And that happens in the left ventricle in what we call the free wall and then it progresses to the rest of the heart. And we can image that using cardiac MRI. So that's what Linda was talking about earlier, looking at late gadolinium enhancement. And so this image on the right is an example of a late gadolinium enhancement image where you see that bright area pointed out with the arrow. And that bright area is that fibro fatty infiltration. So it's essentially an illustration of the replacement of the normal cells of the heart with scar and fat.

And if you go to the next slide, there's been some really nice work done by [indiscernible] out of Cincinnati that showed that when they looked at all the cardiac MRIs in their DMD patients that the patients without LGE, so without that Late Gadolinium Enhancement or the fibro fatty infiltration are shown here in green. They had a very stable left ventricular ejection fraction. They really didn't have progression of the cardiomyopathy of their disease. Once these patients had identifiable Late Gadolinium Enhancement, so once we were able to see scar in their hearts, that's when their hearts began to progress and they started to see progression of left ventricular dysfunction. So that really is the onset of cardiomyopathy.

So that's the first point is that when you have LGE or cardiomyopathy in general, that's when you start to see progression of left ventricular dysfunction. The second point is that we really think that this fibro fatty infiltration is the primary cause or at least the best way we can image the cause of progression of cardiomyopathy. So if we could stop the progression of scar, that would have a huge impact in the disease. So we go to the next slide. This is a secondary analysis of LVEF in just the patients with the diagnosis of cardiomyopathy. So these patients either had known Late Gadolinium Enhancement, already had LVEF dysfunction or had a diagnosis of cardiomyopathy at their primary center.

And these are the patients that we would expect to have a more rapid progression of cardiomyopathy because they already have scar like we talked about. And in this subgroup analysis, deramiocel performed even better. So that means that the patients with placebo had significant progression of disease. And again, the deramiocel patients had stabilization such that there was over a 3 percentage point difference between the 2. So I'd like to -- next slide, I'd like to turn this back over to Dr. Marban.

Thank you, John, and thank you, Craig. So I'm going to talk about this graph, and then I'm going to make a few comments in general about the data. So what this is called is a fourth plot. And you guys probably have seen me present one similar to this from the HOPE-2 study before, but just to remind you that it basically shows the propensity of multiple endpoints either due to a treatment effect of the drug that you're giving or whether or not it's driving towards placebo or basically no clinical efficacy. And what we can see here in the performance of the upper limb 2.0, our primary efficacy endpoint, it's trending, in fact, statistically significant towards deramiocel being the effective in treating the skeletal muscle myopathy.

We saw the key secondary endpoint, a key secondary endpoint is very important nomenclature because it allows for labeling opportunities. We saw improvement and statistical significance in cardiac function in the patients that were treated with deramiocel compared to placebo. Digging down a little deeper, we saw that we had even more statistical significance in the mid-level dimension of the POL 2.0. Dr. McDonald did a great job of describing that, but I'll just remind you that's arm function, so might be correlated with the ability to feed yourself or take a drink of water or as Pat used to say, to hug your mother. The total global statistical test was also statistically significant in terms of field function and survived metrics, so skeletal muscle function, cardiac improvement of left ventricular ejection fraction. And finally, a patient-reported outcome measure called the PGI.

And then finally, as John just talked about late gadolinium enhancement, which is the amount of scar in the heart, and we see that, that was statistically significant too. All of these are what statisticians call type 1 error controlled. That means that you put very, very tight regulation around them mathematically as to whether what you're seeing can be due to chance or whether, in fact, it is actually due to treatment by your therapeutic. So taken together, we are going to present this data to the FDA. We believe that this should answer all the questions raised in their complete response letter on the BLA that was submitted last December, and we're hoping to move rapidly towards an approval for deramiocel in DMD, not only now cardiomyopathy, but also skeletal muscle function.

Next slide, please. I'd like to close with several very important points. First of all, deramiocel is, I would call it a [indiscernible] player in a sandbox or can be used in combination with existing therapeutics. Theoretically and practically, because of the mechanism of action of immunomodulation and antifibrosis, deramiocel may over time be shown to even improve the impact of gene therapies and exon skipping therapeutics because you want to keep the inflammation down as you allow new muscle to be created and deramiocel drives the repair processes in and of itself. So whether you are a patient that received a gene therapy, an exon skipper or whether you're on stable med regimens like corticosteroids or standard cardiac meds, which were required in our trial, corticosteroids and then most of our patients, in fact, almost all of them were on cardiac medications, deramiocel can be additive.

And it's very important to understand that it's safe effective and can be used along with other therapies, as I just said. Next slide, please. So what are the takeaways from today? The Phase 3 HOPE-3 study met its primary efficacy endpoint of the performance of the upper limb 2.0 and the key secondary endpoints of left ventricular ejection fraction or how the heart meets the needs of the body, both achieving statistical significance. To remind you, for those of you that are not statisticians, statistical significance is really benchmarked against the idea of how likely the data that you're seeing is due to chance or luck versus likely a treatment effect. And sort of the gold standard cutoff is 5%. If you have something less than 5%, which we have 3% and 4% here, then it's very likely that what you're seeing is almost exclusively due to a treatment effect and not some type of chance. And that's why the FDA likes adequate well-controlled study so that they can make these determinations between chance and efficacy.

Statistical significance I just described, it was achieved in all type 1 error controlled secondary endpoints. Type 1 error is the statistical term, and that means that you are assuming that something -- the error would be that you assume that it works when it really doesn't. These are controlling for that. Deramiocel is a potential first-in-class therapy designed to treat DMD skeletal and cardiomyopathy. I do not believe that there is anything else approved. There is no medically directed guideline therapy specifically for the cardiomyopathy associated with Duchenne. And therefore, deramiocel can be the first-in-class for that. A very safe and tolerability profile consistent with prior clinical experience. Most importantly, the HOPE-2 open-label extension guys have received over 16 doses each at this point, and they are pleased to report both in documents and also in anecdotes that they are doing very well on deramiocel from a safety and tolerability as well as efficacy perspective.

We are planning -- I guess this slide is [indiscernible]. Planning to submit our response to the complete response letter, incorporating the HOPE-3 data following alignment with the FDA in our Type A meeting, and I can answer questions on that if anybody has them, sure you do. And next slide, I just want to thank everybody, the patients that have participated over these 10 years, the Parent Project muscular dystrophy who have been our allies and friends for more than 10 years with, as I mentioned, Pat sort of coming to an initial meeting to discuss the potential therapy over 11 years ago. I can't say enough thanks to Dr. McDonalds, who is probably one of the most caring physicians and thoughtful leaders I've had the pleasure of working with in my long career in cardiac physiology. He always has something important to share and has really got the patients in mind with everything that he does.

Dr. John Soslow, John and I met at a PPMD meeting. I liked his attitude, and I like the fact that he really was able to coalesce the ideas of using MRI to really be able to drill down into what is causing the pathogenesis of cardiomyopathy in Duchenne. I approached John and John, I can't say thank you enough for working with us. And Chad Villa, who's not on our call today, but I think most of you know Dr. Villa from Cincinnati Children's, is my news and my mentor and the fibro fatty replacement and some of the other types of pathology associated with Duchenne cardiomyopathy. And I look forward to continuing to work with Dr. [indiscernible], all the HOPE-3 investigators as we get this product across the line to commercialization. I think that's the end for us. Eric, I don't know if you want to make some comments and take some questions.

Yes. Well, thank you all for the presentation. I think we're just going to hop in. I've seen a bunch of questions come in. We had a handful that were submitted before. I think what we'll probably start with is some of just the regulatory kind of process questions, and then we can dive into some of the HOPE-3 data. And I'll probably when we get to those go back to the specific slides that were relevant. But we did have a handful of questions kind of come in around timing and things like that. So I think -- just first question here would be, how soon do you anticipate having a formal submission for this HOPE-3 data to the FDA for filing and review?

Yes. So our goal is to send in a response to the CRL with this top line data and some other data before the end of this calendar year, and then we should have some feedback from FDA by the end of January as to the path forward. We're sincerely hoping that with the strength of this data, they will realize that the data that we presented in our BLA was, in fact, reflective of the efficacy of deramiocel, and we hopefully will be able to move relatively quickly to approval.

Great. And then the other piece of this that I think is always a little bit tough is we're learning more as we continue to have more approvals and what this process looks like as a community, but it's always a little bit challenging. And so given that there was the previous BLA and the CRL. Do you maintain your kind of priority review status as you go through this process? Does any of that change at this time?

Yes. So right now, the FDA has told us in response to our Type A meeting, which happened in August that they would consider this a Class II resubmission, which allows them 6 months to review the file. We are hopeful because there are so many patients that are waiting in the wings to get deramiocel that perhaps couldn't qualify into a clinical trial, but feel like the time is ticking in terms of their cardiac function as well as their skeletal muscle function that hopefully we'll be able to go faster. But right now, we do not have a priority review status.

Okay. And then you also said that you may have some of those responses to the CRL. Is there any other kind of pending responses that need to be addressed aside from this new Phase 3 data?

No. So there were also CMC chemistry manufacturing controls issues raised in the CRL. But luckily, we have already addressed all of those and received confirmation from the FDA that they have received those answers. So we don't expect to have CMC issues. And I can remind the community that we will be proud to announce last year that we passed up pre-licensing in section of our commercial manufacturing plant here in San Diego. And so we are ready to go commercially as soon as we can get this across the line.

And then that was all obviously very FDA specific. The other -- we did have a question, we have a lot of international families as well and who are on. And so I think a question of, will you be making submissions to like globally, kind of what's the plan for outside the U.S.

So we're just gearing up on that now. We had a planning meeting this week internally to sort of think about our OUS plans. Obviously, we would like to take this worldwide. We do have a relationship with Nippon Shinyaku to sell, market and distribute both in the U.S. and in Japan. So Japan is on the radar. And in terms of the European countries, EMA and MHRA in the U.K., we have had conversations with them, and we'll prepare data packages as the opportunity becomes likely and available.

Okay. Great. And then if we could go back to Slide 6. So as questions were coming in, I was trying to mark them and match them up to maybe the content that would be most relevant. So just to start, again, we did have a question, I think, essentially asking how does this differ from maybe other approved therapies? I think sometimes families -- they say anti-inflammatory and they go, okay, well, I'm already on a steroid. So can you just maybe talk through a little bit of the mechanism? And then just a reminder, you said that someone from the company has made a mechanism of action video that the families can view as well.

Yes. So this is one of the aspects of the development of deramiocel that I am most proud of. It is a cell therapy with a defined mechanism of action. I want to reiterate for those of you that may be joining or interested for the first time, it is not a stem cell. These cells do not go into the body. They do not become part of injured tissues and replicate themselves. What they do is they're infused in by intravenous delivery. They typically are stored in the microvasculature of the lung for some sort of amount of time, days to weeks primarily.

Don't worry, there's no respiratory consequences. We even treated ARDS patients during the COVID pandemic and did not see any changes in oxygen saturation. So don't worry about that. From there, exosomes are release exosomes are typically taken up by the macrophage, which is one of the major cell types in the immune system. The macrophage themselves goes in through a clonal expansion, releasing exosomes that drive what we would primarily call immunomodulation, which is driving sort of the immune system or from angry and inflamed because there's all these protein pieces floating around as the body is desperately trying to make dystrophin to healing and repair mode, which is evidenced in this immunomodulatory bar graph shown in the middle here.

Dr. Elliott of our team spends a significant amount of time on discussing in the youtube segment on our website. And all of that tamping down the immune system then allows the cells to be antifibrotic, actually reducing the amount of fibrous tissue that is created, allowing for healthy muscles to highlight and be repaired and therefore, that is likely the reason for the improvement in skeletal as well as cardiac muscle function.

Thank you. And it will be helpful, I think, to families have additional, they can go kind of watch that video, which should also be helpful. On Slide 9, when you were talking about -- I guess, this is twofold. So one, just general question around kind of like what's the -- for the procedure, kind of how long does a typical infusion take? And then there was also just a question with this of -- I think, Mike, you noted that there was use of antihistamines to kind of help deal with some of the AEs that were seen. Was this -- was that implemented into the protocol as kind of prophylactic? Is that something that you anticipate? Or is this more just kind of by decision of the treating physician?

Yes. So the -- sorry.

I'm going to ask Dr. McDonald to take that question.

Yes. So actually, due to some early experience with some allergic reactions to the cells, we implemented a pretreatment protocol where patients get a high dose of oral steroids sort of in addition to their usual steroid regimen and then antihistamines, essentially H1 and H2 blockers. And that fortunately has helped prevent serious infusion-related reactions. And we've been really quite pleased with how that has worked in terms of preventing these more significant infusion-related reactions. The infusion itself usually takes just about an hour and usually very well tolerated. Sometimes patients get a metallic taste in their mouth. That's from one of the excipients or the preservatives.

Patients actually on placebo, similarly get the same metallic taste just because they receive the same preservative in the placebo preparation. But all in all, this has been, I think, extremely well tolerated and the pretreatment protocol has really worked beautifully. I don't see this ever being used in a home infusion setting because I think it would be far too risky to have a patient have an infusion-related reaction without a medical team present that can urgently and emergently deal with such a reaction. So I see this really being done at an infusion center at a -- at a medical center that patients go to. I don't see this really being done on a home infusion basis.

And then I think on the -- we had a question related to both -- so both the pull-in and some kind of ambulatory. So maybe on the next -- maybe that was Slide 10, where you started to talk about some of the prognostic factors and looking at some of the late ambulatory patients. So there's a question of basically, is this something that could also benefit ambulatory boys, not just the non-ambulatory. And so knowing that you enrolled some late ambulatory patients, do you -- 2 parts, I guess. One, do you have any functional data from kind of lower limb functional outcomes? And the other piece of that would be, do you anticipate this being something that could be used in younger ambulatory patients?

So in terms of lower muscle function data, except for 2 patients in HOPE-Duchenne 10 years ago, we do not. For the rest of that question, I'm actually going to ask Craig again to take it because I think the issue of the younger kids and sort of the opportunity for treating is far more relevant from the physician. Dr. McDonald?

Yes. I think by all means, this would potentially benefit younger ambulatory patients with Duchenne. I think realistically, the FDA is likely to look predominantly in the patient population that was actually studied, which included these light ambulatory patients in non-ambulatory patients. And I can't say whether they would consider a broader label. But I think with a biologic like this, I think the FDA has oftentimes provided approvals that are more consistent with the patient population that has actually been studied.

I think there will be emerging data. I think we are in the process of discussing and planning of potential clinical trials that might target some younger ambulatory patients. I think there's some emerging preclinical data that if you treat mice with essentially Duchenne muscular dystrophy, and you treat them very early in the course of their disease, you can actually have a quite nice prevention of disease progression in fibrosis and so forth.

So now that we have it's exciting news in terms of newborn screening on the horizon. I think we're going to be looking at potential protocols where we can offer this to younger children. I don't think -- I think -- I know there were questions about potential synergistic effects with other therapies. There's really no reason to believe that this would not be a benefit to a patient who is treated with AAV gene therapy or exon skipping therapy or another therapeutic.

Great. And yes, we also had a question come in basically, I think, around the newborn screening thing with news of the Duchenne being added to the RUS yesterday about how early of intervention can we think about for something like deramiocel? I think that's always the thought of earlier intervention potentially being beneficial. And of course, conducting studies to identify safety and efficacy is also important. On the next slide, I think there was just a question -- and I think you did show this data in the forest plot of just -- so this is showing some of the mean change. And I think there was just a question about kind of what was the actual change in kind of points between the 2 groups. But I also thought it might be helpful just to talk through for those who aren't familiar with the poll, what -- how is the performance of upper limb kind of scored?

Craig?

Yes. So there are an upward dimension or shoulder dimension to the PUL an elbow dimension and then a distal dimension that really focuses more on hand function. And so the items that are administered to a patient really are determined by that PUL entry score that you actually have. So that actually -- so a patient that actually has more limited arm function, they don't necessarily administer those shoulder tasks. But the shoulder dimension items really focused more on overhead reaching and outward reaching levels of function. Those -- and then the elbow dimension functions would be focused more on the functions of the biceps and triceps and elbow flexion, elbow extension really are important in terms of self-feeding and really getting your arm into functional positions. And then the distal items would focus more on distal hand function. The reason we went with percent change, and it's really more robust statistical approach to the PUL.

We vetted this with Anna Mehu, who is one of the co-inventors of the PUL is a research physiotherapist. And these -- the patients with Duchenne will typically when they have PUL scores in the upper 30s or low 40 range that have a lot of preserved shoulder dimension items, they typically will have a very rapid loss of those shoulder items, and they'll have big point swings in the PUL whereas patients that have more have already lost those shoulder items that you actually do the mid-level PUL items with the Elbow dimension items.

Those actually are lost in a more predictable linear function. Hence, that's why the mid-level PUL was a key secondary endpoint. And then those hand function items end up being lost over a much a much slower period of time. But nonetheless, they're extremely functionally relevant to a patient. So as you can imagine, if you rapidly lost a higher number of points and patients started out with a higher number of points, it really makes sense to actually look at this concept of percentage change in PUL. Because the patients who are starting with those lower values that have really important distal hand function and some elbow function left to try to preserve even 1 or 2 points to that patient is extremely important from a -- in terms of clinical meaningfulness.

So it was really, I think, a more statistically robust way to actually look at the PUL data.

That's helpful explanation. And then we had a series of kind of cardiac-related questions come in. So maybe we move to Slide 12. First just being kind of -- or maybe we can go to maybe Slide 13. There we go. But for the patients enrolled in the study, knowing that there's kind of variance in kind of cardiac meds that patients get started on, were patients in both the placebo and the treated group on similar stable cardiac kind of regimens throughout the study?

Yes. So Mark, of my team, I think he reported that in the clinical trial, over 92% of patients were on stable cardiac meds throughout the course of the trial, and that was in all patients.

And then we had a question come in about similar idea to some of what we're talking about to the skeletal muscle function, which is should we be thinking about this from an earlier intervention standpoint? And would there be benefit from starting something like this therapy before we see cardiac involvement. And so John, I don't know if you wanted to speak a little bit to just the care aspect of how we generally think about maybe initiating cardiac meds in Duchenne and then how that might relate to something like daramiocel?

Yes, absolutely. So as most people here probably know, we start medications prophylactically around 8 to 10 years of age with ACE inhibitors and then mineralocorticoid antagonist. And we start the MRAs either around 10 to 12 or when we see late gadolinium enhancement. And then after that, most of our med decisions are based on cardiomyopathy progression of disease, where if we see someone who's progressing a little more rapidly or has left ventricular dysfunction, we'll start beta blockade and then SGLT2 inhibitors. And that's designed because, as you pointed out, we know that these patients are going to get LV dysfunction down the road. And we know that if we do something earlier, as the people who asked the question implied that we will have preservation of function and that preservation of function will last -- will hopefully last a little bit longer.

In terms of deramiocel, I think the initial sort of sweet spot for this would probably be with onset of late gadolinium enhancement or with -- in patients with left ventricular dysfunction because we know that they're starting that cardiomyopathy process. I certainly agree that moving that over time to an earlier, more prophylactic therapy could be beneficial in these patients. I just don't think we have data right now to say what that ideal time would be. And so I think that I would lean towards the presence of cardiomyopathy or LGE, and I imagine that the FDA will do the same.

And then I think on Slide 15, where you kind of talked a little bit about that late gadolinium enhancement piece. There was another question that came in just around kind of, I think, a similar thought of differences in terms of LVEF of was a patient starting at a certain LVEF better responder. And I think maybe it's helpful to just talk again about kind of this late gadolinium enhancement and how this -- what the response was in these patients.

Yes, that's a great question. So presumably, the people who are most likely going to respond, like I said, are patients who have cardiomyopathy. And the reason that, that's actually the ideal group is less for the deramiocel response and more for the placebo responses. Those are the patients that we most expect to have progression of disease. So you're more likely to show a difference. And those are the patients from deramiocel who are most likely to show a benefit in that we know they're already progressed. We know that they're already moving forward with disease. On the flip side, if you have significantly gadolinium enhancement and you have much less muscle left, we would anticipate there's probably going to be less of a response. It doesn't mean there's not going to be a response, but we think that patients probably with a better LVF and less LGE are probably going to respond better because there's more muscle left.

And so when you stop the inflammation, when you stop the progression of fibrosis, you'll probably get more bang for your buck. Does that mean it won't work for someone with worse function? Absolutely not. But it just means that some of that enthusiasm is going to have to be a little tempered in someone with more severe disease because there may be less muscle to sort of preserve.

Thank you. And then another question on the same lines, but I think probably a little bit thinking of some of approved therapies where we do have maybe recommendations around minimum ejection fraction. So there was a question of would there be a minimum ejection fraction needed to receive deramiocel, and this also might be too premature.

Yes. The short answer is I'm not sure. The long answer is what I would say is, as a cardiologist, if someone has bad function, I would like to get them on all the therapy that I can say. And so the big -- the only concern that I would have in that situation is whether there's -- what the margin for them would be and whether their function is good enough to handle coming in to the hospital, getting an infusion, getting that volume load from the infusion, getting all the premeds and everything else. And if there's any concern that their function will be bad enough that, that might put them at risk, and I would say this may not be a patient who should be getting it.

But if just a specific LVF, I don't know that I would have a cutoff for where I too low to administer because as I said, I'd like to get everybody with low LVF on as many meds as I can. But I think we'd have to take that on a patient-by-patient basis and make sure that we're doing something that's safe for that individual patient.

And then I know Craig already touched on, I think, on Slide 17, and Linda, you did as well that this should work in combination with other approved therapies. I think a question was, were there any patients that were on approved therapies enrolled in the study? And if so, kind of what those therapies were?

Mark, can you answer that?

Sure, Linda. Yes, we had approximately 20 patients that have been taking Exon skipper therapy along the way. Everybody was on corticosteroids as background therapy in addition to -- or the majority of patients were taking background cardiac therapy. So yes, this so far, there -- we have not seen any safety trends with combinations of therapies.

But I think what people are asking about is how many patients were in HOPE-3 that were on exon skippers and/or gene therapies in the past?

I believe it's about 18 to 20.

Great. And then we had another question just asking about kind of time line of this would be a therapy, like how frequently would this be administered? And would it be continually administered throughout the lifetime of a patient, if approved?

Yes. So right now, we're doing quarterly infusions. I think that's working out very well. And in terms of length of time, we have not hit a wall yet with open-label extension of HOPE-2. So our current plan is lifetime. It's pretty impressive, actually, that we have over 4 years of data in the same boys and young man and the trajectory of their disease is very significantly attenuated compared to anybody in a natural history cohort that we've looked at. So in general, we feel pretty bullish about this being as long as they want to get it, it's available for them to get.

Yes, Linda, maybe I could just provide a little color on that, because I think I've treated more patients and treated patients for longer. I mean we have patients in the open-label extension that have been on this therapy for over 5 years. I could just comment on 2 patients in that open-label extension. I saw this week.

One was a 22-year-old that had lost ambulation at age 11, a fairly typical pattern of progression and that patient has been on therapy for over 5 years, still has maintained hand-to-mouth function, a PUL entry score of 3. But remarkably, this patient is actually able to lean forward to pick up a low item or an item off the -- nearly off the -- off the floor with a reacher and then actually regains his posture back up to a sitting posture.

The other patient actually is in their 20s, he's attending graduate school. He has actually recently traveled to South America independently and he has continued on this therapy long term. So I really see this as being a therapy that can be continued for a very long time in patients. I can't comment on for the entire lifespan.

But certainly, for a long period of time, and I think used also synergistically with some of our other exciting therapeutics that are on the horizon.

Great thank you and then kind of a final question was around -- we also see a lot of cardiac involvement in our becker population. And so I think there's curiosity to, is there -- would this potentially be a suitable approach for that population? And are there any plans to expand and look at that?

Yes. So whoever asked that question is reading my mind because I must put a slide on Becker in this deck. So especially working with Dr. Soslow and Dr. Villa and sort of reading some of the literature, the cardiomyopathy of Becker is literally identical to the cardiomyopathy with of Duchenne. And so our plan at Capricor is to approach the FDA in the first half of 2026 to discuss the path forward for Becker. And we certainly hope we can move relatively rapidly because we understand that there really is nothing to treat their cardiomyopathy either.

Well, we've kind of come to time. So I do want to just say that, first of all, thank you all for joining us walking through the data, taking questions from the community. And then as you move forward in your engagement with the FDA, as you have the announcements to share, we'll make sure to share that with the community as well. So everyone can be as up to date as possible.

Again, if you have additional questions, please feel free to send them along to us, and we'll make sure we get in contact with the team at Capricor and again, we -- this was recorded, so this will be online, so feel free to share with friends and family who might find this relevant. But again, I'd like to thank everyone for taking time to speak with the community today.

Thank you so much, Eric, and thank you, PPMD like I said, I want to end where I began, which is this began really with Duchenne families coming to the academic lab and asking us to pursue this as a potential indication.

Pat was in the room and some of those very early mouse study days and I think this is evidence that when people really put their mind to treating disease, great things can happen. So thank you, everybody. I hope you have the happiest of holidays and my team are available for questions if you have any. Thank you so much.

Good morning, ladies and gentlemen, and welcome to the Capricor Therapeutics HOPE-3 Phase III Topline Data Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to our host, Mr. AJ Bergmann, Capricor's Chief Financial Officer. Please go ahead.

Thank you, and good morning, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. Statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our enrollment in patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments, our financial position and our possible uses of existing cash and investment resources.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

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

Good morning, everyone. This call this morning represents the culmination of 20 years of work. This technology was originally conceptualized on a poster that was handwritten in Capri, Italy more than 20 years ago. And through all the years of understanding the mechanism of action, trying to find the perfect way to deploy the powers of what was once CAP-1002 and is now deramiocel. We are now proud to be able to present today the data that was released in a press release this morning that shows that the HOPE-3 Phase III pivotal clinical trial of deramiocel to treat Duchenne Muscular Dystrophy has shown statistically significant improvement in both skeletal and cardiomyopathy.

Today, in order to update you not only on the data from the trial, but also talk about our future plans and then to contextualize the relevance of this data for the Duchenne community, I am joined by my esteemed colleagues, AJ Bergmann, who you just heard from; Dr. Michael Binks, our Chief Medical Officer; Mr. Mark Awadalla, our Chief Development Officer; Dr. Kati Maharry and Nathan Hogan, our statisticians here at Capricor; Dr. Craig McDonald, a physician that needs no introduction in the Duchenne community because of his prominence in the clinical developments understanding of and treatment of Duchenne Muscular Dystrophy and other neuromuscular disorders; and Dr. Jonathan Soslow, by far considered the leader in the world of understanding Duchenne cardiomyopathy and has published extensively on the natural history of this disease process in order to contextualize this important data for you.

Next slide, please, AJ. You can see in this very simple agenda that I'm going to be walking through some of the very basics of the trial, the trial design, how we did it, how we conducted it. The rigor by which this data was collected. The fact that we have now an adequate and well-controlled study, which has been asked for by the FDA, and I will give you all of those details, and we look forward to your questions at the end.

Mostly what I'd like to say before I begin this call is my e-mail, my phone, my text messages this morning has exploded in the last few minutes since the release of the press release by the most important people in this whole experimental design that we've built, and that is those with Duchenne Muscular Dystrophy and their families. These boys and young men and their families have hoped this is the first clinical trial that I am aware of, where there are statistical significance, clinical significance and also anecdotal support for the fact that deramiocel changes the life course of these boys and young men.

Next slide, please, AJ. I think most of you on this call know about Duchenne Muscular Dystrophy is an x-linked disease. It mean it's primarily expressed in boys and young men, although there is a growing body of evidence that the mothers of these boys as well as the sisters of these boys have manifestations of the disease as well. And we look forward to being able to be providing therapeutics for them in the future.

Deramiocel is the largest protein in the human body. It acts as a cushion and a glue, so it protects cells from damage and it also helps it holds its structure.

The pathogenesis of Duchenne Muscular Dystrophy is the worst of the muscular dystrophies because those with this disease do not have any dystrophin that is naturally made by their body. Therefore, all of their cells are always undergoing decline ultimately breakdown and early cell death, leading to the loss of progressive muscle groups.

Duchenne takes typically between 25 and 30 years to take the life of a boy or a young man. And every day during that progression of the disease, they are losing some aspects of their ability to function. We hope to be able to attenuate the course of this disease with deramiocel moving forward.

I'd also like to highlight that one of the most important aspects of deramiocel and sequelae of Duchenne Muscular Dystrophy is the inflammation. Inflammation is caused by the constant breakdown of muscle. The immune system is put on alert that there is something going on that is bad. And as the immune system is activated at least to greater cellular breakout. So if you can find a therapeutic where you can attenuate inflammation and fibrosis, you have a potential success. And I think that is what we have seen here today.

Next slide, please. Deramiocel has been under clinical development for over 10 years in the treatment of Duchenne Muscular Dystrophy. We started with the HOPE-Duchenne study that was published in the Journal of Neurology, where we showed a reduction in the amount of scar in the heart and trends for improvements in cardiac function.

We then showed that we could multi-dose switching to an intravenous paradigm in the HOPE-Duchenne open-label extension, which rapidly led to the conduction of the HOPE-2 and the HOPE-2 OLE clinical studies. The HOPE-2 and HOPE-2 OLE clinical studies have shown not only that we can reduce the amount of damage done to the muscle that we improve cardiac function, that we improve skeletal muscle function, that we are addressing an unmet need that nobody else has been able to address, and that is primarily non-ambulant patient population and that we see long term, multiple years, 4 years coming into 5 years of safety as tolerability as well as efficacy.

As you know, we filed a biologics license application based on the HOPE-2 open-label extension data as well as the natural history data collected by Dr. Jonathan Soslow and published in circulation heart failure. And what we are talking about today is the data that was asked for by the Food and Drug Administration to supplement that BLA in order to prove the fact that deramiocel works in treating Duchenne Muscular Dystrophy.

What's most exciting to me and what I want to highlight on this relatively busy slide, the culmination of this work is HOPE-3, the data that we have put out this morning, and we will continue to discuss now. And moving forward, it has been predicted by each one of our clinical studies. In HOPE-Duchenne, we showed a reduction in cardiac scars measured by LGE. You'll hear in the next few minutes that, that was substantiated in this randomized, double-blind, placebo-controlled trial.

The improvement in upper limb function shown in every one of our clinical trial continues to be supported and now shows statistical significance in a 106-patient randomized, double-blind, placebo-controlled trial and the improvement in cardiac function is again substantiated from the HOPE-2 and the HOPE-2 OLE study.

Now how does deramiocel work? Let me remind you of that. So on the next slide is the multimodal mechanism of action of deramiocel. We've recently published this work in a peer-reviewed journal. The measurement of the mechanism of action has been ongoing in our lab and others over the past 20 years, but what has been most important in the development of deramiocel as a drug product is the development of a potency assay that is directly related to the biologic mechanism of action of deramiocel. And that's shown in this relatively simple graph, which shows that we have anti-fibrotic activity, immunomodulatory activity reminding you that inflammation is equally damaging to patients muscles with Duchenne Muscular Dystrophy and other neuromuscular diseases, by the way, as well as anti-inflammatory itself, just slowing down that inflammatory response.

So allowing inflammation to be reduced, allowing healing to begin and then ultimately preventing the development of scar, which leads to the loss of muscle function. All of this has been validated, approved by the Food and Drug Administration as the potency assay moving forward, which allows lot-to-lot consistency, allowed us to scale up our manufacturing, allowed us to pass our pre-licensing inspection for our San Diego manufacturing facility. And with this data, we believe we are prepared to launch deramiocel to treat Duchenne Muscular Dystrophy. New slide.

Let me talk to you for a minute about HOPE-3, our pivotal Phase III trial. This trial has been conducted at 20 sites across the United States. It is a randomized, double-blind, placebo-controlled trial of 106 patients. The primary efficacy endpoint is the performance of the upper limb version 2.0. The key secondary endpoint is left ventricular ejection fraction, and we have other Type 1 error-controlled secondary endpoints, the mid-level performance of the upper limb, that is the ability to move essentially your elbow or your arm, an analogous task by which could be improved by preserving mid-level function is eating, brushing your hair, drinking water, hugging your mom that for long I would say.

A global statistical test, which is a field function and survive type of endpoint. It combines looking at the relationship between the performance of the upper limb, left ventricular ejection fraction and a patient-reported outcome called the PGI. We have left -- late gadolinium enhancement that is a die that is used to examine the heart using MRI and allows you to determine the amount of scar in the heart, and we see that as well statistically significantly, and I'll talk about that in the next few minutes.

As I mentioned, it was a 1:1 randomization, patients received 150 million cells via intravenous infusion 4 times a year. And as you'll hear in the next few minutes, it was safe and well tolerated.

Next slide. Inclusion criteria were primarily based on performance of the upper limb criteria. That means that patients have to have upper limb function with a PUL entry score between 2 and 6, primarily between 2 and 5, where we took in several of those patients that were still in late ambulation at risk of losing ambulation and still maintaining a significant amount of upper limb function. The purpose of this was to provide the opportunity for those that are at the edge of losing ambulation to get deramiocel and also potentially for label opportunities.

What you can see shown here in this slide, which can be also elaborated on by Dr. Craig McDonald, who, as I mentioned, has joined me today, the ability to feed yourself or lift your arms, raise your arms above your head are all the criteria by which patients are randomized into this trial, and we are then able to measure their functional developments as a result of the performance of the upper limb, which is a 21-item scale.

Next slide, please. So shown here is the demographics of the study. HOPE-3, as I mentioned, was 106 patients, randomized double-blind, placebo-controlled. The mean age was in the placebo group, slightly younger, 14.6 years and the deramiocel group 15.4 years. The overall in the trial, the average was 15 years of age. We had a slight difference in left ventricular ejection fraction at baseline with the placebo group being slightly healthier with an entry ejection fraction of 59% and a deramiocel entry -- left-ventricular ejection fraction of 55%. A total of 91 patients had left ventricular ejection fraction measured and you can see that the average baseline criteria for ejection fraction was 57%.

There was no difference in baseline in the performance of the upper limb and the placebo versus the deramiocel group of any measurable difference. But the overall PUL entry score for those with entry scores of 2 to 3 at 48 or 4, 5 and 6 PUL entry scores and overall entry score of 58. All considered well within the standard expectations of this particular patient population.

Most of our patients were non-ambulatory. Let me highlight at this moment, the incredible relevance of this therapy in the Duchenne community. There is nothing approved actually for this patient group. And we are the one therapeutic that can be given across the life course of Duchenne Muscular Dystrophy to attenuate the progression of the disease. Many of the boys and young men receiving deramiocel are in their early 20s and feel and function better than they ever thought they could at this point in their life.

Next slide are the safety results of the HOPE-3 clinical study. The safety of deramiocel is one of the aspects of this clinical development program that we are most proud of. And that is because, of course, the one thing you want to be able to do in drug development is provide a therapeutic that not only works but doesn't impact the quantity or quality of life of a patient.

The reason our patients in our deramiocel clinical trials, HOPE-2, HOPE-2 open-label extension, HOPE-3 and HOPE-3 open-label extension have such low dropouts even with many of our patients staying on for years and the open-label extension program is because of the safety.

Primary safety concerns, if you can call them that, are extremely simple. They're mild flu-like symptoms reported in some types -- some of the patients. 25% to 35% of the patients have some version of a pyrexia, which is fever, cough, some get itchy, a significant proportion get headache. Physicians manage this easily with antihistamines and Tylenol. And as is evident from the lack of serious adverse events as well as the reliability by which patients come back for new treatment is evidence of the safety as well as tolerability profile of deramiocel. This is something we stand behind, years of data supported Data Safety and Monitoring Board has been following our patients for years, and the FDA has received all safety data and timely filings. So we continue to be proud of the safety impacts of deramiocel.

So now let's get into what you guys really came to hear today, which is the efficacy of deramiocel because we've been talking about some of these other features for quite some time. So as shown here in this bar chart is the pictorial representation of our primary efficacy endpoint. That is the performance of the upper limb 2.0 at month 12, shown with the green arrow is actually the difference of means, which is a 54% slowing of disease, a 1.2 point change on an absolute scale. And what we can see here is that, that statistical significance, the likelihood that this is due to chance is less than 3% at the p-value of 0.029.

The difference is shown on the Y-axis as a percent change from baseline. Although as I mentioned, the absolute change was 1.2 points, both can be represented. This happens to be the way that the statistical analysis plan was drafted, submitted to the Food and Drug Administration. We received no comments on the statistical analysis plan. And patients as well as regulators as well as statisticians find this a very easy way to quantify performance of the upper limb.

And let me just explain that to you so you understand the importance of percent change. If I have a PUL score of 20 and I lose 2 points and my colleague, Mark, has a PUL score of 40 and he loses 2 points, that is a very different amount of functional loss for me versus Mark. So this percent change allows us to actually quantify the loss on a per patient basis and its relevance. So again, this was something that was submitted to the Food and Drug Administration, was decided by us and multiple statisticians that we have worked with over the course of the last year is the best way to represent functional improvements, changes, declines in this patient population. And our staff team is happy to take questions on that, should you have any.

In the next slide, we show our secondary endpoint, which is left ventricular ejection fraction. Shown here is a 91% slowing of disease, again, measured by the green arrow showing the difference of means and the percent change from baseline. We are using a rank change with a p-value of 0.041, those zeroes are mighty important right now. This data is also important, a 91% slowing of disease. We saw stabilization across the board in patients treated with deramiocel, and we saw a decline in those that were placebo treated.

I want to point out, and this is something I've been thinking a lot about, and I think our KOLs can provide context here. The disease, Duchenne Muscular Dystrophy, is one that takes somewhere between 25 to 30 years to take the life of a boy or a young man with Duchenne. As I said at the beginning, it's a slow and slightly steady decline towards that inevitable and terrible outcome, the primary cause of which is loss of cardiac function.

In order to do a cross-sectional analysis of looking at these guys for one year and to see this kind of data is unprecedented. If you can delay the progression of this disease by 91% in terms of preservation of heart function, where 65 of the 83 documented patients with cardiomyopathy at baseline have stabilization, we have a tremendous opportunity to potentially extend not only the quality of life of these boys and young men but potentially the quantity of life of these boys and young men. And I wanted to highlight that here, the importance of treating this aspect of the disease.

Next slide please. Shown here is a fourth plot. A fourth plot is a special type of way of representing data. It is a way of showing that data either goes positively, which is to the right of the zero showing that the treatment is having an impact in one way or another. And to the left of the zero would be showing favoring placebo in one way or another. What has shown in this very beautiful plot is the fact that we not only hit the primary efficacy endpoint of the PUL 2.0, the total score, we hit the key secondary endpoint of left ventricular ejection fraction with a p-value of 0.04, as I just mentioned on the previous slide. We hit the -- all Type 1 error controls, secondary endpoints. What does that mean? What it means is that sometimes in a clinical trial, when you sort of laundry basket a lot of secondary endpoints, you can kind of lose statistical value by this concept called multiplicity. When you type 1 error control a secondary endpoint, you're controlling for multiplicity, you're saying, "Yes, we really do think that there is statistical validity here, and we're going to test it using traditional means."

So the 3 secondary endpoints that you see here are the mid-level dimension of the performance of the upper limb, statistically significant improvement was a p-value of 0.008. The total global statistical test, the one that I mentioned a few moments ago, that measures field functions and survives as a secondary endpoint with the key statistic, a p-value of 0.01.

And then finally, one that was additive part of the cohort B of the clinical trial at the request of our cardiology colleagues, is late gadolinium enhancement. Gadolinium is a die that is used in MRI. You've probably seen it if you've heard me speak before, when we talked about HOPE-Duchenne, where you see the tissue differentially stained with healthy tissue stained black and scar tissue stained white, people who are experts in reading these types of images and then quantify the number of segments of the heart that is impacted by scarring or other ways of looking at is the percent of the heart that is affected by scarring, and it's a very efficient means of looking at the damage in the heart.

In all heart disease, this is an important measure. But in Duchenne Muscular Dystrophy, it is extraordinarily important, but because what Dr. Soslow, Dr. Chet Villa, Dr. Larry Markham, many of these physicians that have studied this very different cardiomyopathy for the course of their careers has shown this fibrofatty replacement, as they slow an insidious killer of these boys and young men. They develop scar slowly. They don't know what's happening. Many of them are off their feet. Their hearts are not working as hard as they could if they were playing basketball or soccer. So they're kind of oblivious and then ultimately, there's so much scar that the heart actually can no longer compensate. They develop a fulminant heart failure and ultimately, nothing that clinicians can do can pull them back from the edge.

So the fact that we see a reduction in a statistically significant reduction in the amount of scar with a p-value of 0.02 is probably one of the most amazing aspects of this trial. We are attacking this disease at where it is causing the most potential damage. And we are looking forward to following the boys and young men that are prescribed deramiocel to see that they have extension, not only of length of life but -- quality of life but also length of life.

Next slide, please. So many of you who have heard me speak before, have seen this particular slide. I like it. I call it the good player on the Sandbox slide. Deramiocel can be used with any therapeutics that are currently approved, currently available or under clinical development that we know of, whether it's an exon skipper or a gene therapy that is trying to attack the disease at its source, which is the lack of dystrophin or some other types of anti-fibrotic or corticosteroids. In fact, we required every patient in every trial to be on standard doses of corticosteroids because we believe that, that is the standard of care that has been most efficient at extending life in these boys and young men. Deramiocel goes well with all of them.

There are no negative impacts, and we actually believe that we're going to see synergies over time in this type of polypharmacy because if you can reduce inflation and you can reduce fibrosis and you can drive repair and then you have these other therapeutics that are in there that could be adding dystrophin or repairing the gene, we then have an opportunity to really attack the disease at both sides of its mechanism of destruction, both the lack of dystrophin and inflammation and fibrosis.

Next slide, please. So where are we going from here? This is obviously probably the most important day in the history of Capricor and our history in the development of Deramiocel. The name of the company, as I mentioned, comes from the little island on Italy in which we first discovered the seminal work that has led to this point. We have met the Phase III primary efficacy end point of the PUL 2.0. The key secondary endpoint of left ventricular ejection fraction, both achieving statistical significance of p equals 0.03 and 0.04, respectively. As I said earlier, statistical significance was achieved in all type 1 error controlled secondary end points.

Deramiocel is a first-in-class therapy designed to treat not only Duchenne cardiomyopathy but also the skeletal muscle myopathy, and we made those seminal discoveries now multiple years ago in our preclinical studies and now has been validated in multiple clinical studies, culminating in what I consider to be probably one of the very best clinical trials that's been done in the understanding of Duchenne Muscular Dystrophy, randomized, double-blind, placebo-controlled, 106 patients, highly overpowered at greater than 90%. We really have measured all of the bells and whistles here and done a stellar job of taking this to this end point.

Safety and tolerability, one of the most important aspects of treating any type of disease because you push a bunch of patients to feel and function better with consistent clinical experience, supporting the safety and tolerability of deramiocel.

Obviously, the whole world knows that we received a complete response letter. We thought we were on track to PDUFA last year based on the HOPE-2, the HOPE-2 open-label extension data as well as comparing the cardiac data to Dr. Jonathan Soslow's cardiomyopathy natural history study. The FDA had felt that, that was adequate data for a label. The administration upon review of the data decided that there was not adequate data. They issued a CRL.

We have now answered their concerns by offering them data that is randomized, double-blind, placebo-controlled, an adequate and well-controlled clinical study. We're going to submit this data in response to the CRL. We're hoping to get a relatively rapid PDUFA date right now or until our Type A meeting in August, they were telling us it would be a Class 2 resubmission which is about 6 months, so look for sort of the conservative estimate of a PDUFA in July. But because we now believe that this data substantiates all of their concerns, we've passed pre-licensing infection.

Our commercial manufacturing facility is ready to go Cohort B, which is the aspect of the trial that was done or made -- was done using a drug made at our San Diego commercial facility shows independent statistical significance. We are ready to go and our patients, their families and all of the people in the Duchenne world that have been following this therapeutic for years. I think today, we should raise the glass and celebrate that perhaps we are first time providing an opportunity for these boys and young men, especially those that are nonambulant with no other options in front of them to have an opportunity to extend their lives.

And with that, I will again offer my thanks. I'm joined here by my colleagues who can answer specific medical scientific or statistical questions. And I look forward to continuing to work with you as we take this towards launch and commercialization. Thank you.

Operator, I think you can open the line for questions, please.

[Operator Instructions] with that, the first question comes from Leland Gershell with Oppenheimer.

My congratulations on these very strong data from HOPE-3. I wanted to ask, and I know you had discussed this a bit during the prepared remarks, Linda. But with respect to the primary and secondary endpoints, percent slowing versus, I think, what was on Clinicaltrials.gov of mean change. If you could just walk us through maybe a bit further in your discussions with FDA and perhaps part of your SAP how that will be handled versus mean change and if there may be any differences or further discussion that's needed with respect to the agency regarding those as registrational.

Yes. Thanks, Leland. So obviously, there's been a lot of discussion, a lot of planning that went into the statistical analysis plan. We work with multiple outside statisticians, James Signorovitch of the Analysis Group, who's done a lot of work in Duchenne. And then with the patients and advocacy groups, PPMD and some of the groups that also have worked on patient-reported outcome measures, clinical relevant outcome measures. And the determination of using percent change as a way of measuring the change using the performance of the upper limb, I personally think was one of the greatest steps that Capricor was able to make. So we even worked with Adam International, the group that develop the performance of the upper limb and presented the idea to them before we wrote it in our SAP. They also like it.

The PUL is still a relatively new measure. We're still understanding it. And as I said in my remarks, a PUL score of 20 and a guy who loses 2 points on that has a very different outlook on those 2 points lost than a guy who starts at 40 points and loses 2 points. So percent change allows you on a patient-by-patient basis to assess the loss for that particular patient. And for more clarity on that, [ Anna Mahu ] actually, again, one of the developers of the performance of the upper limb, just published a really lovely paper that was made available peer-reviewed in September, discussing this exact issue, and that's actually where a lot of these ideas came from.

In terms of absolute change, we saw that as well. So the FDA had said that the clinically meaningful change in the performance of the upper limb would be 1 point, we see 1.2 points many of that change attributed to mid-level pool, which is their arm, which is also validated in video assessments that we actually have in front of us, we just can't show today. So look forward to the future of being able to see on video what is actually happening to the arm function on these guys that are on deramiocel.

The good news is, is we see statistical significance in the absolute change as well. It's a p-value of 0.05 so just making the cutoff, but that's all you've got to do. So whichever way the agency wants to look at it, we hit it. And we look forward to having that conversation with them. We really don't think this is going to be an issue that's going to roadblock us at all.

Great, and one follow-up. As the results that were presented were across the entire HOPE-3 population, just wanted to ask with respect to cohort B versus A, obviously, B from San Diego which is the facility that's been fully inspected in past and all that versus from L.A., just plan to hear of any concerns or any possible items that may come up with respect to approvability of deramiocel given the data set across both A and B.

Yes. So we were delighted. We had built a statistical analysis plan, which allowed us to look at A plus B and then drive that primary towards Cohort B, should we not achieve significance with A plus B. We hit the primary at A plus B. So that's great. But B did even better than A. We think that's largely because we put really stringent quality assurance, quality control measures in place. Our potency assay was approved and now it's done in every lot. And so every batch of drug that comes out of San Diego goes through a much more rigorous type of evaluation than from our Los Angeles facility just because we are developing it for commercial use.

So the p-value for Cohort B was really quite extraordinary and this will do several things in our minds. Number one, it shows the efficacy of deramiocel produced by our San Diego facility. Number two, and perhaps even more importantly, it shows that an efficacious product can be made by a manufacturing expansion. So this allows us to have a significant opportunity for expanding our manufacturing capabilities and treating any and all of those worldwide that ultimately can benefit from deramiocel, whether with Duchenne or other indications. And the other issue, of course, is that it really closes a lot of holes we believe that FDA could raise any concerns about manufacturing or CMC because of the efficacy of this product as well us passing PLI already in preparation for approval. So I think this is one of the best findings of the study is how well Cohort B did, and I'm very proud of the data from this aspect of the trial.

And the next question comes from Ted Tenthoff with Piper Sandler.

Great. Thank you very much on this glorious day. Congratulations. I know how much hard work has gone into this and really how meaningful this is going to be to boys who suffer from this terrible disease. I wanted to get a sense for the response to the BLA. What really goes into that to the reply -- I'm sorry, to the CRL? Is it just the submission of this new data set, are there any other components or anything else that needs to be included in that submission? And you mentioned the potential to accelerate their review. Maybe tell us a little bit about that strategy?

Yes. So in response to the CRL, we are going to be submitting this data. We submit all of the data and we will address all of the issues that were directly raised. So obviously, everybody has seen it because the administration put it out, but we would be happy to share. And so they addressed concerns regarding whether we had an adequate cardiomyopathy patient population for cardiac label, we do. So we have 65 out of 83 of our patients, as I mentioned, were diagnosed with cardiomyopathy at baseline. 92% of the patients in the trial were on cardiac meds at baseline. That was another concern raised in the CRL. So we feel really great about our cardiac opportunity, the LGE and we have very good indication that we're going to be able to answer all of their concerns regarding the clinical data with this very stellar data set.

We had already answered the CMC, the chemistry manufacturing control issues that have been raised in the CRL. So we're very confident in that. Because we've had some time to think and our teams are never quiet, we're also going to be submitting additional mechanism of action data where we will be able to support further with further analysis, the actual mechanism of action, which we've been talking about, I showed a very simple slide. There's hundreds of pages of scientific work that is gone into understanding how this works.

And then sorry, the final aspect of your question, Ted, which is acceleration of the PDUFA date, we didn't think that the CRL was issued fairly originally, but we understood it. Okay, it was a small data set. There were a lot of questions. None of the questions raised in the CRL were ones that we hadn't heard from the agency before. We were glad that we had, had the opportunity to file the BLA under the previous administration. We were glad that they could see through the small trial and some of its warts and bruises to the potential efficacy.

But now with this absolute manifestation of efficacy, hitting statistical clinical significance, doing a clinical trial that is how clinical trial should theoretically and practically be done, we're going to be asking the agency for a rapid review, and we will hopefully use some of the political capital as well as the families and advocacy groups to help us work with the FDA to get that accelerated.

Great. Excellent. Well, congratulations and best on these next steps.

Thank you so much, Ted, and thank you for standing by me for all these years.

And the next question comes from Joe Pantginis with H.C. Wainwright.

Congratulations as well. This is really fantastic after the path you followed building this case here. I know it's been difficult, but it's very rewarding now. So 2 questions to start. First, can you give a little perspective with regard to the LVEF percentage increases and how this reflects clinically to the patients?

And then number two, you just spent a bunch of time describing the responses to the CRL components. What would you consider, if any, the worst or the most demanding case that might be still outstanding?

Yes. So I'll take the last part of that first. I don't think we have any. I think that this addresses every single one of them. Like I said, I felt like we -- if we didn't have this data set coming, I would have thought to the end to get a BLA approved based on the data that we have. I believed in that data. It's been published in The Lancet, published in the Journal of Neurology, patients have long term over 4 years of efficacy, you can't turn your head to that. So I believe strongly in what we had. This -- I saw even icing on the cake. It's like the wedding case, like this is it. This is the best that she possibly can have. And so we don't feel like there were any issues.

In terms of clinical relevance, one of the greatest pleasures of my career has been getting to know Dr. Jon Soslow, who is a caring physician, but also an incredible academician. Jon, I hate to put you on the spot, but could you possibly tell everybody a little bit about the clinical significance of this data, what it means to you, to your patients and sort of to the field?

Yes, absolutely. Thank you for asking me. So as they mentioned, the 2.4% difference in LVEF, that's striking because we see pretty much in study after study that there's a 2% to 3% decline in LVEF in these patients once they develop cardiomyopathy. And we and others have shown that LVEF is a very strong predictor of mortality. And in fact, it's shown that a 3% decrease has a hazard ratio of over 1.3 for association with mortality in those patients. So they have a 32% increased chance of having a mortality event for every time their LVEF drops by 3%.

So this is clinically extremely meaningful for these patients. And what I'll say is that we treat these patients with cardiac meds that are adopted from the adult literature. There are no approved cardiac medications. It's an unrelenting progressive disease. And honestly, those adult meds really don't work very well. So we're -- we and others have honestly grown tired of going to these patients' funerals. Like we're not making enough of a difference with the drugs we have. And so a drug that can slow or stop cardiomyopathy progression is really a game changer in this field.

That's fantastic. Looking forward to a potential positive FDA outcome. I think you have the data to show that. So congratulations again.

Thank you. And thank you, Jon. That even brought tears to my eyes. Thank you.

The next question comes from Kristen Kluska with Cantor.

Let me also add my congratulations, and you should be proud of all the young men and boys that you've been able to help with this therapy. So I had a few questions. Just first on the SAP change, I understand the rationale especially as patients come in at different baselines. But can you just help contextualize for us, did you bring this idea to the FDA in the meetings prior to the database lock? And then did they echo that they were supportive of it? Just trying to understand that because I think there's a lot of focus on that this morning.

So explain baseline differences, is that what you're asking, Kristen? I understand the question, sorry.

No, I'm saying I understand the rationale for why the percent of disease slowing makes more sense. But if you can just help us understand when this change happened in terms of your FDA dialogue and again, just reinforce that they were supportive of using that.

Yes. Thank you so much. Sorry for whatever reason, the webcast is a little funky for everybody, including us today. Yes. So as I said, this is sort of iterative thinking that developed with us with our statistician colleagues, with talking to the Adam group that developed the performance of the upper limb, Anna Mahu's paper in September, as I mentioned kind of blue. The field wide open as to what's really important and how do you quantify and qualify progression as well as working with some of the advocacy families and learning what really matters to them and how to measure their function, either decline or stabilization.

We've submitted the percent change opportunity to the FDA as part of our statistic analysis plan. It's now been several months since we submitted it, but we definitely long ago passed any 30-day review period. We have put it in all of our documents that was in our final set that was submitted prior to database lock. So we don't expect any concerns from that. But in sort of the beautiful belts-and-suspenders way, we also see statistical significance in the performance of the upper limb in terms of absolute change which is going to be -- whichever way you want to look at this, it's a win. We won, we won, we won according to Hamilton, the musical. So we don't really anticipate that there's going to be problems in dealing with whether absolute or percent change.

I'll use this moment to sort of talk about the heterogeneity of Duchenne Muscular Dystrophy. And I think there's kind of a misnomer in genetic diseases, especially in diseases where there is a mutation that affects one protein. It should be so easy to fix. And I think that's sort of the kind of the Kool-Aid we all drink when we go into this as our careers is that this got to be easy to fix. But what you realize is that anything that happens in the human body is very complicated. And so the fact that we can see statistically, which is obviously mathematically how likely is this data due to chance, improvements in this patient population using this measure of functional performance and cardiac improvement is really quite game changing, both for the world of drug development, but also for the families and the boys themselves that are impacted.

If you met the endpoint on the mean absolute change as well, I think that's important this morning. And then I know you had previously talked about that the agency would be willing to exercise regulatory flexibility. I think the way Wall Street initially interpreted that is if you missed on PUL and maybe hit on LVEF, there would be a chance there. But obviously, in this scenario, you hit on both.

So I'm curious how you're thinking about what the actual addressable patient population will be. Cardiomyopathy is about 80%. But then since you hit on the skeletal endpoints, one can argue that supports essentially everybody. So I'm curious how you're now thinking about the patients that would be eligible for this therapy.

Yes. So obviously, we now have changed our optics a little bit, achieving both statistical significance as well as clinical significance in the skeletal muscle myopathy, as we have been instructed by FDA to study over the past 10 years, we always considered ourselves a therapeutic for cardiac. And so the skeletal muscle is something that they felt that they could measure and therefore, decide efficacy on. So we have that.

We also have improvement in cardiac function, long-term stabilization. As I said, even in this 1-year study and 91% slowing of disease and Dr. Soslow and his colleagues are working tirelessly to try and find therapeutics and now they finally will have something in their toolbox should we achieve approval with which to offer these boys and young men.

The most important thing, and getting to the heart of your question, no pun intended, who's going to -- who are we going to try and market this to? What's the label going to say? We have over 40% of the patients in a correlation analysis that was done had improvements in both cardiac and skeletal muscle function with over 70% of the patients having a response in either cardiac or skeletal. So we're going to go back in, in response to CRL to keep our cardiomyopathy indication open. We don't want to submit a supplemental or new BLA or anything like that.

And then when we have our labeling discussions and we talked about the data, we will certainly ask also for a label for the skeletal muscle myopathy, based on the strength of this data. All of this will be determined in our meetings with the FDA after we present this data to them. But even almost anybody, even the high school students can look at this data, look at the CRL and think that there's a wonderful opportunity for approval here.

And if I may ask the physicians on the line, I would love to hear how they're potentially considering using this in their practice now that they've seen this data.

So Linda, do you want me to take that? This is Craig.

Yes, please, Craig, if you could answer that question. And then maybe, Jon, could...

Yes. So Craig McDonald, I have been national PI on the HOPE-3 trial and have been involved in the HOPE-2 trial as well as the HOPE-2 OLE. So I have probably the greatest long-term experience using deramiocel clinically in an open-label context. So in terms of really being able to see patients who I know are on therapy.

And so I think the question really pertains to who I would want to use this therapy. And I think it's really quite reassuring from my perspective to see really the consistency of results across the placebo-controlled trials of HOPE-2 and HOPE-3 and the long-term HOPE-2 open-label extension. And I find that to be really compelling.

But as far as who I would want to use this therapy, I think, first of all, the trial itself was conducted in patients that were 10 years of age. There were late ambulatory patients who had 10-meter walk run times greater than 10 seconds. We know those patients will -- 100% of those patients will lose ambulation over the next 24 months. So we refer to those patients as sort of approaching loss of ambulation or the late ambulatory population.

And in addition, we -- a large portion of the patients were non-ambulatory patients that had at least hand-to-mouth function, PUL entry scores of 2 or greater. But I think it's important to keep in mind that patients in the -- who entered the open-label extension have also had PUL scores -- PUL entry scores of 1, and there's been demonstration of stabilization, relative stabilization of the PUL even in those more severely affected patients.

So I would say first of all, I would want to treat non-ambulatory patients, any patient with any deficit of 1 point or more on their total PUL score, I think that would be kind of at the ceiling range. And I think in terms of the floor value, I think if you've got a PUL entry score of greater than or equal to 1 and you've got meaningful upper limb function that you could still preserve, I think that would be a patient that you would want to treat. I think if somebody has completely lost upper limb function in terms of preservation of upper limb function, I think payers and clinicians may be consider that a population that would be less responsive to upper limb function.

But in addition to that, I think any patient irregardless of their upper limb function that's got left ventricular ejection fraction that's in the abnormal range of less than 55% or if they have presence of late gadolinium enhancement on a cardiac MRI even before the age of 10, so a 7- or 8-year-old patient that has late gadolinium enhancement, that would be a patient that I would want to treat as well. So I think that's a pretty broad population of Duchenne patients, but I think it's really -- that's really informed based on the data that we have available to us in terms of efficacy and safety.

So I think really, for the most part, I think we're probably talking late ambulatory patients and a large portion of the non-ambulatory population with some deficit in upper limb function at the outset, but at least some upper limb function that you can still preserve or even if they've got quite profound loss of upper limb function, if they've got cardiomyopathy and late gadolinium enhancement, I think those patients could benefit from the therapy as well.

Jon, maybe you could weigh in just in terms of the cardiomyopathy aspects of it in terms of who you'd want to treat.

Yes. Thanks, Craig. I agree with you completely. So we define cardiomyopathy as either left ventricular dysfunction or presence of late gadolinium enhancement. And I think those are the patients that would benefit. And I do want to point out, I mean, so this LVEF improvement goes that they showed here is -- goes along with that late gadolinium enhancement improvement. So what I mean by that is we're not just seeing an LVEF improvement because of improved contractility or decreased in systolic blood pressure, it seems like there are structural changes that they are preventing the progression of disease and they are slowing the progression of late gadolinium enhancement. And so that's really critical data that suggests that they're getting at an underlying cause of the LV dysfunction and also really critical data to suggest that if you started in someone who's got late gadolinium enhancement or has just started to see it that you can help slow or prevent that progression. So completely agree with what you said from a cardiomyopathy standpoint, Craig.

And then just -- that's great, Jon. And then just to give an overall context about 55% to 60% of all Duchenne patients that I see are actually non-ambulatory, and I think certainly, survival has been enhanced by the use of noninvasive ventilation, but many of these patients are still dying from their cardiomyopathy even if they're aggressively provided with nighttime noninvasive ventilation and so forth. So I think that we're really talking about a fairly substantial proportion of the Duchenne population would potentially benefit from this therapy.

Now whether the FDA provides an even broader label to treat younger ambulatory patients. I'm not sure that CBER would necessarily have the appetite for that, but we certainly do have data in ambulatory patients that are at risk for loss of upper limb function where we're seeing evidence of efficacy. And I would be excited to begin to design studies to treat even younger patients with Duchenne. We certainly have patients that are antibody positive. They aren't eligible for gene therapy and -- so I think that's another population that perhaps we could develop some clinical experience in maybe in an open-label context or maybe in a placebo-controlled setting.

But Linda, does that answer your question, what you were looking for from the clinicians?

Yes. That was fantastic, actually, really fantastic, and I learned myself still. So the clinical contact here, I think, is incredibly important. And now that we have clinical trials really completed in this program, we now are obviously going to be focused on treating large numbers of these patients and sort of who is going to come in and benefit from deramiocel, which Dr. Soslow and Dr. McDonald provided nice overviews on, so thank you both.

And the next question comes from Madison El-Saadi with B. Riley Securities.

Congrats on the results, much needed for the Duchenne patient community. And this is Mayank for Madison. On the significance of 85% non-ambulatory patients enrolled, I appreciate the context that was given earlier. Did you see any treatment effect differences between ambulatory and non-ambulatory. Sorry if I missed that forest plot. That was -- I think that's when the webcast froze. And also, if you could comment on reasons for MRI data, sample size is different in LVEF versus what we see for PUL 2. Maybe just comment on why is that?

And then lastly, if you could touch on any cardiac outcomes interim data you are seeing or will become available as you get ready for this next sprint towards the BLA resubmission and possibly looking at a midyear PDUFA date.

So there are so many questions there. So I think the first question was on ejection fraction as it compared to HOPE-2 and was -- what was I concerned about it? No, I wasn't concerned about it at all. We continue to see statistically significant stabilization improvement ejection fraction. A lot of our open-label extension data over many years and compared to natural history, this is actually placebo-controlled. We saw a 91% slowing disease over the course of one year with absolute stabilization in nearly every one treated with deramiocel. And so we feel that this is a great representation. And as Dr. Soslow so eloquently said, over time, we should be able to see whether these translates into extension of quantity of life. And I certainly -- I'm looking forward to sticking around and seeing these guys live well longer than natural history would predict.

In terms of other cardiac outcomes, we've obviously measured a lot of things in the HOPE-3 trial. This is a call to introduce the top line data. Our plan is to submit the full data set not only to the Food and Drug Administration, but we are in late-stage processing of submitting a peer-reviewed publication of this data, which will further expound on the other measures that were collected and recorded on. What I can say is that there is a cohesion of end points and cardiac function that are suggesting that this data could have long-term implications for preservation of cardiac function and stability.

The one that's the most important to us, and I believe, to our physician colleagues is the late gadolinium enhancement, the reduction in the amount of scar. As I mentioned in my earlier remarks, the fibrofatty accumulation that occurs as the pathogenesis of this cardiomyopathy is very unique and therefore, is even more relevant to look at scar over time, and we look forward to continuing that journey with these patients as we roll forward.

And by the way, I would like to add there that most of the HOPE-3 patients have rolled into open-label extension. So we'll continue to have data coming from them over the course of the second and maybe even a third year of open-label treatment until they roll into commercial products, which is our intention. I got lost, and I'm so sorry, your first question, I don't remember what that was. Can you remind us?

Yes. Yes. Linda, yes, the ambulatory versus non-ambulatory, if you've done any forest -- if that was included in the forest plot, sorry if I missed that. What does the treatment magnitude difference for ambulatory versus non-ambulatory?

Yes. So we haven't built into our actual modeling, the ambulation versus non-ambulatory patient population, although we did build it in as a covariate in one of our models to look at the difference in the trajectory of those that can still walk or have a slow decliners versus sort of a normal progressor in Duchenne. But we didn't actually slice it that thin as most of our patients are non-ambulant or as Dr. McDonald said earlier, on the verge of becoming non-ambulant. So the idea is to stabilize and continue to observe them.

This is -- again, I want to emphasize, and this is one of the learnings in clinical trial conduction and development is we were looking at a cross-section of 1 year in the life of a boy or a young man that's anticipated to live 30 years. And if you look at the average age of 15, they're actually sadly and quite frighteningly halfway through their lifespan. So we're looking at a very small section of time. So what we want to do is be sitting around chatting about our patients when they are 40, 50 years old. And I'd just like to add that only 15% were ambulant at baseline, which is too small of a sample size in which to do any independent statistics.

Yes. And your sample size for PUL 2 endpoint versus the LVEF, those ends are different? That was my clarifying question, like for LVEF, there were some assessments for MRI that may have been missed. Just can you clarify the explanation for that?

It was a coalescence of multiple factors. So some patients actually couldn't go on the magnet. They had so many contractors or spinal fractures that they just couldn't lay down and get in the magnet. Some of the patients didn't -- were missing an image along the journey, either a baseline or 6 months or 12 months, so we couldn't do the analysis. And then we use a core lab. So I want everybody to know that every MRI was collected by the site. It was immediately uploaded to a core lab. The core lab took those images in. They quality assess them, quality control them, and then they were the ones that decide whether the images, and it had to be all 3 images were readable and accessible. Once that was done, they were then put into a pool where they were read by a third-party reader and the data collected. So this was a very rigorous collection and evaluation process.

And as can be noted by anybody that's ever looked at an MRI from a kid with Duchenne Muscular Dystrophy, it's like looking at a snowstorm. They're very hard to read. So sometimes the quality of these images just make it impossible to really use the type of rigor that one is needed to measure for a clinical trial. So that's a difference in the number of patients reported out for cardiac function.

And the next question comes from Aydin Huseynov with Ladenburg.

My sincere congratulations. It's a great day for Duchenne patients and parents. A couple of questions on my end. So I wanted to ask about other cardiac endpoints that were described in HOPE-2, LVDS, LVED volume, wall thickening and others. I think there were about 20 cardiac measures in HOPE-2. And whether those measures were statistically significant in HOPE-3?

Yes. So this morning's focus is the release of an analysis of the top line data, primarily focusing on the primary efficacy endpoint, the key secondary and the type 1 alpha error controlled secondary endpoints. There's a lot of data, I think my team tells me there's 150 pages of tables of data that we have. And so we're just starting to go through those, look at the relevance, do some correlations. And we'll be providing more data either in scientific meetings and publications or in future calls.

Appreciate that. And just a follow-up question. So given the effect not only on cardiac muscle myopathy, but also in skeletal muscle myopathy, so what do you think could be other applications of deramiocel on skeletal muscle myopathy in terms of other indications? And what are your plans as it comes to other indications?

Yes. So you and I have been talking about other indications for a long time. I think the next shot on goal will be Becker's cardiomyopathy and skeletal muscle myopathy. We'll be working with the agency on that. My goal is to begin conversations with them on what the requirements might be for U.S. approval in Becker's in the first half of 2026 once they get this launched across the line.

Obviously, I think it's as broad as one's imagination can be. We now understand, and the good news is in the development of the understanding of the mechanism of action of immunomodulatory, anti-inflammatory, anti-fibrotic, this can be used in a lot of different disease states, a lot of different manifestations as such. And so we have to kind of decide on the plethora of opportunity where we will take the program.

Right now, we are gearing up for market entry for DMD. That's going to take a lot of our time. Manufacturing is busily probably as we speak, making doses in San Diego. And so we have a great market opportunity with DMD. We're going to think about Becker's, and we're just starting to think about pipeline development above and beyond where we are. I've talked for a long time about the development of antibody therapeutics and how that happened and how Avastin changed the world. And we really think that deramiocel has the opportunity to do something similar, and we're going to continue to work on that.

And the next question comes from Catherine Novack with Jones.

Congrats on the results. I think some of the questions we're seeing are how this is going to be handled when FDA stats team looks at the raw data themselves. And I just wanted to ask one more -- I know you've gotten this a bunch, but one more confirmatory question on the percent change versus the absolute change. It sounded like that was more of a tacit approval rather than specific feedback that you got. So is there -- does there seem like a possibility that they would run the absolute change as the primary endpoint in their analysis?

Well, first of all, FDA typically works under a tacit approval mechanism of action, right? When you submit even the most simplest of documents like investigational new drug application, you know you can do your trial when you don't get feedback. So that situation is silence is a sense or no news is good news, using too colloquial expression. So we don't have any problems there. We don't think they're going to raise any problems. They do get the raw data.

The good news is, as I've said now a few times, is we even see statistical significance with absolute change. So whichever way they look at it, they can look at the heads or the tails and they're going to get the same answer. I don't anticipate there's going to be any problems in their statisticians assessing the data. One of the things I'm very proud of is the rigorousness by which this protocol was developed by which the statistical analysis plan was developed by the statisticians that work for and next to and around Capricor in order to make sure that every aspect of the study was adequately controlled, well designed, blinded, randomization was done in the most rigorous of fashion. And so I don't think they're going to be able to poke holes on anything specific.

Should they send us information requests for questions as to why we did something in the way that we did, we have the math and we have the rationales and we have the team to explain it. And your questions have been the same as mine over the past period of time, which is, is there anything they can poke holes in. And I think my stats team sitting next to me here, I feel very confident in the quality of our data.

Linda, this is Craig. If I could just comment briefly on this concept. I think it's important to note the performance of upper limb is there's really 3 key dimensions to it. There's an upper shoulder dimension. There's a mid-level dimension, which is sort of focused on elbow function. And then there's a distal dimension, which is focused on hand function. And if you look at the natural history data, the upper shoulder dimension is really quite dynamic. Patients really plunge with regard to their function and they'll lose 5 or 6 points in a single year. And whereas the mid-level dimension actually is much more linear, is much more predictable. The distal dimension moves much more slowly. But in terms of quality of life and in terms of importance to the patient, those items are really quite important and quite essential.

And I think it's important to point out here that even with the looking at the total score of the PUL, there was statistical significance that was achieved. If you look at the PUL 2.0 mid-level dimension, which was shown in, I think it was Slide 14, the forest plot, there was still a 1-point treatment difference and the p-value there was 0.008. And that was the same primary endpoint that was actually used in HOPE-2 that the FDA had signed off on.

And so I think this concept of percent change, if you're looking at percent change in -- with a higher score at baseline where patients are going to perhaps lose more items and lose more function, I think the percent change makes a lot more to look at really across the entire spectrum of Duchenne patients. And I think importantly, the prespecified endpoint in terms of the PUL 2.0 total score, it really doesn't matter whether you look at it in terms of percent change or absolute value, you still get statistical significance.

And I think with the data coming out from Anna Mahu, who is one of the key developers of the PUL along with [ Eugenie, McCurry ] and our group and others, I think this concept of percent change really makes sense from a methodologic and statistical point of view. But I think we will be armed and ready to justify this with the regulatory authorities.

Great. And then just going back to thoughts on possible differences in statistical analysis. Is there any difference potentially, let's say, in terms of handling of missing data, where they could have a more rigorous approach that might change the statistical significance of the end point?

Yes. So I'm going to have Dr. Nathaniel Hogan, our Director of Biostats here at Capricor answer that question, Nathan?

Yes, that's a great question. So in the PUL, we have -- we don't have a lot of missing data in the PUL. But on top of that, we have run many sensitivity analyses on different methods for imputing the missing data, and all of them show a consistent and robust treatment effect and a similar result to the primary analysis.

Linda, this is Craig again.

Please always.

Yes. Just really quickly, I think I've been involved in clinical development of Duchenne Therapeutics for many years in terms of the multiple approved drugs in the U.S. as well as the EMA. I think this non-ambulatory population has huge unmet burden. And oftentimes, we've sort of relied on accelerated approvals or extrapolation of data to try to get them access to therapeutics. But here, we actually have hard data in terms of 2 placebo-controlled trials and long-term open-label extension. And I think of the 8 or 9 approved therapeutics for DMD, I don't think I've seen as rigorous a data set or as compelling a data set as this particular data set, particularly in the non-ambulatory patient population.

So I think that's just important context in terms of addressing these concerns that the regulatory authorities may be concerned about the prespecified submitted statistical analysis plan. I think we're -- I'm glad we're talking about this that we actually met the primary endpoint. And actually, you look at that forest plot and the consistency across all the key secondary endpoints, it's really just amazing and compelling to me. So that's just to provide a little additional context of the discussion.

Thanks, Craig. You always teach me something every time we talk.

[Operator Instructions] And the next question comes from Boobalan Pachaiyappan with ROTH Capital Partners.

All right. Okay. All right. So congratulations on today's data. A couple of questions and mostly for the KOLs. So let's just say like hypothetically, deramiocel gets approved by tomorrow. So I wanted to speak to you or I wanted to get your thoughts on your comfort level in prescribing deramiocel on top of patients who are getting exon skipping therapy. Do you feel there will be any payer pushback? Or how are you thinking about it?

Craig, please go ahead. And then, Jon, if you want to provide some color, that would be great.

No, I don't think there'd be -- I think this really has the potential to work synergistically with both exon skipping products as well as gene therapy products. I don't think I would use deramiocel within the first 6 months after a patient has been treated with AAV gene therapy just in terms of immunologic responses and the close safety monitoring that's required for gene therapy. But I think by all means, I think deramiocel can be used synergistically with exon skipping therapies with gene therapy with HDAC inhibitors, givinostat and with steroid medications. These patients in this trial were all treated with stable doses of steroids.

So I think that my discussion with third-party payers in terms of the patient that was perhaps treated one of these other therapies would be really probably focused in large part also on the really compelling cardiomyopathy data that we see in cardiac MRI and the really compelling data that we have that deramiocel could actually stabilize the progression of the cardiomyopathy, which I don't think we didn't necessarily have data in terms of the other approved Duchenne therapeutics on. So that would be really my thoughts on that question.

Yes, I agree. I mean we really look at this as we need to layer therapies on with different mechanisms of action in order to really improve the quality and duration of life in these patients. And I think deramiocel has a really nice place in that layering because it's a different mechanism, and I think it really should be synergistic.

In terms of the approval, the -- we have spent a lot of time on approvals for a lot of drugs. And I'll say that the more data we have, the easier it is. And I think that the fact that every endpoint hit in this study will make our lives significantly easier. And I think Craig's point about this being really if it gets a cardiomyopathy label, it would be the only cardiomyopathy drug for DMD. I think that really will make our lives significantly easier to layer this on after someone receives gene therapy or while they're on exon skipping or something along those lines.

Great. And then really quickly, with respect to the placebo response that we saw today, I was wondering if you could comment on whether this was what was expected and was it in line with what is known from the natural history studies?

In terms of the placebo effect, we believe that it's in line with what we've seen in natural history. It's certainly in line with what Dr. Soslow has published in terms of the cardiomyopathy and in line with the performance of the upper limb. Of course, let me remind you that the placebo group and the treated group were well matched in terms of baseline characteristics and appropriately stratified. So we believe the placebo group is well represented in terms of the natural history progression of the disease.

Linda, maybe one final question to you. So after submitting the CRL response to the FDA, I was wondering how you're thinking about the pathway to approval in ex U.S. region, particularly in the U.K. and European Union? Do you think today's data will facilitate that process? Or how are you thinking about the time lines? Any thoughts?

Yes. So the EMA is laser focusing on Cohort B. As I mentioned in my earlier remarks, we saw statistical significance independently in Cohort B. They like to see data from the commercial manufacturing facility. Once we're ready and once we understand most favored nations and once we decide how we're going to proceed outside the U.S. and once we launch in the U.S., we'll take the ex U.S. territories on.

We have an agreement in place with Nippon Shinyaku for rights for sales, marketing and distribution in Japan. We'll be working very closely with the Japanese PMDA in order to move that program forward, and we'll continue to update the EMA as well as the markets on how we intend to proceed. Right now, I think like almost every other drug developer, especially small companies such as Capricor, we're focusing on the United States. We manufacture our product in the United States. Our teams are all based here in the United States. And so that's our focus for right now.

And the next question comes from Yanan Zhu with Wells Fargo.

Great. And I wanted to add my congrats on the planned results here. Just wondering whether there is any correlation between the PUL endpoints and the LVEF endpoint, especially between the absolute change of the PUL endpoint and LVEF endpoint, given that there's some question this morning, but I understand that the absolute endpoint change in PUL also hit p-value. But if there's any correlation, I think that might further reassure the results, yes.

Thanks, Yanan. So our brands must work similarly because that was the first question I asked our stats team after I saw the preliminary top line data, now finalized top line data. And we're very delighted to say that over 40% of patients had improvements in both left ventricular ejection fraction and the performance of the upper limb. And as I stated earlier, 70% or a little bit more patients had improvement in either skeletal muscle or cardiac muscle function. And this, of course, is then also validated in the global statistical test, our type 1 error controlled secondary endpoint, where we looked at the relationship of performance of the upper limb, left ventricular ejection fraction and the patient-reported measure of PGI, which showed statistical significance. So overall, we believe that there is a nice correlation and a good improvement. And as Mindy Leffler, one of our Duchenne moms, so eloquently said, "People ask me, do I want my son's heart to improve or his skeletal muscle to improve? I'll take either or both, and that's how we're approaching deramiocel.

Wonderful. Linda, I was also wondering about Cohort B specifically, given that you mentioned that's the EMA -- more of an EMA focus. And also you mentioned Cohort B data actually look even better than Cohort A. So on the absolute change in PUL endpoint, could you comment on whether Cohort B alone also reached statistic and whether that p-value is a little -- any different than the overall?

Yes. So yes, Cohort B did reach statistical significance, very statistically significant in the PUL. And yes, we are going to use that data to help support primarily manufacturing that the product that is made in our San Diego commercial facility is actually as good or better than anything we've ever made. And as I said earlier, but I want to emphasize, it also shows that you can do a manufacturing expansion of deramiocel very successfully in that our potency assays predict bioactivity. So this is a giant win showing that Cohort B has done so well.

And I'm showing no further questions at this time. I would like to turn it back to the Capricor's management for closing remarks.

Thank you so much for taking your time. I do know there were problems with this webcast. It's a first-world problem because there were so many of you that tried to call in, it just overloaded the lines. We will be posting this webcast. The transcript will be available. And of course, if you have continued questions, please feel free to reach out to me and my team. I'm going to take this final moment to say thank you, everybody says thank you to the families that participate in the clinical trials. But what I can say is the Duchenne families have become my family. I feel them every day. I hear from them regularly. I watch them as they're growing older. And just like our own children, I celebrate when they have something really positive happen to them. And what we're hearing around is that those that are on long-term treatment with deramiocel are living better, healthier lives. And now we have mathematical support to be able to go into the regulators and get this for everyone.

Thank you for our investors. Thank you for believing in us all this time. And thank you for joining us this morning. We look forward to continuing the journey with you in a successful approval and ultimate launch of deramiocel for DMD.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics Third Quarter 2025 Conference Call. [Operator Instructions] This call is being recorded on Monday, November 10, 2025.

I would now like to turn the conference over to our CFO, AJ Bergmann, for the forward-looking statement. Please go ahead.

Thank you very much, and good afternoon, everyone.

Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety, and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our enrollment of patients in our clinical studies, plans to present or report additional data, plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments, our financial position, and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause our actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

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

Good afternoon, and thank you for joining us on Capricor's Third Quarter 2025 Conference Call. This has been a very busy time for Capricor, as we are just weeks away from a major milestone, the top line readout from our HOPE-3 Phase III clinical study of deramiocel, our investigational cell therapy for the treatment of Duchenne muscular dystrophy. This pivotal study represents the culmination of nearly a decade of scientific development, all aimed at helping boys and young men living with this devastating disease. Importantly, HOPE-3 focuses primarily on non-ambulant individuals, a patient population that has historically had limited clinical research dedicated to it.

HOPE-3 was conducted across 20 leading academic and clinical centers in the United States. The trial enrolled 105 participants and is one of the largest double-blind placebo-controlled studies ever conducted in the Duchenne population. The study was designed with a 1:1 randomization and is statistically powered to detect changes in both upper limb function -- as measured by the performance of the upper limb version 2.0, and cardiac function -- as measured by left ventricular ejection fraction, measured by cardiac MRI, as well as several secondary and exploratory endpoints. These 105 patients enrolled in HOPE-3 represent 2 cohorts: Cohort A, which received deramiocel manufactured from our Los Angeles clinical facility; and Cohort B, which receives products manufactured at our commercial GMP facility in San Diego.

As a reminder, the FDA required the addition of Cohort B to evaluate the efficacy of the commercial scale product. While we have demonstrated nonclinical comparability, Cohort B provides the opportunity to generate direct evidence of efficacy for the commercial material. The San Diego facility was built to meet commercial manufacturing standards operating under elevated quality and compliance requirements to support commercial deramiocel production. Because the San Diego manufactured product is intended for commercialization, the statistical analysis plan for HOPE-3 includes analyses designed to evaluate efficacy, both across the combined cohorts and independently within Cohort B.

We believe -- in alignment with our biostatisticians and clinicians who designed our statistical analysis plan with us -- that while the aggregated data are informative, demonstrating efficacy of the commercial scale product represents the most direct regulatory path to potential approval.

From the standpoint of safety -- which, of course, is the most important aspect of the clinical study -- safety data from the trial have been regularly reported to the FDA, and no new or emerging safety signals have been observed. Across our entire program, we have now administered more than 800 infusions to, approximately, 150 boys and young men with Duchenne, with deramiocel continuing to demonstrate a strong and consistent safety profile.

At Capricor, our mission remains clear: To bring forward the first therapy that directly addresses Duchenne muscular dystrophy associated cardiomyopathy.

Nearly every patient with Duchenne develops cardiomyopathy, which remains the leading cause of death in these boys and young men. Deramiocel has been shown to help preserve both cardiac and skeletal muscle function, and our goal will be to emphasize to the FDA the life-limiting cardiovascular impact of this disease. Should deramiocel be approved, it would represent a first-in-class therapeutic option for this critical unmet medical need.

We are now in the final stages of data preparation. Our statistical analysis plan has been submitted to the FDA, and the comment period passed without additional feedback. We plan to unblind the study once all data management processes are finalized, which, as noted, will occur within the next several weeks. The process has required review of more than 300 MRIs by independent external readers, who are fully blinded both to treatment allocation and sequence, a process that requires additional time to collect and analyze the data set.

To remind you, after our pre-BLA meeting with the FDA in 2024, we submitted a BLA based on existing data from our HOPE-2 and HOPE-2 open-label extension trials compared to an external control comparator from the cardiac consortium. At that time, the purpose of HOPE-3 was to support potential ex-U.S. expansion, as well as label expansion. However, following receipt of the CRL in July, the role of HOPE-3 shifted. The CRL primarily cited the need for additional substantial evidence of effectiveness and certain CMC clarifications. Importantly, most of the CMC issues had already been addressed in prior information request responses. And the remainder were resolved shortly after the receipt of the CRL. While the CRL was unexpected, we were well positioned with HOPE-3 to provide the additional safety and efficacy data requested by the FDA.

During our Type A meeting in August of this year, the FDA indicated that the HOPE-3 results could be submitted to address the issues raised in the CRL. A key element of that meeting was our request to keep the current BLA open and maintain the indication for DMD-associated cardiomyopathy. To advance that path, we proposed designating left ventricular ejection fraction -- LVEF -- as the primary efficacy endpoint. While the FDA did not allow this formal change, they agreed to exercise regulatory flexibility in reviewing the HOPE-3 data. Accordingly, we plan to submit the HOPE-3 results as a formal complete response to the CRL, with the goal of receiving a rapid review by the FDA and a new PDUFA date.

As of now, FDA has classified the resubmission as Type 2, which means the review period can be up to 6 months, but there is precedent for faster review times. We will make every effort to advance deramiocel toward approval as efficiently as possible in 2026. To remind you, we are eligible to receive a priority review voucher if approved -- if approval is obtained prior to September 30, 2026, and PRVs may become increasingly valuable as the program approaches its statutory sunset. While we cannot predict the exact timing of approval, we remain highly motivated to achieve approval as early as possible in 2026, well ahead of that deadline. This consistency demonstrated across multiple clinical studies underscores deramiocel's potential to stabilize disease progression and preserve both muscle and heart function. We now look forward to seeing whether the data from HOPE-3 confirms these benefits in a larger, rigorously controlled pivotal trial.

As we approach our quiet period, I will remind you that we expect to report top line data within the next few weeks. And we will do everything we can to keep both the market and the DMD community informed of our further plans with respect to this program and the release of the data.

We also recently published a peer-reviewed paper in Biomedicines, detailing new mechanistic insights into deramiocel's mechanism of action. The study described in the paper demonstrated that cardiosphere-derived cells, CDCs, the active components of deramiocel, release exosomes and soluble factors that suppress fibrotic gene expression, collagen 1 and collagen 3 in human fibroblasts. These findings were consistent across more than 100 manufacturing lots, validating deramiocel's antifibrotic and immunomodulatory properties and further supporting its mechanism of action. To complement this publication, we also released a scientific video illustrating deramiocel's mechanism of action, which is available on our website, reinforcing the biologic rationale and consistency that underline our entire development program for deramiocel.

Now focusing for a moment on the CMC front, following acceptance by the FDA of all findings from our pre-license inspection or PLI, our San Diego commercial facility is fully operational and preparing for GMP production activities. Our manufacturing and quality systems are fully implemented and all CMC-related items cited in the CRL have been addressed. This achievement reflects the strength of our operations and represents a critical milestone in ensuring readiness for commercialization and long-term product consistency.

In parallel, we continue to prepare for launch with advancing initiatives in physician education, patient services, market access and reimbursement. We are engaging both neurology and cardiology specialists to ensure an integrated approach to patient care should deramiocel receive approval.

While our immediate focus remains on U.S. approval, we are also laying the groundwork for potential global expansion and we'll share updates as appropriate. We are closely monitoring evolving U.S. and international pricing policies, including the current administration stance on most favored nation frameworks and we'll adapt our global strategy accordingly.

Now I'd like to spend the next few minutes talking about our exosome platform. We continue to advance our StealthX program under Project NextGen, a U.S. government-funded initiative led by HHS and the National Institutes of Allergy and Infectious Disease to develop next-generation vaccines for COVID-19 and other potential infectious threats. The NIAID sponsored Phase I clinical trial remains ongoing and is evaluating multiple dose levels of the monovalent vaccine, targeting the spike or S antigen with an additional planned arm that will utilize a multivalent vaccine construct targeting spike S and the nucleocapsid N antigens, pending separate FDA clearance.

We expect initial data in the first quarter of 2026, subject to completion of the trial by NIAID. The goal is to validate StealthX as a versatile non-mRNA adjuvant-free platform capable of delivering native proteins safely and efficiently, a model that could potentially extend to infectious and rare diseases alike. While vaccines are not our core business, this program serves as a critical proof of concept for the StealthX platform. Positive results could open the door to strategic collaborations and highlight the platform's potential for targeted therapeutic delivery well beyond vaccinology.

With that, I will now turn the call over to AJ, to run through the financials. AJ?

Thanks, Linda. This afternoon's press release provided a summary of our third quarter 2025 financials on a GAAP basis. And you may also refer to our quarterly report on Form 10-Q, which we expect to become available shortly and will be accessible on the SEC website, as well as the Financial Section of our website.

Let me start with our cash position. As noted, as of September 30, 2025, our cash, cash equivalents and marketable securities totaled approximately $98.6 million. We believe that based on our current operating plan and financial resources, our available cash, cash equivalents and marketable securities will be sufficient to cover anticipated expenses and capital requirements into the fourth quarter of 2026.

Turning briefly to the financials. Revenue for the third quarter of '25 were 0 compared to approximately $2.3 million for the third quarter of 2024. Additionally, revenue for the first 3 quarters of 2025 were 0 compared to approximately $11.1 million for the first 3 quarters of 2024. I'd like to point out that the source of revenue in 2024, was the ratable recognition of the $40 million we have received under our U.S. distribution agreement with Nippon Shinyaku, which had been fully recognized as of December 31, 2024.

Turning to our operating expenses for the third quarter of 2025. Excluding stock-based compensation, our research and development expense were approximately $18.1 million compared to approximately $11 million in Q3 2024. And for the first 3 quarters of 2025, excluding stock-based compensation, our research and development expenses were approximately $54.4 million compared to approximately $32.8 million in the first 3 quarters of 2024. Again, excluding stock-based compensation, our G&A expenses were approximately $4.1 million in Q3 2025, and approximately $2.2 million in Q3 2024. For the first 3 quarters of '25, excluding stock-based comp, our general and administrative expenses were approximately $11.1 million and approximately $5.7 million for the first 3 quarters of 2024.

Net loss for the third quarter of '25 was approximately $24.6 million compared to a net loss of approximately $12.6 million for the third quarter of 2024. And net loss for the first 3 quarters of '25 was approximately $74.9 million compared to a net loss of approximately $33.4 million for the first 3 quarters of 2024.

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

Thanks, AJ. As AJ just mentioned, we ended the quarter with approximately $100 million in cash, providing a solid foundation to continue executing on our near-term objectives and advancing our key programs. And let me just remind you that if deramiocel is approved, we remain eligible to receive $80 million milestone payment from NS Pharma, and a priority review voucher, which represents significant non-dilutive capital opportunities that would strengthen our balance sheet and extend our runway well into 2027 and beyond.

We will now open the line for questions.

[Operator Instructions] Your first question comes from the line of Ted Tenthoff from Piper Sandler.

Great. Excited for the upcoming HOPE-3 data. I just want to get a sense for what we should expect from that in terms of what will be actually released in the initial data reporting in the top line data.

Ted, always great to hear your voice. Yes, the top line data will be primary and key secondary endpoints. We will release those as soon as we have them. And we'll host a conference call to explain them and help the markets, as well as the key opinion leaders help explain the ramifications of that data.

Just one quick follow-up, if I may. With the consideration of left ventricular ejection fraction as a key secondary, are there any statistical changes in this study because of elevating LVEF tanks?

No, Ted. So thanks for that. So the great thing is the study was always powered with the idea that we were well overpowered to measure ejection fraction. We had such strong results from HOPE-2 and HOPE-2 open-label extension that it really wasn't an issue. We have tremendous powering for ejection fraction. It was powered for PUL, but that the overarching power is quite strong for the cardiac as well.

Your next question comes from the line of Leland Gershell from Oppenheimer.

I wanted to ask just a bit further on HOPE-3 and the SAP. We're in this sort of unique circumstance of having a BLA that's for the cardiomyopathy, but the primary endpoint of the trial is the PUL 2.0. So wondering how the SAP designates treatment of the LVEF secondary endpoint in the situation in which you miss significance on the primary?

Yes. Leland, thanks so much. So this has obviously been an issue that we've spent a lot of time thinking about, working with the FDA. And we've brought in several very well-respected statistical consultants to help us build an SAP that allows for both of those parameters, right? So the Food and Drug Administration said we want the primary to remain the performance of the upper limb. We left it as a performance of the upper limb. The way that the primary is being analyzed, as I mentioned in my remarks. We'll look at the combined cohorts A and B. But we're going to focus then also on looking specifically at Cohort B, because that's going to provide strength in the manufacturing facility that we have built and passed PLI with.

The alpha is going to be used in the primary endpoint, as would be in any other situation. And should we achieve statistical significance and that alpha passes through to the secondaries and continues along until you miss a secondary. The key secondary of ejection fraction, we did not reserve any specific alpha for. But we know from our Type A meeting that the FDA was interested in looking at all of the data in its totality. So the SAP is a pretty traditional one and actually fairly simple with which we think we have a lot of great opportunity to utilize the performance of the upper limb and then also ejection fraction.

Now just to add a little bit of color to what you asked, because our open BLA is for cardiomyopathy. We are not going to ask -- at least in first iteration -- to expand the indication to skeletal muscle until we are assured that we're going to get the indication and label of cardiomyopathy. Once we have achieved that with the agency, we will then assuming that we have statistical significance in the primary, we'll then ask to expand to skeletal muscle as well.

Also just a question with respect to the cardiac MRI review procedure. Could you just run us through that? Are all of these reviewed by an external review? Or is there an adjudication process? If you wouldn't mind just summarizing that.

Yes. So that's obviously very important and something that we have a charter in place that was signed off on, which is multifaceted. So first, an outside CRO reviews every single MRI, they're first quality controls. So everybody looks at them, at the CRO to make sure that the image meets the standards of being able to be reviewed and analyzed. Once that happens, then they're read by a primary reader, a secondary reader; and then anywhere the primary reader and the secondary reader disagree by a certain number, which is of relevance that could not possibly change that much over a certain time period, there is a third reader that comes in for adjudication. And then the 3 of them look at it together to decide which, in fact, would be the appropriate read. So there's a tri-level measurement procedure. And they are independent to time point. So they don't know which time point it is and also to patient ID and obviously, the treatment group.

Your next question comes from the line of Joseph Pantginis from H.C. Wainwright.

Linda, I just wanted to clarify something quickly before my question. So depending on the primary endpoint, you said you're going to continue to look for cardiomyopathy and then if statistically significant, expand to skeletal, if I heard you correctly. Would that be in the form of an sBLA?

Yes. So interesting that you asked that. We don't really know exactly how we're going to go about that yet. It's going to involve conversations with the agency. So right now, we have a CRL. The CRL said we want to see more data. We're going to give them more data as a response to the CRL. We're going to provide all the data, which includes the primary and the key secondary endpoints, which we've also agreed that we would provide publicly. So you'll get to see them too. And then in those conversations, we'll decide how we're going to do the label expansion of skeletal should that be appropriate.

I just wanted to make sure I understood. Because it looks like with regard to the analyses, you're going to be looking at the 2 manufacturing cohorts of A and B versus B alone. Does that include any alpha spend at all? Or how should we view those in general impacting the SAP or not?

Yes. So the way that the analysis is built is a statistical analysis that's very commonly used, called the Hochberg analysis, which basically does not utilize alpha spend if you prespecify which group you are going to be directing your alpha towards. So if you are, for instance, going to say A or B and we'll take either one, that's an alpha spend so that you would then have a 0.025 going into your secondary. But if you actually direct it prespecified, you save all your alpha and therefore, you have it to use in your secondaries.

Maybe a question for AJ, and if you'd like to fill in, that would be great. I wanted to get a sense now with regard to your burn going forward. You have a couple of things coming down, a few things potentially going up. You'll have HOPE-3 wrapping up in the clinical trial expenses around that. I wanted to see about discussing manufacturing expenses that might be increasing, personnel and then maybe a gradual increase in exosomes. Maybe some views on how the expenses might be going forward.

Yes. Thanks, Joe. I mean, obviously, our expenses in the third quarter were higher than they had been. But we were moving towards pretty much a PDUFA date as we moved -- got -- received our CRL in July. A lot of the expenses you just said correctly have gone into the execution of the HOPE-3 trial, which is winding down. So we'll see those expenses hopefully continue to wind down. But they're going into the manufacturing and the development of the commercial product as we prepare and continue to prepare for a commercial launch.

So we're maintaining and cautiously watching our burn in every area we can. We're building out our team in areas that are absolutely necessary. And then obviously, following the results of the data and our next steps with FDA. We'll continue to put the dollars to work where they need to go. So we feel very comfortable with where we're at. And we're putting -- diligently investing in where we hope to drive value.

Exosome, same type of answer. Just to point out, NIAID is obviously funding that study. We've said that many times. We've already made the doses necessary for that. So that's well off our balance sheet, which hopefully will be a nice value driver and catalyst for us in the early part of 2026.

Your next question comes from the line of Kristen Kluska from Cantor.

I'm sending you all my best in the next few weeks ahead for the company. So on the statistical analysis plan, my understanding was when you originally designed the Phase III study, you powered it based off of Cohort A in terms of patient size number. And now that you will be using Cohort B, it's essentially the same size anyway. Is my understanding correct here?

Yes, pretty close, Kristen That's exactly right. So we combined them. It's been a long journey, right? So we started with Cohort A, then we were told by FDA we needed to add Cohort B for efficacy. Then when we were filing the BLA on the existing data, we combined A and B into sort of one clinical trial because they agreed to nonclinical comparability between the sites. But now especially with some of the things that's going on with the administration, the fact that our manufacturing plant in San Diego has passed PLI, we've answered their CMC issues. We feel that it was important to be able to highlight the potential efficacy of Cohort B. And yes, the powering is pretty much the same. Cohort B is a little smaller with an 80% powering. Cohort A was a 90% powering. But we still feel that we're well within the range of ability to achieve efficacy.

I know in the past, you've shared with us a little bit of the baseline characteristics amongst these patients, including the percent that had cardiomyopathy. As we now divide it between A and B, would you say that, that statement is still true? Or is there one cohort where the baselines are skewing a little bit differently?

Yes. So the baseline characteristics are pretty much identical across the cohorts. We didn't change inclusion/exclusion criteria for either one. And really, it didn't work out in any specific way that it was heavily weighted one way or the other. We have seen and obviously, I don't know the data from HOPE-3. But we've seen from HOPE-2 open-label extension from John Soasllow's natural history study that those patients that get treatment with ejection fraction over 45% seem to do specifically well compared to those that are worse off. So we're definitely trying to get to these guys as early in the pathogenesis of the cardiomyopathy as possible.

I think when we did the analysis of Cohort A and B together in preparation for the CRL response, we had over 70 that would have had diagnosed cardiomyopathy. One thing that's really nice about Cohort B is we're also measuring scar as measured by late gadolinium enhancement. So we'll also be able to do a correlation between the amount of damage that looks visible in the heart as well as ejection fraction and/or volumes, which is going to be very important for the field moving forward to understand sort of what the tipping points are in terms of scar aggregation and function.

Your next question comes from the line of Catherine Novack from Jones Trading.

I just have a question on -- when you mentioned FDA intended to exercise regulatory flexibility. At what point would -- do you intend to ask them to exercise this kind of flexibility? There's a possibility that you don't see statistical significance on PUL, but there is some kind of apparent benefit on LVEF. Is this a situation in which you would want the FDA to try to look at the totality of the data going forward?

Yes. So you hit it exactly. We are obviously anxiously awaiting the data. The easiest story will be if we hit PUL and we hit ejection fraction. If for some reason, we miss on PUL. And I think there's a lot of information that's being discussed both in the Cognizente arenas in terms of the performance of the upper limb, what its utility is, how good of a measure it is, the lability of it, that kind of thing.

If for some reason, we miss on PUL, but we hit hard on cardiac, that would be where we would ask for that regulatory flexibility. And we're hopeful that based on what we have in the Type A minutes, what we have educated the FDA about with the performance of the upper limb and the key opinion leaders that we would still be able to succeed in getting the label for cardiomyopathy.

Then if there's anything you can share specifically what -- about what FDA did say when it comes to regulatory flexibility. We've obviously seen them be more stringent when it comes to statistics in recent decision-making. If there's anything you can give us to -- any more specific detail you can give us about what FDA has said about what it means to exercise regulatory flexibility?

Yes. I think when we put out our press release on our Type A meeting, we actually provided a quote in there that came directly from the minutes, which basically said, we want you to submit all of your data from HOPE-3. We're not willing to change the primary to ejection fraction. But we will regard all of the data and make decisions based on pretty much the preponderance of all the data. They did not give us specifics. We did have a hallway conversation in which one of the reviewers assured the mother, Mindy Leffler. That came with us to our Type A meeting that they would be very sure to look at the cardiac data very carefully as they recognize that this was the unmet medical need with no approved therapeutics for that patient population.

Your next question comes from the line of Madison El-Saadi from B. Riley Securities.

A couple from us. Do you have a sense that from the FDA's position, how did they view Cohort B? Is it, I guess, more importance than the aggregate PUL? And then secondly, maybe what is the bar to achieve a more rapid review time that you alluded to? And has that been a request that has been made? Or is that something that you would, I guess, request alongside the submission of HOPE-3 data?

Yes, yes. All really good questions. So the reason that we're focusing a little bit more on Cohort B, which we might not have done had the original plan of the existing data been accepted. And we had approval already for the cardiomyopathy is because we knew that there was some question regarding the manufacturing of the product from San Diego that it was a shift from a clinical facility to a commercial facility and we passed the PLI. So we've seen, frankly, a lot of CRLs being issued in the last few months around CMC-related concerns. And so we wanted to obviate that by targeting our efficacy data to our approved facility. We thought that would be the safest way to go about it. And since the powering was basically the same. We thought that would be one of the best ways to assure the fastest path to approval.

In terms of time lines and speeding it up, that, again, is going to be based on what we see in the data, where we can convince the agency to move a little bit quicker. We have seen them do it. They did it with Calvista. They did it with Stealth. They are typically falling back on as long a review period as possible. And part of that, I think, is just because they are so understaffed and going through so many changes themselves that speed is hard for them. But we certainly will work with them and try and get this to PDUFA as quickly as we possibly can.

If I may ask one more to clarify. I think you answered this a couple of questions back. But could you clarify the LGE stratification, if that was balanced across both cohorts? Or is that a Cohort B specific stratification that was reached?

Yes. So we didn't measure LGE in HOPE-2 or Cohort A. And that was largely because there was a little bit of a haze at the time that LGE might cause aggregation of the brain, that there might be some bad side effects. And so we didn't really want to jump into that pool of messiness. But several things happened along the way. One, those substantiations were not proven to be true. LGE is safe. And two, our cardiology leaders convinced us that since we know that the pathogenesis of the cardiomyopathy associated with DMD is very different than what would be considered an adult dilated cardiomyopathy.

It would be really interesting to be able to correlate scar, how much, where, when and then how it potentially correlates with ejection fraction. So it's an exploratory endpoint. But one as a cardiac physiologist, I'm very excited to see because it could provide some very important answers in developing treatment paradigms for Duchenne muscular dystrophy.

[Operator Instructions] Your next question comes from the line of Boobalan Pachaiyappan from ROTH Capital Partners.

So I just have a couple starting from the Type 2 classification. I think this is the first time you're articulating that Type 2 is likely. And obviously, this is going to garner a review period of 6 months. So I wonder if there were any recent developments between you and the FDA that made you believe or the Class 1 resubmission is impossible. I just wanted to know when this decision on Type 2 was sort of like set in stone.

Yes, yes. So thanks for your question. I think I pretty much answered it when Madison asked a similar question a moment ago. So we know that most people are getting Class 2 resubmissions. That's what we're expecting. That's what we've been told we should expect.

In terms of being able to speed it up, I think that's going to be incumbent upon the strength of the data. Our conversations with the agency and sort of other imponderable factors that I cannot answer until I have not only seen the data, but also met with the agency. But we'll go as fast as we can. We obviously are looking for a quick PDUFA as well.

Secondly, can you discuss whether the potency assay adequately fulfills the FDA's guidance of potency test for cellular product expectations?

Yes. So we're very proud of the way that we have developed the potency assay profile for deramiocel. One of our goals was always to make deramiocel a drug product and not sort of a hand-waving cell therapy. It works, but we really don't know how it works. And so our science team did a methodical multiyear program in which they looked at the data from HOPE-2. They then were able to identify the master cell banks that we use in order to treat the patients in HOPE-2, so we know it works. And then they took those specific cell banks. And they put it through some pretty rigorous RNA-seq assays looking at 166 genes. And all of this, by the way, is in a very nice by tactic few minute overview on our website.

Looking at those 166 genes, then, use bioinformatics to basically quantify those that identify CDCs as a completely unique cell type and then identify which ones were up and which ones were down. Once we have identified which ones are CDCs by their genotype, we then put them through an antifibrosis assay, one of the stated mechanisms of action.

Looking at the production of collagen 1 and collagen 3 or in this case, the knockdown of collagen 1, collagen 3. The main product of fibrosis. And each and every lot has to pass that by a certain quantification in order to be considered effective deramiocel.

So we feel very confident in our potency assay profile. It's now been published. And again, if you're interested in more details, Dr. Christy Elliott, our Chief Science and Operating Officer, does a nice job explaining it in more detail on our website.

Your next question comes from the line of Matthew Venezia from AGP Alliance Global Partners.

Just one quick one on the potential label expansion. Is there any chance at first launch if an approval were to be granted that you could get a cardiac and skeletal label? Or are you mostly looking at label expansion further down the line?

No, I think we'll obviously enter into those conversations during our labeling discussions with the agency. Of course, it's all incumbent upon what the data shows. But certainly, if we achieve statistical significance in skeletal and cardiac in our labeling discussions, we will ask for the label to have both parameters.

Just to switch gears a little bit to the exosomes platform. For the COVID vaccine program, we've seen Vaxart recently sell their COVID vaccine program to Dynavax. What are the partnership opportunities that you potentially see? Has there been any inbound? Is there anything you could share on that front for the exosomes platform?

Yes. So we're all waiting with bated breath for the data to come through from the NIAID study. Obviously, the government shutdown has not helped that. We are looking forward to getting that data. I think once we have that data, we'll be on a more directed shopping expedition for the appropriate partner. This vaccine is fantastic. It's a native protein vaccine. We use no adjuvant. The lipid that encompasses it is an exosome, which is a natural product. So you don't have to worry about gumming up the liver or the spleen. And if the antibody response and T cell response is anything similar to what we saw preclinically, it should have really tremendous value -- plus because of the little bit of protein that we need to evoke a strong immune response. We can do multivalent vaccines, not only with multivalence for COVID. For instance, but we could do a COVID plus flu plus RSV and all of those are in the planning stages. So we're pretty excited to see that data. And we'll provide updates as the data becomes available.

Your next question comes from the line of Joseph Pantginis from H.C. Wainwright.

Linda, I want to make sure I'm absolutely sure on this. So forgive me if there's any repetition here. And this goes to the SAP around HOPE-3 and I'm getting questions on this as well. So obviously, you need the primary to hit to be able to trigger LVEF, if I heard that correctly, number one.

Is that a question? Or did you just miss Joe?

Is that the -- like I just want to make sure that's correct. You have to hit the primary in order to trigger the analysis of LVEF. And if you don't hit the primary, how would LVEF be analyzed? And what would you say would be the hurdle for success there?

Yes, yes, yes. So this is where sort of the colloquium of regulatory flexibility becomes the open-ended question. It depends on how far we miss on the PUL. Let's say, if we did and then what the p-value independently of ejection fraction would be. I think we would go in there and fight really hard if we missed by a little on PUL and achieved really nice p-values on ejection fraction.

It depends on how dogmatic the agency is going to want to be on statistical analyses, which typically use up your alpha in your primary. But in this situation, because they had said they would be flexible, that they would look through to the cardiac data, that they know that the applications for cardiac and the BLA, they were looking for more cardiac data. There may be a lot more windows of opportunity than just sort of strict statistical dogma.

There are no further questions at this time. I will now turn the call back to Capricor management for their closing remarks. Please go ahead.

Thank you so much for all of your questions and also for participating today. Obviously, the coming weeks will be transformative for Capricor as we prepare to announce the HOPE-3 top line results. These data will define the next chapter for deramiocel and for our company as we advance toward our goal of delivering a life-changing therapy to patients and families affected by Duchenne muscular dystrophy.

We remain steadfast in our mission and continue to execute with discipline, scientific rigor and readiness across every area of our business.

To the DMD community, your courage and partnership continue to inspire everything we do. We look forward to sharing this important next step with you soon. Thank you so much for joining us today. And we will be in touch soon.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Good morning, ladies and gentlemen. Welcome to the Capricor Therapeutics DMD Program Update Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. A.J. Bergmann, Capricor's Chief Financial Officer. Please go ahead.

Thank you, and good morning, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our enrollment of patients in clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments, involving our product candidates, including the ability to obtain regulatory approvals or otherwise bring products to the market.

Revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments, our financial position and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause the actual results to differ materially from those contained in the forward-looking statements.

These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You're cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements. With that, I'll turn the call over to Linda Marban, CEO.

Good morning, A.J., and thank you so much, all of you, for joining. The purpose of today's call is to provide a regulatory and clinical update for our deramiocel DMD Program and outline next steps. As you know, following the CRL we received in July, we held a Type A meeting with the FDA. The meeting minutes took longer than the standard 30 days because we are going back and forth with the agency on some important clarifications. And so we thought it was best to align with them before we presented any public-facing opportunities.

Overall, the dialogue with FDA was constructive and productive, the outcome was positive, and we continue to work closely together on the path forward to approval for deramiocel in DMD. Now let me talk a little bit about HOPE-3, our pivotal trial, which, as you saw in the announcement this morning, FDA has agreed to accept the data and review it as part of our ongoing BLA.

The trial was completed with 105 patients, all of them have passed the 12-month mark, and the database is currently undergoing cleaning with anticipated database lock before the end of the quarter with release of top line data at that time. The data remain blinded and the analyses are currently underway. We do expect top line results in mid-November of this year. Importantly, about 70% of the boys and young men had cardiomyopathy at baseline, which means that the trial was well designed to evaluate both skeletal muscle and cardiac outcomes.

This was one of the questions that we had to answer and anticipate with the FDA. And as you might have seen, was part of the CRL that was actually released publicly. Now HOPE-3 is one of the largest placebo-controlled trials that has ever been conducted in Duchenne Muscular Dystrophy. In 105 patients, we believe that is an adequate and well-controlled trial and with each of the outcomes being both skeletal and cardiac, we're well powered to a steep statistical significance.

When combined with each of the cohorts, we believe that the data set allows us the greatest opportunity to see what the evidences of statistical significance as well as clinical efficacy in DMD. Now I want to remind you that the data that we submitted as part of the original BLA was data that the FDA had encouraged us to apply on. That was the HOPE-2 clinical trial data as well as the HOPE-2 open-label extension compared to the external comparator control from Vanderbilt University, is strong data. It showed that we showed preservation of left ventricular ejection fraction and measure of cardiac function as well as volumes and other multiple parameters of cardiac function.

When we submitted the BLA, as many of you have heard many times, we believe that this was the data that the FDA had requested and we gave them everything in terms of 50 information requests that came through. We passed our prelicensing inspection. We had a noneventful mid-stage meeting, and we're looking forward to our ADCOM, which was canceled as well as the late-stage meeting.

However, the great part of the opportunity here for Capricor is that FDA knew that HOPE-3 was coming. They understand that, that data could be very important in demonstrating the efficacy of deramiocel. And so we had a productive Type A meeting, as I just mentioned, where they said they were not only willing to look at the data from HOPE-3, but they will continue to exercise regulatory flexibility. They were willing to look both at the skeletal muscle endpoint as well as the cardiac muscle endpoint.

So this allows for 2 potential labeling opportunities the way that, that will be manifest is that the performance of the upper limb version 2.0 will stay as the primary efficacy endpoint. The agency was very uncomfortable with the concept of changing the primary endpoint. This is a legacy decision, it's the reason that the original BLA was based on the existing data of HOPE-2 and the HOPE-2 OLE because they were uncomfortable with the concept of changing the primary from HOPE-3. However, as HOPE-3 is well powered to show skeletal and they will allow us to continue to maintain and reopen the BLA that is currently under file using the skeletal muscle endpoint as well as the cardiac muscle endpoint for 2 labeling opportunities, we believe this is potentially the best possible outcome. And certainly, the tone of the meeting was supportive.

They talked about the large unmet medical need. They appreciated the very complete presentation that we were able to give them where we brought our key opinion leaders, Dr. Chet Villa of Cincinnati Children's and Dr. Jon Soslow of Vanderbilt, both pediatric cardiologists and perhaps the world's best adjudicators of cardiac function in Duchenne muscular dystrophy. Dr. Craig McDonald, not only our national PI, but probably the most visible Duchenne Muscular Dystrophy physician in the United States as well as statisticians and members of our own team to talk not only about deramiocel, but also about treating the cardiomyopathy and why that is such an important indication because remember, it is the #1 cause of loss of life in Duchenne muscular dystrophy.

Beyond the clinical and regulatory front, we also brought Aiden Leffler, one of our patients and his mom Mindy Leffler, who not only is a Duchenne mom, but has turned her personal journey into developing understanding of and measurements of clinical reported outcome measures and patients. Both of them presented to the FDA at the Type A meeting and talked about their experience with deramiocel and how it changed Aiden's life.

There is a video available, which I believe best way to access it is on YouTube where AIden talks about his experiences with deramiocel and how it changed his life. We also have the work of Eliza Stacy, an incredibly impassioned plea from his mom, who is also battling Stage IV cancer that she is asking for deramiocel to be moved forward and approved so that her son has a chance to access deramiocel as his own cardiac function is beginning to deteriorate.

We will continue to work with the patients, with the advocates, with the community, with the Food and Drug Administration and with all of you to get deramiocel across the line for DMD because we see not only anecdotally but also from the perspective of data that deramiocel indeed attenuates the progression of Duchenne muscular dystrophy both from a cardiac and skeletal muscle viewpoint.

So with that in mind, the one question that remains a little bit unanswered is the timing of the PDUFA. I know that's going to be the first question that I get. Our plan is to submit the HOPE-3 data as a response to the CRL that we received in July. We are currently working with the agency on how we will deliver that data to them so that it can be best evaluated as quickly as possible.

And to that end, we will provide updates as they become available. Financially, we remain in good shape. We have more than $120 million in cash and equivalents, which will fund operations well into 2026 and supports our launch readiness activity. We continue to work with Nippon Shinyaku, our partner, as we prepare for launch, we obviously now are gearing up for top line data before the end of the year and then ultimately resubmission of our BLA and moving forward as rapidly as possible to PDUFA and therefore, to launch.

I'll stop there and take any questions as you have them. Again, thank you for your continued support. This has been a challenging time, not only for Capricor, but for all of biotechnology as we negotiate the Food and Drug Administration and some of the changes that have been put in place there. We are delighted currently with our potential opportunity. Thank you so much for your time today.

[Operator Instructions] Your first question comes from the line of Joe Pantginis with HC Wainwright.

Thanks for taking the questions, and especially for the updated visibility. I know everyone appreciates it across the street and the medical community. So a couple of questions, if you don't mind. And I know you talked about the PDUFA, but I think not necessarily the date, but I guess one would consider this putting HOPE-3 data in there a major amendment or do you feel that, as you said you'd hope to get the data on a timely basis that might impact whether it's a major amendment or not?

Yes, Joe. So thank you so much for your question. This is one of the reasons why we have held off on some of the public announcements of the results of the Type A is just that we're not completely sure on how the FDA is going to ask for this data, how they'll adjudicate it and how it will impact the time lines. My regulatory team tells me that we're going to submit it as a major amendment, that we're going to hope to weigh on the agency to use a quick turnaround of 2 months to PDUFA time keeping our priority review alive.

But it's also possible that they'll ask for Class II resubmission, which really would slow down the clock and give them 6 months to review. So we'll continue to keep the street updated as we become more aware ourselves of what the agency will accept in the time line. Obviously, we'll work as hard as we can to get this across the line as fast as possible.

No, that totally makes sense. And I guess also the question here, and this has been the open question, it's good to have the visibility of keeping the primary endpoint to pull. But were there any real changes discussed with regard to the statistical analysis plan of how cardiomyopathy might play in? And then when you talk about 2 potential labeling opportunities, of course, it would be great to be a fly on the wall during your meetings. Is it -- do these labeling opportunities still -- are they still only gated on pull before you can -- if that fails, for example, which I don't believe it will, negate the potential for cardiomyopathy? Just want to make sure we're going down the right roads here.

Yes. So thanks. So again, these are really important and salient issues that were -- we grappled with them as well. Our current understanding is that they are wanting to maintain regulatory -- I was going to say rigidity, but let's say, strength, and so they're going to be looking for the primary efficacy end point theoretically to be positive with a p-value of less than 0.05. We are 2. And then with the key secondary being cardiac that would then be adjudicated on its statistical significance as well, which we also have very high hopes of hitting to the level of less than p 0.05.

The issue is whether they would look through a negative pull to a primary cardiac or to the cardiac secondary is one of the issues we've raised with them and talked with them about in detail as many others who have sat at my desk and other companies know FDA never gives you firm language that you can absolutely bank upon. But what they did say is they would exercise regulatory flexibility and that they would continue to look at the cardiomyopathy as a separate indication and a separate opportunity.

They understand that the current BLA was for the cardiomyopathy. They're not asking for a new BLA as far as I know, at this point, for the skeletal muscle myopathy. I don't know whether then the indication in the labeling would be gated on theoretically and practically the pull scores. Therefore, the ambulant or non-ambulant status of the patients. Obviously, they'll do full labeling discussions until you get a much later stage in the PDUFA process.

So I know it's a long-winded answer. The answer to the question is this study was well powered to detect a statistically significant difference in the performance of the upper limb. We saw and hope to -- we see it in the open-label extension compared to the external comparators that we've used and certainly, this trial is powered for that. So we're looking forward to seeing that data and are expecting to see statistical significance in both the performance of the upper limb and cardiac functions measured by ejection fraction.

No, I appreciate that very much. And don't worry about your answer because my questions were long-winded as well, but it's nice to hear the positive center of the discussions.

Thanks, Joe.

And your next question comes from the line of Kristen Kluska with Cantor.

I'm very happy to see that this alignment is in place and you've been focused on executing now. So I wanted to ask for the HOPE-3. I know that it's very well powered, but can you share with us how the patient population is relative to the previous trial experiences, which also helped with your powering assumptions? And then I believe for the original submission, you had included the safety findings from this study. Can you just confirm that's the case and that, again, the CP looks very clean.

Yes. So let's start with safety because obviously, that's the most important issue always in the therapeutic. Yes, the safety was submitted with the original BLA. It's been updated, and it continues to be very safe with thank goodness, no serious adverse events directly related to the product. And so we are encouraged, of course, by the safety of the product. In terms of the powering of the study, it was -- HOPE-3 was powered on data assumptions from the HOPE-2 clinical study. Remember, the original powering was done based on a 60-patient study that was Cohort A. Cohort B was added when FDA had originally asked us to validate the manufacturing of the product from our San Diego facility.

So the 105 patients is actually way overpowered based on the original assumptions. The patient populations are very similar. And yes, because so many of those guys that are in the later stages of the skeletal muscle myopathy aspect of Duchenne, also have cardiomyopathy with over 70% of them, as I said, having diagnosed cardiomyopathy and probably more of them on the verge of or starting to experience cardiac dysfunction. We feel very confident in the powering of the study.

And your next question comes from the line of Madison El-Saadi with B. Riley Securities.

Thanks for providing the update today. Can you remind us, is there a correlation between pulled and ejection fraction. And then to kind of follow up on a prior comment given that 70% of patients do have cardiomyopathy, does this tell us anything about what we could expect and how does that align with the HOPE-2 data set?

Yes. So -- thanks for the questions. In terms of the cardiomyopathy, the HOPE-2 data set suggests that when you have a -- especially if this was very evident in the open-label extension, if you have an ejection fraction that's maintained above 45% you have a really great chance of seeing stabilization. Once they start dropping below 45%, they have a lot of scar in their heart, a lot of disease, it's harder to stabilize and bring them back.

So we're looking to treat primarily those patients. Well, any patient that has diagnosed cardiomyopathy or scar in the heart will be what we ask for on the label. But we're encouraging physicians to consider starting early because the data is stronger the earlier that the therapy has started. And I'm sorry, I lost the second part of your question. What was the second part of your question?

You mentioned that 70% have cardiomyopathy. I was just curious how that aligned with the Phase II? And then the second part, I'll go ahead and squeeze that second part. Will you have ejection fraction or pull measurements beyond 12 months? I know every patient has gone 12 months, but just curious if you will have some data sets at 18 months, et cetera.

Yes. Sorry. So the part that I missed originally was you asked about a correlation between pull and cardiomyopathy. And while they tend to coexist in terms of losing skeletal muscle function and it's very, very common as the disease progresses to start seeing the cardiac implications, they don't directly correlate. And it's been one of the conundrums in developing therapeutics for DMD because the heart muscle disease develops sort of on its own continuum compared to the skeletal muscle disease. And so you can have a patient that has pretty advanced heart disease, but might be still ambulant or you can have a patient that has -- is non-ambulant, losing a lot of upper limb function, but has a pretty strong heart.

So they don't correlate, but they both need treating. And as Mindy Leffler, Aiden's mom said so eloquently, treat this cardiac, treat the skeletal whatever you treat, we'll be grateful. So we're taking that attitude as well. I thought I answered, but I'll reiterate. So the patient population in HOPE-3 in terms of cardiomyopathy is very similar to the HOPE-2 patient population. We were not using inclusion and exclusion criteria in HOPE-2 to specifically for cardiac, but if you actually bucket them, they're very similar in terms of the manifestations and representations of ejection fraction, especially as we move into the open-label extension aspect of HOPE-2.

And your next question comes from the line of Ted Tenthoff with Piper Sandler.

Great. And a very exciting update. I know it's been a long and winding road here, but I appreciate your persistence on behalf of the boys and investors. So thank you for the update. My question really has to do sort of twofold. Firstly, just with respect to Nippon Shinyaku, any update what's the latest there? Obviously, that potential milestone for regulatory approval of, I think, $80 million could be pretty relevant. And then also when it comes to the potential for pediatric voucher, just remind me sort of what the latest is there and how that could come into play?

Thanks, Ted. Yes. So in terms -- I'll take the last one first. In terms of the pediatric voucher, that program currently remains active, as I'm aware, until September of '26, we expect to have PDUFA before that. That's obviously going to be one of our goals. We do continue to qualify for that. We do not -- have not lost that. So that will be one of the opportunities that will remain front and center as we negotiate with the agency for our PDUFA dates, plus we just want to get it out there.

The other question that you had was regarding Nippon Shinyaku. Yes, yes, was -- we continue to work very closely with them. They're doing the work that needs to be done to get ready for launch. In fact, we have a day meeting with them today in order to continue to work on launch activities. Obviously, this news is relieving to everybody that the FDA is willing to take HOPE-3 that we have the opportunity for dual labeling. And so I think we're all now sitting on the edge of our seats excitedly waiting for the top line data and to really move this program towards approval very rapidly.

And your next question comes from the line of Aydin Huseynov with Ladenburg.

Linda, A.J., thanks for providing this update. A couple of questions on our end. So do you think that there may be some sub-populations in the HOPE-3 trial, where more advanced patients may have sort of more profound benefits from deramiocel, like more advanced patients may have more cardiomyopathy. And do you think the FDA will be flexible enough to take sort of a holistic approach and look at both HOPE-2 and HOPE-3 data and give you some sort of more narrow label if needed?

Yes. I don't think that's actually going to be needed, and I actually think it's kind of the opposite. So our data and Jon's data, Jon Soslow's data as well suggest that there's sort of this tipping point around 45% ejection fraction. If you can think of the pathophysiology of Duchenne cardiomyopathy is like the skeletal multimyopathy, you have current -- steady loss of muscle mass then that can be measured by late gadolinium enhancement or scar. And the more scar the heart has, the harder it is to beat against that load.

So we want to get in early, while they still have cardiac muscle to preserve and function to preserve, we believe that's a much better treatment paradigm than trying to salvage late which is much harder. There's really no way to turn the scar around once it's generated, especially in the heart. So no, I don't think that there will be cell populations that way. But if there were, it would be the greater than 45%. But we're not even talking or thinking about that. We've seen such statistically significant data across all ejection fractions that we've measured.

The inclusion and exclusion criteria of HOPE-3 excluded those with very, very severe heart disease. What we know in Duchenne cardiomyopathy is once they cross a certain point where their function has dropped low, it really becomes a very rapid trajectory for its end of life, which is why the patients with Duchenne are so anxious to get on deramiocel because they know that they're ticking clock in terms of their cardiac function.

Makes sense. Makes sense. And another question I have, during your discussions with the FDA. Was there any other additional cardiac endpoint beyond LVEF that FDA was particularly interested in?

So we didn't really discuss other cardiac endpoints. Obviously, we saw 23 out of 24 cardiac-related endpoints improve in HOPE-2. And those -- that was published in the Lancet study. We've always presented the totality of cardiac data with MRI, there's a lot. I will present the volume, left ventricular end systolic index volume, which was very statistically significant and very clinically relevant in HOPE-2 to the FDA, and we'll also present to them a global statistical test of cardiac function, which will then allow them to see the totality of the evidence in terms of preservation of cardiac function.

And your next question comes from the line of Catherine Novack with Jones Trading.

Just wanted to get a clarity on something. So after a month of discussion ultimately didn't get to change the primary endpoint. So where exactly was FDA flexible? What were the requests that you had that FDA did comply with? Was it the dual labeling? Was it LVEF as a key secondary? Where were they flexible with you?

Yes. So that's kind of a complicated question. I think that they're trying to exercise regulatory flexibility across the program. Their lack of willingness to change the primary efficacy endpoint is really, as I mentioned, from what they've explained, regulatory dogma. Our concern, the reason we were asking for the change is we wanted to keep the current BLA open. The biggest win is that not only are they going to be keeping the current BLA open, they won't require us to submit a new BLA, so we can just submit this data under the current BLA, our inspections are done, a lot of answers are done. CMC review is done.

So this was a giant win for us. We're very pleased with that flexibility. And the dual labeling opportunity, obviously, is one that's presented by the fact that we'll have a primary skeletal muscle and a key secondary of cardiac muscle function. So it was more the tone of the meeting, the idea to keep the current BLA open to understand the unmet need to be able to look at the cardiac data. Technically, the study was not originally designed around cardiac function, and they understand that over 70% of the patients have the cardiomyopathy. So they're willing to look at that data.

So it's a complicated question because everything is flexible in terms of the fact that they started with having an in-person meeting with us. So I feel very positive about our interactions with the agency right now.

Yes. Okay. And then I remember at the time of the CRL, there were CMC items that the FDA had not yet addressed. Are these items still outstanding? Or has FDA kind of addressed your responses to those outstanding issues?

Yes. We've submitted them. They've acknowledged that they've received them and are ready to move forward with the next steps towards approval. We do not believe that there are any open CMC issues that will need to be addressed prior to PDUFA.

[Operator Instructions] Your next question comes from the line of Rohan Mathur with Oppenheimer.

This is Rohan on for Leland Gershell. Just a couple from me. When do you expect to submit the final statistical analysis plan? And if HOPE-3 were to miss the primary, would the statistically significant if a p-value of under 0.05 is achieved? And in that scenario, what would be the likely ?

Yes. So in terms of the specific analysis plan submission that is imminent. We're planning on submitting that really within the next few days. It's finalized and under final review. So we're looking forward to getting that in. In terms of whether FDA would look past a failed primary to a key secondary for statistical significance, obviously, that would be something that we would work very hard for them to understand the value of. They'll never say again, as somebody asked earlier, FDA would never write something like that down, but they did say they would continue to exercise regulatory flexibility that they understand that the unmet need of cardiomyopathy is separate than this skeletal muscle myopathy, and that there is nothing currently approved to treat the cardiomyopathy associated with Duchenne.

There is no guideline-directed medical therapy. Deramiocel certainly provides the very first opportunity. We are hopeful that based on the powering of HOPE-3, based on the data from HOPE-2, based on the open-label extension studies compared to the external comparator and all the other data that we've aggregated over now 4 years that we will not have to deal with an issue of passing over the primary to look at the secondary, but please stay tuned as we update you further on our regulatory progress.

Got it. And just 1 more. With respect to discussions the CHMP. Can you give any updates there? And how are those discussions being guided by what's been happening with FDA?

Yes. So we've made the strategic decision right now to focus primarily on getting across the line in the United States. There's a lot going on outside the United States. I think everybody is aware of sort of President Trump's most favored nations, type of pricing paradigm and also, the current administration is focusing hard on making things better here in the United States. So we have made the decision, as I mentioned, to focus on getting this across the line in the United States getting this launch underway and then we'll focus outside the U.S. more directly at that time.

And your next question comes from the line of Boobalan Pachaiyappan with ROTH Capital Partners.

So a couple from us. So firstly, with respect to HOPE-3, what is your primary -- I mean, when you release the data, what if the primary end point was not met, but you still achieved statistical significance in your secondary endpoint? What could be the potential next steps? That's the first one. And then in terms of LVEF. I understand that the FDA doesn't want to go against its own regulatory dogma, but what if in the future, there's a new drug developer, who wants to approach only cardiomyopathy, and they wanted to use only LVEF as an endpoint because with all the publications from Soslow and others, do you think the agency will be open to discussing LVEF as a primary endpoint for someone else? I know it doesn't concern you, but just curious, your answer will provide some clarity to future drug developers.

Thanks. Well, your first question, I think, I just answered from the Oppenheimer analyst, but I'll reiterate that we're expecting that based on the powering of the study to hit the primary efficacy endpoint as well as the key secondary endpoint of left ventricular ejection fraction. If it misses on pull, will they look at cardiac, that's what we're hoping for. They certainly said they would exercise regulatory flexibility, and they also said they understood that the pathophysiology of skeletal muscle myopathy and the cardiomyopathy were similar, but needed different treatments. There is no guideline-directed medical therapy for the cardiomyopathy associated with Duchenne.

And so if that eventuality occurred, of course, we would continue to work with the agency to get it across the line for the cardiac indication independent of the skeletal muscle indication. In terms of other drug developers, I guess I'm going to be a little solipsistic here and say that that's not something I'm thinking a lot about. I'm a cardiac physiologist, so I've spent my entire career thinking about the heart. And I can tell you that I think left ventricular ejection fraction is a really great indicator of the progression of cardiac disease.

And I certainly would be wanting to work with the agency and help them understand the value of using that as a clinically driven endpoint that can predict morbidity and mortality.

And I'm showing no further questions at this time. I would like to turn it back to the Capricor's management for closing remarks.

So thank you so much for joining us this morning. We are delighted to provide this update on our Type A meeting. We look forward to releasing top line data before the end of the quarter. This is the culmination of many years of work, a lot of data, a very large clinical trial and certainly a long and now storied tail with the Food and Drug Administration. Please do pay attention to some of the videos and letters that are out there from the patient community. They not only are quite emotional, but they also provide a really good understanding of how deramiocel is working in the community. And again, thank you so much, and have a great day.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics Second Quarter 2025 Conference Call. [Operator Instructions] This call is being recorded on Monday, August 11, 2025. I would now like to turn the conference over to CFO, A.J. Bergmann, for the forward-looking statements. Please go ahead.

Thank you, and good afternoon, everyone. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future research and development plans, including our anticipated conduct and timing of preclinical and clinical studies, our enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential regulatory inspections, revenue and reimbursement estimates, projected terms of definitive agreements, manufacturing capabilities, potential milestone payments and our financial position and possible uses of existing cash and investment resources.

Forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

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

Thank you, A.J. Good afternoon, everyone, and thank you for joining us on our second quarter conference call. At Capricor, our mission remains unchanged and clear to bring transformative therapies to patients with rare and life-limiting diseases. While this past quarter has presented us with some unique challenges, it has also reinforced our conviction that we have in Deramiocel for the treatment of DMD, the agility of our team and, of course, the promise of our pipeline.

In particular, for the Duchenne community, we remain unwavering in our commitment to deliver the first approved therapy aimed at specifically treating the cardiomyopathy that affects nearly every patient with Duchenne muscular dystrophy and remains the leading cause of death in this devastating disease.

Now for the latest update on our Biologics License Application or BLA. As previously disclosed, we received a complete response letter from the FDA in July. The CRL stated that the BLA in its current form does not meet the statutory requirements for substantial evidence of effectiveness and also referenced certain CMC items, most of which we had already responded to, which were not reviewed by the FDA due to the issuance of the CRL.

As a reminder, approximately 1 year ago in our pre-BLA meeting with the FDA, we requested to switch the primary efficacy endpoint of our ongoing Phase III HOPE-3 study to left ventricular ejection fraction, or LVEF, and the agency responded by encouraging us to submit on currently available data from our HOPE-2 and HOPE-2 open-label extension trials matched to an external natural history comparator and then use the data from our HOPE-3 trial to support potential label expansion in the future. This became the plan that we implemented.

While the FDA response contained in the CRL was certainly disappointing, we stand behind the strength of our submission and the substantial progress made throughout the review process. from a successful Pre-License Inspection or PLI, to completion of our mid-cycle review with no deficiencies noted and timely responses to more than 50 information requests from the FDA, we believe we consistently met the agency's expectations throughout the review process.

The complete response letter was unexpected given the trajectory of positive interactions. While the FDA continues to evolve under new leadership and its approach to novel therapies to treat rare diseases, we remain focused on working constructively with the FDA to define the clearest and most efficient path forward for Deramiocel and the patients who need it. I would like to emphasize that our HOPE-3 trial is still blinded and will not be unblinded until we have clarity on the path to potential approval from FDA.

Let me take a minute to remind you of the features of the HOPE-3 trial. The study is fully enrolled with the last patient last visit occurring in June of this year. HOPE-3 is a double-blind, placebo-controlled clinical trial with a 1:1 randomization, which enrolled 104 patients consisting of 2 arms, Cohort A and Cohort B. The combined power of this trial using both cohorts is greater than 90% with the original primary efficacy endpoint being the performance of the upper limb or the pull version 2.0.

Based on a multitude of reasons, not the least of which is the tremendous unmet need of DMD cardiomyopathy. We have submitted a protocol amendment to designate left ventricular ejection fraction or LVEF, as the primary efficacy endpoint and the skeletal muscle endpoint, performance of the upper limb or PUL as a prespecified secondary endpoint.

This change is based on multiple factors. One, the objectivity of LVEF as measured by cardiac MRI. Remember, there is no volition in cardiac function as measured by MRI as well as the relevance of left ventricular ejection fraction to the pathophysiology of DMG cardiomyopathy, which has only been recently elucidated by the work of Dr. Jonathan Soslow from Vanderbilt University and the DMD Cardiac Consortium in a study funded by the Office of Orphan Products of the FDA and the NHLBI.

In addition, HOPE-3 is well powered to detect the treatment effect on cardiac function. I want to remind you that Capricor developed Deramiocel specifically to address heart disease, particularly the cardiomyopathy associated with DMD. However, until Dr. Soslow's study and its subsequent publication, there were no established efficacy benchmarks in DMD cardiomyopathy for the FDA to use in defining clinical benefit.

Our entire regulatory path, including the current BLA, was built on the FDA's guidance on how efficacy should be defined in this patient population. We have always intended for ejection fraction to serve as our primary efficacy endpoint. So while this may appear to be a change in strategy, it is, in fact, a return to the original goals we set early in the development of Deramiocel.

To that end, with our Type A meeting with the FDA now scheduled, we have submitted a comprehensive briefing package that addresses the concerns raised in the CRL and outlined several potential paths to approval. These include, first and foremost, the continued review of our previously filed BLA, which we believe meets the applicable regulatory requirements for approval as well as supplementing the current BLA with additional data from HOPE-3, if needed.

We believe the current handling of our submission is inconsistent with our interpretation of the FDA written guidances for cell and gene therapies as well as recent public statements addressing the approval of safe and effective therapies for rare disease populations. We are hopeful that FDA will exercise a patient-focused and science-driven approach and rare disease approvals in which they have been emphasizing in the media as well as highlighting in the FDA direct podcasts.

Based on the comments of Secretary Kennedy and Commissioner Makary, approving Deramiocel for the treatment of DMD cardiomyopathy seems directly in line with their goals.

In conclusion, about a year ago, we received FDA feedback that shaped our decision to submit the BLA based on cardiac endpoints. We provided the requested data and analysis and fully expected any differences in interpretation to be addressed at an advisory committee meeting, one that was ultimately canceled by the FDA without explanation.

We are concerned with how our file has been managed because we believe there were opportunities during the review period for the agency to raise the specific issues cited in the CRL before issuing the letter. We have long worked aside the DMD community and understand their calls, both to continue treatment with Deramiocel and to gain access if it becomes commercially available.

We will continue to urge the FDA to recognize that cardiomyopathy is a leading cause of death in DMD and a far more severe consequence than the loss of arm function. Deramiocel has demonstrated a strong safety profile and the data indicate it can help stabilize the inevitable decline in cardiac function for people living with DMD.

With regard to the CMC and pre-commercial aspects of our program, I am pleased to announce that the FDA has now formally accepted all 483 items from our Pre-License Inspection. This milestone further validates the strength of our quality systems, manufacturing capabilities and overall commercial readiness. In addition, the CMC-related items noted in the CRL have either been addressed prior to the issuance of the CRL or have been internally addressed since.

We have prepared formal responses, which we plan to submit with our response to the CRL. Our manufacturing facility in San Diego remains fully operational and in production, and we are being disciplined in our commercial manufacturing investments to ensure we are fully prepared while managing resources wisely.

In parallel, we are diligently and strategically investing in launch readiness activities, including physician education, patient services, market access planning and reimbursement. We've also begun working closely with treating physicians across the field of neurology and cardiology who will ultimately collaborate in prescribing Deramiocel to patients with DMD cardiomyopathy, if approved.

Many of these clinicians are already familiar with the therapy through their participation in the HOPE-2 and HOPE-3 studies, and we are committed to ensuring a smooth transition to commercial use if approved. At this time, we are focused on seeking approval for Deramiocel in the U.S. And with respect to our global expansion plans, we will provide updates as they become available.

Now turning to our exosome program. To remind you, in 2024, we were selected to participate in Project NextGen, an initiative led by the U.S. Department of Health and Human Services aimed at advancing next-generation vaccines for COVID-19 and other potential infectious diseases.

Under this program, the National Institutes of Allergy and Infectious Disease, NIAID, will be sponsoring the Phase I clinical trial of our StealthX vaccine. Within the last several weeks, we reached a significant milestone for this program, which was the clearance of the IND and initiation of the trial using StealthX, our exosome platform technology.

The Phase I study is being conducted and overseen by NIAID's Division of Microbiology and Infectious Disease, DMID. And I am pleased to report we have already supplied them with our clinical material for use in the trial. The Phase I study is assessing our COVID-19 vaccine product. The trial is divided into 3 arms comprised of 3 escalating doses of the spice spike or S antigen and a combined high-dose S plus the nucleocapsid or N antigen, the multivalent vaccine we have been developing.

NIAID is starting with the S first because previous COVID vaccines are mainly S-based, and they wanted to have a basis for comparison with our vaccine candidate using similar antigenic profiles. The end goal is for the adoption of the N+S, which is our multivalent vaccine, and we will provide more updates on this developing program as they become available.

We believe that StealthX has the characteristics of a vaccine product that Secretary Kennedy would find acceptable. It contains no adjuvants. It is not mRNA-based, uses a native protein antigen and can be rapidly produced if needed. We have long believed that this type of vaccine checks all the boxes for a safe and effective platform as supported by multiple preclinical studies and upcoming clinical data will allow us to confirm or challenge that hypothesis.

This platform also has the potential to address multiple disease areas, including influenza and RSV. While vaccines are not a core focus for us, if our candidate meets U.S. government criteria and demonstrates efficacy, it could potentially open meaningful business development opportunities. Just as importantly, it would serve as strategic proof for our exosome platform, which we hope to advance as a versatile therapeutic engine for rare diseases and beyond.

While a majority of our efforts this year have been focused on securing approval for Deramiocel, an additional reason we recruited Dr. Michael Binks as our Chief Medical Officer was his expertise in translational science and medicine. He is now leading efforts to advance our exosome pipeline with the goal of forging strategic partnerships to expand the platform into and beyond vaccines.

We believe the differentiated features of exosomes, including low immunogenicity, scalable manufacturing and targeted delivery position Capricor for unique potential opportunities in the therapeutic delivery space. We look forward to sharing updates as they become available.

Thank you. And with that, I will now turn the call over to A.J. to run through our financials.

Thanks, Linda. This afternoon's press release provided a summary of our second quarter 2025 financials on a GAAP basis. You may also refer to our quarterly report on Form 10-Q, which we expect to become available shortly and will be accessible on the SEC website as well as the financial section of our website.

Let me start with our cash position. As of June 30, 2025, our cash, cash equivalents and marketable securities totaled approximately $122.8 million. Turning into the financials. Revenues for the second quarter of 2025 were 0 compared to approximately $4 million for the second quarter of 2024.

Additionally, revenues for the first half of 2025 were 0 compared to approximately $8.9 million for the first half of 2024. I'd like to point out that the source of revenue for 2024 was the ratable recognition of the $40 million we had received under our U.S. distribution agreement with Nippon Shinyaku, which has been fully recognized as of December 31, 2024.

Moving to our operating expenses for the second quarter of 2025. Excluding stock-based compensation, our research and development expenses were approximately $20.1 million compared to approximately $11.7 million for Q2 2024. For the first half of 2025, excluding stock-based compensation, our research and development expenses were approximately $36.3 million compared to approximately $21.8 million for the first half of 2024.

Moving into general and administrative expenses, excluding stock-based compensation, were approximately $4 million in Q2 2025 and approximately $1.8 million in Q2 2024. And for the first half of '25, also excluding stock-based compensation, our general and administrative expenses were approximately $7 million for the first half of '25 and $3.6 million for the first half of 2024.

Net loss for the second quarter of '25 was approximately $25.9 million compared to a net loss of approximately $11 million for the second quarter of '24, and net loss for the first half of '25 was approximately $50.3 million compared to a net loss of approximately $20.8 million for the first half of 2024. I will now turn the call back over to Linda for some closing remarks.

Again, thank you, A.J. Just to reinforce A.J.'s point on our financial position, with over $120 million in cash, we are well positioned to support operations into late 2026 and continue to advance our key pipeline objectives. Additionally, if we receive approval, we would still be eligible to receive a priority review voucher as well as a milestone payment of $80 million from Nippon Shinyaku, representing additional significant nondilutive capital opportunities to further strengthen our balance sheet.

This is an important moment for Capricor. While we have faced recent regulatory headwinds, we are advancing deliberately, strategically and with confidence in our data, our team and our path forward. We continue to believe that Deramiocel represents a major step forward for patients with DMD cardiomyopathy and that our exosome platform is well positioned to deliver value through continued innovation and partnerships.

To the Duchenne muscular dystrophy community, thank you for your ongoing trust and support. We remain grounded in the science on execution and committed to building a company that delivers meaningful and lasting impact for all DMD patients. I will now open up the line for questions.

[Operator Instructions] Your first question comes from Ted Tenthoff from Piper Sandler.

And I appreciate all of your hard work to keep fighting for these boys and get them a therapy that's going to help them with their heart function. I wanted to get a sense for sort of the plan for next steps in terms of unblinding HOPE-3. Is the plan to sort of get confirmation from the FDA on that first? Just maybe sort of reiterating what the plan is.

Thanks, Ted. Always a pleasure even during these crazy, crazy times. Yes. So we are waiting for adjudication from FDA as to what their requirements will be for HOPE-3, and then we will submit a statistical analysis plan and proceed with unblinding only after that has been accepted. We just don't want to muddy or cloud the waters with any thoughts that we had unblinded early. So our plan is to stay quiet until we have plans from them.

Great. And when do you expect to hear back from the FDA or get that clarity?

Well, obviously, from the rescheduling of our earnings call today, our Type A meeting is this week. We anticipate to have a really good conversation with the FDA. We're looking forward very much to meeting with them. We certainly -- August is our month. August of 2024 was when this whole plan was put in place. So I'm very excited for this meeting.

And in terms of providing clarity and updates to the markets, that probably won't be until I get the official feedback in writing, especially with the liability of our current situation and times. So hopefully, Adam First won't report on it before I do.

Your next question comes from Leland Gershell from Oppenheimer.

Just a couple here. So just maybe further from Ted's inquiry. So if you go with the plan to not unblind HOPE-3, but continue with the current BLA as it is, would there then be supplemental OLE data that could go into what the FDA has on file versus what had been submitted? I guess if you could share just what incremental data ex HOPE-3 that could become available to them that would be different from what they had reviewed previously.

Yes, Leland. So actually, I don't haven't really thought about submitting supplemental OLE data, though, of course, it continues to support our safety profile and the efficacy. If you look at the long-term efficacy of Deramiocel, it's actually quite extraordinary, and we're very proud of that record in our OLE patients. And I don't know of another clinical effort in DMD that has as long of a record post study as we do.

Having said that, I think the meeting with FDA will define what they will want for data for either the reopening and resubmission of this BLA. And so I don't have an answer on that. My current plan is to have everything ready, then they have an opportunity to select what they think would be most efficient in determining efficacy for approval.

Okay. And I guess I have to ask with Vinay Prasad now back at CBR, how does that inform your thinking? Are the people who you're interacting with the FDA, is there a different team now with Nicole Verdun out of the picture since the last few weeks? How should we think about kind of who your kind of counterparties are at FDA at this point?

Thanks, Leland. It's interesting. I think the last few years, I've been thinking about this a lot. People have become much more focused on who the review team is and exercising political capital and regulatory flexibility and all of this lingo that has become very popular. I'm going back to old school. We have good clinical data. We have great safety data.

We have guidance from the agency in writing as to what they wanted. We provided it. And now really, I think it's up to them to decide who is best suited within that agency to make the decision of adjudication and all of the factors that go into it. So I tell my team, I'll tell the market, we are proud of our data. We see it in terms of the long-term efficacy in our patients and safety, and we sincerely hope that the agency gives us a good path forward to get this to those patients as quickly as possible.

The next question comes from Joe Pantginis from H.C. Wainwright.

So just to sort of press the envelope a little bit. Obviously, things could change incrementally or dramatically this week and about a month after that when you provide the details from the minutes to the Street. But with language in the press release and what you talked about today, you're talking about resubmitting in its current form. You're saying maybe not really having any incremental data from the OLE that you just discussed in the last question. So what would you expect that could be potentially different?

Well, again, we have given the FDA a variety of opportunities in our briefing document. We remain open to resubmission of the BLA as it is. We didn't feel that the CRL was founded. The data that we submitted was exactly what they asked for and they grafts themselves are interpretable as statistically and clinically significant. So that's, of course, our #1 goal is explaining to them why perhaps their interpretation was wrong.

There's then everything that follows from that accelerated approval with the submission of HOPE-3 data in support of that and a variety of other opportunities that they can help us adjudicate, and that's why we're looking forward to this Type A meeting.

So with that in mind, we go in with open hearts to meet with the agency and look forward to having them understand that developing and approving therapeutics for rare diseases, especially pediatrics one does require looking at the data in a more holistic fashion, and we're hoping that, that is exactly what happens this week.

All right. So that's fair. And so maybe just another question starting at the -- or from the back end of your comments around StealthX. So it's great that it's getting into the clinic now. Any visibility with regard to what might be next with regard to an indication? Obviously, you mentioned influenza as a potential. And how would you describe the early talks, maturity levels of potential BD around StealthX?

Yes. Thanks, Joe. So our StealthX program is sort of our little engine that could. We just kept on moving it forward. Our vaccine program is really exciting in the sense that, as I mentioned in my remarks, this type of vaccine, which we've always believed in is exactly what Secretary Kennedy has advocated as would be a much better vaccine candidate, neoadjuvant, native proteins, rapidly produced, no mRNA, that kind of thing.

So we're very excited about that. We're looking forward to the NIA data. They're very excited about it because it's a program that does fit that criteria, and we'll see where that goes. In terms of Capricor's interest in developing vaccine technology, that's something that I've always said would be a business development opportunity. We think it's wiper than ever based on the criteria I just put forth.

In terms of therapeutic indications, we haven't disclosed some of the ones that we've been working on internally. As I've mentioned many times, we've focused most of our efforts and our capital on Deramiocel and look forward to providing updates on where we're going to be taking the exosome program as we further develop that therapeutic pipeline.

Got it. Looking forward to more visibility out of the program and good luck with the meeting this week.

Your next question comes from Kristen Kluska from Cantor.

Linda and A.J., also sending you best wishes for your meeting this week. A few questions from me. First, I was pleasantly surprised to see that you received the acceptances of responses related to the Form 483 observations. I guess, can you just comment on that? Because typically, after we see CRLs, the FDA isn't so much as engaged in responding to those things until you resubmit. So can you kind of explain that time line for us?

Yes. So this has been an unorthodox review process, as I've mentioned in my remarks, as we've talked about in our disclosures and other companies have gone through similar situations. So we passed our PLI. They issued the 483s. We responded to the 483s and that review team, independent of the CRL provided feedback that we had cleared our 483s, and we are on path for approval of our CMC and our manufacturing plant for GMP use.

So that is where that situation is. As I mentioned in the CRL, there were several CRL issues related to CMC. Many of those had already been addressed in information request responses that we provided prior to the issuance of the CRL, but they had stopped reviewing in anticipation of issuing the CRL. The rest of them have already been addressed, and we look forward to providing those in our response to the CRL.

Okay. And just want to confirm that the new time line guidance 4Q versus 3Q for HOPE-3 is just solely driven by the fact that you haven't started the unblinding yet because, again, you're waiting for this meeting and that clarity?

Absolutely. Yes. Yes. Everything is on time with HOPE-3, and we just are waiting for feedback from FDA.

Okay. And then just lastly, I guess, in a nutshell, what are the key things that you hope to align from after this meeting takes place this week? Is it just understanding specifically what's required? If it is HOPE-3, do you expect to have full understanding of what that primary endpoint will be? And then even they're kind of blessing that if HOPE-3 is successful on that endpoint, that could potentially be sufficient enough to support an approval?

Yes. So exactly what you hypothesized. So we're looking for feedback on exactly what it's going to take to get this approved, as I mentioned in a previous question. We believed in the data that we submitted. We believe that the CRL was unfounded. We were going towards the PDUFA very directly. Because there were no issues raised in the mid-cycle review meeting, we thought we were in a pretty good position.

When the AdCom was canceled, I didn't really take too much issue with that because I felt like in the late-stage meeting, we would be able to address any concerns they might have. So my first plan is to try and understand what their resistance is to the currently available data. And if that is maintained, then what it will take to get to approval.

Your next question comes from Madison El-Saadi from B. Riley Securities.

I was just curious, has there been any informal agency communication? I believe post CRL, you noted there was an opportunity for an informal teleconference. And just wondering what the takeaways were there and if that kind of contributed to your decision to resubmit.

Yes. So we did have a short informal meeting with them based on their guidance from their leadership. It was primarily to align on time lines of this Type A meeting and what would potentially be submitted and then to clarify the CMC-related issues, neither clinical nor stats were part of that meeting. So this Type A meeting is very important because it allows us to meet with the agency and really flesh it out.

In terms of our decision to reply or respond to the CRL, that's always been our intent. We'd like feedback from them so that we can keep it smooth and steady and work our way to the quickest date of a PDUFA as possible, but we will see what happens this week.

Got it. And then do you expect to get an answer on the primary endpoint change at the August meeting? I believe you said you were expecting an answer on that.

Yes. So that's been one of our primary questions. We are looking to get that worked out during this meeting.

Your next question comes from Aydin Huseynov from Ladenburg Thalmann.

I appreciate all the work you're doing. A couple from us. So first, I want to clarify, and apologies if this has been addressed, but I want to clarify the time line of the upcoming events. So the fourth quarter, you're going to read out HOPE-3, resubmit the BLA. And how do we treat this BLA? Is it -- if it is the same BLA, what is the review process typical for these kind of reapplications? Is it 2 months sort of acceptance then review sort of months? Just curious your thoughts on the time line.

Yes. So that's one of the issues that we're going to be taking on with the agency during this meeting. Obviously, there's a lot of time line issues that were predicated on how they want to update the BLA, whether or not they would require a new BLA, what that does to priority review. We are still eligible for the PRV, the voucher that comes with approval for a pediatric indication independent of time line. But -- and our RMAT allows us certain benefits in terms of submission and also return on feedback, but we'll have to figure that out during this meeting with them, and we'll disclose that as soon as it becomes available to us.

Okay. I appreciate that. And regarding the left ventricular ejection fraction as the primary efficacy endpoint for HOPE-3. Could you walk us through your thought process as to why you chose this endpoint? I think HOPE-2 had multiple cardiac endpoints, I think 21 cardiac measures. And could you also remind us any prior successful or unsuccessful left ventricular ejection fraction primary endpoint submissions so that we can model based on those precedents?

Yes, really, really important question. So left ventricular ejection fraction is obviously one of the most important indicators of cardiac function. And clinicians, cardiologists use it all the time to sort of define where their patients sit in terms of cardiac function and also what their likely outcomes are going to be. So cardiologists know that below and above certain points, you're either at greater risk for morbidity and mortality or in a reasonable position for stabilization of your cardiac function.

We've known that for a long time. The reason that ejection fraction, and this answers your last question along with your first one, has not been used as a primary efficacy endpoint in clinical studies is because up until recently, it's really been considered a surrogate. It has not been directly tied to clinically relevant events such as mortality, hospitalization, exercise performance, those types of things.

The most amazing thing, and this is why the change in our submission occurred from a clinical endpoint of skeletal muscle to cardiac ejection fraction was in collaboration with the agency because while everybody knew that cardiomyopathy was the leading cause of death currently for Duchenne muscular dystrophy, up until John Soslow's study with the cardiac consortium, there really were not general evidence of what would be the predicting facts for mortality, hospitalization, those kinds of things.

And in Duchenne, it's super hard. You're dealing with a rare disease with a small patient population and a pediatric disease. So in order to do a mortality study, you probably have to do like a 20-year study globally in order to be able to gather enough information. So the Office of Orphan Products understood this paradigm or paradox as did the NHLBI, National Heart, Lung and Blood Institute. So they funded John study, which allowed them to look at what would be the predictive factors of either morbidity or mortality in Duchenne muscular dystrophy cardiomyopathy.

And along with what our data suggested, ejection fraction was the most important feature. So there's also left ventricular end systolic and end diastolic volumes. We're measuring those. Those are secondary endpoints as well as some biomarkers that John had, which was like BNP and 1 or 2 other paradigms or 1 or 2 other endpoints that would suggest the paradigm of morbidity and mortality.

And what we actually were able to demonstrate with the presentation of this data is that Deramiocel attenuated and may have even reversed the path of that decline in ejection fraction, therefore, predicting morbidity and mortality. Because, again, highlighting what I just said, it's a pediatric disease and it's rare, doing those types of large studies that sometimes require thousands of patients to look at mortality risk this is good for rare disease. And so the agency at the time and hopefully still is willing to understand that ejection fraction is probably the best way of predicting where this patient population could go should it not be stabilized.

It is very helpful. Appreciate it, Linda. Just to summarize this maybe, essentially, LVEF was a surrogate endpoint, and it requires a little bit of sort of innovative thinking on the FDA side to make it like a primary endpoint going forward. Would that be sort of a fair summarization here?

I don't agree because, again, with the understanding of the new data that has come forth and the, again, rare disease population, there really is no other opportunity for adjudication of a primary efficacy endpoint. So if you really want to hear -- I'm passionate about this, as you can probably tell from my voice. But if you really want to understand the risk and benefit here, please listen to our Parent Project Muscular Dystrophy webinar that we did about a week ago.

Dr. Chet Villa talked about the unmet need in cardiomyopathy. And what Dr. Villa, who sees these patients all day, every day at Cincinnati Children's talks about is there is no other way of measuring efficacy in this particular patient population that would be fair and safe for human beings.

Very helpful. And one final question on Becker's muscular dystrophy, my favorite one because part of our modeling is based on that. So -- but all these discussions, what kind of takeaways it has for BMD? I mean would you have to run sort of another sort of HOPE-3 style large trial in BMD to get a similar potential sort of label as in DMD? And would left ventricular ejection fraction sort of also sort of a primary endpoint for BMD?

So sideways answer to that because I don't know directly at this point what the agency will require is. It's very early in this administration to understand what they're actually going to do in moving rare disease approvals forward. Our plan previously, which I have discussed with you, and discussed publicly as well is that we were going to try and use the Duchenne data to build the Becker program because the pathophysiology of the cardiomyopathy is identical, just somewhat slower progressing in the Becker patients.

And in fact, as the Becker patients get older, it becomes more and more of a risk factor for morbidity and mortality. I don't know my current plan with Becker because I need to get understanding from the agency of how they're going to view the current Duchenne data, and then I'll be able to make more educated comments on it as I achieve clarity there.

Your next question comes from Boobalan Pachaiyappan from ROTH Capital.

I'm Manasa, dialing in for Boobalan. So we have a couple of questions. The first question is, so do you regard the upcoming Type A meeting as an opportunity for the FDA to clarify the change of stance with respect to Deramiocel BLA or a bellwether for investors in predicting the future outcomes of potential resubmission with the HOPE-3 data. Also, we are curious to know whether you'll be open to sharing the Type A meeting minutes to investors to the extent you can to be comprehensive and elaborate.

Yes. In terms of your first question, yes, we expect share the data as it becomes available and the information as it becomes available. In terms of providing meeting minutes to investors, that becomes a little bit of an as-needed basis. I can tell you right now, as you heard, our cash position is very strong. We're not out raising money. We don't anticipate needing to raise money. We're focusing on approval of Deramiocel and DMD. And so we'll see if the situation calls for it, we would definitely discuss it directly with that investor.

Okay. Another question. So some investors are wondering about the scope and the pragmatic value of the early and the mid-cycle FDA review processes in relation with the overall review process. So what are your general thoughts on that?

I'm sorry, could you ask that question again? I'm not sure I understood the question.

Okay. So some investors are wondering about the scope and the pragmatic value of the early and the mid-cycle FDA review processes in relation with the overall review process. So what are your general thoughts on that?

Well, we had -- BLA was accepted and we had a very successful mid-cycle review. So I guess the takeaway for investors is in our situation anyway, it wasn't predictive of what was coming next.

Okay. And one last question. So in terms of the ex-U.S. clinical pathway for development and for approval, particularly in the U.K., we were wondering if Capricor could be eligible to take advantage of the IRP to seek U.K. authorization at some point, provided the future FDA decision was favorable. So...

What decision?

So we were wondering if in terms of the ex-U.S. clinical pathway, whether Capricor could be eligible to take the IRP, which is the International Recognition Procedure to seek the U.K. authorization at some point, given that the future FDA decision is going to be favorable?

Yes. Thanks. So as I mentioned in my prepared remarks, we're focusing on U.S. approval right now. Our global strategy is emerging. A lot of it will be based on some of the feedback we received from FDA and what our path forward is. And please stay tuned. We'll provide updates on our ex-U.S. strategies as they become available.

Your next question comes from Catherine Novack from Jones.

So one question was when the FDA responded to your request for a Type A meeting, gave you the date, did they give any substantive replies to your meeting request, particularly around positive or negative wording around the LVS?

No. So typically, when they accept a meeting request, they just say, accept your meeting request and then they send over a date. We submitted a briefing package, and we're awaiting feedback on that. And we'll discuss the ramifications of what we asked for and what they respond in the meeting.

Got it. And then the R&D expense for 2Q, what accounts for the increase? Is this buildup of product inventory ahead of potential launch? Or is this due to ongoing clinical studies that we should expect to see continued growth on that line?

Yes. Thanks, Catherine. I mean -- it encompasses a little bit of both of what you said. We're obviously in the end stages of HOPE-3, but those patients, 104 of them are ongoing in that clinical development expense line item. We're also obviously preparing for the CMC endeavor. So that's where it's at. Obviously, when we get more clarity and feedback from FDA and announce more plans, I think we'll have more granular items on the burn rate moving forward. But it really encapsulates both of those areas. That's the main areas of spend.

[Operator Instructions] Your next question comes from Matthew Venezia from AGP.

So just looking for a little clarity on the FDA review process to date. Has -- obviously, there's been turnover since the new administration, but has there been any turnover since Prasad's leaving the FDA and then him coming back? And has the team that you've been engaging with at the FDA changed at all in that time?

We don't know. We'll know more this week. So the big change was Dr. Prasad leaving and now Dr. Prasad returning. We don't know the ramifications of his exit or return on our program. But what I can say for sure is that we're looking forward to working directly with him and with the team. And we do not think that the data should be interpreted differently by any teammate that are different.

Got it. And just a little bit on the run rate. Do you expect it to taper off in 2026 once you kind of get clarity regulatory-wise and potential launch-wise as HOPE-3 winds down and should R&D come down and maybe G&A go up a little bit?

Yes, I think that's fair. Thanks, Matt. I mean, obviously, again, as I articulated, the next steps in HOPE-3 is a big aspect to that. But should we achieve approval, we'll have some pretty serious capital injections around the potential sale of the PRV and $80 million from Nippon Shinyaku. That will allow us, of course, to invest in CMC expansion and everything we want to do around the launch for commercial endeavors. So that's kind of how we're looking at it. Obviously, more granular level can be discussed in the future, but we expect the capital to go right where it needs to be, which is preparing for the launch.

Your next question comes from Chris Lemos from [indiscernible].

[Technical Difficulty] The Type A meeting?

Sorry. All right. Well, thank you so much. I guess we lost the question. I want to thank you for joining today's call. We look forward to updating you on our progress over the coming months, although this is a big week for us. So we will update as soon as we get feedback from the FDA and look forward to a positive review of Deramiocel. Thank you so much, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation. You may now disconnect.

Good afternoon. Thank you for joining us today for this webinar with Capricor Therapeutics. So we wanted to hold this webinar to talk with the community about Capricor's investigational product, deramiocel, talk a little bit about cardiomyopathy in Duchenne, discuss what a complete response letter is, what it means and touch on the HOPE-3 trial and Capricor's plans moving forward. So we have a number of panelists with us today for this webinar.

So from PPMD, we have Pat Furlong and Lauren Stanford, who's our Senior Director of Advocacy as well as myself. We have Dr. Tim Franson, who's Principal at Faegre Drinker. We have 2 pediatric cardiologists, Dr. Chet Villa from Cincinnati Children's and Dr. Jon Soslow from Vanderbilt Children's. And then from the Capricor team, we have Mark Awadalla, Chief Development Officer; Dr. Micheal Binks, their Chief Medical Officer; and Dr. Linda Marbán, their CEO.

So this webinar is being recorded. So if you have friends or family who this will be relevant to, it should be up on PPMD's website within the next week. And then after we get through all of the material today, we are going to have an open Q&A portion. So if you have questions, there's a chat function at the bottom of your screen. Go ahead and put your questions in there while we're going through the webinar, and then we'll try to get to as many of those as we can. We also have a large number submitted before the webinar. So we're going to try to tackle those as well. But we're just going to get started because we have a lot to cover today. So I'm going to hand it over to Lauren, who's going to begin by having a conversation with Dr. Tim Franson kind of around complete response letters, what those are and what they mean.

Hi, everyone. Good afternoon or good morning if you're with us from the West Coast. It's great to be here with you. And I have Tim -- Dr. Tim Franson here with me. We're just going to have a brief discussion about complete response letters and CRLs. And Tim is a Principal at Faegre Drinker, but I'd like to call him our regulatory and FDA expert. So we have the right person on the line. So Tim, I don't know if you wanted to introduce yourself briefly before we get into our Q&A.

No, that's fine. I'm a physician and pharmacist by training and have consulted with PPMD for almost 15 years.

Thank you. Okay. So like Eric said, we have a lot to get to, so let's get right into it.

Tim, would you mind explaining in plain everyday language what a complete response letter or CRL is and how it differs from other traditional letters a company might receive from the FDA?

Absolutely. So it's best to frame this as part of the overall FDA review process. When a company, also called a sponsor, is preparing to register a new product for approval consideration, they submit a large dossier of information. And FDA then makes a determination whether that can be reviewed, that's called a filing decision. And if it passes the filing decision, then there is a set amount of time, either 6 or 10 months for FDA to review that document. There are frequent interactions during that process. So a company has some indications of questions that may arise.

And then comes that magic moment at the end of the overall review process when FDA registers a decision about next steps, whether there may be a full approval and a product is prepared for marketing, and that is just a traditional approval letter or whether there are still some points that need to be clarified for -- before a product is labeled and approved.

And that's the complete response letter. A complete response letter is not uncommon. In fact, between 2018 and 2023, over 30% of new drug and new biologic applications were complete response letters. What these usually indicate are that FDA has some remaining questions about what is in the application or what has been assessed. Frequently, it may be as simple as agreeing on appropriate labeling statements so that practitioners and patients have a full understanding of all the implications from the application summary.

So there are actually several subtypes of these complete response letters and that they can be for safety or effectiveness, manufacturing issues or bioequivalence if there's a comparison with a prior approved product. And each of those may be handled uniquely. If it's a simple thing, a sponsor may be able to respond such as with labeling and it only takes after that a 2-month review process or FDA may request additional analysis of previously submitted material, which is pretty straightforward or that additional studies may be necessary, which may be brief for long term. So there's a number of flavors to complete response.

And you touched on this a little bit, but would you mind giving a little more detail on what the most common reasons a company might receive a CRL from the FDA?

Sure. First of all, it would not receive a rejection that is a filing decision made early. So the parts of the application are there. And frequently, when there are different groups at FDA, the chemistry people, the clinical people and so forth that are involved, they may raise questions about additional details, perhaps when a drug is studied in a larger population, whether there are particular subgroups such as ambulatory or non-ambulatory where additional assessments need to be made. And so those are the kind of questions that frequently arise. Mostly, it's benefit-risk type determinations, although it can be manufacturing processes and so forth.

That's very helpful. And what are the regulatory implications of receiving a CRL? For example, does it affect eligibility for future priority review or anything else like that?

Well, the decisions on priority or standard review are typically made on the quality of data and not on whether there is a complete response or not. A complete response is just a pause, if you will, to gather what may be additional information required to answer questions that the regulator has raised. And sometimes, these things arise earlier in a process and a company may have the opportunity to respond during the initial review cycle or sometimes it comes in near the end, and that may be when new parties who get involved near the end of processes, as always happens with any application that senior management becomes involved, there may be additional comments, questions that hadn't been previously raised that trigger a request for more information. So it does not impede a reconsideration. It does impact the time line for those things.

Okay. You know our patient community pretty well. You know we're really active, and we want to be doing all the things and helping. Are there ways patient communities can be supportive or involved during the CRL response process to help ensure the progress continues? Or is it a time when we should step back? Just what do you think is best for the community to do?

Well, in the formal process, there is no patient voice that is mandated or invited because usually, it is technical questions and not related to issues of patient preference or the kind of data that is involved there. On occasion, a sponsor may call upon a patient community to provide input on particular technical aspects. And we've certainly seen that with patient preference analyses where that have been helpful in clarifying questions. But overall, writing cards and letters at this stage maybe boosting the spirits of the company, but would not necessarily influence the proceedings because it's an FDA and sponsor type interaction and is technical and not the same kind of interpreted thing that we may be able to engage our patient communities and family communities in.

Understood. And the last question I have for you is, how should the patient community interpret the CRL, especially when this is a very highly anticipated therapy, a lot of people were like waiting on the edge and nervous and all these things? So how would you say the community should interpret this?

Well, as with most complete response letters, it indicates a pause to answer some questions that were outstanding, but is not casting a pall upon the probability of approval. Overall, it just means things need to be sorted through in one area or another in order to answer the FDA's questions to allow them to have the information they need for labeling. So while it's a frustration to the community because it involves more time, it is certainly not atypical in the overall drug development and review process. So just hang on, hang tight and await this next step.

Okay. Great. And hopefully, we are able to provide all of you with some background on CRLs and what they mean. And if you have any other questions for Tim or I regarding the overarching CRLs and how they work, please feel free to drop them in the chat, and I will try to respond. But with that, we will pass it over to Linda to talk in more detail about what's going on with Capricor.

Well, good morning, good afternoon, wherever you are. Thank you so much for joining us. Doing PPMD webinar is kind of like coming home. We've been doing these for a long time. We've been updating the community with the progress of deramiocel, started off as CAP-1002.

And we have spent many years uncovering the mechanism of action and working with FDA to get this across the line. Today, I am really pleased to be joined by my colleagues, people that I hold in the highest of esteem, Dr. Chet Villa, who has been my muse for years now in understanding the cardiomyopathy associated with Duchenne, the patient experience and sort of the unmet need.

Dr. Micheal Binks, who has recently joined us as our Chief Medical Officer, I consider it one of the great achievements of my leadership team in the last 2 years because Dr. Binks has such a presence, and I heard him present. I met him at a PPMD conference and was able to understand the incredible depth of understanding he has for the patients, but also the medicine and the science.

And then finally, Jon Soslow, who I also met at a PPMD conference, and I became so encouraged by his ability to take on tough issues and fight for what he believes in and really address the understanding of using imaging to predict the outcomes for cardiomyopathy. And I think if I could say that there is one person that has put the blue dots on the trees of this hiking trail to the top of this mountain. It's Dr. Soslow for helping us understand the progression of the cardiomyopathy. So these amazing people are here today, and I don't want to take much more of my time or your time with me presenting, so I'll go on with my rest of my presentation.

Next slide, please. Deramiocel. So many of you know us right now. We are an allogeneic cell therapy. It's an off-the-shelf product that is not a stem cell. It does not go in and become part of a functional muscle group. What does deramiocel do? Deramiocel, and I'll talk about the mechanism in detail in a little bit, actually has the ability to calm down the immune system. So there's probably less death of muscle cells. It's anti-fibrotic, our actual potency assay, which has been approved by FDA demonstrates its antifibrotic property.

That means it slows down the aggregation of scar and allows healthy muscle. Weather it's been treated by a gene therapy or an exon-skipper to thrive. We have positioned deramiocel as a good player in the sandbox in the sense that it should be used in combination with any of these other therapies because the more that we can calm down the immune system, the secondary implications of Duchenne muscular dystrophy and other neuromuscular disorders, the greater opportunities for these other therapies to work well.

So keep in mind, all of the people that are on deramiocel and that will receive it in the future have the opportunity for every standard of care medicine, whether it'd be a gene therapy, an exon-skipper, a steroid or heart medications, that are available for them to use. So with that in mind, I want to talk to you a little bit about our path with the Food and Drug Administration.

I think many of you have been following our journey and perhaps I can get the next slide now. I think many of you have been following our journey. We have been working on deramiocel, formally CAP-1002, for the treatment of DMD cardiomyopathy really for about almost 10 years now. It came to our attention that the type of pathophysiology that is associated with Duchenne cardiomyopathy would exactly fit the mechanism of action of our product. And so we started the journey first in mdx mice, that's when I had the opportunity to meet Pat and learn about her journey. Then we did a clinical trial called HOPE-1, which we then took to the FDA and talked to them about our path to approval. And you'll see our clinical trial journey in a few minutes.

But suffice it to say, I want to identify that we did HOPE-1, HOPE-2, HOPE-2 open-label extension and HOPE-3. And finally, in our meetings with FDA last year in August of 2024, we had this incredible pivotal meeting in which they were willing to take the cardiac data from HOPE-2, as published in The Lancet, the HOPE-2 open-label extension data compared to Dr. Soslow's external comparator control, which also really was collected by the whole cardiac consortium of -- funded by the Office of Orphan Products of FDA and National Heart, Lung, and Blood Institute and asked us to submit on the cardiomyopathy label. This happened in an amazing interaction with 38 reviewers in White Oak, Maryland just about 1 year ago.

And of course, this is an incredibly important indication because while there are other therapeutics evolving or approved for the skeletal muscle myopathy, there's currently nothing specifically for Duchenne cardiomyopathy, but deramiocel. So we proceeded, and we proceeded in our interaction with the agency. We submitted the BLA at the end of 2024 as we had been requested to do.

We submitted individual patient data propensity match, which means that it looks like you're taking a natural history population and using it as a control group. It's very well accepted statistically. They accepted -- the FDA accepted our BLA. We had 50, 5-0, information requests that we answered from the agency between January and June of 2025. We passed our pre-licensing inspection of our new and ready-to-go commercial facility here in San Diego, California, where we were told that it was unexpected how well for a small company we have built our manufacturing paradigm.

We have approval of our potency assay. We have approval of most of our CMC requirements. All of them can be met by the original PDUFA date as assigned of August 31, 2025. We had a mid-cycle meeting in which 10 minutes of the 60 minutes were used because there were really no issues that were raised. So you can imagine that as we were preparing for our late-stage meeting, as we were preparing for our advisory committee meeting, as we were preparing for PDUFA, we were very surprised by some turn of events.

So first, our advisory committee meeting was canceled. It was canceled in the public forum before the company was even told. We didn't even know officially for an entire week after it was published that our advisory committee meeting was canceled. Then we thought, okay, maybe they have enough data. That's fantastic. We'll prepare for the late-stage meeting. We were on par for our late-stage meeting. It was scheduled for the middle of July. And then all of a sudden, a few days before a late-cycle meeting was literally supposed to happen, we received a complete response letter.

Next slide, please. So let's talk about what was in the complete response letter. The complete response letter came to us as a surprise. And in there was information that could easily have been either asked for or garnered through the mid-cycle meeting or earlier in the review process or even perhaps not accepting the BLA for approval because all of the data that was cited not meeting the statutory requirement for substantial evidence of effectiveness was submitted in the BLA at the end of the calendar year.

Now -- this took us as a great surprise. We've been working with the agency. We have a very collaborative relationship with them. We thought that everything was going well. Prior to reaching -- receiving the complete response letter, we've reached out to the agency multiple times to try and work with them once the advisory committee meeting was canceled. Dr. Craig McDonald, Dr. Villa, Dr. Soslow, along with Pat Furlong as well as some of our statisticians that work with us externally sent a letter to the FDA, explaining why deramiocel should be looked at favorably at least in terms of an advisory committee, if not for direct approval, based on the data that has been collected and presented to which there was no reply.

Finally, in the CRL, they gave us an opportunity for something called a Type A meeting to determine the path forward for potential approval. So this is where Capricor is luckier than some of the other companies that are receiving CRLs right now. And let me just take a minute to explain this to you. In the background, we had done a clinical trial. Some of you were probably participants in it called HOPE-3. HOPE-3 is a randomized, double-blind, placebo-controlled trial evaluating deramiocel in Duchenne muscular dystrophy. Now originally, the primary efficacy endpoint of HOPE-3 is and has been the Performance of the Upper Limb 2.0.

Now as we had been developing deramiocel, originally CAP-1002, for the treatment of the heart disease, that's what we invented it for. We have been working with the agency. The entire time trying to get them to understand that what we needed was a primary efficacy endpoint that would allow us a cardiac label because the work had not been done by Dr. Soslow on the cardiac consortium. Identifying the risk for morbidity and mortality, the agency kept coming back to us and saying, "Look, you have skeletal muscle efficacy. Why don't you use that?" We understand the pathogenesis of that part. We don't understand the cardiac part.

What happened last year in August was so game changing because not only did we show that there's unequivocal proof that deramiocel seems to perform better than a natural history study in terms of feeding the cardiac disease, but now the FDA has something to hang their hat on their own funded study, identifying the pathogenesis and morbidity and mortality of DMD cardiomyopathy.

Originally, in that meeting, the purpose of that meeting was for us to change the primary efficacy endpoint of the HOPE-3 clinical trial to cardiac. And at that point, the agency said, "Don't do that. Expand your label with the skeletal muscle disease. Now just go in with the data that you have." But because we have this fully enrolled, fully treated last patient, last visit in June clinical trial, if the current administration does not think that the current BLA meets the standard for statutory requirement for substantial evidence of effectiveness, let us do what Sarepta has done and other companies have done and read through the primary efficacy endpoint of PUL and either change it to ejection fraction or allow us to take that and use it for the substantiation of the regulatory requirements for approval. That data is still blinded. We haven't looked at it. It is completely pure data that can be used to support the substantial evidence of efficacy.

And look, many of you know and have heard me say many times, I'm a scientist. I started in this field because I had the desire to make life better for human beings that were sick. If for some reason, we don't have evidence of effectiveness in cardiac disease in HOPE-3, I don't want you to get that either. So we are willing to put ourselves on the line. We are just asking FDA for the regulatory flexibility that they have so loudly talked about in all of their public presentations.

Now you probably saw that there were some CMC issues that were raised in the CRL. All of those were either addressed in information requests that had already been submitted and they had not reviewed it based on the CRL or have been addressed currently, and we plan to be able to submit full responses to the CMC items as recently as next week, the first week of August. So we're ready to go. We're hoping that FDA exercises some regulatory flexibility. That's an update on the regulatory piece. I know you all are going to have questions.

I'm going to roll forward and just remind you, on the next slide, please, that CDCs are from healthy human hearts. They are not stem cells. I already talked about that, talk about manufacturing after you hear from our key opinion leaders. There's over 300 peer-reviewed scientific publications, substantiating the mechanism of action and the efficacy of deramiocel that we have been treating patients across multiple trials. We have over 250 patients and over 700 infusions. So this is a very safe product, very safe once a quarter infusion is nice and easy.

Finally, last slide just to remind you that the indication that we are going after is the treatment of deramiocel with treatment of cardiomyopathy, I've spoken too much, in patients with DMD, and it's 150 million cells, IV infusion every 3 months.

And with that, I will turn the floor over to my esteemed colleague, Dr. Chet Villa.

Thank you, Linda. And thanks to PPMD as well for hosting this.

Next slide. So as everyone, I think, is aware, muscle injury is detectable immediately after birth in patients who have DMD. This leads to progressive skeletal, respiratory and cardiac dysfunction, which ultimately leads to mortality. Through research funded by PPMD and others, life expectancy has grown quite a bit over the last 3 decades, so that patients are now living into their late 20s or 30s if they receive standard of care therapy. And in fact, the neuromuscular and respiratory improvements have significantly delayed the onset of respiratory failure, and that has unmasked the significance of DMD cardiomyopathy, which generally shows up later than skeletal and respiratory muscle weakness, the point where cardiac disease is not a leading cause of death in DMD.

Next slide. So when you look around the world, we can see that about 40% to 50% of mortality in DMD is due to cardiac disease, and that is independent of the population and independent of geography.

Next slide. And so what have we learned about DMD cardiomyopathy over the last decade? As you heard from Dr. Marbán, we have learned quite a bit, so when you were looking even in the mid-2010s, a lot of what we were learning was coming from cardiac MRI. So in the 1950s through the '70s, the way that we had to be able to look at the heart was mostly by under the microscope. And there, we could see that there was evidence of cardiac fibrosis in people who had passed away in their late teens and early 20s.

In the 2000s and 2010, cardiac MRI had improved to the point where we were able to image these tissue changes, and you started hearing us use the term fibrosis. What that is? We were looking at what we call late gadolinium enhancement. And in areas where we saw fibrosis on the old histology, we could see these changes. And so we started using the term fibrosis, fibrosis, fibrosis to characterize these changes that happen in the heart.

Next slide. And why this mattered is there were a number of studies that came out in the early 2000s and mid-2010s that basically said when we are able to detect this late gadolinium enhancement or what we used to call fibrosis, is that, in fact, seminal. So here on this slide, you can see in green the way that heart function stays stable over time prior to the onset of this late gadolinium enhancement. Then once that develops, again, what we used to call just fibrosis alone, we start to see heart functions start to decline.

Next slide. Now over the last 5 or so years, we have gained further understanding of this, and it has really started to underscore why we need early therapies that change the long-term trajectory of DMD cardiomyopathy. So first, we started to learn quite a bit from what was happening in the skeletal muscle disease, especially from studies that were coming out of imaging DMD where they were able to use MRI to show fatty replacement of the muscles, especially in the leg and also now in the arms and in the respiratory muscles as well.

And we started to ask the question, well, if this is what's happening in the skeletal muscle disease, is the same thing happening in the heart? Is that old paradigm of fibrosis alone really correct in the new era with current outcome?

Next slide. And in fact, what we found is the same sort of things that were happening in the skeletal muscle were happening in the heart. And just later, like everything else about heart disease in general. So on the screen left, you can see the heart muscle from somebody who is a preteen.

At the bottom of the screen, you can see the kind of dark pink stuff, which looks like more typical muscle. In the in between, you see light pink that is kind of interspersed between that dark pink, and that's the areas of fibrosis for that scarring that we used to think was the dominant theme. And then at the top, what you can actually see in very light white is actually we're getting the very beginnings of fatty replacement of the heart.

And why this matters is that means that you're getting irreversible replacement of the heart even in early stages of disease. And in fact, when we started to look at adults or even late teens, we started to see quite profound replacement of the heart in a number of our patients. So again, on screen right, you see a similar area of tissue, but what is the dominant picture is one of fatty replacement. So there's large areas of white. There are very few areas of that dark pink and there are scattered areas of fibrosis. So this really started to beg the question, should we be starting therapies early? Can we preserve that muscle? And how do we go about doing that?

Next slide. Furthermore, when we started to look at other areas of the heart, not just the left ventricle, which had been the historic way that we looked at it, we saw similar things. So in the right ventricle, the chamber that comes to the lung, we actually saw more profound muscle loss and in fact, there were areas where there was almost no muscle in the right ventricle. And similar things were happening in the upper chamber of the heart or atrium. And so this really started to change the paradigm and say we need new therapies that preserve cardiac muscle now rather than kind of using the old paradigm for non-DMD cardiomyopathy.

Next slide. And so where we are at now is that we understand that late gadolinium enhancement, the stuff that we used to call just fibrosis is really fibro-fatty and that you can get that disease very early. The late stages of disease are characterized by almost complete replacement of the myocardium in areas. So you've lost whatever muscle that was there. So really, we need early therapies that can preserve cardiac muscle in every way that's possible. And finally that, that fibro-fatty replacement or fatty replacement occurs in all of the chambers of the heart. So we really need good ways to modify this to really get the best outcomes that we can.

Next slide. This matters especially in patients with DMD or in anybody who's nonambulant because what we know is in neuromuscular cardiology that disease progression is often asymptomatic. So in the patients that I take care of who don't have DMD or don't have neuromuscular disease, we do things like exercise testing, stress testing, as you may hear it called. And we ask them about, are you able to go up steps? How fast can you go up steps, all of those things. For patients who have DMD or skeletal myopathy, confuses that picture? Or if you're already nonambulatory, we miss that all together.

So patients go effectively from not symptomatic to symptomatic and we miss those in between stages. We can use cardiac MRI to track those changes and that has really become fundamental to our understanding of how the disease progresses and where we might be able to intervene and you'll hear more from Dr. Soslow about that.

Next slide. So where does that leave us? Right now, there are no DMD-specific cardiac therapies. We have generic therapies that are used in other cardiomyopathies that may help. Guideline-directed medical therapy, what we typically use to treat heart failure and non-DMD cardiomyopathy is really focused on the late stages of disease. It's not focused on disease modifying and it's not DMD specific. We are working to improve access to things like ventricular assist device and heart transplant, but those things remain exceedingly rare in the current era. And we've only found 6 heart transplants to date.

So we really need to be able to modify that early stage of disease while we continue to work on continued access to the late stages of disease and advanced therapy. And really, we need these new therapies to stop people from DMD from passing away prematurely due to cardiac disease. The promise of skeletal muscle therapies is there. And now we need to start to focus on the cardiac impact of the disease as well. Thank you.

Thank you, Chet. I really appreciate that background, and we all continue to learn from you. I'm going to spend the next few minutes going through, first of all, how deramiocel works, how we make it and then just briefly sharing with you an overview of the data. Many of you have seen this data sort of in piecemeal and over time, but I think it's worth taking a look not only at the data that is currently out in the public purview, but also the data that made up our biologics license application. But first, one of the strengths of deramiocel at the cell therapy is that we have spent literally 20 years developing an understanding of what the cells are, how they work, how they work to repair cardiac dysfunction, how they actually work to manage skeletal muscle deterioration.

So we have done years' earth of preclinical studies, identifying, first, the mechanism of action of reduction in inflammation, reduction in fibrosis, improvement in skeletal muscle function and improvement in cardiac function. We then moved this program into the clinic, first doing studies of intracoronary infusion thinking that the cells needed to get close to the site of injury, learning that we could actually back out to intravenous infusions and also be able to increase our dosing, not only in terms of number of cells and frequency, where we showed improvement in skeletal muscle function and cardiac structure and function.

And then finally, the gold standard of any therapeutic development is the development of potency assays that directly and absolutely measure the efficacy of a product before it goes into a patient so that lot-to-lot consistency can be maintained. And in this slide, we sort of show that path to how we got to this point. Now how do we actually make deramiocel? Let's look at that on the next slide.

We start with transplant qualified donor human hearts. That means these are hearts that could potentially go into another person, but cannot go in for technical reasons usually. And what we first do is along with the organ procurement organization is make sure that these donor hearts are very, very safe. They don't have viral pathogens, they don't have antibodies and then they don't have anything that could possibly be transferred to another human being. That is, first and foremost, what we do.

Then we bring it back into our labs and we select specific regions of the heart that we have learned over these years, where there is high likelihood to find the cells of interest, which we know become deramiocel. But there's very few of them in the heart. It's why the heart can't usually fix itself. So we use proprietary methods to get those cells out, and we call those explant-derived cells. They become the foundation of our master cell bank or what is called here the drug substance.

Once we get the drug substance, we go through all kinds of testing to make sure that the cells are what we think they are, to make sure that they're living, to make sure that they can divide, to make sure they have extracellular markers that identify them as what we now know as deramiocel. And of course, we put them through a lot of sterility testing to make sure that they are not carrying anything forward that could possibly get into a person and harm them in any way. And this is one of the reasons why this product is so very safe.

Then this is where the magic starts, where we actually put it into a production, where we put it into a type of cell culture, it's a suspension culture that synergistically allows expansion of the cells to many, many, many more than would naturally be available. And then that once it is done, is frozen down and put into vials where it ultimately will come to you.

Now again, we put them through all the testing that went through with the drug substance. We look at viability, cell number. We make sure that they express exactly what we think they do. We make sure that they do not carry any risk for any pathogen development or passing on pathogenesis and then, of course, again, the most important aspect once we make sure that it is clean and safe is we put it through the potency assay so that lot-to-lot variability is extremely low, if not nonexistent, in terms of providing you with the highest quality deramiocel product that we can.

We've worked many years to develop this program, and I'm very pleased to say it's been looked at and scrupulously examined by FDA through our chemistry, manufacturing and controls program. We passed pre-licensing inspection, as I mentioned, and we now are geared towards commercial manufacturing in much higher numbers.

Now I'm going to switch gears on the next slide and start talking about our clinical experience. I alluded to this in my introductory remarks. We have been working on treating patients with Duchenne muscular dystrophy cardiomyopathy for multiple clinical trials. First HOPE-Duchenne, we were able to show reduction in the scar in the heart measured by late gadolinium enhancement and improvements in cardiac and skeletal muscle function. This trial actually had formed our dosing and treatment paradigm in terms of numbers of cells.

We treated patients in an open-label extension of the original HOPE study, and we were able to identify that it was safe to increase the number of cells that these patients were getting. And also the frequency of dosing, and we were able to infuse intravenously based on preclinical studies. This was the game-changing study.

We then did the HOPE-2 clinical trial. I'll show you a little bit of data from that, although most of you are aware of it. It was published in The Lancet. This was our game-changing study, which we were able to show significant improvements in cardiac structure and function as well as skeletal muscle structure and function and was very well tolerated, very safe, and again, as I mentioned, published in The Lancet.

The HOPE-2 open-label extension study is the one that we're so proud of here at Capricor. We continue to treat these boys and young men. They're growing older with us, which is really exciting, 4 years coming into their fifth. Some have gone out to college, some have gone on to careers, some of them have reported that they've had no change in skeletal muscle function as measured not only by measures of the Performance of the Upper Limb, but also functional assessments that they do on themselves. Their cardiac function has stabilized, and we have a long-term safety profile. These guys are coming in. Some of them have had 16 infusions at this point and continue to show up every quarter because of the safety and efficacy of this product.

And then finally, the HOPE-3 clinical trial, the one that I've spoken about, which is blinded, we haven't unblind it. Let me remind you that the original primary efficacy endpoint was the Performance of the Upper Limb 2.0. We have now asked the Food and Drug Administration to change that primary efficacy endpoint to left ventricular ejection fraction to reflect our long-term history of treating the cardiac disease associated with Duchenne and to lead to the first approved therapy for cardiac disease in Duchenne muscular dystrophy as opposed to standard of care medication.

I'm going to quickly now walk you through our clinical experience and give you snippets of the data. Obviously, there's much more of it. With that, I'll ask for the next slide.

In HOPE-2, it was a randomized double-blind placebo-controlled trial. It was the first trial in which we did intravenous infusion of 150 million cells 4 times a year. We brought the subjects in every quarter to measure the Performance of the Upper Limb. They got 3 MRIs of their hearts at baseline at month 6 and at month 12, where the primary analysis was done and the data from that study was really quite extraordinary. Many of you know that, that study was stopped early due to primarily resource reasons, but also because we wanted to see if the therapy was going to be potentially efficacious and the data speaks for itself.

Next slide, please. So shown here, we've shown this many, many times, but I'll just reiterate, in blue are the subjects treated with deramiocel and gray are the placebo-treated patients. What we saw is the primary efficacy endpoint was met. That's the Performance of the Upper Limb, 1.2 is mid-level. That was the arm that was recommended by the agency at the time because it was the one that would be most easy to be quantified.

We hit a p-value of 0.01, which means there is an extremely small chance that the data that you see is due to chance. More importantly, sort of on a day-to-day basis for those of you that are receiving deramiocel or want to, it was a 71% slowing of the disease process over the first 12 months of treatment and that has continued.

Again, game-changing, ejection fractions shown on the right blue is treated deramiocel patients, gray are the placebo patients. This was the first study that showed stabilization and in fact, improvement in ejection fraction in Duchenne muscular dystrophy. Let me remind you, our patients at a later stage nonambulatory one, those of you that are like that, you know that your hearts are highly at risk for declining in this very, very fragile time in your bodies. Those of you with young kids, you don't have it now, but it's very, very likely that your sons will -- or you yourselves will experience a reduction in cardiac function that ultimately is the #1 cause of death now in Duchenne muscular dystrophy. So having a therapy that is safe that can be started young and that can reduce the ramifications of the heart disease cannot be overemphasized.

Next slide, please. This is the most important slide in my presentation today. This is the slide that we showed to the Food and Drug Administration. And this is thanks to Dr. Jon Soslow and his colleagues that actually gathered the data, did the imaging study and looked at the risk factors for morbidity and mortality in DMD. In The Lancet that's shown on the left, what we published in The Lancet is shown on the left, it's called a forest plot. And what you basically do in a forest plot is you show many, many measures that can either go to the left, which has had no treatment effect or to the right of the midline, which means that there's likely a treatment effect.

And what we see is in 21 of 22 cardiac measures, deramiocel was better than placebo in 21 of 22 cardiac measures. The ones that are called out on the right are the ones that are most important is how the heart meets the needs of the body ejection fraction, volumes global statistical test of all the cardiac measures. And as you can see here, what we see is a very strong indication that deramiocel is actually addressing the very measures that the cardiac consortium calls out in their reasons for Duchenne cardiomyopathy to be the #1 cause of death.

Reduction in ejection fraction over time leads to them falling off a cliff and ultimately losing their lives. We believe that we can actually attenuate this disease process, slow it down in addition to the current standard of care cardiac medications.

Next slide, please. So just to summarize, we saw a significant stabilization in HOPE-2 of upper limb and cardiac function. We met the primary efficacy endpoint with a 71% slowing of disease in mid-level pool, 1.2 with a p-value of 0.014. We saw statistically significant effects in several critical cardiac parameters, including ejection fraction, which is now what we're asking for the primary efficacy endpoint in HOPE-3. Again, almost a nonexistent cost that this would be considered to be chance.

Next slide, please. Now the open-label extension study is a really important study. As I mentioned a minute ago, it's actually the clinical study that I feel most proud of because it's just long-term safety and efficacy of deramiocel, but we also have the advantage of working with our colleagues to gather natural history studies.

So in an open-label extension, everybody is getting your drug. So you can't really have a placebo group to bank on. But in Duchenne, because, unfortunately, it's a chronic disease in which decline is usually the only way to go, you are able then to be able to use external controls. So in the next slide, I want to highlight what I think is one of the most important slides that I can show you today, which is that over 3 years of treatment with deramiocel, those treated had a 99%, 99% slowing with a chance that it was due to a chance of good luck, almost nonexistence again, a P-value of 0.008 compared to the external comparator control, the Dr. Soslow data. This means that there is a very good chance, almost an incontrovertible chance that deramiocel is making those patients with ejection fraction -- with DMD cardiomyopathy, their ejection fraction better.

Take this home. This is a safety -- a safe therapeutic that is improving the heart in conjunction to all the cardiac medication.

Next slide. Additionally, we're showing improvement in skeletal muscle function. And those are the guys that are in the long-term open-label extension study of HOPE-2 will tell you, they will actually feel when their dose is wearing off. Some of our guys will tell us that they have measures that they kind of measure their own function with at home. They can push open a door, they can transfer themselves. They can move around in bed. All of a sudden, they start to feel weaker. They start to feel that they're losing it. And that's why most of the guys that are coming in for the open-label extension infusions, come in on literally the day that they are eligible for their next infusion because they want to make sure that they can maintain the strength that they've achieved.

This is another external control group. This one is coming from Cincinnati Children's Hospital Medical Center. Thank you to Dr. Villa and his colleagues for allowing us access to this data, which shows that over time, those that are treated with deramiocel have a 52% slowing of disease over this 3-year time period.

Next slide, please. The most important aspect is how an individual does. We all know that Duchenne muscular dystrophy is a heterogeneous disease. One of the reasons why clinical trials in this space are so hard, one of the reasons why it's so difficult is that you always have variability and so there's some people that just don't respond or don't respond as well or may have some other physical indication that doesn't allow them to perform well in a lab.

That's why people are starting to work on, measuring things at home or outside of a clinic, but I wanted to introduce you to one of our open-label extension and actually HOPE-2 patients. He's an incredible guy. Many of you might know him. And what you can see on the right is as his scores over the course of time, he is rock stable in his Performance of the Upper Limb. And what we can tell you is that at his current age, which is in his early 20s, not typical that they're not losing skeletal muscle function. They're losing skeletal muscle function. But what's more important to him, what is more important to his family, what's more important to those that love him is that his heart function is stable. And you can see this is over a long stretch of time that his ejection fraction has really stayed stable.

So we continue to be committed to him to all of the patients that are in the open-label extension. We have over 100 patients now that are in open-label extension. We are supporting these patients. We are a small biotechnology company, but we are so committed to this space that we are providing deramiocel to them until we get it across the line, until we get approval, until we have the opportunity to have -- everybody have access to deramiocel. We believe in our patients, and we're grateful to them for first offering themselves to us and now to see the benefits along with us.

Now I'm going to turn over the podium to Dr. Binks, our Chief Medical Officer. He's going to talk about perhaps what is the most important aspect of deramiocel, which is its safety profile. Dr. Binks?

Thanks, Linda. So I'd like to just give you an overview of safety that was observed in the HOPE-2 and HOPE-2 OLE studies, first of all. As in many studies, and you might expect, most patients did report an adverse event. In the case of deramiocel, 50% or 60% were thought to be related to the study drug. Overall, these were mild and well balanced between the deramiocel and placebo group and resolved within 24 hours following infusion. There were 2 serious adverse events reported to -- in the deramiocel group, and I'll tell you a bit more about those in a moment.

There were some milder hypersensitivity responses, reasonably well balanced between the HOPE-2 deramiocel and placebo group. There were no deaths in either study. The particular focus of our safety monitoring around respiratory decompensation, immune or HLA sensitization or arrhythmias basically drew a blank in terms of detecting events.

Next slide, please. So in terms of the serious adverse events that have been related to deramiocel, there are 2 in the HOPE-2 study, and 2 have been reported in the still-blinded HOPE-3 study. All of these resolved without sequelae and share some fairly similar characteristics. Although they're all described slightly differently here in the reporting term, there are essentially severe allergic responses, we think, to deramiocel. They tended to present with tingling around the lips, a tickly cough, tightness in the throat, a bit of flushing, sometimes swelling with a fast heart rate and in some cases, reduced blood pressure. And they were all managed in the infusion units with additional steroids or antihistamines resolved within 24 hours and had no long-term sequelae. In 2 of these instances, epinephrine was used, so there were obviously fairly major events. Each event started during the infusion itself.

After the first event occurred, we instituted a mitigation regime, on the next slide, that involves pre-administration of high-dose oral steroids and histamine receptor antagonist. And in addition, we limited the rate of infusion for the first 20 minutes or so just to allow minimization of exposure to -- in those who may have an allergic reaction.

And I should also just mention that these allergic-type reactions occurred either on the first or most commonly on the second infusion with deramiocel and have not -- there have not been any such events in the HOPE-2 open-label extension study. So clearly, the first couple of infusions need to be watched fairly carefully, but the drug is administered in an infusion center that are well equipped to deal with these types of allergic responses. So that's it on safety. It's a short part of the presentation because there's not a lot to report.

Thank you. I'm going to turn it now over to Dr. Jon Soslow to talk about the clinical perspective. And it is always a pleasure to hear you speak, Jon. So I'll be quiet.

Thank you, Linda, and thank you, PPMD, for hosting the webinar. So as Linda said, I'll be talking about the clinical perspective. And if you go to the next slide, we're going to start with what do we see in the clinic, what do we see in our patients.

And so next slide, this is a paper from way back when in 1992, looking at the progression of cardiac function in patients with Duchenne muscular dystrophy. It was the first one I could find published. And they looked at something called left ventricular ejection fraction, which is the most common measure that we use to evaluate heart function. And this is done on echocardiography. And what you can see from these points is that patients started in various different spots, but for the most part, everybody declined. And this is what we see clinically that this is a disease that leads to an unremitting progression of left ventricular dysfunction.

Now if you go to the next slide, since that time, there have been many, many guideline papers, many, many changes in the way that we routinely treat patients. These are from our most recent guideline paper. And we now give ACE inhibitors or ARBs with the presence of LV dysfunction or start prophylactically around 10 years of age. We give mineralocorticoid antagonist with the presence of late gadolinium enhancement or fibro-fatty changes, as Chet described earlier, or with any LV dysfunction. And we give beta-blockers with any tachycardia or with patients who have left ventricular dysfunction.

In addition, we've adopted a lot of more advanced medications from adult medicine, including SGLT2 inhibitors and angiotensin receptor-neprilysin inhibitors. And we use these usually for ejection fractions around 40% or less. This is a significant change in the therapy that we give compared to where we were in 1992. We're much, much more aggressive, and we're much more focused on prophylaxis where we start medications before we see cardiomyopathy.

If you go to the next slide, this is a look at left ventricular ejection fraction progression from our natural history study. It started a little later in age because these patients were all getting cardiac MRIs instead of echos. But what you can see is that there's still that unremitting progression of disease. These medications work, but they don't work that well and they're not preventing progression. This line right here is an LVF of 55%, and that's what we consider normal for an ejection fraction. So once the line goes below that, we're considering that abnormal function.

Next slide, please. So what does this mean if we look at it over time? Well, this is from a similar study, one of our studies where we looked at ventricular function and looked at outcomes and this looked at the LVEF change at 1 year and 2 years. And as you can see, we saw about a 3% change at 1 year and about a 5% change at 2 years. So it's really a 2.5% to 3% change per year. And when you look at other studies in the literature, they all come out around the same place, whether you're looking at a clinical trial or a natural history study, it's somewhere in that 2% to 3% change per year for that progression of disease that we end up seeing in our patients.

Next slide, please. So what does this dysfunction mean? And that's a big part of this for us. What do we do with that information? So this is, again, an older study. This is an echo study done in 2002, where they looked at what's called a survival plot. So this is time down here, and then this is the percent that survived. And as you can see from this study, those who had left ventricular dysfunction, low LVEF at the time of entering the study had a worse outcome or a worse survival than those who didn't. So it associates with mortality.

If you go to the next slide, this is our more recent paper looking at cardiac MRI, which is a more sensitive and accurate way to evaluate cardiac function. And in this study, we showed that for every 3% decrease. And again, that's the expected decrease over 1-year period. So for every 3% decrease, we see a significant increase in the risk of death. This is also true for the diastolic and systolic volumes and for measures of function called strain. But the LVF was really one of the more sort of notable and remarkable in that study.

Next slide, please. We've also shown that the time that you develop heart dysfunction matters. And same with the time that you develop that late gadolinium enhancement or fibro-fatty infiltration that Dr. Villa was talking about. So the earlier you get LV dysfunction or the earlier you get that delayed enhancement, the more likely you are to have a bad outcome or to have a mortality event. And so if we can delay that onset of left ventricular dysfunction, then we know that we can keep that patient or these patients alive longer.

Next slide, please. The other really big thing that we and others have shown is that the rate of progression of heart dysfunction matters. So it's not just where you're starting, but it's also how quickly you're progressing. And this is a very intuitive thing. So the more rapidly you progress, the more likely you are to have decreased survival. But it's important because this suggests that if we can affect this progression, if we can slow down or stop the progression of left ventricular dysfunction, that, that could have a direct impact on survival and keep patients alive for longer.

Next slide, please. So a summary of that, the start of cardiomyopathy and heart dysfunction varies in each patient with DMD. As Dr. Villa pointed out, a lot of times, it really seems like once you get late gadolinium enhancement, that's when that starts. However, once it begins, there's really an unremitting progression of dysfunction. It just keeps going down year after year. Current medications help, but they're not enough. They're not everything that we need. We need better meds.

Severe dysfunction and dilation is for boating. Earlier heart dysfunction is more likely to lead to early death. And if we can slow down or stop the progression of heart dysfunction, we can delay mortality from heart disease.

Next slide. So when I go to look at my clinical perspective of this medication and this therapy, I think this slide and the next slide really encapsulate everything that I've seen and sort of bring it all together for me. And this is that HOPE-2 data that they've shown before. And you can see here that the LVF is stable in the patients on deramiocel. And in the placebo, the LVF goes down.

And importantly, the placebo matched perfectly with the matched patients from our natural history study, and they matched 2 different cohorts. And that suggests to me that the placebo patients really were behaving as we would have expected. That they were declining at the same rates that we see in natural history studies. But these deramiocel patients remained stable.

And if you go to the next slide, this is really what I find striking. So these patients over a 3-year period remained stable. They had no progression of their left ventricular dysfunction. And when you compare that again to our natural history study, that's just not what we see in patients. We see that, that progression of disease that we spoke about.

And right now, I have no medical therapies that I can give that I feel will effectively stop the progression of disease, that I feel will effectively stabilize left ventricular ejection fraction. So I think this is really what's the most striking about deramiocel to me.

Next slide, please. So in summary, heart dysfunction associates with mortality. Earlier age of onset of heart dysfunction associates with mortality. So if we can delay that onset of left ventricular dysfunction, we think or we know that these boys should live longer. And the rate of progression associates with mortality, so we can slow down or stop that progression that should lead directly to an improved mortality.

Despite increasingly the aggressive medications, the outcomes in DMD cardiomyopathy have really only minimally improved, and we know that patients are still dying from cardiomyopathy and stabilization of progressive heart dysfunction would significantly improve outcomes. Thank you.

Thank you, Jon. As usual, that was great. As I said earlier, but I can't say enough, I am a tremendous fan of the work that you've done. I just want to finalize before we open the floor for questions, and I promise I won't take long. What are the takeaways from this meeting? The takeaways from this meeting is that we believe that we can combat this complete response letter with data from the HOPE-3 clinical study.

We stand behind the data that was presented. It's strong. It's good. It shows statistical and clinical significance, but we have in our back pocket, the HOPE-3 data. We've asked the Food and Drug Administration to switch the primary efficacy endpoint, the left ventricular ejection fraction. We have already submitted a protocol amendment to that and this is actually something that there is precedent for in regulatory history, and we look forward to working with the FDA to get this therapy to you as quickly as possible.

And thank you for your support, thanks to PPMD for the years of support. Thank you for the families and for the people that believe in us and also who open their bodies to try out new medications to try and stem the progression of Duchenne. Eric?

Thanks, Linda, and thanks, everyone, for a really informative presentation. So we're obviously running over time, but I do want to make sure that we get to some of these key questions that we saw come in from the community. So some of this was touched on during the webinar. And I know folks will be able to see the recording of this later within a week's time up on the website. But I think, ultimately, what we're seeing come through in some of the questions, our family is just trying to understand where it is deramiocel sit with the FDA and kind of time lines to an approval decision. So I think that the very first question we're kind of going to start with is just what is Capricor's next step kind of in the near term?

So our next step in the near term is to work with the FDA. We've already submitted the protocol amendment to switch the primary of HOPE-3. We've drafted an e-mail, which we sent into the agency combating what they stated was inadequate data from the CRL. We are looking forward to a Type A meeting, which should happen hopefully very soon imminently. We haven't gotten a date, but we're waiting on it, where we'll be able to go in and talk with them to make sure we're all on the right path to approval. We believe that there is definitely precedence for this type of thing.

And then on the HOPE-3 trial data, when can we expect a potential readout?

That's going to be dependent on response from the agency. So because we want to preserve the blind and we want to preserve the independent aspect of the data and make sure the statistical analysis plan is exactly what the agency will take as reason to approve the drug, we will maintain the blind until we hear from the agency.

Okay. And then this probably shifts a bit depending on kind of what you're able to do with the HOPE-3 trial. But then can you just talk a little bit of potential time line and then process from that to getting to kind of an approval decision?

Yes. So as soon as we have guidance from the agency, we can submit the statistical analysis plan, finally called the SAP. And then it's dependent upon the imaging cores to make sure that the images are read and processed appropriately. We expect that to be done and analyzed. And so we're hoping that it will be relatively quick. It will be all dependent on FDA on what they want in terms of the documentation for how long it will take from then to the next PDUFA and to approval.

Great. Thanks, Linda. And then, Lauren, I'm going to kind of direct this one at you. We've had a few questions come in from the community of, is there anything that we can do from kind of a community voice, patient advocacy standpoint?

Yes. No, I think that's a really good question. And Tim and I got into in the beginning that right now during the CRL process, that it's very much more data focused than community input, unfortunately, at this moment. But if the time comes, when it's time for us to share stories or do things like that with the FDA, we will be sure to let you guys know. I feel like we try really hard to make sure that those opportunities are presented. But I think right now, unfortunately, there really isn't much for us as patient advocates to do. And it sounds like our friends at Capricor are doing all the things and sending all the data that they need to be doing. So I don't know, Tim, if you had anything to add on to that either.

No, I think that's very reasonable. Obviously, if there's a particular matter where patient advice -- family advice is needed, I'm sure the company or FDA would request that. At this point, that's hard to predict. But I'm presuming we'll hear more after that Type A meeting, which is critical.

So I'm going to jump in here really quick. I'm not sure patient letters to FDA will do that much. But where patient letters will really make a difference to your Congressmen, to your senators. I've never had the opportunity to really be up on Capitol Hill. And I guess most other companies have government relations. But being a scientist, I just sort of thought the process would be naturally driven by data. But the elected officials definitely need to hear from you, please let them know. Especially if you have a specific story, they are really interested in hearing the stories they are really interested in seeing how the new FDA is functioning. And it's going to be important that our voices are heard. FDA makes the decisions based on data, but patients and their lives have to come into that decision process.

Thanks, Linda. And then I think just in terms of maybe continued kind of clarity. So Dr. Binks touched on some of the safety data there. Linda, both you and Jon kind of touched on some of the data from HOPE-2. So some of the questions were just kind of specifics around where was maybe the FDA's concern? Is it more of the small numbers? Is it a lack of placebo in terms of trying to understand kind of, again, where we're at today, where we're looking with them to potentially the HOPE-3 trial results?

I'm going to geek out for just 1 minute here. The issue with HOPE-2 predates the submission of the BLA. In fact, we've been debating the HOPE-2 data with the FDA for a good 5 years now. The issue is that the model or the original statistical design was based on the assumption of something called normality. And if you can sort of see like a hill in your head, that means that half of the people will be on one side of the hill, half of the people will be on the other side of the hill in terms of their averages. And so you can do your statistics based on the fact that the data is sort of normally distributed, is what I call. That happens in larger sample size. That's why big pharma do big trials because the more people you have, the more they fall within a normal distribution.

By stopping HOPE-2 early, which we had to do for many reasons, then when you look at the actual data, it violated the assumption of normality. Now once you violate the assumption of normality, you then have to use different kinds of statistical measures, which are called nonparametric measures, which means they look at the likelihood that your data is due to chance based on not taking into the fact that you have a normally distributed population. If you do this test correctly, you end up in a nonparametric way, looking at HOPE-2 was statistically significant, and I showed you that data, and that's why The Lancet took it. Because that hits on the canonical way the statistical analyses are done. If you violate normality, you have to go to nonparametric measures.

What the FDA is contending and I really do think that maybe they just need to look at the data a little more carefully is that they say that, no, no, no, you missed your original primary efficacy endpoint, which relied on this assumption of normality and, therefore, nothing that happened below that statistically is relevant. And I'll leave that with one point, even if you go with the original model, which you have already violated from PREMISE-1. The data was very close. The p-value was less than 0.1. So no matter how you look at this, this definitely looks like there's a reasonable, in fact, robust treatment effect.

Okay. Thanks for that, Linda. That's complex, obviously, but we do appreciate you taking the time to kind of...

I do love my stat.

And then so when the HOPE-3 readout does occur? Would you be able to come back and present that data to the community?

Oh, yes, we will be very excited to do that.

And then just some general, I think, kind of questions that we have any time talking about potential therapies. So just around deramiocel itself, there were a few questions of just is this something of more of a potentially replacing other cardiac therapies or more beneficial be used in combination? And then there was, again, a question kind of around the age limit from the trials versus kind of maybe when we could think about like earlier intervention with cardiac meds?

Yes. So our goal is that deramiocel would be in addition to cardiac meds. Dr. Soslow, Dr. Villa, all of their colleagues in the world of cardiac treatment for Duchenne will say that they've already got their guys on standard of care meds and they are addressing them all the time. So this will be in addition to cardiac medication. Now is it possible over time if you get in early enough that there could be a reduction in the need for some? Perhaps we will be able to watch that sort of in part of post-marketing observational studies, and we're excited for that opportunity.

In terms of the age limits, the way that we are trying to build the label is the presence of scar, which already is suggesting that not good things are going on in the hearts of those guys could happen when they're pretty young or -- and cardiac dysfunction is measured by MRI or echo or whatever measurement of choice where the ejection fraction begins to drop. Although let me just say sort of in addendum to that, some of our best data comes in those guys that still have really good preservation of cardiac function. So we're looking to stabilize them. And hopefully, they won't dip below and need treatment for cardiac dysfunction, but for stabilization of their hearts.

Great. Thanks, Linda. Pat, I don't know if you have any kind of other questions you're seeing come in. I mean those are some of the big -- I wanted to get some of those big thematic ones since we did run over quite a bit, but I appreciate everyone staying on for that. I just want to make sure I didn't miss any kind of key points from the community standpoint.

No, thank you for that. I'll just add one last question. I think just because we know -- you know that heart failure is part and parcel of Duchenne. And we've asked the question the muscle too more times than I can count over the last 31 years. So would you -- Dr. Binks, Dr. Villa, Dr. Soslow, if you had a child with Duchenne, is this preventative? So at age X when we typically see that there is scar present and then you know what's going to happen following, is it an idea to -- or would you have to do a study to promote a very early intervention? I'll just arbitrarily say, 8 years old as you typically see significant stain at that time.

Go ahead, Jon.

Sorry, I think that's a great question. And I think the way I look at this is that the strongest data really seems to be preservation of left ventricular ejection fraction. And so from my standpoint, I would say this is probably a preventative therapy. Now I do agree with what Linda said earlier though that the presence of LGE, I think, would be an important thing for me in the beginning, just so that I know that I'm giving someone a therapy when I know that their cardiomyopathy has started. Now whether this moves down the road to being something that is preventative for everybody, I think that would probably require other trials or at least a lot more clinical experience. But in the beginning, I would look at this as a preventative for patients with delayed enhancement.

Thank you so much. I think we've gone over now. So this has been a wonderful webinar. Thank you to all of the team from Capricor. And thank you to Jon and Chet, who are always present and thankful for you protecting our heart, all these little children and some women that we still care for. And so maybe one day soon, Linda, you'll consider a trial in carrier females that are at risk. So I can't thank you enough. Thank you, Tim. Thank you, Lauren, Pat. Thank you, Eric.

And thank you for the background, Emily. Otherwise, we wouldn't be online. So thank you all for joining us. I think this is a very wonderful opportunity to protect the heart and keep in mind that the heart of the muscle, too. So thanks for joining us. We'll see you again soon with HOPE-3 data.

Thank you so much. We really appreciate everything PPM does for us and for the world. Be well. Thank you all.

Good bye.

Good morning, ladies and gentlemen. Welcome to the Capricor DMD program update call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. AJ Bergmann, Capricor's Chief Financial Officer. Please go ahead.

Thank you, and good morning. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future R&D plans, including our anticipated conduct and timing of preclinical and clinical studies, our enrollment of patients in our clinical studies, our plans to present or report additional data, our plans regarding regulatory filings, potential regulatory developments involving our product candidates including the ability to obtain regulatory approvals or otherwise bring products to market, revenue and reimbursement estimates, projected terms of the agreements, manufacturing capabilities, potential milestone payments, our financial position and our possible uses of existing cash and investment resources.

These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements.

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

Well, good morning, everyone, and thank you, AJ. Thank you all for joining us today. I would like to provide you an important update on the status of our biologics license application for deramiocel, Capricor's lead cell therapy candidate for the treatment of cardiomyopathy associated with Duchenne muscular dystrophy.

As announced this morning, Capricor received a complete response letter, otherwise known as a CRL, from the FDA indicating that the agency is not able to approve the BLA in its current form, specifically citing that the BLA does not meet the statutory requirement for substantial evidence of effectiveness and in addition, the need for more clinical data.

The CRL also referenced certain outstanding items in the chemistry manufacturing controls, or CMC section of the application most of which we believe have been addressed by Capricor and communications to the FDA in response to prior comments but were not reviewed by the FDA due to the timing of the CRL issuance.

At this point, the review clock has been stopped until we submit our complete response, and we do not believe that a new BLA will be required. Capricor has already initiated the process to engage with the FDA and is seeking a meeting to discuss the CRL. In parallel, the company is preparing a written response to the CRL with all the next steps now actively in motion.

To be clear, we are both surprised and disappointed by the FDA's decision. We have followed the guidance provided by the FDA at every stage from submission through inspection and review. We successfully completed our pre-licensure inspection completed a mid-cycle review with no significant deficiencies noted and responded to more than 50 information requests during the review period.

The Public Advisory Committee meeting was canceled by the FDA without explanation. The company was not informed of that decision for more than a week and just 1 week before our scheduled late cycle meeting we received the CRL. For novel therapy and a new indication with a high unmet medical need, we believe this sequence of events is deeply concerning and to our knowledge, unprecedented.

Capricor's BLA for deramiocel was granted priority review in March of 2025 as supported by data from the randomized, double-blind, placebo-controlled HOPE-2 trial. Our HOPE-2 open-label extension and natural history comparisons using FDA-funded data sets. The data submitted for this BLA demonstrated statistically significant, clinically relevant and durable benefits in cardiac function. Specifically in HOPE-2, deramiocel met its primary efficacy endpoint with statistical significance when analyzed using appropriate statistical methodology.

Furthermore, the secondary and exploratory cardiac endpoints were prespecified for hypothesis testing and demonstrated a high degree of internal consistency, yielding a composite p-value of 0.0066, measuring the global statistical test of all cardiac measures, supporting the reliability and the reducibility -- reproducibility of the observed clinical benefit.

In addition, the HOPE-2 open-label extension study showed statistically significant results in left ventricular ejection fraction as compared to a propensity matched external comparator resulting in a p-value of 0.0079, favoring deramiocel-treated patients after 2 years of continuous treatment. Similarly, when analyzing a global statistical test of multiple key cardiac parameters in the HOPE-2 open-label extension at 2 years, a statistically significant result of p equaling 0.0086 was observed.

We believe that this is fundamental evidence of the consistency of our data, which highlights the benefit of treatment with deramiocel across multiple studies and sustained durability. The data was presented to the FDA in August of 2024 and served as the foundation for the acceptance of the BLA and as such, the CRL was unexpected. Importantly, deramiocel has now been administered in over 700 infusions across more than 250 patients many of whom have received multiyear treatment.

Across all clinical studies, the therapy has demonstrated consistent and favorable safety, something particularly important in a population as medically fragile as those with Duchenne muscular dystrophy, where treatment toxicity tolerance is low and durable therapeutic benefit is rare.

Following our review of the CRL, we view our ongoing Phase III HOPE-3 clinical trial as a key opportunity to address FDA's request for additional clinical data and to further support the potential efficacy and safety of deramiocel for the treatment of cardiomyopathy in DMD patients.

Capricor has completed the 12-month time point of the study, evaluating with 104 DMD patients in a randomized, double-blind, placebo-controlled study initially designed to assess upper limb function and key cardiac outcomes, including the changes in left ventricular ejection fraction. One-year data are expected in the third quarter of 2025 as we work diligently to finalize the data set for submission. We believe results from cardiac functional endpoints in HOPE-3, if positive, to meaningfully strengthen the current BLA, aligned with the FDA's guidance for an adequate and well-controlled study and serve as the foundation for a path to potential approval in DMD cardiomyopathy.

Now switching to the CMC front, we view the FDA's deferral of review as an opportunity to efficiently clarify and resolve any remaining issues. Based on the feedback provided to us and the actions already taken, we believe these items are resolvable in a timely manner. We remain committed to ensuring the quality, consistency and scalability of our manufacturing platform.

We also want to acknowledge the broader regulatory landscape. While there is growing uncertainty across the sector, we continue to believe the FDA is committed to advancing innovation in rare diseases, particularly where unmet need is high and standard clinical trial models are not always feasible. The use of long-term extension data, natural history comparisons and real world evidence is not only supported by current guidance, but essential and therapeutic areas like Duchenne muscular dystrophy. We urge the agency to consider the full context, complexity and urgency of the disease as it evaluates our resubmission.

After the cancellation of our advisory committee meeting, a group of the nation's leading DMD physician scientists, including our national principal investigator, Dr. Craig McDonald, submitted a joint letter to the FDA, expressing their support for the deramiocel clinical program and the data submitted in our BLA.

In order to give you context, I would like to share how this letter began with this powerful statement. "We are a group of physician scientists, academic collaborators, principal investigators and biostatisticians who have collectively been involved in the treatment and study of thousands of children and adults with Duchenne muscular dystrophy in the clinic and in registration trials spanning 4 decades. We have over 100 years of treatment experience in this patient population, including expertise in DMD biology, pharmacological strategies, skeletal muscle and cardiac management, natural history and the design, conduct and interpretation of clinical trials for Duchenne muscular dystrophy. We are writing to share our clinical experiences treating DMD patients in clinical trials of deramiocel for up to 5 years and our interpretation of the clinical trial data."

These experts many of whom are directly involved in the HOPE-2 open-label extension and the HOPE-3 clinical trials express their collective belief that the totality of the data supports the efficacy and safety of deramiocel in treating cardiomyopathy and Duchenne muscular dystrophy. Capricor remains committed to working collaboratively with the FDA and remains open to all regulatory pathways that can bring deramiocel to patients. We will continue to act with urgency, transparency and scientific discipline.

Our goal remains the same, to bring this potentially life-changing therapy to those who needed the most. To our shareholders, collaborators and most importantly to the DMD community, we remain fully committed to this mission. We believe in the science, we believe in the patients. We believe in the families who inspire our work and in the progress that we will still explore to head to.

This is not simply about advancing a therapy. It is about fulfilling a promise to a community that deserves better. We believe this application reflects the type of innovation the FDA has pledged to support data-driven, well controlled and consistent with regulatory precedent. We appreciate your continued support as we work to bring deramiocel to the patients who need it most. Thank you. I will now open the line for questions.

[Operator Instructions]. And we do have our first question coming from the line of Ted Tenthoff with Piper Sandler.

Sorry to hear this news, Linda. I know the CBER Director has been vocal in his opposition, but we really think this is a therapy that needs to get approved for the patients. When it comes to the BLA, the response to the CRL, as you laid out, when do you think you might be able to respond to the CRL and with the HOPE-3 data, would this still be for DMD cardiomyopathy? Or would it potentially be for the more expanded DMD label broadly?

Yes. So Ted, thank you so much. And of course, while we're disappointed with this news, we are in a really terrific position having an adequate well-controlled clinical trial in HOPE-3 which very few people in our position actually have that. And with the data is slated to read out within a very short amount of time really just a few months with last patient last visit in June.

We are working directly with the agency now. So in the CRL, they open the door for an informal teleconference to discuss and quoting the letter, path to approval. They've also suggested a follow-up to that. We could actually request a Type A meeting in addition. So they're anxious to work with us. I think they could not include HOPE-3 opportunity in the CRL because it was not part of this initial application.

We're going to work closely with the agency to build HOPE-3 to be exactly what we need to get this BLA across the line. This BLA is for the cardiomyopathy. Therefore, the simplest path to approval is to see if they'll take HOPE-3 for the cardiomyopathy to treat DMD. And of course, there's a broader application in terms of skeletal muscle as well and we look forward to feedback from them.

We do believe, based on a lot of the public presentations of Dr. Prasad and Dr. Macari and even Secretary Kennedy that this is exactly the type of therapeutic they want to see move forward. So we're confident in our ability to work with them.

And your next question comes from the line of Leland Gershell with Oppenheimer.

Linda and team, also sharing my disappointment to hear the news. I wanted to just clarify with respect to sort of dividing between the observations that have been made and the statistical analyses that have been applied. If you could just sort of provide us some more color there and also how those may impact upon your statistical analysis plan for HOPE-3 with the understanding that the HOPE-3 primary endpoint is the skeletal muscle function analysis?

Thanks so much, Leland. This is the crux of the matter, right? So -- and this is where colloquially, the rubber meets the road. So obviously, FDA had raised concerns about the initial analysis of the HOPE-2 clinical data. That conversation has been back and forth with the agency literally for years.

Let me just explain for a minute exactly how we get to the statistical significance and what we've been going back and forth with the agency on and, in fact, got over the hump in August of 2024 in our meetings with the agency. And that was that the original model that was designed for HOPE-2 was based on an 84-patient trial because of the early unblinding, there was an imbalance in the distribution.

So a normally distributed curve was what the original model was based on you have to meet the assumption of a normal distribution in order to do that analysis. Once the violation of a normal distribution occurs, you must use a nonparametric analysis and our statistician have talked to the agency about this in great detail.

When you apply the nonparametric analysis, you then have a very robust statistical significance of the performance of the upper limb, 1.2 mid in HOPE-2, which then leads to all of the other secondary endpoints, achieving statistical significance, most importantly being left ventricular ejection fraction. The agency had accepted that.

That was one of the topics that was discussed in the meeting in August of 2024. And now they've gone back to a little bit more of their traditional dogma of the fact that it did not meet the original model assumptions.

In terms of the analysis plan for the HOPE-3 clinical trial, this is where the story gets very beautiful because HOPE-3 was actually and is actually an adequate and well-controlled study, randomized, double-blind, placebo-controlled. We enrolled all the patients anticipated. We did an appropriate power analysis.

The study is heavily powered for performance of the upper limb, but even more so for ejection fraction. So we believe that the models that we have discussed in terms of the statistical analysis plan for HOPE-3 should be very easy to meet, and we look forward to sharing that data with the agency when it becomes available.

And could you remind us or have you shared the specific powering of HOPE-3 for the PUL primary endpoint based on prior data?

Yes. The PUL primary endpoint, so don't forget, HOPE-3 was originally designed as Cohort A. And then based on agency recommendation, we did Cohort B, which was a completely separate clinical trial of product made in our San Diego facility based on recommendations by the agency, we were able to combine Cohort A and Cohort B. Each of the arms was independently powered. HOPE-3 was powered to an 80% power for a p-value of 0.05, but those were the independent arms. So obviously, the combined arms are much more highly powered.

And your next question comes from the line of Kristen Kluska with Cantor.

Sorry to hear about this. I know how much you genuinely care about this patient group. I had a few questions. First, was there anything that they said about the data itself being clinically or not clinically meaningful? Or is the sense here that it was just more on the magnitude, the way the study was statistically analyzed beyond what you just said for HOPE-2 and the number of patients?

Yes, Kristen, so you hit right at, no pun intended, at the heart of the matter. Yes, it seems mostly that the argument is around the statistical analysis. So in HOPE-2, the concept was, as I just explained, when Leland asked his question was in the model assumptions and whether to use a parametric normal distribution or a nonparametric model, which was obviously acceptable to the statistical reviewers at the Lancet and to some of the previous reviewers at the Food and Drug Administration.

In terms of the open-label extension, their concern is that there was not a concurrent control group. We use the natural history group funded by the FDA. This is a disease that has a chronic and is progressive. And the really amazing thing about MRI is that it cannot be interpreted, right? There's no volitional aspect to measurement of cardiac function by MRI.

So really, some of the concerns about post-hoc analysis, for instance, we believe, once we explain this clearly to the agency and give them clarity on the MRI, they should be able to understand that this is not necessarily statistically not as relevant as they might have thought.

Okay. And then just for the HOPE-3 study, we understand you're probably somewhere in the cleaning up and analyzing the data step. Can you just give us a sense of your confidence in this trial being successful. I don't know if you have seen any data from the trial yet or anything of that nature?

Yes. So the data is being handled by the core labs, the statistical analysis groups, and I have not had a chance to see data. We did do and presented to the FDA the safety data from HOPE-3 as part of this application. The safety data looks very good, continues to reflect the strong safety of the clinical trial.

Based on the powering of the trial, based on the HOPE-2 study, the HOPE-2 open-label extension study and compared with the natural history study, we believe that HOPE-3 will be positive, but we haven't looked at the data or had a chance to see it yet.

Okay. And then last one for me on the why a BLA, a new BLA might not be required. Essentially, do you get the sense of certain modules in the application that are already going to be sufficient. They don't need to kind of look over from scratch. I guess I'm trying to understand why a new application might not be required? Or is it just the case that you think they're going to just look at essentially what's going to be new to the package primarily HOPE-3 data?

Yes. So thanks. So this is what we'll be discussing with the agency. They were clear in their letter that they were going to look for a response to this complete response and that the clock would be restarted once we submitted a response to the CR. The whole crux of the matter will be in discussions with the agency.

We do not believe that a new BLA will be necessary. We do believe that all of the other modules will be acceptable. They did say that they would rereview the CMC information that was submitted after they had stopped review once they restart the clock. So stay tuned for updates on this. This will be a very important conversation to have with the agency.

And your next question comes from the line of Madison El-Saadi with B. Riley Securities.

I wanted to ask, you mentioned that the powering on HOPE-3 on PUL was at 80%. Just wondering what that powering would look like if the ejection fraction was moved to the primary endpoint? And then if you could, could you clarify, are you expecting like a Class II resubmission? Or will this be a major amendment since it's not going to be an independent BLA?

And then lastly, could you mention if the FDA viewed the PUL data point and HOPE-2 as statistically significant.

Yes. Thanks, Madison. Good to hear from you. So to take your questions in order, in terms of the powering of HOPE-3 for ejection fraction. It is highly overpowered for ejection fraction. As you know, that was strongly statistically significant in HOPE-2 and the HOPE-2 open-label extension study.

Very importantly, whether you use the parametric or the nonparametric distribution in HOPE-2, ejection fraction still was statistically significant in terms of the p-value associated with this. So we haven't done the actual calculations of power, but it's highly overpowered given that there's 104 patients.

In terms of this sort of concept of a major amendment or a Class II submission, we do maintain our status and priority review due to our regulatory designations. Again, the agency offered to talk with us. We have not had a chance to have a meeting with them yet. We're looking forward to that. We'll provide updates to The Street as we have them. Of course, our goal will be that this will be a major amendment to this BLA that will not require a new BLA.

They have not suggested that it would require a new BLA. They are asking for additional data. We believe that data can be provided with the HOPE-3 clinical trial data and because, as I said before, but I'll reiterate. Because the HOPE-3 data was not submitted as part of this BLA, they can't ask for it directly in this complete response letter.

But what they can do is ask for new data, and then we're going to offer them the HOPE-3 data. So we remain really hopeful that this is going to be relatively easily resolved and with a little bit of a setback, but not a major setback.

And your next question comes from the line of Catherine Novack with Jones.

Just another question on sort of the timeline. Do you have just under 2 months left on the review. Would that the new review period be those 2 months plus whatever kind of PDUFA extension, assuming you can submit the data under the existing BLA? And why would the FDA stop the review so early prior to looking at any of your CMC responses?

Yes. So thanks for the questions. Again, I can't provide an update on timelines until I meet with the agency. It's going to be critical to have this meeting with them to get their feedback to see exactly what they're going to want us to do and how that's going to impact timeline.

Here's what I do know. HOPE-3 last patient last visit was in June. We anticipate being able to have top line data from that study before the end of the third quarter. All of the analyses are under -- being taken on right now. We remain, of course, completely blinded to anything that's going on. So we will reveal top line data as soon as we have it.

I'm hoping that the agency will take this, as I just said in answer to the previous question as a major amendment. I don't know the impact on the PDUFA clock at this point but we'll let you know as soon as we know.

In terms of them stopping the review, that remains somewhat of a mystery to us. We hit the deadline in terms of when they wanted the information request sent in. Our team worked diligently to make sure that every single one of the 50 information requests were handled and handled in a timely fashion. We did several -- many, actually, many informal calls with the agency. Over the past 6 months, we successfully completed our pre-licensure inspection. We submitted our responses to the 483s.

They did not give us a reason as to why they stop review of these issues. But what I can tell you is that most of them are easily resolved with the answers to the IRs in their hands or could be resolved with a simple follow-up IR. So we remain confident that the CM package is on track whenever they reset the PDUFA clock too.

Okay. And then I just want to ask about the partnership with NS Pharma. Obviously, are they aware of the CRL? Have they said anything about their commitment to commercialization in the U.S.?

Nippon Shinyaku have been an incredibly strong partner with us. They have been with us since we initiated HOPE-3. I think they were delighted as we were when the agency was willing to review a cardiomyopathy biologics license application on the data from HOPE-2 and the HOPE-2 open-label extension compared to the propensity matched controls from the Vanderbilt University Cardiac consortium data. However, this is a setback. They remain completely committed. Of course, I've spoken with them, with their CEO and their leadership team, and they are on team Capricor as we are on Team NS.

[Operator Instructions] And your next question comes from the line of Boobalan Pachaiyappan with ROTH Capital.

I'm Manasa dialing in for Boobalan. Sorry to hear the news. So we have a couple of questions. The first question is, are you aware of regulatory precedents in which a drug application advanced mid-cycle review without deficiencies and was issued a CRL at later stages? And the second one is how does the CRL impact the ex U.S. clinical development, particularly in terms of the timeline?

Yes. Thanks for those questions. No, I mean I haven't spent a lot of time on regulatory precedents, just sort of keep up with the companies that we follow in the space. We certainly don't think this is a traditional pathway. We were surprised.

Our mid-cycle review meeting was literally 10 minutes out of the allotted 60 because they had no major issues to discuss with us. So this came as a complete surprise to us as well. I can't speak for what happens with other companies.

In terms of our outside of the U.S. strategy, obviously, we're going to continue to work with the MA. We're going to continue to work with [ PMGA ]. We had already thought that HOPE-3 might be sufficient for use outside of the United States, and our strategies have not changed. Obviously, right now, we're going to focus on getting this across the line in the United States, working with Food and Drug Administration.

And we currently have no further questions at this time. I would like to turn it back to the Capricor's management for closing remarks.

Thank you so much for joining us today. While this news obviously was disappointing sets us back a little bit. Upon reflection, both personally and with my team, I can say that the reason we show up at work here every day is because we want to make the difference in the lives of the young men and boys with Duchenne muscular dystrophy.

We remain committed to this vision. We believe in the power of deramiocel to address the consequences of this disease and we look forward to providing you with updates as we achieve clarity with the FDA as to how to get this across the line. And again, thank you for your continued support, and we look forward to happy outcomes in the future.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect.