CAPRICOR THERAPEUTICS, INC. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ CAPRICOR THERAPEUTICS, INC. INDEX TO FINANCIAL STATEMENTS ​ Page Report of Independent Registered Public Accounting Firm (PCAOB ID 468 ) 89 Consolidated Balance Sheets 91 Consolidated Statements of Operations and Comprehensive Loss 92 Consolidated Statements of Stockholders’ Equity 93 Consolidated Statements of Cash Flows 95 Notes to Consolidated Financial Statements 96 ​ ​ ​ 88 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ​ To the Board of Directors and Stockholders of Capricor Therapeutics, Inc. and Subsidiary ​ Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Capricor Therapeutics, Inc. and Subsidiary (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. ​ Revenue Recognition – Revenue Recognized Over Time ​ Description of the Matter ​ As discussed in Note 1 and Note 7 to the Consolidated Financial Statements, the Company earns its revenue through an exclusive commercialization and distribution agreement. For performance obligations related to services that are required to be recognized over time, the Company generally measures its progress to completion using an input measure of total costs for patient visits incurred divided by total costs expected to be incurred for all patient visits. ​ 89 Table of Contents Auditing revenue recognition is complex and highly judgmental due to the variability and uncertainty associated with the Company’s assessment of measure of progress. Changes in these estimates would have a significant effect on the amount of revenue recognized. ​ How We Addressed the Matter in Our Audit ​ To test the measures of progress used for performance obligations related to services that are required to be recognized over time, our audit procedures included, among others, evaluating the appropriateness of the Company’s accounting policy for each type of arrangement, testing the identified measure of performance by reading contracts with customers, including all amendments, and reviewing the contract analyses prepared by management. We evaluated whether the selected measures of progress towards satisfaction of performance obligations were applied consistently. We also tested the completeness and accuracy of the underlying data used for the measure of progress by testing and or analyzing the underlying data and conducting interviews of project personnel. ​ ​ /s/ Rose, Snyder & Jacobs LLP Rose, Snyder & Jacobs LLP ​ We have served as the Company’s auditor since 2011. ​ Encino, California March 26, 2025 ​ 90 Table of Contents CAPRICOR THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2024 AND 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 December 31, 2023 ​ ​ ​ ​ ​ ​ ​ CURRENT ASSETS ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 11,286,996 ​ $ 14,694,857 Marketable securities ​ 140,228,881 ​ 24,792,846 Receivables ​ 10,368,489 ​ 10,371,993 Prepaid expenses and other current assets ​ 1,500,901 ​ 995,776 ​ ​ ​ ​ ​ ​ ​ TOTAL CURRENT ASSETS ​ 163,385,267 ​ 50,855,472 ​ ​ ​ ​ ​ ​ ​ PROPERTY AND EQUIPMENT, net ​ 5,561,597 ​ 5,560,641 ​ ​ ​ ​ ​ ​ ​ OTHER ASSETS ​ ​ Lease right-of-use assets, net ​ ​ 1,312,522 ​ ​ 2,050,042 Other assets ​ 221,700 ​ 268,172 ​ ​ ​ ​ ​ ​ ​ TOTAL ASSETS ​ $ 170,481,086 ​ $ 58,734,327 ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES ​ ​ Accounts payable and accrued expenses ​ $ 8,191,377 ​ $ 6,250,241 Lease liabilities, current ​ ​ 834,799 ​ ​ 749,112 Deferred revenue, current ​ ​ 12,000,000 ​ ​ 24,270,465 ​ ​ ​ ​ ​ ​ ​ TOTAL CURRENT LIABILITIES ​ 21,026,176 ​ 31,269,818 ​ ​ ​ ​ ​ ​ ​ LONG-TERM LIABILITIES ​ ​ CIRM liability ​ ​ 3,376,259 ​ ​ 3,376,259 Lease liabilities, net of current ​ ​ 616,315 ​ ​ 1,486,783 ​ ​ ​ ​ ​ ​ ​ TOTAL LONG-TERM LIABILITIES ​ 3,992,574 ​ 4,863,042 ​ ​ ​ ​ ​ ​ ​ TOTAL LIABILITIES ​ 25,018,750 ​ 36,132,860 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES (NOTE 6) ​ ​ ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS’ EQUITY ​ ​ Preferred stock, $ 0.001 par value, 5,000,000 shares authorized, none issued and outstanding ​ — ​ — Common stock, $ 0.001 par value, 100,000,000 and 50,000,000 shares authorized, 45,582,288 and 31,148,320 shares issued and outstanding , respectively ​ 45,582 ​ 31,148 Additional paid-in capital ​ 344,224,338 ​ 181,701,859 Accumulated other comprehensive income ​ 1,026,955 ​ 235,813 Accumulated deficit ​ ( 199,834,539 ) ​ ( 159,367,353 ) ​ ​ ​ ​ ​ ​ ​ TOTAL STOCKHOLDERS’ EQUITY ​ 145,462,336 ​ 22,601,467 ​ ​ ​ ​ ​ ​ ​ TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY ​ $ 170,481,086 ​ $ 58,734,327 ​ See accompanying notes to the audited consolidated financial statements. ​ 91 Table of Contents CAPRICOR THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ REVENUE ​ ​ ​ ​ ​ ​ Revenue ​ $ 22,270,465 ​ $ 25,178,066 ​ ​ ​ ​ ​ ​ ​ TOTAL REVENUE ​ 22,270,465 ​ 25,178,066 ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ ​ Research and development ​ 49,968,585 ​ 36,448,039 General and administrative ​ 14,866,722 ​ 12,807,886 ​ ​ ​ ​ ​ ​ ​ TOTAL OPERATING EXPENSES ​ 64,835,307 ​ 49,255,925 ​ ​ ​ ​ ​ ​ ​ LOSS FROM OPERATIONS ​ ( 42,564,842 ) ​ ( 24,077,859 ) ​ ​ ​ ​ ​ ​ ​ OTHER INCOME (EXPENSE) ​ ​ Other income ​ 7,471 ​ 67,657 Investment income ​ ​ 2,202,990 ​ ​ 1,728,701 Loss on disposal of fixed assets ​ ​ ( 112,805 ) ​ ​ ( 6,041 ) ​ ​ ​ ​ ​ ​ ​ TOTAL OTHER INCOME (EXPENSE) ​ 2,097,656 ​ 1,790,317 ​ ​ ​ ​ ​ ​ ​ NET LOSS ​ ( 40,467,186 ) ​ ( 22,287,542 ) ​ ​ ​ ​ ​ ​ ​ OTHER COMPREHENSIVE INCOME (LOSS) ​ ​ Net unrealized gain on marketable securities ​ 791,142 ​ 130,569 ​ ​ ​ ​ ​ ​ ​ COMPREHENSIVE LOSS ​ $ ( 39,676,044 ) ​ $ ( 22,156,973 ) ​ ​ ​ ​ ​ ​ ​ Net loss per share, basic and diluted ​ $ ( 1.15 ) ​ $ ( 0.83 ) Weighted average number of shares, basic and diluted ​ ​ 35,218,628 ​ ​ 26,778,360 ​ See accompanying notes to the audited consolidated financial statements. ​ ​ 92 Table of Contents CAPRICOR THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM DECEMBER 31, 2022 THROUGH DECEMBER 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER ​ ​ ​ ​ TOTAL ​ ​ COMMON STOCK ​ ADDITIONAL PAID- ​ COMPREHENSIVE ​ ACCUMULATED ​ STOCKHOLDERS' ​ SHARES AMOUNT IN CAPITAL INCOME DEFICIT EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2022 25,241,402 ​ $ 25,241 ​ $ 148,735,420 ​ $ 105,244 ​ $ ( 137,079,811 ) ​ $ 11,786,094 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of common stock, net of fees 5,813,442 ​ 5,813 ​ 25,509,536 ​ — ​ — ​ 25,515,349 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation — ​ — ​ 7,392,396 ​ — ​ — ​ 7,392,396 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock options exercised 93,476 ​ 94 ​ 64,507 ​ — ​ — ​ 64,601 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gain on marketable securities — ​ — ​ — ​ 130,569 ​ — ​ 130,569 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ — ​ ( 22,287,542 ) ​ ( 22,287,542 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2023 31,148,320 ​ $ 31,148 ​ $ 181,701,859 ​ $ 235,813 ​ $ ( 159,367,353 ) ​ $ 22,601,467 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of common stock, net of fees 14,124,536 ​ 14,125 ​ 152,307,451 ​ — ​ — ​ 152,321,576 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercise of common warrants ​ 105,782 ​ ​ 106 ​ ​ 144,288 ​ ​ — ​ — ​ 144,394 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock-based compensation — ​ — ​ 9,765,164 ​ — ​ — ​ 9,765,164 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 93 Table of Contents Stock options exercised ​ 203,650 ​ ​ 203 ​ ​ 305,576 ​ ​ — ​ ​ — ​ ​ 305,779 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gain on marketable securities ​ — ​ ​ — ​ ​ — ​ ​ 791,142 ​ ​ — ​ ​ 791,142 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss — ​ — ​ — ​ — ​ ( 40,467,186 ) ​ ( 40,467,186 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at December 31, 2024 45,582,288 ​ $ 45,582 ​ $ 344,224,338 ​ $ 1,026,955 ​ $ ( 199,834,539 ) ​ $ 145,462,336 ​ See accompanying notes to the audited consolidated financial statements. ​ 94 Table of Contents CAPRICOR THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ ​ ​ 2024 2023 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ ​ ​ $ ( 40,467,186 ) ​ $ ( 22,287,542 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Loss on disposal of fixed assets ​ ​ ​ ​ 112,805 ​ ​ 6,041 Depreciation and amortization ​ ​ ​ 1,425,214 ​ 1,068,882 Stock-based compensation ​ ​ ​ 9,765,164 ​ 7,392,396 Changes in lease liabilities ​ ​ ​ ​ ( 47,261 ) ​ ​ ( 24,282 ) Changes in operating assets and liabilities: ​ ​ ​ ​ Receivables ​ ​ ​ 3,504 ​ ( 9,824,413 ) Prepaid expenses and other assets ​ ​ ​ ( 458,653 ) ​ ( 75,884 ) Accounts payable and accrued expenses ​ ​ ​ ​ 1,941,136 ​ ​ 1,326,323 Deferred revenue ​ ​ ​ ( 12,270,465 ) ​ ( 3,178,066 ) Net cash used in operating activities ​ ​ ​ ( 39,995,742 ) ​ ( 25,596,545 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ Purchase of marketable securities ​ ​ ​ ( 208,441,162 ) ​ ( 97,441,506 ) Proceeds from sales and maturities of marketable securities ​ ​ ​ 93,796,269 ​ 104,597,249 Purchases of property and equipment ​ ​ ​ ​ ( 1,166,871 ) ​ ​ ( 1,311,660 ) Payments for leasehold improvements ​ ​ ​ ( 372,104 ) ​ ( 735,873 ) Net cash provided by (used in) investing activities ​ ​ ​ ( 116,183,868 ) ​ 5,108,210 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ Net proceeds from sale of common stock ​ ​ ​ 152,321,576 ​ 25,515,349 Proceeds from exercise of stock awards and warrants ​ ​ ​ 450,173 ​ 64,601 Net cash provided by financing activities ​ ​ ​ 152,771,749 ​ 25,579,950 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ ​ ​ ( 3,407,861 ) ​ 5,091,615 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents balance at beginning of period ​ ​ ​ 14,694,857 ​ 9,603,242 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents balance at end of period ​ ​ ​ $ 11,286,996 ​ $ 14,694,857 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ Interest paid in cash ​ ​ ​ $ — ​ $ — Income taxes paid in cash ​ ​ ​ $ — ​ $ — ​ See accompanying notes to the audited consolidated financial statements. ​ ​ 95 Table of Contents 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Capricor Therapeutics, Inc., a Delaware corporation (together with its wholly-owned subsidiary, referred to herein as “Capricor Therapeutics,” the “Company,” “we,” “us” or “our”), 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. Capricor, Inc. (“Capricor”), a wholly-owned subsidiary of Capricor Therapeutics, was founded in 2005 as a Delaware corporation. Capricor became public after the completion of a merger between Capricor and a subsidiary of Nile Therapeutics, Inc., a Delaware corporation (“Nile”), in 2013, where Capricor became a wholly-owned subsidiary of Nile and Nile formally changed its name to Capricor Therapeutics, Inc. Capricor Therapeutics was listed on the Nasdaq Capital Market shortly thereafter. Capricor Therapeutics, together with its subsidiary, Capricor, has multiple therapeutic drug candidates in various stages of development. Basis of Consolidation Our consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary. All intercompany transactions have been eliminated in consolidation. Reclassification Certain reclassification of prior period amounts has been made to conform to the current year presentation. Liquidity and Capital Resources As of December 31, 2024, the Company’s cash, cash equivalents and marketable securities totaled approximately $ 151.5 million with an accumulated deficit of approximately $ 199.8 million. The Company has historically financed its research and development activities as well as operational expenses primarily from equity financings, government grants, and payments from collaboration partners. The Company’s principal uses of cash are for research and development expenses, expenses in development of manufacturing capabilities, general and administrative expenses, capital expenditures and other working capital requirements. ​ The Company’s future expenditures and capital requirements may be substantial and will depend on many factors, including, but not limited to, the following: ● the timing and costs associated with our research and development activities, commercial launch activities, clinical trials and preclinical studies; ● the timing and costs associated with the manufacturing of our product candidates, including the expansion of our manufacturing capacity to support the potential commercialization of deramiocel for DMD in the United States and other select territories; ● the timing and costs associated with potential commercialization of our product candidates; ● the number and scope of our research programs, including the expansion of our exosomes program; ● the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and ● the costs associated with pursuing marketing approval and potential commercialization of deramiocel in countries outside the United States. The Company’s options for raising additional capital include potentially seeking additional financing primarily from, but not limited to, the sale and issuance of equity or debt securities, the licensing or sale of its technology and other assets, potential distribution and other partnering opportunities, and from government grants. The Company has incurred significant operating losses and negative cash flows from operations. The Company’s plan to address its financial position may include potentially seeking additional financing primarily from, but not limited to, the sale and issuance of equity or debt securities, the licensing or sale of its technology and from government grants. ​ The Company will require substantial additional capital to fund its operations. The Company cannot provide assurances that financing will be available when and as needed or that, if available, financing will be available on favorable or acceptable terms. If the Company is unable to obtain additional financing when and if required, it would have a material 96 Table of Contents adverse effect on the Company’s business and results of operations. The Company would likely need to delay, curtail or terminate portions of its clinical trials and research and development programs. To the extent the Company issues additional equity securities, its existing stockholders would experience substantial dilution. ​ Business Uncertainty Related to the Coronavirus ​ In light of past uncertainties due to COVID-19 and its economic and other impacts and to uncertainties around the timing and availability of grant disbursements, the loss of revenue from the REGRESS and ALPHA trials as well as any potential equity and debt financings, the Company submitted for the Employee Retention Credit (“ERC”), a credit against certain payroll taxes allowed to an eligible employer for qualifying wages, which was established by the CARES Act. The Company has submitted $ 738,778 in ERC for applicable 2020 and 2021 periods, receiving $ 191,199 in 2021, and $ 191,463 in 2023. As of December 31, 2024, the Company has recorded a receivable for $ 366,551 for the remainder of funds expected to be received, of which $ 190,582 was received subsequent to year end in January 2025. ​ Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of less than 30 days at the date of purchase to be cash equivalents. Marketable Securities The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. All of the Company’s marketable securities are considered as available-for-sale and carried at estimated fair values. Realized gains and losses on the sale of debt and equity securities are determined using the specific identification method. Unrealized gains and losses on available-for-sale securities are presented as accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. As of December 31, 2024, marketable securities consist primarily of short-term United States treasuries. Property and Equipment Property and equipment are stated at cost. Repairs and maintenance costs are expensed in the period incurred. Depreciation is computed using the straight-line method over the related estimated useful life of the asset, which such estimated useful lives range from five to seven years . Leasehold improvements are depreciated on a straight-line basis over the shorter of the useful life of the asset or the lease term. Depreciation was $ 1,425,214 and $ 1,068,882 for the years ended December 31, 2024 and 2023, respectively. Property and equipment, net consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ 2024 2023 Furniture and fixtures ​ $ 192,083 ​ $ 187,997 Laboratory equipment ​ 6,318,362 ​ 5,449,597 Leasehold improvements ​ 2,501,207 ​ 2,129,102 ​ ​ 9,011,652 ​ 7,766,696 Less accumulated depreciation ​ ( 3,450,055 ) ​ ( 2,206,055 ) Property and equipment, net ​ $ 5,561,597 ​ $ 5,560,641 ​ 97 Table of Contents Long-Lived Assets The Company accounts for the impairment and disposition of long-live assets in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”). Long-lived assets to be held and used are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable, or annually. No impairment related to long-lived assets was recorded for the years ended December 31, 2024 and 2023. ​ Leases ASC Topic 842, Leases (“ASC 842”), requires lessees to recognize most leases on the balance sheet with a corresponding right-to-use asset (“ROU asset”). ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of fixed lease payments over the lease term. ROU assets are evaluated for impairment using the long-lived assets impairment guidance. ​ Leases will be classified as financing or operating, which will drive the expense recognition pattern. The Company elects to exclude short-term leases from ASC 842 analysis if and when the Company has them. ​ The Company leases office and laboratory space, all of which are operating leases (see Note 6 - “Commitments and Contingencies”). Most leases include the option to renew and the exercise of the renewal options is at the Company’s sole discretion. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew. In addition, the Company’s lease agreements generally do not contain any residual value guarantees or restrictive covenants. ​ The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. ​ For real estate leases, the Company has elected the practical expedient under ASC 842 to account for the lease and non-lease components together for existing classes of underlying assets and allocates the contract consideration to the lease component only. This practical expedient is not elected for manufacturing facilities and equipment embedded in product supply arrangements. ​ Revenue Recognition The Company recognizes revenue following a five-step framework as control of promised goods or services is transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by: (i) identifying the contract; (ii) identifying the performance obligations; (iii) determining the transaction price; (iv) allocating the transaction price to the performance obligations in the contract; and (v) recognizing revenue when (or as) the Company satisfies a performance obligation. At contract inception, the Company assesses whether the goods or services promised within each contract are distinct and, therefore, represent a separate performance obligation, or whether they are not distinct and are combined with other goods and services until a distinct bundle is identified. The Company then determines the transaction price, which typically includes upfront payments and any variable consideration that the Company determines is probable to not cause a significant reversal in the amount of cumulative revenue recognized when the uncertainty associated with the variable consideration is resolved. The Company then allocates the transaction price to each performance obligation and recognizes the associated revenue when, or as, each performance obligation is satisfied. ​ The Company’s distribution agreements may entitle it to additional payments upon the achievement of milestones or shares of product revenue on sales. The milestones are generally categorized into two types: development milestones and sales-based milestones. The Company evaluates whether it is probable that the consideration associated with each milestone or shared revenue payments will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold. At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and royalties, and, if necessary, adjusts its estimate of the overall 98 Table of Contents transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the Company’s consolidated statements of operation and comprehensive loss. Typically, milestone payments and shared revenue payments are achieved after the Company’s performance obligations associated with the distribution agreements have been completed and after the customer has assumed responsibility for the commercialization program. Milestones or shared revenue payments achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or shared revenue payments were achieved. If a milestone payment is achieved during the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue. ​ The revenue standard requires the Company to assess whether a significant financing component exists in determining the transaction price. The Company performs this assessment at the onset of its distribution agreements. Typically, a significant financing component does not exist because the customer is paying for services in advance with an upfront payment. Additionally, future shared revenue payments are not substantially within the control of the Company or the customer. ​ Whenever the Company determines that goods or services promised in a contract should be accounted for as a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Percentage of completion of patient visits in clinical trials are used as the measure of performance. The Company feels this method of measurement to be the best depiction of the transfer of services and recognition of revenue. Significant management judgment is required in determining the level of effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on its consolidated balance sheets. ​ Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term (less than one year) and long-term (over one year) deferred revenue based on its best estimate of when such revenue will be recognized. This estimate is based on the Company’s current operating plan and the Company may recognize a different amount of deferred revenue over the next 12-month period if its plan changes in the future. ​ Under the U.S. Commercialization and Distribution Agreement (the “U.S. Distribution Agreement”) with Nippon Shinyaku, the transaction price consists of variable shared revenue payments and fixed components in the form of an upfront payment and milestones. For the first performance obligation identified, which is the conduct of the HOPE-3, Phase 3 clinical study, the timing of the fixed component of the transaction price is upfront, however, the performance obligation is satisfied over a period of time, which is the estimated duration of the HOPE-3 clinical trial, Cohort A arm. Therefore, upon receipt of the upfront payment and achievement of the first milestone, a contract liability was recorded which represents deferred revenue. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition. For the second performance obligation identified, which is the submission of our BLA to the FDA, the payment was due at the point in time when the application was submitted, as such, revenue was recognized at the point in time, and a contract asset was recorded which represents accounts receivable. ​ Grant Income Generally, government research grants that provide funding for research and development activities are recognized as income when the related expenses are incurred, as applicable. Because the terms of the grant award (the “CIRM Award”) from the California Institute for Regenerative Medicine (“CIRM”) allow Capricor to elect to convert the grant into a loan after the end of the project period, the CIRM Award is being classified as a liability rather than income (see Note 5 - “Government Grant Awards”). Grant income is due upon submission of a reimbursement request. The transaction price varies for grant income based on the expenses incurred under the awards. No grant income was recognized during the years ended December 31, 2024 and 2023. Receivables As of December 31, 2024, and 2023, accounts receivable primarily consisted of $ 10 million due from Nippon Shinyaku, related to the second and first milestone payments, respectively, as well as $ 366,551 related to funds due from the Employee Retention Credit. 99 Table of Contents Income Taxes Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is provided when it is more likely than not that some portion or the entire deferred tax asset will not be realized. The Company uses guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position, and must assume that the tax position will be examined by taxing authorities. As of December 31, 2024, the Company had federal net operating loss carryforwards of approximately $ 97.1 million, available to reduce future taxable income, of which approximately $ 40.9 million will begin to expire in 2032 . The post December 31, 2017 net operating losses generated of approximately $ 56.3 million will carryforward indefinitely, but may be subject to an 80% limitation upon utilization. As of December 31, 2024, the Company had state net operating loss carryforwards of approximately $ 176.8 million, available to reduce future taxable income, which will begin to expire in 2028 . Utilization of these net operating losses could be limited under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state laws based on ownership changes and the value of the Company’s stock. Additionally, currently, the Company has approximately $ 6.3 million of federal research and development credits and approximately $ 11.8 million of federal orphan drug credits, available to offset future taxable income. These federal research and development and orphan drug credits begin to expire in 2027 and 2035 , respectively. Additionally, the Company currently has approximately $ 2.1 million of California research and development credits available to offset future taxable income which will carryforward indefinitely. Utilization of these credits could be limited under Section 383 of the Code and similar state laws based on ownership changes and the value of the Company’s stock. Under Section 382 of the Code, the Company’s ability to utilize NOL carryforwards or other tax attributes, such as federal tax credits, in any taxable year may be limited if the Company has experienced an “ownership change.” Generally, a Section 382 ownership change occurs if one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Similar rules may apply under state tax laws. We have experienced an ownership change that we believe under Section 382 of the Code will result in limitation in our ability to utilize net operating losses and credits. In addition, the Company may experience future ownership changes as a result of future offerings or other changes in ownership of its stock. As a result, the amount of the NOLs and tax credit carryforward presented in the financial statement could be limited and may expire unutilized. The Company’s net operating loss carryforwards are subject to Internal Revenue Service (“IRS”) examination until they are fully utilized and such tax years are closed. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties were insignificant for the years ended December 31, 2024 and 2023. The Company files income tax returns with the IRS, the California Franchise Tax Board, and the Florida Department of Revenue. Research and Development Costs relating to the design and development of new products are expensed as research and development as incurred in accordance with FASB ASC 730-10, Research and Development . Research and development costs amounted to approximately $ 50.0 million and $ 36.4 million for the years ended December 31, 2024 and 2023, respectively. Comprehensive Income (Loss) Comprehensive income (loss) generally represents all changes in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders. The Company’s comprehensive loss was approximately $ 39.7 million and $ 22.2 million for the years ended December 31, 2024 and 2023, respectively. The Company’s other comprehensive income (loss) is related to a net unrealized gain (loss) on marketable securities. For 100 Table of Contents the years ended December 31, 2024 and 2023, the Company’s other comprehensive income was $ 791,142 and $ 130,569 , respectively. Clinical Trial Expense As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses. Our clinical trial accrual process is designed to account for expenses resulting from our obligations under contracts with vendors, consultants, contract research organizations (“CROs”), and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations, which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided to us under such contracts. Our objective is to reflect the appropriate clinical trial expenses in our consolidated financial statements by matching the appropriate expenses with the period in which services are provided and efforts are expended. We account for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial. We determine accrual estimates through financial models that take into account discussions with applicable personnel and outside service providers as to the progress or state of completion of trials, or the services completed. During the course of a clinical trial, we adjust our clinical expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on the facts and circumstances known to us at that time. Our clinical trial accrual and prepaid assets are dependent, in part, upon the receipt of timely and accurate reporting from CROs and other third-party vendors. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low for any particular period. Stock-Based Compensation The Company accounts for stock-based employee compensation arrangements in accordance with guidance issued by the FASB, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values. The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s statements of operations and comprehensive loss. The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected stock option exercise behavior. For employees and directors, the expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. For other service providers, the expected life was calculated using the contractual term of the award. The Company’s estimate of expected volatility was based on the historical stock price of the Company. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options. Basic and Diluted Loss per Share The Company reports earnings per share in accordance with FASB ASC 260-10, Earnings per Share. Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed similarly to basic earnings (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive. ​ For the years ended December 31, 2024 and 2023, warrants and options to purchase 15,666,804 and 13,268,807 shares of common stock, respectively, have been excluded from the computation of potentially dilutive securities. Potentially dilutive shares of common stock, which primarily consist of stock options issued to employees, consultants, and directors as well as warrants issued, have been excluded from the diluted loss per share calculation because their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per share for the years ended December 31, 2024 and 2023. 101 Table of Contents Fair Value Measurements Assets and liabilities recorded at fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories are as follows: ​ Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs, other than quoted prices included in Level I, that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. ​ The following table summarizes the fair value measurements by level at December 31, 2024 and 2023 for assets and liabilities measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ Level I Level II Level III Total Marketable Securities ​ $ 140,228,881 ​ $ — ​ $ — ​ $ 140,228,881 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ Level I Level II Level III Total Marketable Securities ​ $ 24,792,846 ​ $ — ​ $ — ​ $ 24,792,846 ​ Carrying amounts reported in the balance sheet of cash and cash equivalents, receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, and deferred revenue approximate fair value due to their relatively short maturity. The carrying amounts of the Company’s marketable securities are based on market quotations from national exchanges at the balance sheet date. Interest and dividend income are recognized separately on the income statement based on classifications provided by the brokerage firm holding the investments. The fair value of borrowings is not considered to be significantly different from its carrying amount because the stated rates for such debt reflect current market rates and conditions. Recent Accounting Pronouncements In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) . The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures. ​ Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures. ​ 2. STOCKHOLDERS’ EQUITY October 2024 Underwritten Public Offering On October 16, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Piper Sandler and Oppenheimer as representatives of the underwriters (the “Underwriters”), pursuant to which the Company agreed to sell and issue, in a public offering an aggregate of 5,073,800 shares of common stock, including the 102 Table of Contents exercise in full of the underwriters’ option to purchase additional shares to cover over allotments, at a public offering price of $ 17.00 per share for total gross proceeds of approximately $ 86.3 million, before deducting underwriting commissions and other offering expenses payable by the Company. The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to the Underwriters, as well as legal and accounting fees in the aggregate amount of approximately $ 5.4 million. September 2024 Private Placement On September 16, 2024, the Company entered into a Subscription Agreement with Nippon Shinyaku pursuant to which the Company agreed to issue and sell to Nippon Shinyaku in a private placement (the “Private Placement”), an aggregate of 2,798,507 shares of the common stock of the Company at a price per Share of $ 5.36 , which was issued at a 20 % premium to the 60-day volume-weighted average price, for an aggregate purchase price of approximately $ 15.0 million. The Subscription Agreement also included lock-up provisions restricting Nippon Shinyaku from selling or otherwise disposing of shares of Common Stock until the six-month anniversary of the Closing Date which occurred on March 15, 2025. ​ In connection with the Private Placement, the Company also entered into a Registration Rights Agreement with Nippon Shinyaku on September 16, 2024 (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Company has filed with the SEC a registration statement to register for resale the shares sold in the Private Placement, which registration statement was declared effective on November 8, 2024. ​ ATM Program The Company established the ATM Program on June 21, 2021, with an aggregate offering price of up to $ 75.0 million, pursuant to a Common Stock Sales Agreement with Wainwright by which Wainwright sold our common stock at the market prices prevailing at the time of sale. Wainwright is entitled to compensation for its services at a commission rate of 3.0 % of the gross sales price per share of common stock sold plus reimbursement of certain expenses. ​ From June 21, 2021 through October 1, 2024, the Company sold an aggregate of 9,228,383 shares of common stock under the ATM Program at an average price of approximately $ 8.13 per share for gross proceeds of approximately $ 75.0 million, which represents all amounts that were available to be sold under the ATM program. Effective October 1, 2024, the ATM Program was closed and terminated. The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to Wainwright, as well as legal and accounting fees in the aggregate amount of approximately $ 2.4 million. ​ September 2023 Financing On September 29, 2023, the Company entered into Securities Purchase Agreements, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 4,935,621 shares of its common stock, par value $ 0.001 per share, at a price per share of $ 4.66 for an aggregate purchase price of approximately $ 23.0 million. Each share of common stock offered was sold with a warrant to purchase one share of common stock at an exercise price of $ 5.70 per share. Each warrant became exercisable beginning six months after issuance and will expire seven years from the date of issuance. ​ 103 Table of Contents 3. STOCK AWARDS, WARRANTS AND OPTIONS Warrants The following table summarizes all warrant activity for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ Warrants Exercise Price Outstanding at January 1, 2023 105,782 ​ $ 1.37 Granted ​ 4,935,621 ​ ​ 5.70 Exercised ​ — ​ ​ — Outstanding at December 31, 2023 5,041,403 ​ $ 5.61 Granted ​ — ​ ​ — Exercised ​ ( 105,782 ) ​ ​ 1.37 Outstanding at December 31, 2024 4,935,621 ​ $ 5.70 ​ The following table summarizes all outstanding warrants to purchase shares of the Company’s common stock at December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrants Outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ Exercise Price ​ Expiration Type Grant Date 2024 2023 per Share Date Common Warrants ​ 12/19/2019 ​ — 40,782 ​ $ 1.10 ​ 12/19/2024 Common Warrants ​ 3/27/2020 ​ — 65,000 ​ $ 1.5313 ​ 3/27/2025 Common Warrants ​ 10/3/2023 ​ 4,935,621 ​ 4,935,621 ​ $ 5.70 ​ 10/3/2030 ​ ​ ​ ​ 4,935,621 ​ 5,041,403 ​ ​ ​ ​ ​ ​ Stock Awards The Company’s Board of Directors (the “Board”) has approved five stock option plans: (i) the 2006 Stock Option Plan, (ii) the 2012 Restated Equity Incentive Plan (which superseded the 2006 Stock Option Plan) (the “2012 Plan”), (iii) the 2012 Non-Employee Director Stock Option Plan (the “2012 Non-Employee Director Plan”), (iv) the 2020 Equity Incentive Plan (the “2020 Plan”), and (v) the 2021 Equity Incentive Plan (the “2021 Plan”). At this time, the Company only issues stock options and restricted stock awards under the 2020 Plan and the 2021 Plan and no longer issues stock awards under the 2006 Stock Option Plan, the 2012 Plan, or the 2012 Non-Employee Director Plan. In June 2021, the Company’s stockholders approved the 2021 Plan, which authorized 3,500,000 shares of common stock reserved under the 2021 Plan for the issuance of stock awards. The number of shares available for issuance under the 2021 Plan shall be automatically increased on January 1 of each year, commencing with January 1, 2022, by an amount equal to the lesser of 5 % of the outstanding shares of Common Stock as of the last day of the immediately preceding fiscal year or such number of shares determined by the compensation committee of the Board. On January 1, 2025 and 2024, 2,279,114 and 1,557,416 shares were added under the 2021 Plan, respectively. ​ As of December 31, 2024, 59,850 stock awards remain available for issuance under the respective stock option plans. The Company’s stock option plans are administered by the Board, in conjunction with the compensation committee of the Board, which determines the recipients and types of awards to be granted, as well as the number of shares subject to the awards, the exercise price and the vesting schedule. Each stock award granted will be designated in the award agreement as either an incentive stock option, a nonstatutory stock option, or a restricted stock award. Notwithstanding such designation, however, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the participant during any calendar year (under all plans of the Company and any parent or subsidiary) exceeds $ 100,000 , such options will be treated as nonstatutory stock options. Stock options are granted with an exercise price not less than equal to the closing price of the Company’s common stock on the date of grant, and generally vest over a period of one to four years . The term of stock options granted under each of the plans cannot exceed ten years . 104 Table of Contents The estimated weighted average fair value of the options granted during 2024 and 2023 were approximately $ 5.89 and $ 3.85 per share, respectively. The Company estimates the fair value of each option award using the Black-Scholes option-pricing model. The Company estimates the fair value of each restricted stock awards using the Company’s stock price on the grant date. There were no restricted stock awards issued during the year ended December 31, 2024 or 2023. The company used the following assumptions to estimate the fair value of stock options issued during the year ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 ​ 2023 ​ Expected volatility 109 - 119 % 111 - 121 % Expected term 5 - 7 years 5 - 7 years ​ Dividend yield 0 % 0 % Risk-free interest rates 3.7 - 4.5 % 3.5 - 4.5 % ​ Employee and non-employee stock-based compensation expense was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 ​ 2023 General and administrative ​ $ 6,159,497 ​ $ 5,476,151 Research and development ​ 3,605,667 ​ 1,916,245 Total ​ $ 9,765,164 ​ $ 7,392,396 ​ The Company does not recognize an income tax benefit as the Company believes that an actual income tax benefit may not be realized. For non-qualified stock options, the loss creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance. As of December 31, 2024, the total unrecognized fair value compensation cost related to non-vested stock options was approximately $ 20.4 million, which is expected to be recognized over a weighted average period of approximately 1.5 years. The following is a schedule summarizing employee and non-employee stock option activity for the years ended December 31, 2024 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ Weighted Average ​ Aggregate ​ Options Exercise Price Intrinsic Value Outstanding at January 1, 2023 5,776,839 ​ $ 2.97 ​ ​ Granted 3,425,979 ​ 4.32 ​ Exercised ( 182,405 ) ​ 2.55 $ 367,422 Expired/Cancelled ( 788,009 ) ​ 3.82 ​ Outstanding at December 31, 2023 8,232,404 ​ $ 3.46 ​ ​ Granted 3,236,726 ​ 6.81 ​ Exercised ( 226,105 ) ​ 2.60 $ 1,973,252 Expired/Cancelled ( 511,842 ) ​ 5.79 ​ Outstanding at December 31, 2024 10,731,183 ​ $ 4.38 ​ $ 101,787,480 Exercisable at December 31, 2024 6,568,089 ​ $ 3.44 ​ $ 68,037,248 ​ The aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock for each of the respective periods. ​ 4. CONCENTRATIONS Concentration of Risk ​ Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash, cash equivalents, and marketable securities. The Company maintains accounts at three financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation (the “FDIC”) for up to $ 250,000 and/or the Securities Investor Protection Corporation, as applicable. The Company monitors the financial stability of the financial institutions 105 Table of Contents with which it maintains accounts and believes it is not exposed to any significant credit risk in cash and cash equivalents. Historically, the Company has not experienced any significant losses in such accounts and does not believe it is exposed to any significant credit risk due to the quality nature of the financial instruments in which the money is held. ​ 5. GOVERNMENT GRANT AWARDS CIRM Grant Award (HOPE) On June 16, 2016, Capricor entered into the CIRM Award with CIRM in the amount of approximately $ 3.4 million to fund, in part, Capricor’s Phase I/II HOPE-Duchenne clinical trial investigating deramiocel for the treatment of DMD-associated cardiomyopathy. Pursuant to terms of the CIRM Award, the disbursements were tied to the achievement of specified operational milestones. In addition, the terms of the CIRM Award included a co-funding requirement pursuant to which Capricor was required to spend approximately $ 2.3 million of its own capital to fund the CIRM funded research project. The CIRM Award is further subject to the conditions and requirements set forth in the CIRM Grants Administration Policy for Clinical Stage Projects. Such requirements include, without limitation, the filing of quarterly and annual reports with CIRM, the sharing of intellectual property pursuant to Title 17, California Code of Regulations (CCR) Sections 100600-100612, and potentially the sharing with the State of California of a fraction of licensing revenue received from a CIRM funded research project and net commercial revenue from a commercialized product which resulted from the CIRM funded research as set forth in Title 17, CCR Section 100608. The maximum royalty on net commercial revenue that Capricor may be required to pay to CIRM is equal to nine times the total amount awarded and paid to Capricor. After completing the CIRM funded research project and at any time after the award period end date (but no later than the ten-year anniversary of the date of the award), Capricor had the right to convert the CIRM Award into a loan, the terms of which will be determined based on various factors, including the stage of the research and development of the program at the time the election is made. On June 20, 2016, Capricor entered into a Loan Election Agreement with CIRM whereby, among other things, CIRM and Capricor agreed that if Capricor elects to convert the grant into a loan, the term of the loan could be up to five years from the date of execution of the applicable loan agreement; provided that the maturity date of the loan will not surpass the ten-year anniversary of the grant date of the CIRM Award. Beginning on the date of the loan, the loan shall bear interest on the unpaid principal balance, plus the interest that has accrued prior to the election point according to the terms set forth in the CIRM Loan Policy and CIRM Grants Administration Policy for Clinical Stage Projects (the “New Loan Balance”), at a per annum rate equal to the LIBOR rate for a three-month deposit in U.S. dollars, as published by the Wall Street Journal on the loan date, plus one percent. Interest shall be compounded annually on the outstanding New Loan Balance commencing with the loan date and the interest shall be payable, together with the New Loan Balance, upon the due date of the loan. In 2019, Capricor completed all milestones and close-out activities associated with the CIRM Award and expended all funds received. The Company accounts for this award as a liability rather than income. As of December 31, 2024, Capricor’s principal liability balance for the CIRM Award was approximately $ 3.4 million, excluding any accrued interest as the Company had not elected to convert the CIRM Award into a loan. Subsequently, on February 26, 2025, Capricor notified CIRM of its election to convert the CIRM Award into a loan. As a result, certain requirements of the CIRM Award will no longer be applicable, including the revenue sharing requirements. The terms of the loan agreement are currently under discussion with CIRM. Depending on these discussions, accrued interest on the CIRM Award could range from zero to approximately $ 7.1 million, and will continue to accrue over time until the final payout, if it is determined that interest is due. 6. COMMITMENTS AND CONTINGENCIES Short-Term Operating Leases Capricor leases office space in Beverly Hills, California from The Bubble Real Estate Company, LLC ("Bubble Real Estate") pursuant to a lease beginning in 2013. Capricor subsequently entered into several amendments modifying certain terms of the lease. Effective January 1, 2021, we entered into a month-to-month lease amendment with Bubble Real Estate, which is terminable by either party upon 90 days ’ written notice to the other party. Effective July 1, 2023, the monthly lease payment was $ 7,619 per month. 106 Table of Contents Commencing March 13, 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 were granted an exclusive license to use certain space and the non-exclusive right to use certain equipment and property for our early phase clinical manufacturing purposes. Our license fee was approximately $ 110,615 per month. The initial license agreement term expired on September 26, 2024, which the Company extended through November 8, 2024. ​ Commencing on November 20, 2024, the Company entered into a lease with Shiraz Partners LP for manufacturing facilities located in Vista, California, with a term of 6 month s with an option to extend for another 6 months . The monthly base rent is $ 31,247 . In March 2025, the Company extended the term of the lease until November 19, 2025. ​ In December 2024, the Company entered into a sublease agreement with Entos Pharmaceuticals US, Inc. for office and research space located in San Diego, California, with a monthly base rent of $ 63,127 . The lease has a term of 12 months and has an option to continue on a month-to month basis after the expiration date. ​ Expenses incurred under short-term operating leases for the years ended December 31, 2024 and 2023 were $ 1,073,870 and $ 92,928 , respectively. Long-Term Operating Leases Capricor leases facilities in Los Angeles, California from CSMC, pursuant to a lease (the “Facilities Lease”) entered into in 2014. Capricor has subsequently entered into several amendments modifying certain terms of the lease. We entered into an amendment effective August 1, 2024 for an additional 24-month period extending the term through July 31, 2026 with a monthly lease payment of $ 11,028 . Capricor leases facilities in San Diego, California from Altman Investment Co., LLC (“Altman”). The Company entered into a lease agreement commencing October 1, 2021 with Altman for 9,396 square feet of office and laboratory space (the “San Diego Lease”). The rent is subject to a 3.0 % annual rent increase during the initial lease term of five years , plus certain operating expenses and taxes. The San Diego Lease contains an option for Capricor to renew for an additional term of five years . The Company has subsequently entered into several amendments to the San Diego Lease increasing the square footage of the premises. Effective October 1, 2023, the monthly lease payment was increased to $ 58,409 per month. Effective October 1, 2024, the monthly lease payment was increased to $ 60,161 per month. On February 26, 2025, the Company entered into a lease amendment modifying certain terms of the San Diego Lease (see Note 9 – “Subsequent Events”). ​ Effective November 1, 2021, the Company entered into a vivarium agreement with Explora BioLabs, Inc. (“Explora”), a Charles River Company, for vivarium space and services. Under the terms of the agreement, the Company is obligated to pay a base rent of $ 4,021 per month for an exclusive large vivarium room located in San Diego, California. In December 2022, we were notified by Explora of a monthly rent escalation of 4.5 % bringing the base rent to approximately $ 4,202 per month effective January 1, 2023. Additionally, effective January 1, 2024, we entered into an amendment for an additional 24-month period extending the term through December 31, 2025 with a monthly lease payment of $ 4,370 commencing on January 1, 2024 subject to a 4.0 % annual rent increase. ​ The long-term real estate operating leases are included in “lease right-of-use assets, net” on the Company’s Consolidated Balance Sheet and represent the Company’s right-to-use the underlying assets for the lease term. The Company’s obligation to make lease payments are included in “lease liabilities, current” and “lease liabilities, net of current” on the Company’s Consolidated Balance Sheets. ​ 107 Table of Contents The table below excludes short-term operating leases. The following table summarizes maturities of lease liabilities and the reconciliation of lease liabilities as of December 31, 2024: ​ ​ ​ ​ ​ 2025 ​ $ 914,220 2026 ​ ​ 634,889 2027 ​ ​ — 2028 ​ ​ — 2029 ​ ​ — Total minimum lease payments ​ ​ 1,549,109 Less: imputed interest ​ ​ ( 97,995 ) Total operating lease liabilities ​ $ 1,451,114 Included in the consolidated balance sheet: ​ ​ ​ Current portion of lease liabilities ​ $ 834,799 Lease liabilities, net of current ​ ​ 616,315 Total operating lease liabilities ​ $ 1,451,114 ​ ​ ​ ​ Other Information: ​ ​ ​ Weighted average remaining lease term ​ ​ 1.7 years Weighted average discount rate ​ ​ 7.4 % ​ The following table contains a summary of the lease costs recognized and lease payments pertaining to the Company’s operating leases under ASC 842 for the period indicated: ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2024 2023 Lease costs $ 841,429 ​ $ 792,842 Lease payments ​ 903,598 ​ ​ 802,216 ​ Legal Contingencies The Company is not a party to any material legal proceedings at this time. From time to time, the Company may become involved in various legal proceedings that arise in the ordinary course of its business or otherwise. The Company records a loss contingency reserve for a legal proceeding when it considers the potential loss probable and it can reasonably estimate the amount of the loss or determine a probable range of loss. The Company has not recorded any material accruals for loss contingencies as of December 31, 2024. Accounts Payable During the normal course of business, disputes with vendors may arise. If a vendor disputed payment is probable and able to be estimated, we will record an estimated liability. Other Funding Commitments The Company is a party to various agreements, principally relating to licensed technology, that require future payments relating to milestones that may be met in subsequent periods or royalties on future sales of specific products (see Note 7 - "License and Distribution Agreements"). Additionally, the Company is a party to various agreements with contract research, manufacturing and other organizations that generally provide for termination upon notice, subject to certain time periods, with the exact amounts owed in the event of termination to be based on the timing of termination and the terms of the agreement. Employee Severances The Board from time to time may approve severance packages up to twelve months of their base salaries for specific full-time employees based on their length of service and position in the event of termination of their employment, subject to certain conditions. No liability under these severance packages has been recorded as of December 31, 2024. ​ 108 Table of Contents 7. LICENSE AND DISTRIBUTION AGREEMENTS 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. Capricor has also entered into an exclusive license agreement for intellectual property rights related to exosomes with CSMC and JHU. In addition, Capricor has filed patent applications related to the technology developed by its own scientists. University of Rome License Agreement ​ Capricor and the University of Rome entered into a License Agreement, dated June 21, 2006 (the “Rome License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by the University of Rome to Capricor (with the right to sublicense) to develop and commercialize licensed products under the licensed patent rights in all fields. Pursuant to the Rome License Agreement, Capricor paid the University of Rome a license issue fee, is currently paying minimum annual royalties in the amount of 20,000 Euros per year, and is obligated to pay a lower-end of a mid-range double-digit percentage on all royalties received as a result of sublicenses granted, which are net of any royalties paid to third parties under a license agreement from such third-party to Capricor. The minimum annual royalties are creditable against future royalty payments. The Rome License Agreement will, unless extended or sooner terminated, remain in effect until the later of the last claim of any patent or until any patent application comprising licensed patent rights has expired or been abandoned. Under the terms of the Rome License Agreement, either party may terminate the agreement should the other party become insolvent or file a petition in bankruptcy. 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 the Rome License Agreement for any reason upon 90 days ’ written notice to the University of Rome. The Johns Hopkins University License Agreements License Agreement for CDCs Capricor and JHU entered into an Exclusive License Agreement, effective June 22, 2006 (the “JHU License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by JHU to Capricor (with the right to sublicense) to develop and commercialize licensed products and licensed services under the licensed patent rights in all fields and a nonexclusive right to the know-how. Various amendments were entered into to revise certain provisions of the JHU License Agreement. Under the JHU License Agreement, Capricor is required to exercise commercially reasonable and diligent efforts to develop and commercialize licensed products covered by the licenses from JHU. ​ Pursuant to the JHU License Agreement, JHU was paid an initial license fee and, thereafter, Capricor is required to pay minimum annual royalties on the anniversary dates of the JHU License Agreement. The minimum annual royalties are creditable against a low single-digit running royalty on net sales of products and net service revenues, which Capricor is also required to pay under the JHU License Agreement, which running royalty may be subject to further reduction in the event that Capricor is required to pay royalties on any patent rights to third parties in order to make or sell a licensed product. In addition, Capricor is required to pay a low double-digit percentage of the consideration received by it from sublicenses granted and is required to pay JHU certain defined development milestone payments upon the successful completion of certain phases of its clinical studies and upon receiving approval from the FDA. The maximum aggregate amount of milestone payments payable under the JHU License Agreement, as amended, is $ 1,850,000 . 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. 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 109 Table of Contents from the effective date. Under the terms of the JHU License Agreement, either party may terminate the agreement should the other party become insolvent or file a petition in bankruptcy or fail to cure a material breach within 30 days after notice. In addition, Capricor may terminate for any reason upon 60 days ’ written notice. ​ Cedars-Sinai Medical Center License Agreements License Agreement for CDCs On January 4, 2010, Capricor entered into an Exclusive License Agreement with CSMC (the “Original CSMC License Agreement”), for certain intellectual property related to its CDC technology. In 2013, the Original CSMC License Agreement was amended twice resulting in, among other things, a reduction in the percentage of sublicense fees which would have been payable to CSMC. Effective December 30, 2013, Capricor entered into an Amended and Restated Exclusive License Agreement with CSMC (the “Amended CSMC License Agreement”), which amended, restated, and superseded the Original CSMC License Agreement, pursuant to which, among other things, certain definitions were added or amended, the timing of certain obligations was revised and other obligations of the parties were clarified. The Amended CSMC License Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by CSMC to Capricor (with the right to sublicense) to conduct research using the patent rights and know-how and develop and commercialize products in the field using the patent rights and know-how. In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC. In the event the parties fail to agree upon the terms of an exclusive license for any future rights, Capricor will have a non-exclusive license to such future rights, subject to royalty obligations. Pursuant to the Original CSMC License Agreement, CSMC was paid a license fee and Capricor was obligated to reimburse CSMC for certain fees and costs incurred in connection with the prosecution of certain patent rights. Additionally, Capricor is required to meet certain spending and development milestones. Pursuant to the Amended CSMC License Agreement, Capricor remains obligated to pay low single-digit royalties on sales of royalty-bearing products as well as a low double-digit percentage of the consideration received from any sublicenses or other grant of rights. The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty-bearing product. The Amended CSMC License Agreement will, unless sooner terminated, continue in effect on a country by country basis until the last to expire of the patents covering the patent rights or future patent rights. Under the terms of the Amended CSMC License Agreement, unless waived by CSMC, the agreement shall automatically terminate: (i) if Capricor ceases, dissolves or winds up its business operations; (ii) in the event of the insolvency or bankruptcy of Capricor or if Capricor makes an assignment for the benefit of its creditors; (iii) if performance by either party jeopardizes the licensure, accreditation or tax exempt status of CSMC or the agreement is deemed illegal by a governmental body; (iv) within 30 days for non-payment of royalties; (v) after 90 days ’ notice from CSMC if Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights; (vi) if a material breach has not been cured within 90 days ; or (vii) if Capricor challenges any of the CSMC patent rights. If Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights and fails to cure that breach after 90 days ’ notice from CSMC, instead of terminating the license, CSMC has the option to convert any exclusive license to Capricor to a non-exclusive or co-exclusive license. Capricor may terminate the agreement if CSMC fails to cure any material breach within 90 days after notice. Capricor and CSMC have entered into several amendments to the Amended CSMC License Agreement, pursuant to which the parties agreed to add and delete certain patent applications from the list of scheduled patents and extend the timing of certain development milestones, among other things. Capricor reimbursed CSMC for certain attorneys’ fees and filing fees incurred in connection with the additional patent applications. License Agreement for Exosomes ​ On May 5, 2014, Capricor entered into an Exclusive License Agreement with CSMC (the “Exosomes License Agreement”), for certain intellectual property rights related to CDC-derived exosomes technology. The Exosomes License Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by CSMC to Capricor (with the right to sublicense) in order to conduct research using the patent rights and know-how and to develop and commercialize 110 Table of Contents products in the field using the patent rights and know-how. In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC. In the event the parties fail to agree upon the terms of an exclusive license, Capricor shall have a non-exclusive license to such future rights, subject to royalty obligations. Pursuant to the Exosomes License Agreement, CSMC was paid a license fee and Capricor reimbursed CSMC for certain fees and costs incurred in connection with the preparation and prosecution of certain patent applications. Additionally, Capricor is required to meet certain non-monetary development milestones and is obligated to pay low single-digit royalties on sales of royalty-bearing products as well as a single-digit percentage of the consideration received from any sublicenses or other grant of rights. The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty bearing product. The Exosomes License Agreement will, unless sooner terminated, continue in effect on a country by country basis until the last to expire of the patents covering the patent rights or future patent rights. Under the terms of the Exosomes License Agreement, unless waived by CSMC, the agreement shall automatically terminate: (i) if Capricor ceases, dissolves or winds up its business operations; (ii) in the event of the insolvency or bankruptcy of Capricor or if Capricor makes an assignment for the benefit of its creditors; (iii) if performance by either party jeopardizes the licensure, accreditation or tax exempt status of CSMC or the agreement is deemed illegal by a governmental body; (iv) within 30 days for non-payment of royalties; (v) after 90 days if Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights; (vi) if a material breach has not been cured within 90 days ; or (vii) if Capricor challenges any of the CSMC patent rights. If Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights and fails to cure that breach after 90 days ’ notice from CSMC, instead of terminating the license, CSMC has the option to convert any exclusive license to Capricor to a non-exclusive or co-exclusive license. Capricor may terminate the agreement if CSMC fails to cure any material breach within 90 days after notice. Capricor and CSMC have entered into several amendments to the Exosomes License Agreement. Collectively, these amendments added additional patent applications and patent families to the Exosomes License Agreement, added certain defined product development milestone payments, modified certain milestone deadlines, added certain performance milestones with respect to product candidates covered by certain future patent rights in order to maintain an exclusive license to those future patent rights, and converted certain exclusive rights to co-exclusive rights. These amendments also obligated Capricor to reimburse CSMC for certain attorneys’ fees and filing fees in connection with the additional patent applications and patent families. Commercialization and Distribution Agreement with Nippon Shinyaku (Territory: United States) On January 24, 2022, Capricor entered into the U.S. Distribution Agreement with Nippon Shinyaku, a Japanese corporation and related party (see Note 8 – “Related Party Transactions”). Under the terms of the U.S. Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in the United States of deramiocel for the treatment of DMD. 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. The Company has evaluated the U.S. Distribution Agreement in accordance with ASU 606, Revenue for Contracts from Customers . At the inception, the Company identified one distinct performance obligation. The Company determined that the performance obligation is the conduct of the HOPE-3, Phase 3 clinical study. The Company determined the transaction price totaled $ 40.0 million, which was the upfront payment of $ 30.0 million and first milestone payment of $ 10.0 million. The Company has excluded any future milestone or shared revenue 111 Table of Contents payments from this transaction price to date based on probability. Revenue related to this performance obligation has been recognized using a proportional performance method in relation to the completion of the HOPE-3 clinical study, Cohort A arm, to determine the extent of progress towards completion. Under this method, the transaction price is recognized over the contract’s entire performance period using a cost percentage per patient visit relative to the total estimated cost of patient visits. As of December 31, 2024, all of the $ 40.0 million has been recognized as revenue. In December 2024, the Company triggered its second milestone with Nippon Shinyaku under the U.S. Distribution Agreement, which related to a separate distinct performance obligation. The performance obligation was tied to the submission of our BLA to the FDA. As a result, the $ 10.0 million milestone payment is recognized as revenue within the Company’s consolidated statement of operations and comprehensive loss as of December 31, 2024. For the year ended December 31, 2024, the Company recognized approximately $ 22.3 million as revenue compared to approximately $ 25.2 million for the year ended December 31, 2023. In relation to the U.S. Distribution Agreement, there was no deferred revenue recorded as of December 31, 2024, as the total $ 50.0 million payment received (including $ 30.0 million upfront payment and two $ 10.0 development milestone payments) has been fully recognized as revenue, compared to approximately $ 12.3 million as of December 31, 2023. As of December 31, 2024 and 2023, the Company recognized a receivable of $ 10.0 million for each year related to the first and second milestones, which payments were received in January 2025 and 2024, respectively. The Company had no opening or closing contract asset balances recognized other than the accounts receivable mentioned above. The difference between the opening and closing balances of the Company’s contract liability results from the Company performance of services in connection to its performance obligation. ​ Commercialization and Distribution Agreement with Nippon Shinyaku (Territory: Japan) 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 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 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. The Company has evaluated the Japan Distribution Agreement in accordance with ASU 606, Revenue for Contracts from Customers . The Company determined the initial transaction price totaled $ 12.0 million, which was the upfront payment fee. The Company has excluded any future milestone or shared revenue payments from this transaction price to date based on probability. At this time, the Company is evaluating the regulatory pathway to achieve potential product approval in this territory. Until such time, the Company cannot identify any distinct performance obligation. As such, the Company has recorded the entire upfront payment fee of $ 12.0 million as current deferred revenue on the Company’s consolidated balance sheets as of December 31, 2024. ​ 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. Upon execution of the definitive agreement, the 112 Table of Contents Company will evaluate the terms in accordance with ASU 606, Revenue for Contracts from Customers . As of December 31, 2024, nothing has been recorded or received. ​ 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. ​ 8. RELATED PARTY TRANSACTIONS Consulting Agreements In 2013, Capricor entered into a Consulting Agreement with Dr. Frank Litvack, the Company’s Executive Chairman and a member of its Board of Directors, whereby Capricor agreed to pay Dr. Litvack $ 10,000 per month for consulting services. The agreement is terminable upon 30 days ’ notice. As of December 31, 2024 and 2023, $ 10,000 was recorded in accounts payable and accrued expenses related to this Consulting Agreement. In January 2024, Capricor entered into a Consulting Agreement with Michael Kelliher, a member of its Board of Directors, related to business development services whereby he was granted an option to purchase 30,000 shares of the Company's common stock. Commercialization and Distribution Agreements As noted above, Capricor is party to two commercialization and distribution agreements with Nippon Shinyaku, which holds more than 10 % of the outstanding capital stock of Capricor Therapeutics (see Note 7 – “License and Distribution Agreements”). The amount receivable from Nippon Shinyaku as of December 31, 2024 and 2023 was $ 10.0 million. There were no outstanding payables as of December 31, 2024 or 2023. Binding Term Sheet As noted above, 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 (see Note 7 – “License and Distribution Agreements”). 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. Private Placement On September 16, 2024, the Company entered into a Subscription Agreement with Nippon Shinyaku pursuant to which the Company agreed to issue and sell to Nippon Shinyaku in a private placement (the “Private Placement”), an aggregate of 2,798,507 shares of the common stock of the Company at a price per Share of $ 5.36 , which was issued at a 20 % premium to the 60-day volume-weighted average price, for an aggregate purchase price of approximately $ 15.0 million. In connection with the Private Placement, the Company also entered into a Registration Rights Agreement with Nippon Shinyaku on September 16, 2024 (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Company has filed with the SEC a registration statement to register for resale the shares sold in the Private Placement, which registration statement was declared effective on November 8, 2024. 9. SUBSEQUENT EVENTS Stock Award Grants In January 2025, the Company granted a total of 1,831,237 stock options and restricted stock awards to its employees, certain non-employee consultants, and directors. San Diego Lease Amendment On February 26, 2025, the Company entered into an amendment to the San Diego Lease (the “Fourth Amendment”) with Altman. Pursuant to the terms of the Fourth Amendment, the Company increased the rentable square footage to 34,348 square feet commencing on or before July 1, 2025 and extended the lease term to September 30, 2033. Commencing January 1, 2026, our base rent will increase to $ 188,914 per month. The rent is subject to a 3.0 % annual rent increase commencing October 1, 2026 plus certain operating expenses and taxes. The Fourth Amendment contains an option for Capricor to renew for an additional term of five years . ​ 113 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ​