What changed in this filing

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Item 1. Business

2025-03-26 compared with 2024-03-11 · 200 added, 226 removed, 554 unchanged (43% of the section changed)

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is a clinical-stage biotechnology company focused on the development of transformative cell and exosome-based therapeutics for treating Duchenne muscular dystrophy (“DMD”), a rare form of muscular dystrophy which results in muscle degeneration and premature death, and other diseases with high unmet medical needs.

Since our inception, we have devoted substantial resources to developing deramiocel and our other product candidates including our exosomes platform technology, developing our manufacturing processes, staffing our company and providing general and administrative support for these operations.

We do not have any products approved for commercial sale.

Our ability to eventually generate any product revenue sufficient to achieve profitability will depend on the successful development, approval and eventual commercialization of deramiocel for the treatment of DMD and our other product candidates.

If successfully developed and approved, we intend and plan to commercialize deramiocel in the United States and Japan with our partner, Nippon Shinyaku Co., Ltd., a Japanese corporation (“Nippon Shinyaku”).

Capricor may enter into licensing agreements or strategic collaborations in other markets.

Technology and Platforms

Cell Therapy Platform

Our core program is focused on the development and commercialization of a cell therapy (referred to herein as CAP-1002) comprised of cardiosphere-derived cells (“CDCs”), which are a population of stromal cells isolated from donated cells of healthy human hearts currently being developed for the treatment of DMD.

DMD is a rare, monogenic, X-linked muscle disease driven by the impaired production of functional dystrophin, which normally functions as a structural protein in muscle.

The reduction of functional dystrophin in muscle cells leads to significant cell damage and ultimately causes muscle cell death and fibrotic replacement.

CAP-1002 is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, and anti-fibrotic actions of CDCs, which are mediated by secreted exosomes laden with bioactive cargo.

Cell Therapy Platform (Deramiocel)

Our core program is focused on the development and commercialization of a cell therapy technology (referred to herein as deramiocel) comprised of cardiosphere-derived cells (“CDCs”), which are a rare population of cardiac cells isolated from donated cells of healthy human hearts, for the treatment of DMD.

Deramiocel is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, pro-angiogenic and anti-fibrotic actions of CDCs, which are mediated by secreted exosomes laden with bioactive cargo.

Among the cargo elements known to be bioactive in CDC-exosomes are microRNAs.

Collectively, these non-coding RNA species alter gene expression in macrophages and other target cells, dialing down generalized inflammation and stimulating tissue regeneration in DMD (and in a variety of other inflammatory diseases).

This mechanism of action, consistent with the changes observed in clinical studies to date in circulating inflammatory biomarkers, contrasts with that of exon-skipping oligonucleotides and gene therapy approaches that aim to restore dystrophin expression.

Our CAP-1002 cell therapy program for the treatment of DMD is currently in Phase 3 clinical development in the United States, for which we expect to have top-line data available in the fourth quarter of 2024.

Exosomes Platform

DMD pathophysiology is driven by the impaired production of functional dystrophin which normally functions as a structural protein in muscle.

The reduction of functional dystrophin in muscle cells leads to significant cell damage and ultimately causes muscle cell death and fibrotic replacement.

In DMD patients, heart muscle cells progressively die and are replaced with scar tissue.

This cardiomyopathy eventually leads to heart failure, which is currently the leading cause of death among those with DMD.

The annual cost of care for patients with DMD is very high and increases with disease progression.

There is no currently approved treatment for DMD-cardiomyopathy, therefore, we believe that DMD represents a significant market opportunity for our product candidate, deramiocel.

Exosomes Platform (StealthX TM )

Extracellular vesicles, including exosomes and microvesicles, are nano-scale, membrane-enclosed vesicles secreted by most cells and contain characteristic lipids, proteins and nucleic acids such as mRNA and microRNAs.

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Aspects of our exosome pipeline have been supported through collaborations and alliances.

Our collaborations and research around exosomes include the National Institutes of Health (“NIH”), the National Institute of Allergy and Infectious Diseases (“NIAID”), Johns Hopkins University (“JHU”), the Department of Defense (“DoD”), the U.S.

Our collaborations and research around exosomes include the National Institutes of Health (“NIH”), the National Institute

of Allergy and Infectious Diseases (“NIAID”), Johns Hopkins University (“JHU”), the Department of Defense (“DoD”), the U.S.

Army Institute of Surgical Research (“USAISR”), and Cedars-Sinai Medical Center (“CSMC”).

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In pursuit of this objective, we intend to focus on the following activities:

● continuing the development of our CAP-1002 program for the treatment of DMD in preparation for potential commercialization, which includes streamlining our manufacturing capabilities, furthering our commercial capabilities and securing additional partners in other markets around the world for the potential launch in the U.S., Japan and in other select territories;

● continuing the development of our deramiocel program for the treatment of DMD in preparation for potential commercialization, which includes streamlining our manufacturing capabilities, furthering our commercial capabilities and securing additional partners in other markets around the world for the potential launch in the U.S., Japan, Europe and in other select territories, subject to rights of Nippon Shinyaku as our exclusive distributor for DMD in the U.S.

● exploring further product expansion opportunities for deramiocel outside of DMD;

● advancing our exosome technology for therapeutic development, focused on internal research, strategic partnerships and collaborations;

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Our core cell therapy technology was first identified in the academic laboratory of Dr.

Eduardo Marbán while he was Chief of Cardiology at Johns Hopkins.

Since its initial publication in 2007, CDCs have been the subject of over 100 peer-reviewed scientific publications and have been administered to over 200 human subjects across several clinical trials.

Eduardo Marbán while he was Chief of Cardiology at JHU.

Since their initial publication in 2007, CDCs have been the subject of over 200 peer-reviewed scientific publications and have been administered to over 250 human subjects across several clinical trials.

We began to explore the therapeutic potential of exosomes as we learned that CDCs mediate most of their therapeutic activities through the secretion of exosomes.

We have assembled a scientific advisory board with cardiology and neurology experts, including DMD specialists.

Our advisors include clinicians and researchers who are experts on DMD’s skeletal and cardiac aspects.

Our advisors include clinicians and researchers who are experts on DMD’s cardiac and skeletal aspects.

Moreover, some of our advisors lead clinical units at some of the leading DMD centers in the United States and are actively involved in our drug development process and programs.

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Capricor Therapeutics was listed on the Nasdaq Capital Market shortly thereafter and currently trades under the symbol “CAPR”.

Capricor Therapeutics and Capricor have together raised approximately $145.0 million in equity capital (both privately and publicly) as well as approximately $90.0 million in non-dilutive funding from our partners including Nippon Shinyaku Co.

Capricor Therapeutics and Capricor have together raised approximately $300 million in equity capital (both privately and publicly) as well as approximately $100 million in non-dilutive funding from our collaboration partners including Nippon Shinyaku Co.

Ltd., a Japanese corporation (“Nippon Shinyaku”), as well as government sources such as the NIH and the California Institute for Regenerative Medicine (“CIRM”).

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There is no cure for DMD, and for the vast majority of patients, there are no satisfactory symptomatic or disease-modifying treatments.

It is estimated that DMD occurs in approximately one in every 3,500 to 5,000 live male births and that the patient population is estimated to be approximately 15,000-20,000 in the United States.

It is estimated that DMD occurs in approximately one in every 3,500 to 5,000 live male births and that the patient population is estimated to be approximately 15,000 to 20,000 in the United States.

DMD pathophysiology is driven by the impaired production of functional dystrophin, which normally functions as a structural protein in muscle.

The reduction of functional dystrophin in muscle cells leads to significant cell damage and ultimately causes muscle cell death and fibrotic replacement.

The reduction of functional dystrophin in muscle cells leads to significant cell

damage and ultimately causes muscle cell death and fibrotic replacement.

Due to reduced functional dystrophin protein, affected individuals generally experience the following symptoms, although disease severity and life expectancy vary:

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● progressive loss of upper extremity function during mid- to late-teens;

● respiratory and/or cardiac failure, resulting in death before the age of 30;

● cardiomyopathy eventually leads to heart failure, which is currently the leading cause of death among those with DMD.

● respiratory and/or cardiac failure, resulting in death before the age of 30 with cardiomyopathy leading to heart failure, which is currently the leading cause of death among those with DMD.

Glucocorticoid treatment, the current standard of care, has been shown to improve muscle strength temporarily, prolong the period of ambulation and slow the progression of DMD.

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The economic burden includes costs associated with hospital admissions, medications, frequent doctor visits, assistive devices, as well as indirect costs related to productivity losses for caregivers and costs due to pain, anxiety, social handicap as well as end-of-life care expenses.

While there are many clinical initiatives in DMD, Capricor’s program is one of the very few to focus on predominantly non-ambulant patients.

These boys and young men are looking to maintain their function in their arms and hands and slow the progression of cardiomyopathy.

We therefore believe that DMD represents a significant market opportunity for our product candidate, CAP-1002.

While there are many clinical initiatives in DMD, Capricor’s program is one of the very few to focus on predominantly older patients.

These boys and young men are looking to slow the progression of cardiac and skeletal muscle function.

We therefore believe that DMD represents a significant market opportunity for our product candidate, deramiocel.

Coronaviruses are a large family of viruses that can cause illness in animals or humans.

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cardiovascular disease, diabetes, chronic lung disease, obesity).

Since late 2021, infections have been dominated by subvariants of the Omicron strain which continue to displace previous circulating strains by evading immunity and spreading more efficiently resulting in an increased risk of breakthrough infection among the vaccinated.

As the world pivots from the kinds of responses needed during the pandemic, vulnerable populations need a vaccine strategy to provide protective durable immunity against current and emerging variants of SARS-CoV-2 to reduce the infection and disease burden for both the public and the health care systems globally.

Since late 2021, infections have been dominated by subvariants of the Omicron strain especially the XEC variant, which continue to displace previous circulating strains by evading immunity and spreading more efficiently resulting in an increased risk of breakthrough infection among the vaccinated.

As the world pivots from the kinds of responses needed during the COVID-19 pandemic, vulnerable populations need a vaccine strategy to provide protective durable immunity against current and emerging variants of SARS-CoV-2 to reduce the infection and disease burden for both the public and health care systems globally.

We therefore believe that SARS-CoV-2 represents a potential market opportunity for our exosome-based vaccine program.

Our strategy is focused on securing partnerships to provide the necessary resources and capital to bring our exosome-based vaccine into clinical development.

Our Pipeline – Key Programs

Duchenne Muscular Dystrophy Program:

CAP-1002 is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, and anti-fibrotic actions of CDCs, with the goal of improving skeletal and cardiac muscle function in patients with DMD.

Deramiocel is designed to slow disease progression in DMD through the immunomodulatory, anti-inflammatory, pro-angiogenic and anti-fibrotic actions of CDCs, with the goal of improving cardiac and skeletal muscle function in patients with DMD.

Biologics License Application (“BLA”):

In the third quarter of 2024, we held a pre-BLA meeting with FDA where we discussed our rolling BLA submission schedule, potential label expansion, plans for commercial manufacturing as well as other topics.

Subsequent to this meeting, we held several additional meetings with FDA and announced our intent to file a BLA based on existing cardiac data from our Phase 2 HOPE-2 and HOPE-2 OLE trials compared to patient-level natural history data.

We completed the full submission of the BLA in December 2024 and in the first quarter of 2025, we were informed by the FDA, they have accepted for review our BLA seeking full approval for deramiocel as a treatment for patients diagnosed with DMD cardiomyopathy.

Additionally, the FDA granted the BLA Priority Review with a Prescription Drug User Fee Act (“PDUFA”) target action date of August 31, 2025.

The FDA also informed us that they have not yet decided whether an Advisory Committee meeting is needed in relation to our application.

Phase 3 (HOPE-3) Clinical Trial :

HOPE-3 is a Phase 3, multi-center, randomized, double-blind, placebo-controlled clinical trial comprised of two cohorts evaluating the safety and efficacy of CAP-1002 in participants with DMD and impaired skeletal muscle function who are on a stable regimen of systemic glucocorticoids.

Non-ambulatory and ambulatory boys who meet eligibility criteria are randomly assigned to receive either CAP-1002 or placebo every 3 months for a total of 4 doses during the first 12-months of the study.

Approximately 102 eligible study subjects will participate in this dual-cohort study.

Enrollment has been completed for Cohort A where 61 subjects were randomized to either CAP-1002 or placebo in a 1:1 ratio and is intended to support a Biologics License Application (“BLA”) submission.

In December 2023, we announced a positive outcome of the interim futility analysis for Cohort A of HOPE-3, which was reviewed by the Data Safety Monitoring Board (“DSMB”).

HOPE-3 is a Phase 3, multi-center, randomized, double-blind, placebo-controlled clinical trial comprised of two cohorts evaluating the safety and efficacy of deramiocel in participants with DMD and impaired skeletal muscle function who are on a stable regimen of systemic glucocorticoids.

Non-ambulatory

and ambulatory boys who meet eligibility criteria are randomly assigned to receive either deramiocel or placebo every 3 months for a total of 4 doses during the first 12-months of the study.

Approximately 105 eligible study subjects are currently enrolled in the dual-cohort study (comprised of Cohorts A and B).

Cohort A uses product manufactured at our Los Angeles facility and Cohort B uses product manufactured at our San Diego facility.

Subjects are randomized to either deramiocel or placebo in a 1:1 ratio.

In the fourth quarter of 2023, we announced a positive outcome of the futility analysis for Cohort A of HOPE-3, which was reviewed by the Data Safety Monitoring Board (“DSMB”).

This resulted in a favorable recommendation to continue the HOPE-3 trial as planned.

At this time, we expect to have topline data available from Cohort A in the fourth quarter of 2024.

Cohort A uses product manufactured at our Los Angeles facility.

Performance of the Upper Limb (PUL entry items) (1)

(CAP-1002 current DMD target population)

(1) Image from HOPE-2 Lancet Publication (March 2022)

Enrollment is underway for Cohort B, which is designed to enroll approximately 44 participants randomized to either CAP-1002 or placebo in a 1:1 ratio.

A primary efficacy and safety analysis will be performed for each individual cohort at month 12, following 4 administrations of CAP-1002 or placebo.

We plan to complete enrollment for Cohort B in the second quarter of 2024.

Cohort B uses product manufactured at our San Diego facility.

The primary outcome measure of the HOPE-3 study will be the Performance of the Upper Limb (“PUL”) v2.0, a validated tool specifically designed for assessing high (shoulder), mid (elbow) and distal (wrist and hand) functions, with a conceptual framework reflecting weakness progression in upper limb function.

HOPE-3 will also measure various secondary endpoints including cardiac function assessments.

Under our RMAT designation, in the third quarter of 2023, we met with the FDA in a Type-B meeting where we discussed our manufacturing plans in anticipation of potentially submitting a BLA application.

In this meeting, we affirmed alignment with respect to our Phase 3, HOPE-3 program.

Additionally, we discussed our plans with respect to commercial manufacturing activities, including our potency assay and other product release criteria to support commercialization.

We plan to meet with FDA in the first quarter of 2024 to continue discussing our pathway to BLA.

In the upcoming Type-B meeting, we intend to discuss our further CMC plans for commercial launch, if approved, with the aim of expediting our BLA submission pathway.

Our ultimate goal is to file a BLA allowing for the use of CAP-1002 commercial product manufactured at our San Diego facility.

To support potential label expansion to treat DMD, we plan to provide clinical data on skeletal muscle myopathy by combining Cohorts A and B of the HOPE-3 clinical trial to serve as a post-approval study.

Furthermore, if necessary, the HOPE-3 study will also be supporting ex-U.S.

marketing authorizations.

Currently, we have initiated regulatory activities in Europe and Japan and will be working with the various health authorities to develop the most efficient path for regulatory approval of deramiocel in these regions.

Phase 2 HOPE-2 Clinical Trial:

HOPE-2 was a randomized, double-blind, placebo-controlled clinical trial conducted at multiple sites in the United States and was completed in 2021.

The clinical trial was designed to evaluate the safety and efficacy of repeated, intravenous doses of CAP-1002, in boys and young men with evidence of skeletal muscle impairment regardless of ambulatory status.

The clinical trial was designed to evaluate the safety and efficacy of repeated, intravenous doses of deramiocel, in boys and young men with evidence of skeletal muscle impairment regardless of ambulatory status.

Approximately 90% of the patients in the study were non-ambulant and all patients were on a stable regimen of steroids.

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The final one-year results from HOPE-2 were published in The Lancet in March 2022, showing that the trial met its primary efficacy endpoint of the mid-level dimension of the PUL v1.2 (p=0.01) and additional positive endpoints of full PUL v2.0 (p=0.04).

Although the PUL v1.2 for the mid-level was the primary endpoint established for the trial, we also conducted an analysis using the PUL v2.0 as the FDA suggested the use of the updated PUL v2.0 as the primary efficacy endpoint in support of a BLA.

Left ventricular ejection fraction (LVEF), a global measure of cardiac pump function, decreased in the placebo group over time, but improved in the CAP-1002 group, showing a 107% slowing of the progression of cardiac disease (p=0.002).

Left ventricular ejection fraction (LVEF), a global measure of cardiac pump function, decreased in the placebo group over time, but improved in the deramiocel group, showing a 107% slowing of the progression of cardiac disease (p=0.002).

Additionally, the data suggested global improvements in cardiac function as measured by indexed volumes (LVESV, LVEDV).

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The results of the placebo patients were consistent with natural history, but in the treated group, most patients were stable or improved on these endpoints throughout the one-year treatment period.

CAP-1002 was generally safe and well tolerated throughout the study.

With the exception of hypersensitivity

reactions early in the clinical trial, which were mitigated with a common pre-medication regimen, there were no serious safety signals identified by the HOPE-2 DSMB.

Deramiocel was generally safe and well tolerated throughout the study.

With the exception of hypersensitivity reactions early in the clinical trial, which were mitigated with a common pre-medication regimen, there were no serious safety signals identified by the HOPE-2 DSMB.

HOPE-2 Study Results - 12-Month Efficacy Data

12-Month Difference in Change from Baseline†

Δ, CAP-1002 vs.

Δ, deramiocel vs.

Skeletal-Muscle (Upper Limb Function)

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Percentile ranked change from baseline converted back to original scale

‡Negative value favors CAP-1002

‡Negative value favors deramiocel

*Graphed figures below

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12 patients elected to continue treatment.

We announced positive one-year and two-year results from this ongoing OLE study.

Data from the study suggests disease modification with statistically significant differences in the PUL v2.0 scale in the CAP-1002 original treatment group when compared to the original placebo group from HOPE-2.

The HOPE-2-OLE study previously met its primary endpoint at the one-year timepoint on the PUL v2.0 scale (p=0.02).

At the two-year timepoint, data showed statistically significant differences in the PUL v2.0 in the OLE treatment group when compared to the original rate of decline of the placebo group from HOPE-2 after one-year (p=0.021).

LVEF was measured using cardiac magnetic resonance imaging (cMRI) and six of nine patients showed improvements in heart function with CAP-1002 treatment compared to their final assessment at the end of the HOPE-2 study.

CAP-1002 treatment during the OLE portion of the study continues to yield a consistent safety profile and has been well-tolerated throughout the study.

At this time, we expect to have three-year data available from this OLE study in the second quarter of 2024.

Phase 1/2 HOPE-Duchenne Clinical Trial :

HOPE-Duchenne was a randomized, controlled, multi-center Phase 1/2 clinical trial which was designed to evaluate the safety and exploratory efficacy of CAP-1002 in patients with cardiomyopathy associated with DMD.

Twenty-five patients were randomized in a 1:1 ratio to receive either CAP-1002 on top of usual care or usual care only.

In patients receiving CAP-1002, 25 million cells were infused into each of their three main coronary arteries for a total dose of 75 million cells.

Data from the study suggests disease modification with statistically significant differences in the PUL v2.0 scale in the deramiocel original treatment group when compared to the original placebo group from HOPE-2.

The HOPE-2-OLE study previously met its primary endpoint at the one-year timepoint on the PUL v2.0 scale.

The study remains ongoing and the three-year data demonstrated improvements in multiple measures of cardiac function, including left ventricular ejection fraction (LVEF), as well as indexed volumes, which are considered highly relevant in terms of predicting long-term cardiac outcomes.

In order to evaluate the relevance of the data to disease progression as well as the chronic and progressive nature of DMD where cardiac function can decline year over year, a natural history data set was used to compare the trajectory of those treated with deramiocel to standard of care.

In addition to the cardiac data, patients demonstrated a statistically and clinically relevant benefit in the PUL v2.0 total score when

compared to an external comparator dataset of similar DMD patients.

Deramiocel treatment during the OLE portion of the study continues to yield a consistent safety profile and has been well-tolerated throughout the study.

Left ventricular ejection fraction % (LVEF) compared to external comparator (2)

End-Systolic Volumes, indexed compared to external comparator (2)

PUL v2.0 Total Score compared to external comparator (2)

(2) Images from HOPE-2 OLE

Phase I/II HOPE-Duchenne Clinical Trial :

HOPE-Duchenne was a randomized, controlled, multi-center Phase I/II clinical trial which was designed to evaluate the safety and exploratory efficacy of deramiocel in patients with cardiomyopathy associated with DMD.

Twenty-five patients were randomized in a 1:1 ratio to receive either deramiocel on top of usual care or usual care only.

In patients receiving deramiocel, 25 million cells were infused into each of their three main coronary arteries for a total dose of 75 million cells.

It was a one-time treatment, and the last patient was infused in September 2016.

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Efficacy was evaluated according to several exploratory outcome measures.

This study was funded in part through a grant award from the CIRM.

This study was funded in part through a grant award from CIRM.

In 2019, this study was published in Neurology, the medical journal of the American Academy of Neurology.

As shoulder function had already been lost in most of the HOPE-Duchenne participants, investigators used the combined mid-distal PUL subscales to assess changes in skeletal muscle function and found significant improvement in those treated with CAP-1002 in a defined post-hoc analysis.

Among the lower-functioning patients, defined as patients with a baseline mid-distal PUL score < 55 out of 58, investigators reported sustained or improved motor function at 12 months in 8 of 9 (89%) patients treated with CAP-1002 as compared to none (0%) of the usual care participants (p=0.007).

Additionally, we reported improvements in systolic thickening of the left ventricular wall as well as reduction in scarring of the heart muscle among those treated with CAP-1002 relative to the control group.

CAP-1002 was generally safe and well-tolerated in the HOPE-Duchenne trial.

Additionally, we reported improvements in systolic thickening of the left ventricular wall as well as reduction in scarring of the heart muscle among those treated with deramiocel relative to the control group.

Deramiocel was generally safe and well-tolerated in the HOPE-Duchenne trial.

There was no significant difference in the incidences of treatment-emergent adverse events in either group.

There were no early study discontinuations due to adverse events.

CAP-1002 - Investigator Sponsored Clinical Trials :

Capricor provided CAP-1002 for investigational purposes in two clinical trials sponsored by CSMC.

These cells were developed as part of the Company’s past research and development efforts.

The first trial is known as “Regression of Fibrosis and Reversal of Diastolic Dysfunction in HFpEF Patients Treated with Allogeneic CDCs (the “REGRESS trial”).

Eduardo Marbán is the named principal investigator under the study.

The second trial is known as “Pulmonary Arterial Hypertension treated with Cardiosphere-derived Allogeneic Stem Cells (the “ALPHA trial”).

Enrollment of the REGRESS and ALPHA trials have been completed.

In December 2023, the results from the ALPHA study were published in the peer-reviewed journal, eBioMedicine , a Lancet journal.

The Phase 1 results were shown to be safe, with no short-term clinical safety adverse events related to the investigational product, which was the primary outcome measure of the study.

Although this study was only designed to assess the safety of the CAP-1002 infusions, investigators observed encouraging changes that might indicate the 16 patients who received CAP-1002 infusions had improved cardiopulmonary health.

Exosome Platform :

Our exosome platform program consists of engineered exosomes and exosomes derived from CDCs (CAP-2003), both of which are in preclinical development.

StealthX™ Exosome Platform :

Our StealthX™ exosome platform program consists of engineered exosomes for vaccine and therapeutic development.

Exosome Platform:

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Exosomes offer a new antigen delivery system that could potentially be utilized to rapidly generate multivalent protein-based vaccines.

Recently, we were selected to be part of Project NextGen, an initiative by the U.S.

In 2024, we were selected to be part of Project NextGen, an initiative by the U.S.

Department of Health and Human Services to advance a pipeline of new, innovative vaccines providing broader and more durable protection for COVID-19.

As part of Project NextGen, the National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health, will conduct a Phase 1 clinical study with our StealthX™ vaccine, subject to regulatory approval.

At this time, we have submitted an Investigational New Drug Application (“IND”) to the FDA for our StealthX™ vaccine, which is currently under review and we anticipate that if the IND is approved, that NIAID plans to initiate this trial in late 2024.

NIAID's Division of

Microbiology and Infectious Diseases (DMID) would oversee the study.

At this time, manufacturing is underway for our StealthX™ vaccine and we have submitted an Investigational New Drug Application (“IND”) to the FDA, which is currently under review.

At this time, NIAID is planning for regulatory approval in the second quarter of 2025 with the clinical study initiated soon thereafter.

NIAID's Division of Microbiology and Infectious Diseases (“DMID”) would oversee the study.

If NIAID finds that our StealthX™ vaccine meets its criteria for safety and efficacy, they may consider our program for a funded Phase 2.

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At this time, we are exploring the use of our proprietary StealthX™ exosome platform for a broad range of therapeutic applications including targeted RNA, protein and small molecule therapeutics to treat or prevent a variety of diseases.

Exosome Platform:

CDC-Derived Exosomes (CAP-2003) :

CAP-2003 is the name of our exosomes product candidate which are derived from CDCs.

We have promising preclinical data in several indications from studies done utilizing CAP-2003 in our labs as well as in collaboration with other academic institutions.

In 2020, we filed an IND with the FDA to investigate the use of CAP-2003 in patients with DMD.

The FDA has requested more information related to manufacturing for this product candidate and we are evaluating the next steps for this program as we continue to further develop our exosome platform.

These programs represent our core technology and products.

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(allogeneic CDCs)

Duchenne muscular dystrophy*

Phase 3 (HOPE-3)

enrollment complete

Phase 2 (HOPE-2) completed**

Duchenne muscular dystrophy – Cardiomyopathy*

BLA accepted for priority review;

August 31, 2025

Nippon Shinyaku Co., Ltd.

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Engineered Exosomes (RNA, protein and small molecule delivery)

CAP-2003 (CDC-exosomes)

Duchenne muscular dystrophy

IND submitted

* The FDA has granted orphan drug, Regenerative Medicine Advanced Therapy, and Rare Pediatric Disease designations to CAP-1002 for the treatment of DMD.

**We are currently conducting an OLE study of the HOPE-2 trial.

* The FDA has granted orphan drug, Regenerative Medicine Advanced Therapy, and Rare Pediatric Disease designations to deramiocel for the treatment of DMD.

Manufacturing, Supply and Distribution

We have developed proprietary Chemistry, Manufacturing and Controls (“CMC”) and manufacturing capabilities that allow manufacturing and testing of our product candidates to support both clinical development as well as potential commercialization.

Manufacturing is subject to extensive regulations that impose procedural and documentation requirements.

Manufacturing of biological products is subject to extensive regulations that impose procedural and documentation requirements.

These regulations govern record keeping, manufacturing processes and controls, personnel, quality control and quality assurance.

We continue to enhance, refine and optimize our manufacturing processes.

We currently maintain two manufacturing facilities for the production of CAP-1002.

In 2022, we completed construction of our San Diego Research and Development Facility (GMP pilot manufacturing facility) as we prepare for potential commercial launch, subject to FDA approval.

We are required to obtain and maintain certain other licenses in connection with our manufacturing facilities and activities.

At this time, we have Drug Manufacturing and Tissue Bank Licenses issued from the State of California for both our San Diego and CSMC facilities.

We currently maintain two manufacturing facilities for the production of deramiocel.

Our primary manufacturing facility is located in San Diego, California within our corporate headquarters.

This facility was designed to be compliant with U.S.

and European Medicines Agency (“EMA”) standards.

This facility is currently producing CAP-1002 product for clinical use in Cohort B of our HOPE-3 trial and supporting our OLE trials.

We are preparing for a potential commercial launch, subject to FDA approval, from the San Diego facility.

and European Medicines Agency (“EMA”) as well as Good Manufacturing Practice (“GMP”) standards.

We are preparing for potential commercial launch, subject to FDA approval, from this facility.

It is to be determined whether the FDA will ultimately approve commercial manufacturing at this facility.

Our second manufacturing facility is located within our laboratory, research and manufacturing facilities at CSMC in Los Angeles pursuant to a Facilities Lease.

In that portion of the leased premises where we manufacture CAP-1002 and may manufacture our exosome products for potential clinical use, we believe that we follow, current good manufacturing practices to the extent that they are applicable to the stage of our clinical programs although our facility at CSMC is not current Good Manufacturing Practices (“cGMP”) qualified for commercial at this time.

Capricor manufactured CAP-1002

in this facility for our current and previous studies including Cohort A of the HOPE-3 trial.

Our Facilities Lease at CSMC has an expiration date of July 31, 2026.

In the third quarter of 2023, we met with the FDA, where we affirmed alignment with respect to our Phase 3, HOPE-3 program where the FDA agreed to allow us to submit a BLA supported by results using product manufactured at our Los Angeles manufacturing site.

At this time, we are planning on utilizing such data for the submission of a BLA, but it is to be determined whether the FDA will ultimately approve commercial manufacturing at this facility.

The sale of commercial product produced in our Los Angeles facility may require the consent of CSMC.

We are required to obtain and maintain certain other licenses in connection with our manufacturing facilities and activities.

At this time, we have a Drug Manufacturing License issued from the State of California for both our San Diego and CSMC facilities.

We are currently applying for a Tissue Bank License from the State of California for both of our facilities.

Additionally, in February 2024, we entered into a License and Services Agreement with Azzur Cleanrooms-on-Demand – San Diego, LLC (the “Azzur License Agreement”) pursuant to which we have been granted an exclusive license to use certain space and the non-exclusive right to use certain equipment and property for our early phase clinical and/or pre-clinical manufacturing purposes.

We are planning to use this facility to manufacture our exosome-based vaccine for potential clinical use to support our collaboration with NIAID.

Manufacturing Process for CAP-1002

The manufacturing process for CAP-1002 begins with material from an entire heart from a donor that was collected from an organ procurement organization (“OPO”).

We recently entered into an amendment to our lease adding an additional approximate 22,000 square feet of space for continued manufacturing expansion.

We plan to build additional cleanrooms in this expanded space suitable for commercial manufacturing, subject to FDA approval.

Our second manufacturing facility is located within our laboratory, research and manufacturing facilities at CSMC in Los Angeles, California pursuant to a Facilities Lease.

In that portion of the leased premises where we manufacture deramiocel, we believe that we follow current good manufacturing practices to the extent that they are applicable to the stage of our clinical programs, although our facility at CSMC is not current Good Manufacturing Practices (“cGMP”) qualified for commercial manufacturing.

We currently manufacture our exosome-based vaccine to support our collaboration with NIAID in a short-term leased facility located in Vista, California.

Manufacturing Process for Deramiocel

The manufacturing process for deramiocel begins with material from an entire heart from a donor that was collected from an organ procurement organization (“OPO”).

This tissue is then taken to the lab where the cells are isolated, expanded, and processed through a series of proprietary unit operations.

After expanding, processing, release testing and quality review, the CAP-1002 product becomes available for administration to patients participating in clinical trials.

CAP-1002 is cryo-preserved, enabling us to produce large lots that can be frozen and then administered to patients as needed.

After expanding, processing, release testing and quality review, the deramiocel product becomes available for administration to patients.

Deramiocel is cryo-preserved, enabling us to produce large lots that can be frozen and then administered to patients as needed.

Manufacturing Process for Engineered-Exosome Technologies

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We have explored the use of various cell sources to generate our exosomes for preclinical and potential clinical use.

Manufacturing Process for CDC-Exosomes (CAP-2003)

The process for manufacturing CAP-2003 starts with the proprietary process of creating a cell bank from donor heart tissue through the expansion of CDCs.

Afterwards, exosomes are isolated from the expanded CDCs.

After these exosomes are prepared, formulated, filled, tested, and validated, the exosomes product may become available for clinical investigation, subject to regulatory approval.

Material Agreements, License Agreements & Collaborations

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Under the terms of the U.S.

Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in the United States of CAP-1002 for the treatment of DMD.

Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in the United States of deramiocel for the treatment of DMD.

Under the terms of the U.S.

Distribution Agreement, Capricor will be responsible for the conduct of the HOPE-3 trial as well as the manufacturing of CAP-1002.

Nippon Shinyaku will be responsible for the distribution of CAP-1002 in the United States.

Pursuant to the U.S Distribution Agreement, Capricor received an upfront payment of $30.0 million in the first quarter of 2022.

The first milestone payment of $10.0 million was paid upon completion of the interim futility analysis of the HOPE-3 trial whereby the outcome was determined to be not futile.

Additionally, there are potential milestones totaling up to $90.0 million leading up to and including the BLA approval.

Further, there are various potential sales-based milestones, if commercialized, tied to the achievement of certain sales thresholds for annual net sales of CAP-1002 of up to $605.0 million.

Further, pursuant to the U.S.

Distribution Agreement, Capricor has the obligation to sell commercial product to Nippon Shinyaku, subject to regulatory approval, and Capricor will have the right to receive a meaningful mid-range double-digit share of product revenue.

Distribution Agreement, Capricor will be responsible for the clinical development and manufacturing of deramiocel.

Nippon Shinyaku and NS Pharma, Inc.

(its wholly-owned U.S.

subsidiary) will be responsible for the distribution of deramiocel in the United States.

Pursuant to the U.S.

Distribution Agreement, Capricor received an upfront payment of $30.0 million in 2022.

The first milestone payment of $10.0 million was paid upon completion of the futility analysis of the HOPE-3 trial whereby the outcome was determined to be not futile.

The second milestone payment of $10.0 million was triggered in December 2024 upon submission of the BLA to the FDA seeking marketing approval of deramiocel in the United States.

Additionally, there is another potential milestone of $80.0 million due to Capricor upon receipt of marketing approval.

The foregoing milestones are considered development milestones under the terms of the U.S.

Distribution Agreement.

Further, there are various potential sales-based milestones, if commercialized, tied to the achievement of certain sales thresholds for annual net sales of deramiocel of up to $605.0 million.

Subject to regulatory approval, Capricor will have the right to receive a share of product revenue which falls between 30 and 50 percent.

Commercialization and Distribution Agreement with Nippon Shinyaku (Territory:

On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku.

Under the terms of the Japan Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in Japan of CAP-1002 for the treatment of DMD.

Under the terms of the Japan Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in Japan of deramiocel for the treatment of DMD.

Under the terms of the Japan Distribution Agreement, Capricor received an upfront payment of $12.0 million in the first quarter of 2023 and in addition, Capricor may potentially receive additional development and sales-based milestone payments of up to approximately $89.0 million, subject to foreign currency exchange rates, and a meaningful double-digit share of product revenue.

Nippon Shinyaku will be responsible for the distribution of CAP-1002 in Japan.

Capricor will be responsible for the conduct of clinical development in Japan, as may be required, as well as the manufacturing of CAP-1002.

Subject to regulatory approval, Capricor will sell commercial product to Nippon Shinyaku in Japan.

Nippon Shinyaku will be responsible for the distribution of deramiocel in Japan.

Capricor will be responsible for the conduct of clinical development and regulatory approval in Japan, as may be required, as well as the manufacturing of deramiocel.

In addition, Capricor or its designee will hold the Marketing Authorization in Japan if the product is approved in that territory.

Binding Term Sheet with Nippon Shinyaku (Territory:

European Region)

On September 16, 2024, Capricor entered into a Binding Term Sheet (the “Term Sheet”) with Nippon Shinyaku for the commercialization and distribution of deramiocel for the treatment of DMD in the European region, as defined in the Term Sheet.

Subject to finalization of a definitive agreement, under the terms of the Term Sheet, Capricor would be responsible for the development and manufacturing of deramiocel for potential approval in the European region.

Nippon Shinyaku would be responsible for the sales and distribution of deramiocel in the European region.

Subject to regulatory approval, Capricor would receive a double-digit share of product revenue and additional development and sales-based milestone payments.

If the definitive agreement is entered into on the same economic terms as the term sheet, Capricor will receive an upfront payment of $20.0 million upon execution of the definitive agreement, with potential additional development and sales-based milestone payments of up to $715.0 million.

At this time, Capricor and Nippon Shinyaku have entered into various amendments to the Term Sheet, pursuant to which the parties agreed to extend the date during which the parties shall negotiate the definitive agreement to April 30, 2025.

Collaboration Agreement with NIH

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NIAID's Division of Microbiology and Infectious Diseases (DMID) will oversee the study.

NIAID's DMID will oversee the study.

Under the terms of the collaboration, Capricor will be responsible for supplying investigational product for the trial.

Cooperative Research and Development Agreement with the U.S.

Army Institute of Surgical Research

In 2018, we entered into a Cooperative Research and Development Agreement with the USAISR, pursuant to which we agreed to cooperate in research and development on the evaluation of our CAP-2003 for the treatment of trauma related injuries and conditions.

In 2021, in collaboration with the USAISR, we published a manuscript demonstrating CAP-2003 as a potential antishock therapeutic, if delivered early.

Intellectual Property Rights for Capricor’s Technology - CAP-1002 and Exosomes

Intellectual Property Rights for Capricor’s Technology - Deramiocel and Exosomes

Capricor has entered into exclusive license agreements for intellectual property rights related to certain cardiac-derived cells with Università Degli Studi Di Roma La Sapienza (the “University of Rome”), JHU and CSMC.

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Either party may terminate the agreement upon the other party’s material breach, provided that the breaching party will have up to 90 days to cure its material breach.

Capricor may also terminate for any reason upon 90 days’ written notice to the University of Rome.

Capricor may also terminate the Rome License Agreement for any reason upon 90 days’ written notice to the University of Rome.

The Johns Hopkins University License Agreements

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In March 2022, Capricor paid the $250,000 development milestone related to the Phase 2 study pursuant to the terms of the JHU License Agreement.

The next milestone is triggered upon successful completion of a full Phase 3 study for which a payment of $500,000 will be due.

Capricor’s next milestone payments will be triggered, if at all, upon a successful completion of a full Phase 3 study, for which a payment of $500,000 will be due, and upon receipt of a full FDA market approval for which a payment of $1,000,000 will be due.

The JHU License Agreement will, unless sooner terminated, continue in effect in each applicable country until the date of expiration of the last to expire patent within the patent rights, or, if no patents are issued, then for twenty years from the effective date.

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In addition, Capricor may terminate for any reason upon 60 days’ written notice.

License Agreement for Exosome-based Vaccines and Therapeutics

Capricor and JHU entered into an Exclusive License Agreement (the “JHU Exosome License Agreement”), effective April 28, 2021 for its co-owned interest in certain intellectual property rights related to exosome-mRNA vaccines and therapeutics.

The JHU Exosome License Agreement provided for the grant of an exclusive, worldwide, royalty-bearing license of JHU’s co-owned rights by JHU to Capricor, with the right to sublicense, in order to conduct research using the patent rights and know-how and to develop and commercialize products in the field using the patent rights and know-how.

The JHU Exosome License Agreement was terminated by Capricor on December 15, 2023.

Cedars-Sinai Medical Center License Agreements

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Capricor reimbursed CSMC for certain attorneys’ fees and filing fees incurred in connection with the additional patent applications.

We recently received a letter from CSMC alleging that pursuant to the Amended CSMC License Agreement between CSMC and Capricor, Capricor has certain overdue payment obligations to CSMC arising out of a milestone payment received by Capricor pursuant to the U.S.

Distribution Agreement entered into between Capricor and Nippon Shinyaku.

The notice letter requests that Capricor cure the alleged breaches of the Amended CSMC License Agreement, and reserves CMSC’s purported right to terminate the Amended CSMC License Agreement if such alleged breaches are not cured.

We dispute the allegations in the letter from CSMC and intend to vigorously defend our position and pursue all available remedies, but there is no guarantee that any disputes that we have with CSMC will be resolved or if resolved, will not result in our incurring certain payment and other obligations.

License Agreement for Exosomes

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Cell Line License Agreement with Life Technologies

On March 7, 2022, Capricor entered into a non-exclusive cell line license agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific, Inc., for the supply of certain cells which we will use in connection with the development of our exosomes platform.

On March 7, 2022, Capricor entered into a non-exclusive cell line license agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific, Inc., for the supply of certain cells which we are utilizing in connection with the development of our exosomes platform.

An initial license fee payment was made in 2022 and additional milestone fees may become due based on the progress of our development program.

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Even patent protection, however, may not always afford us with complete protection against competitors who seek to circumvent our patents.

If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of our intellectual property rights would diminish.

To this end, we require all of our employees, consultants, advisors and

other contractors to enter into confidentiality agreements that prohibit the disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions relevant to our technologies and important to our business.

The development of complex biotechnology products such as ours typically includes the early discovery of a technology platform – often in an academic institution – followed by increasingly focused development around a product opportunity, including identification and definition of a specific product candidate and development of manufacturing processes, formulations, patient selection and treatment regimes, and delivery and dosage regimens.

If we fail to adequately protect or enforce our intellectual property rights or secure rights to own or otherwise use the patents of others, the value of our intellectual property rights would diminish.

To this end, we require all of our employees, consultants, advisors and other contractors to enter into confidentiality agreements that prohibit the disclosure and use of confidential information and, where applicable, require disclosure and assignment to us of the ideas, developments, discoveries and inventions relevant to our technologies and important to our business.

As a result, biotechnology products are often protected by several families of patent filings that are made at different times in the development cycle and cover different aspects of the product.

Earlier filed broad patent applications directed to the discovery of the platform technology thus usually expire ahead of patents covering later developments such as manufacturing processes, specific formulations, additional indications and dosing regimens.

Earlier filed broad patent applications directed to the discovery of the platform technology thus usually expire ahead of patents covering later developments such as

manufacturing processes, specific formulations, additional indications and dosing regimens.

Patent expirations on products may therefore span several years and vary from country to country based on the scope of available coverage.

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The earlier expiring patents are generally directed to precursor cell populations or early non-DMD indications and administration methods.

We have patents directed to CAP-1002 for the treatment of DMD that expire in 2038 unless otherwise extended under Hatch-Waxman.

We continue to file patents on processes, indications, dosage forms and formulations directed to extend the patent portfolio related to CAP-1002 and our exosome technologies as our technology progresses.

We have patents directed to deramiocel for the treatment of DMD that expire in 2038 unless otherwise extended under the Hatch-Waxman Act.

We continue to file patents on processes, indications, dosage forms and formulations directed to extend the patent portfolio related to deramiocel and our exosome technologies as our technology progresses.

Our product candidates and our technologies are primarily protected by composition of matter and process (methods of use and methods of making) patents and patent applications as well as trade secrets.

As of the date of this filing, we have 46 granted patents and 15 pending patent applications covering processes and compositions of matter related to our CDC (CAP-1002) technology and 37 granted patents and 43 pending patent applications covering processes and compositions of matter related to our exosome technology.

As of the date of this filing, we have 149 granted patents and pending patent applications covering processes and compositions of matter related to the CDC (deramiocel) technology as well as processes and compositions of matter related to exosome technologies.

Regulatory Designations

Regulatory Designations for CAP-1002 for the treatment of DMD

In 2015, the FDA granted orphan drug designation to CAP-1002 for the treatment of DMD.

Regulatory Designations for deramiocel for the treatment of DMD

In 2015, the FDA granted orphan drug designation to deramiocel for the treatment of DMD.

Orphan drug designation is granted by the FDA’s Office of Orphan Drug Products to drugs intended to treat a rare disease or condition affecting fewer than 200,000 people in the United States or a disease or condition that affects more than 200,000 people in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.

This designation confers special incentives to the drug developer, including tax credits on the clinical development costs and prescription drug user fee waivers and may allow for a seven-year period of market exclusivity in the United States upon FDA approval.

In 2017, the FDA granted Rare Pediatric Disease Designation to CAP-1002 for the treatment of DMD.

In 2017, the FDA granted Rare Pediatric Disease Designation to deramiocel for the treatment of DMD.

The FDA defines a “rare pediatric disease” as a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years and that affects fewer than 200,000 individuals in the United States, or a disease or condition that affects more than 200,000 people in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.

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The Priority Review Voucher may be sold or transferred an unlimited number of times.

If Capricor were to receive market approval for CAP-1002 by the FDA, Capricor would be eligible to receive a Priority Review Voucher based on its designation as a rare pediatric disease.

In 2018, we were granted the Regenerative Medicine Advanced Therapy (“RMAT”) designation for CAP-1002 for the treatment of DMD.

If Capricor were to receive market approval for deramiocel by the FDA, Capricor would be eligible to receive a Priority Review Voucher based on its designation as a rare pediatric disease.

In 2018, we were granted the Regenerative Medicine Advanced Therapy (“RMAT”) designation for deramiocel for the treatment of DMD.

The FDA grants the RMAT designation to regenerative medicine therapies intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition and for which preliminary clinical evidence indicates a potential to address unmet medical needs for that condition.

The RMAT designation makes therapies eligible

for the same actions to expedite the development and review of a marketing application that are available to drugs that receive fast track or breakthrough therapy designation – including increased meeting opportunities, early interactions to discuss any potential surrogate or intermediate endpoints and the potential to support accelerated approval.

CAP-1002 is one of the few therapies currently in development to help late-stage patients with DMD.

To receive the RMAT designation, we submitted data from the HOPE-Duchenne Trial.

The RMAT designation makes therapies eligible for the same actions to expedite the development and review of a marketing application that are available to drugs that receive fast track or breakthrough therapy designation – including increased meeting opportunities, early interactions to discuss any potential surrogate or intermediate endpoints and the potential to support accelerated approval.

Deramiocel is one of the few therapies currently in development to help late-stage patients with DMD.

To receive the RMAT designation, we submitted data from the HOPE-Duchenne clinical trial.

Our trademarks are generally filed to protect our corporate brand, our products and our platform technologies.

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We are the owner of several common law, and federal trademark registrations or applications in the U.S.

including, but not limited to, Capricor®, Capricor Therapeutics, STEALTHX™ and the Capricor logo.

including, but not limited to, Capricor®, Capricor Therapeutics, StealthX™, and the Capricor

Trademark protection varies in accordance with local law, and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered.

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Research and Development

Capricor’s research and development program has been advanced in part through federal and state grants and loan awards totaling approximately $28.0 million to date.

Our ongoing research and development activities primarily concern CDCs and exosomes and are focused on the characterization of their composition and actions, the evaluation of their therapeutic potential in selected disease settings, the development of next generation product candidates, and the identification of new technologies and indications.

Our ongoing research and development activities primarily concern deramiocel and exosomes and are focused on the characterization of their composition and actions, the evaluation of their therapeutic potential in selected disease settings, the development of next generation product candidates, and the identification of new technologies and indications.

We are engaged in fields that are characterized by extensive worldwide research and competition by pharmaceutical companies, medical device companies, specialized biotechnology companies, hospitals, physicians, academic institutions, government agencies and research organizations both in the United States and abroad.

There are many pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations that compete with us in developing various approaches to the treatment of DMD, which includes competitors both in the United States and internationally.

With CAP-1002, we expect to face competition from existing products and products in development.

With deramiocel, we expect to face competition from existing products and products in development.

In addition, at this time, there are four FDA conditionally approved exon skipping drugs:

EXONDYS 51 (eteplirsen), AMONDYS 45 (casimersen) and VYONDYS 53 (golodirsen), which are phosphorodiamidate Morpholino oligomers (PMOs) approved for the treatment of DMD patients amenable to Exon 51, Exon 45 and Exon 53 skipping, respectively, and are marketed by Sarepta Therapeutics, Inc., and VILTEPSO (vitolarsen), a PMO approved for the treatment of DMD patients amenable to Exon 53 skipping, which is marketed by Nippon Shinyaku (U.S.

NS Pharma, Inc.).

In June 2023, the FDA approved Sarepta’s BLA application seeking accelerated approval of Elevidys (delandistrogene moxeparvovec), its microdystrophin gene therapy, for the treatment of ambulant individuals with Duchenne.

subsidiary, NS Pharma, Inc.

Currently, Sarepta’s microdystrophin gene therapy, Elevidys (delandistrogene moxeparvovec) is approved for the treatment of ambulant individuals with Duchenne who are at least 4 years of age and conditionally approved for non-ambulant individuals with Duchenne.

There are multiple other companies focused on developing genetic based therapies that target dystrophin mechanisms and non-dystrophin mechanisms for the treatment of DMD.

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There can be no assurance that existing or future therapies developed by others will not render our potential products obsolete or noncompetitive.

In addition, companies pursuing

different but related fields represent substantial competition.

In addition, companies pursuing different but related fields represent substantial competition.

These organizations also compete with us to attract patients for clinical trials, qualified personnel and parties for acquisitions, joint ventures, or other collaborations.

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● submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may begin;

● approval by an IRB at each clinical site before each trial may be initiated;

● approval by an Institutional Review Board (“IRB”) at each clinical site before each trial may be initiated;

● adequate and well-controlled human clinical trials to establish the safety and efficacy of the drug for each indication;

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The lengthy process of seeking these approvals, and compliance with applicable laws and regulations, require expending substantial resources.

concerning the drug manufacturing process and its controls, and a proposed clinical trial protocol and other information must be submitted to the FDA as part of an IND that must be reviewed and become effective before clinical testing can begin.

The study protocol and informed consent information for patients in clinical trials must also be submitted to an independent Institutional Review Board (“IRB”) for approval covering each institution at which the clinical trial will be conducted.

The results of preclinical testing, which include laboratory evaluation of product chemistry, formulation, toxicity and carcinogenicity animal studies to assess the potential safety and efficacy of the product and its formulations, details concerning the drug manufacturing process and its controls, and a proposed clinical trial protocol and other information must be submitted to the FDA as part of an IND that must be reviewed and become effective before clinical testing can begin.

The study protocol and informed consent information for patients in clinical trials must also be submitted to an independent IRB for approval covering each institution at which the clinical trial will be conducted.

Once a sponsor submits an IND, the sponsor must wait 30 calendar days before initiating any clinical trials.

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A CRL generally contains a statement of specific conditions that must be met in order to secure final approval of an NDA or BLA and may require substantial additional testing or information.

If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter, which authorizes commercial marketing of the product with specific prescribing information for specific indications, and sometimes with specified post-marketing commitments and/or distribution and use restrictions imposed

under a Risk Evaluation and Mitigation Strategy program.

Any approval required from the FDA might not be obtained on a timely basis, if at all.

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Under the Orphan Drug Act, the FDA may grant orphan drug designation to therapeutic candidates intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the U.S.

or more than 200,000 individuals in the U.S.

more than 200,000 individuals in the U.S.

and for which there is no reasonable expectation that the cost of developing and making available in the U.S.

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The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as a Fast Track product at any time during the clinical development of the product.

Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the

complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees.

Unique to a Fast Track product, the FDA may consider for review sections of the marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays any required user fees.

Upon submission of the first section of the application FDA may revoke the Fast Track designation if it believes that the designation is no longer supported by data emerging in the clinical trial process.

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A product is eligible for priority review if it is intended to treat a serious condition and, if approved, it would provide a significant improvement in safety or effectiveness.

FDA intends to take action on a priority review marketing application within 6 months of filing, compared to 10 months of filing for regular review submissions.

The FDA intends to take action on a priority review marketing application within 6 months of filing, compared to 10 months of filing for regular review submissions.

Additionally, a product may be eligible for accelerated approval if it is intended to treat a serious or life-threatening disease or condition and would provide meaningful therapeutic benefit over existing treatments.

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If such post-approval requirements are not satisfied, the FDA may withdraw its approval of the drug.

In addition, holders of an approved NDA or BLA are required to report certain adverse reactions to the FDA, comply with certain requirements concerning advertising and promotional labeling for their products, and continue to have quality control and manufacturing procedures conform to cGMP after approval.

cGMP after approval.

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.

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We anticipate additional state and federal healthcare reform measures will be adopted in the future.

and services, and potentially could reduce demand for our products once approved, create additional pricing pressures, or ultimately limit our net revenue and results.

These may include price controls and cost-containment measures, or more restrictive policies in jurisdictions with existing controls and measures, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, and potentially could reduce demand for our products once approved, create additional pricing pressures, or ultimately limit our net revenue and results.

In addition, in some non-U.S.

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After the NHI drug price is listed, the NHI price, which is the official price of drugs, will be reviewed and updated on a regular basis.

In principle, NHI price revisions are conducted once every two years in conjunction with the April revision of medical fees.

In principle, NHI price revisions are conducted once every two years in conjunction with the

April revision of medical fees.

When NHI drug prices are revised, most drugs will be priced lower than before the revision.

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federal criminal False Claims Act, which is similar to the federal civil False Claims Act and imposes criminal liability on those that make or present a false, fictitious or fraudulent claim to the federal government.

The Federal Criminal Statute on False Statements Relating to Health Care Matters makes it a crime to knowingly and willfully falsify, conceal, or cover up a material fact, make any materially false, fictitious, or fraudulent statements or representations, or make or use any materially false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services.

representations, or make or use any materially false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items, or services.

Federal Civil Monetary Penalties Law (the “CMPL") authorizes the imposition of substantial monetary penalties against an entity, such as a pharmaceutical manufacturer, that engaged in activities including, among others (1) knowingly presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent in any way;

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In addition, many state laws govern the privacy and security of health information in specified circumstances, many of which differ from each other in significant ways, are often not pre-empted by HIPAA, and may have a more prohibitive effect than HIPAA, thus complicating compliance efforts.

For instance, the California Consumer Privacy Act (“CCPA”) became effective on January 1, 2020, giving California residents expanded privacy rights, and requiring businesses to provide detailed information about their data practices.

For instance, the California Consumer Privacy Act (“CCPA”) became effective on January 1, 2020, giving California residents expanded privacy rights, and requiring

businesses to provide detailed information about their data practices.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

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Additionally, to the extent that we have business operations in foreign countries or sell any of our products in foreign countries and jurisdictions, including Japan or the European Union, we may be subject to additional regulations.

and enforcement by the federal and state governments of the jurisdictions in which we conduct our business.

Although we do not currently have any products on the market, once our product candidates or clinical trials are covered by federal health care programs, we will be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal and state governments of the jurisdictions in which we conduct our business.

Because we intend to commercialize products that could be reimbursed under a federal healthcare program and other governmental healthcare programs, we intend to develop a comprehensive compliance program that establishes internal controls to facilitate adherence to the rules and program requirements to which we will or may become subject.

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As part of the requirements to participate in certain government programs, many pharmaceutical manufacturers must calculate and report certain price reporting metrics to the government, such as average manufacturer price (“AMP”) and best price.

Penalties may apply in some cases when such metrics are not submitted accurately and timely.

Any failure to comply with price reporting and rebate payment obligations under federal healthcare programs could negatively impact our financial results.

Civil monetary penalties can be applied if we are found to have knowingly submitted any false pricing information to the government, if we are found to have made a misrepresentation in the reporting of any pricing metrics, or if we fail to submit the required pricing data on a timely basis.

Such conduct also could provide a basis for other potential liability under other federal laws such as the False Claims Act.

Healthcare Reform

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This law was designed to expand access to health insurance coverage for uninsured and underinsured individuals while at the same time containing overall healthcare costs.

With regard to pharmaceutical products, among other things, the ACA contains provisions that may potentially affect the profitability of our products, including, for example, subjecting biologics potential competition by lower-cost biosimilars, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain products under Medicare Part D, expansion of entities eligible for discounts under the Public Health Service’s pharmaceutical pricing program, and a significant annual fee on companies that manufacture or import certain branded prescription drug products.

Substantial new provisions affecting compliance have also been enacted, which may affect our business practices with healthcare providers and entities.

With regard to pharmaceutical products, among other things, the ACA contains provisions that may potentially affect the profitability of our products, including, for example, subjecting biologics potential competition by lower-cost biosimilars, increased rebates for products sold to Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, expansion of entities eligible for discounts under the Public Health Service’s pharmaceutical pricing program, and a significant annual fee on companies that manufacture or import certain branded prescription drug products.

Additionally, there have been executive, judicial, and legislative challenges to certain aspects of the ACA.

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Moreover, on June 17, 2021, the U.S.

Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.

Prior to the Supreme Court’s decision, President Biden had issued an executive order that instructed certain governmental agencies to review and

reconsider their existing policies and rules that limit access to healthcare, including among others, policies that create barriers to obtaining access to health insurance coverage through the ACA marketplaces.

We cannot predict what effect the healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal, amend or replace the ACA would have on our business.

Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.

Other legislative changes have been proposed and adopted since the ACA was enacted.

For example, the Budget Control Act of 2011 included reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislation, will stay in effect into through the first six months of the fiscal year 2032 sequestration order (with the exception of a temporary suspension due to the COVID-19 pandemic from May 1, 2020 through March 31, 2022 and a subsequent reduction to 1% from April 1, 2022 until June 30, 2022).

For example, the Budget Control Act of 2011 included reductions to Medicare payments to providers of up to 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislation, will stay in effect into through the first eight months of the fiscal year 2032 sequestration order (with the exception of a temporary suspension, and subsequent reduction, due to the COVID-19 pandemic).

Additionally, the American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

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A number of federal reports and inquiries have focused on these issues, and various legislative and regulatory provisions have been proposed and enacted at the federal and state level that seek to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the out-of-pocket cost of prescription drugs, and reform government program reimbursement methodologies for drugs.

Additionally, on December 21, 2020, Congress passed a $900 billion U.S.

coronavirus relief and government appropriations legislation, the Consolidated Appropriations Act of 2021, which contains several important new drug price reporting and transparency measures that could result in additional transparency with respect to manufacturers’ prescription drug prices.

For example, on December 21, 2020, Congress passed a $900 billion U.S.

coronavirus relief and

government appropriations legislation, the Consolidated Appropriations Act of 2021, which contains several important new drug price reporting and transparency measures that could result in additional transparency with respect to manufacturers’ prescription drug prices.

Among other things, the Act includes provisions requiring Medicare Part D prescription drug plan (the “PDP”) sponsors and Medicare Advantage organizations (“MAOs”) to implement tools to display Medicare Part D prescription drug benefit information in real time and provisions requiring group and health insurance issuers offering health insurance coverage to report information on certain pharmacy benefit and drug costs to the Secretaries of HHS, Labor, and the Treasury.

Further, the Biden Administration and Congress have each indicated that it will continue to pursue new legislative and administrative measures to control drug costs.

For example, the American Rescue Plan Act of 2021 included among its provisions a sunset of the ACA’s cap on pharmaceutical manufacturers’ rebate liability under the Medicaid Drug Rebate Program.

Under the ACA, manufacturers’ rebate liability was capped at 100% of the average manufacturer price for a covered outpatient drug.

Additionally, the American Rescue Plan Act of 2021 included among its provisions a sunset of the ACA’s cap on pharmaceutical manufacturers’ rebate liability under the Medicaid Drug Rebate Program.

Under the ACA, manufacturers’ rebate liability was previously capped at 100% of the average manufacturer price for a covered outpatient drug.

However, effective January 1, 2024, manufacturers’ Medicaid Drug Rebate Program rebate liability is no longer be capped, potentially resulting in a manufacturer paying more in Medicaid Drug Rebate Program rebates than it receives on the sale of certain covered outpatient drugs.

Further, in August 2022, President Biden signed into law IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and the creation of new Medicare inflation rebates.

Further, in August 2022, former President Biden signed into law IRA, which implements substantial changes to the Medicare program, including drug pricing reforms and the creation of new Medicare inflation rebates.

Namely, the IRA imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the prices of those products increase faster than inflation;

implements changes to the Medicare Part D benefit that, beginning in 2025, will cap beneficiary annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers;

implements changes to the Medicare Part D benefit that, beginning in 2025, cap beneficiary annual out-of-pocket spending at $2,000, while imposing new discount obligations for pharmaceutical manufacturers;

and, beginning in 2026, establishes a “maximum fair price” for a fixed number of high expenditure pharmaceutical and biological products covered under Medicare Parts B and D following a price negotiation process with the CMS.

Since its enactment, CMS has taken steps to implement various drug pricing provisions of the IRA.

This includes, without limitation, issuing guidance on June 30, 2023 detailing the requirements and parameters of the first round of price negotiations, to take place during 2023 and 2024, for products subject to the “maximum fair price” provision that would become effective in 2026;

on August 29, 2023, releasing the initial list of 10 drugs subject to price negotiations;

and on December 14, 2023 releasing a list of 48 Medicare Part B products that had adjusted coinsurance rates based on the inflationary rebate provisions of the IRA for the time period of January 1, 2024 to March 31, 2024.

This includes, without limitation, releasing the negotiated maximum prices, which will be effective in 2026, for the first ten drugs that were subject to the IRA’s negotiation process, releasing quarterly lists of Medicare Part B products that are subject to adjusted coinsurance rates based on the inflationary rebate provisions of the IRA, and announcing a list of fifteen additional drugs that will be subject to price negotiations during 2025.

Several pharmaceutical manufacturers and other industry stakeholders have challenged the law, including through lawsuits brought against the Department of Health and Human Services, the Secretary of the Department of Health and Human Services, CMS, and the CMS Administrator challenging the constitutionality and administrative implementation of the IRA’s drug price negotiation provisions.

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However, we expect these initiatives to increase pressure on drug pricing.

Furthermore, the Biden administration continues to direct the Department of Health and Human Services to consider new healthcare payment and delivery models that would lower drug costs and promote access to innovative therapies for beneficiaries enrolled in the Medicare and Medicaid programs.

For example, on October 14, 2022 President Biden issued an Executive Order on Lowering Prescription Drug Costs for Americans, which instructed the Secretary of the Department of Health and Human Services to consider whether to select for testing by the CMS Innovation Center new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.

On February 14, 2023, the Department of Health and Human Services issued a report in response to the October 14, 2022 Executive Order, which, among other things, selects three potential drug affordability and accessibility models to be tested by the CMS Innovation Center.

There have also been administrative developments in the U.S.

related to drug pricing.

For example, on February 14, 2023, the Department of Health and Human Services issued a report which, among other things, selects three potential drug affordability and accessibility models to be tested by the CMS Innovation Center.

Specifically, the report addresses:

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and (3) a model that would adjust Medicare Part B payment amounts for Accelerated Approval Program drugs to advance the developments of novel treatments.

We cannot predict how, or to what extent, the Biden administration’s drug pricing policies will affect our products.

We cannot predict what other healthcare reforms will ultimately be implemented at the federal or state level or the effect of any future legislation or regulation.

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Given the lack of clarity in the laws and their implementation, our future reporting actions could be subject to the penalty provisions of the pertinent federal and state laws and regulations.

From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory provisions governing the testing, approval, manufacturing and marketing of products regulated by the FDA.

In addition to new legislation, FDA regulations and policies are often revised or interpreted by the agency in ways that may significantly affect our business and our products.

It is impossible to predict whether further legislative changes will be enacted or whether FDA regulations, guidance, policies or interpretations will be changed or what the effect of such changes, if any, may be.

Finally, the regulatory environment governing the biopharmaceutical industry may be subject to significant and abrupt change, including due to judicial challenges, election cycles, and resulting regulatory updates and changes in policy priorities.

For example, on June 28, 2024, the U.S.

Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (“APA”) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by CMS and other agencies with significant oversight of the healthcare industry.

The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases.

As a result, significant regulatory policies may be subject to increased litigation and judicial scrutiny.

In addition, federal agency priorities, leadership, policies, rulemaking, communications, spending, and staffing may be significantly impacted by election cycles, including, for example, the current presidential administration’s commitment to significantly reduce government spending through cuts to federal healthcare programs and reductions in the workforces of key government agencies, such as the U.S.

Department of Health and Human Services, FDA, and CMS.

Efforts by the current administration to limit federal agency budgets or personnel may lead to slower response times and longer review periods, potentially affecting our ability to progress development of our product candidates or obtain regulatory approval for our product candidates.

Any resulting changes in regulation may result in unexpected delays, increased costs, or other negative impacts on our business that are difficult to predict.

Corporate Information

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We have included our website address in this Annual Report on Form 10-K solely as an inactive textual reference.

As of December 31, 2023, we had 102 employees, of whom 101 are full-time employees with 34 holding advanced degrees.

As of December 31, 2024, we had 160 employees, all of whom are full-time employees with 44 holding advanced degrees.

None of our employees are covered by a collective bargaining agreement.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business