Earnings Call Transcript - CAPR Q4 2024

Operator, Operator

Good afternoon, ladies and gentlemen, and welcome to the Capricor Therapeutics Fourth Quarter 2024 Earnings Call. At this time, all participant lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Wednesday, March 19, 2025. I would now like to turn the conference over to our CFO, A.J. Bergmann for the forward-looking statement. Please go ahead.

A.J. Bergmann, CFO

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

Linda Marban, CEO

Thanks, A.J. Good afternoon, everyone, and thank you for joining today's conference call. The mission of Capricor has always been to discover and develop transformative drug products for patients in need and translating these biological medicines into commercial products. As many of you know, Capricor was founded over 20 years ago, originally in the laboratories at Johns Hopkins University where we isolated, characterized, and harnessed a unique cell type derived from heart tissue. Even at the time of discovery, the cardiosphere-derived cells, now known as deramiocel, were conceptualized to potentially be a powerful cellular therapeutic that could one day treat diseases of the heart for which there are many. Now let me remind you that deramiocel has a defined mechanism of action, which is primarily immunomodulatory and anti-fibrotic driven by the release of exosomes after the cells are infused. Our identity and potency assays, supported by the FDA, are based on those properties of bioactivity. Deramiocel is not a stem cell. Its active ingredient is a rarefied population of cardiac cells that Capricor isolates and expands using proprietary methods. Cells are infused in a simple one-time quarterly intravenous infusion at a dose of 150 million cells. With over 700 infusions of the product over many years, deramiocel has been shown to be a safe and effective means for attenuating disease progression. We have been working for over eight years developing deramiocel as a treatment for those impacted by Duchenne muscular dystrophy, and it is with great pride and joy that I can say we find ourselves potentially nearing approval. Today, I will walk you through the latest regulatory, DMC, and commercial updates as Capricor begins to transition from a translational medicines company to a potentially commercial stage company. We will continue to stay committed to our mission, developing transformational treatments for patients in need and driving value for our shareholders. Now turning first to our Biologics License Application or BLA filing for DMD cardiomyopathy, which we announced in early March was accepted by the FDA for priority review. The application is seeking full, not accelerated approval of deramiocel to treat DMD cardiomyopathy, an aspect of the disease that afflicts essentially all DMD patients and is the leading cause of mortality associated with DMD. As we look ahead to our PDUFA date of August 31, 2025, we are working with the FDA as they are actively reviewing our application. At this time, the FDA has not indicated to us whether an AdCom will be necessary, but we are preparing for one should that be needed. I'm pleased to inform you that we have officially scheduled our prelicensing inspection of our manufacturing facility, set for the second quarter of this year. Our BLA is supported with data from two trials: our Phase 2 HOPE-2 placebo-controlled trial and our HOPE-2 open label extension trial compared to patient level natural history data from the DMD Cardiac Consortium led by Dr. Jonathan Soslow at Vanderbilt University. Many factors have given us confidence in our BLA submission pathway. First and foremost, it has a strong safety profile and has been administered to over 250 human subjects across several clinical trials over multiple years. Equally important is that the data continues to show clinical and statistically significant efficacy in the treatment of DMD cardiomyopathy. This data is foundational to our BLA filing. It is well known that the cardiac and skeletal aspects of the disease do not decline at the same rate. We see an impact on both cardiac and skeletal muscle function, and are confident we are seeing a treatment effect of deramiocel across multiple domains, further strengthening the opportunity to treat DMD with deramiocel. Furthermore, as exhibited this week at the Muscular Dystrophy Association conference, we see a year-over-year improvement in function, suggesting that long-term use of deramiocel is warranted for the treatment of DMD. We have continued to work in close collaboration with the FDA. We have been the beneficiaries of CBER's approach to drug development and believe that with the combination of statistically and clinically significant data that addresses an unmet medical need, we are well poised to gain approval of deramiocel for DMD cardiomyopathy. In addition, our RMAT designation allows us to work directly with the FDA, as we realize the true goal here is to bring the first treatment to market for DMD cardiomyopathy, for which there are no approved therapies. Lastly, throughout 2024, we met with the FDA multiple times outlining our BLA filing strategy, of which we have discussed previously. I want to reiterate that they have not requested the HOPE-3 data, and currently, we do not believe it will be necessary to support our application. As you may recall, the HOPE-3 clinical trial has a primary efficacy endpoint of the performance of the upper limb version 2.0, which is an indicator of skeletal muscle function. We plan to use this data in the future for potential label extension. To that end, we are currently evaluating plans for HOPE-3 and will provide more updates as they become available. Now turning our attention to commercial planning. We are actively working with our commercial partner, NS Pharma, on launch readiness for the United States. Key areas of overlapping focus are market access and reimbursement. Their team in the United States is comprised of approximately 125 people with market access, reimbursement, medical affairs, and sales teams actively preparing for the launch of deramiocel in the United States. We recently completed surveys with the top five payers in the US with very favorable responses from a reimbursement standpoint for deramiocel. Since there are currently no approved therapies for DMD cardiomyopathy and data suggests that standard cardiac medications do not significantly impact disease progression in most cases, we see deramiocel as a transformational treatment option for these boys and young men. We expect reimbursement would be consistent with other recently approved DMD therapies such as exon skippers. If approved, we anticipate that approximately 50% to 60% of the overall DMD population in the United States, or around 7,500 boys and young men with DMD, would be eligible for treatment with deramiocel. If approved, we anticipate entering the market with approximately 100 patients transferring from our open label extension trial to commercial products. This would drive revenue to the bottom line. In the US, we are entitled to between 30% to 50% of revenue share based on product sales inclusive of cost of goods sold. Now I'd like to shift our attention to CMC or chemistry manufacturing and controls. Our current GMP compliant facility located in San Diego is fully operational and staffed, producing doses of deramiocel. We built and carefully designed this facility to meet early market demand. The fully operational capacity in this facility can support approximately 250 to 500 patients per year and we believe will be sufficient to support the anticipated first year of launch. As we expect a strong launch and rapid adoption of deramiocel for DMD cardiomyopathy, if approved, I am pleased to announce that we have expanded our current San Diego facility where we have leased an additional 25,000 square feet to build additional clean rooms, increasing our manufacturing capacity to approximately 2,000 to 3,000 patients per year once completed and fully operational. We have assembled a world-class team who is extremely sophisticated in this area and I have high confidence we will have this new expanded facility online by mid-2026, allowing us to bolster supply of the product for the next several years to meet demand. As we continue to expand our capabilities, we are already looking into product development endeavors to allow us to further increase our yield. Our cash balance of approximately $150 million is being deployed across the organization with our current runway into 2027 with no additional infusions of cash. If we receive FDA approval, we will receive an additional $80 million milestone payment from Nippon Shinyaku. In addition, we would receive a priority review voucher, which we have the full rights to sell or transfer. These non-dilutive cash infusions could total well over $200 million, which would enhance our balance sheet in 2025 alongside our existing cash and potential product revenue. This puts us in a strong position to deliver for our shareholders on multiple fronts. Our strong cash position will continue to allow us to strengthen our commercial organization, which includes enhancing our team with commercial and medical expertise to fuel future product development opportunities for deramiocel and build Capricor into a world-class revenue-generating, cash flow positive company with a commercial product on the market and a robust pipeline of expansion opportunities leveraging cell and exosome-based therapeutics. Lastly, for a brief update on our European partnering efforts. Last year, we entered into a term sheet with Nippon Shinyaku for the marketing, sales and distribution of deramiocel in the European region, subject to finalization of a definitive agreement. Our commitment to Nippon Shinyaku in the USA and Japan as our commercial partner is strong, but we have not yet finalized terms on the definitive agreement, which is still being negotiated. In the meantime, we have achieved important regulatory designations in Europe and are on track for meeting with EMA in the second quarter of 2025. We will provide additional details as our strategy for Europe develops. Now I'd like to switch gears and give an update on our exosomes pipeline program. We continue to develop our StealthX exosome platform technology as part of a next-generation drug delivery platform. Our goal is to build the exosomes into a standardized drug delivery platform that has enhanced capabilities compared to a lipid nanoparticle, including targeting and delivering contents across the cell membrane. While most of our focus has been on the commercialization of deramiocel cells, we have a small team working on building the exosomes in the background. They have successfully designed a cost-effective manufacturing method that can produce large amounts necessary for therapeutic delivery. We have presented this proof-of-concept data at many scientific meetings and published these findings in peer-reviewed journals. Our approach is to concurrently demonstrate the utility of the exosomes by developing a vaccine platform that is unique, using native proteins loaded in or coated on an exosome that could be made rapidly within the 100-day constraints developed by the US government, but also able to generate a robust and long-lasting immune response. That program is part of the US government's project NextGen, which aims to test vaccine candidates for COVID-19 prevention in addition to preparing for future pandemics. Currently, our StealthX vaccine candidate is in the manufacturing phase. The NIAID, the National Institutes of Allergy and Infectious Disease, will then conduct and fully fund a Phase 1 clinical trial. Currently, manufacturing is underway for our StealthX vaccine and the NIAID is planning for regulatory approval in the second quarter of 2025, with the clinical study initiated soon thereafter. We will provide further updates on this program as they become available. Now that deramiocel is on a defined path towards potential commercialization, we are further evaluating the path forward for our therapeutic exosome pathway and also assessing other opportunities to grow our future pipeline. In conclusion, 2024 was a transformational year for Capricor and 2025 is the year in which we will hopefully transition into our next stages of development. I am proud of our progress and grateful to the patients, their families, and our investors for their continued support. Capricor's goal is to continue to meet its milestones while focusing on our efforts to bring deramiocel towards potential commercialization and investing judiciously across the organization to prepare for that endeavor. I will now turn the call over to A.J. to run through our financials. A.J.?

A.J. Bergmann, CFO

Thanks, Linda. This afternoon's press release provided a summary of our fourth quarter and full year 2024 financials on a GAAP basis. You may also refer to our annual report on Form 10-K, which we expect to become available in the next several days and will be accessible on the SEC website as well as the financial section of the company website. Let me start with our cash position. As of December 31, 2024, our cash, cash equivalents and marketable securities totaled approximately $151.5 million. Subsequent to December 31, 2024, we received a $10 million milestone payment from Nippon Shinyaku pursuant to the terms of our US distribution agreement. On a pro forma basis, our cash, cash equivalents, and marketable securities would total approximately $161.5 million. Turning now to the financials. Revenues for the fourth quarter of 2024 were approximately $11.1 million compared to approximately $12.1 million for the fourth quarter of 2023. The source of revenue is the ratable recognition of the $40 million we have received from our US distribution agreement with Nippon Shinyaku and the $10 million milestone payment we triggered in December 2024 after we submitted our BLA to the FDA. Moving to operating expenses for the fourth quarter of 2024, excluding stock-based compensation, our research and development expense was approximately $13.6 million compared to approximately $9.4 million in Q4 2023. Excluding stock-based compensation, our G&A expense was approximately $3 million in Q4 2024 and approximately $2.1 million in Q4 2023. The net loss for the fourth quarter 2024 was approximately $7.1 million compared to a net loss of approximately $800,000 for the fourth quarter of 2023. The net loss for the year ended December 31, 2024 was approximately $40.5 million compared to a net loss of approximately $22.3 million for the year ended December 31, 2023. We will now open the line for questions.

Operator, Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from the line of Ted Tenthoff from Piper Sandler. Please go ahead.

Edward Tenthoff, Analyst

Great. Thank you very much and congratulations on all of the progress. It's going to be an exciting year for you guys. Just looking at the commercial preparation for deramiocel, what additional color can you tell us about the prep and sort of the division of labor between you and Nippon Shinyaku? And how much of a benefit will it be with their existing commercial infrastructure? Thanks.

Linda Marban, CEO

Thanks, Ted. Yes, great to hear from you as always. So, yes, this has been an exciting time for Capricor and, obviously, NS is very excited as well. We keep achieving our milestones, as we told them we would, and they’re in full-scale preparation for commercial launch. They have approximately 125 employees in the US dedicated to their Viltepso franchise. They're spending a significant amount of time now focusing on getting deramiocel ready for commercialization. What that means in practical terms is that we are working with them on a day-to-day basis building out models for forecasting market penetration, first-year launch activities, working with physicians, and also potential infusion centers to ensure that everything is set up and organized. Market access is in full swing as we have an accepted BLA. Our role is primarily to shepherd deramiocel to market; their role is to sell it and distribute it. Part of selling a biologic like deramiocel is a deep understanding of the product, which we are providing to them. We are very excited about their energy and also working closely with them on the launch.

Edward Tenthoff, Analyst

Great. Thank you very much.

Operator, Operator

Thank you. And your next question comes from the line of Leland Gershell from Oppenheimer. Please go ahead.

Leland Gershell, Analyst

Good afternoon. It's great to hear about all the progress, and we are excited for the upcoming events for Capricor later this year. I have a few questions. First, Linda, in your discussions with payers, have you considered the implications for patients who might be using other high-cost drugs for DMD alongside deramiocel or vice versa? Given the financial burden of having two expensive drugs for this condition, how are the payers responding to that, if you have any insights?

Linda Marban, CEO

Yes. So we've had really good feedback from the payers so far. There are several reasons why I think this is a great opportunity for reimbursement. First and foremost, it is the only therapeutic that will treat Duchenne cardiomyopathy. This cannot be highlighted enough. This is a disease where not only is cardiac disease one of the primary features of the pathophysiology, but has been indicated to be more important as treatment for the dystrophinopathy could become more relevant, such as gene therapy. We see long-term benefits. Year-over-year, we’ve seen three years of improvement or stabilization in cardiac and skeletal muscle function, which we've shown not only to the FDA but are also presenting to the payers. Overall, we think that when they have their sort of pharmacopeia to choose from in treating Duchenne, this will be a prime opportunity for therapeutic benefits to an area that has largely been unaddressed, can reduce hospitalization and mortality, and will work along with other treatments for the dystrophinopathies.

Leland Gershell, Analyst

All right. Thank you. And then a question just sort of longer term, you've got a healthy cash balance. You're going to have the $80 million presumably on the FDA approval and then that and the PRV that you could monetize doesn't even include other terms with NS with Japan and potentially Europe. Just curious given that Capricor's operating expenses will remain relatively lean since you wouldn't have to be building your own sales force and getting into the commercial infrastructure yourselves. Any thoughts on how you may invest that capital? Obviously, exosomes are very promising, but given the stage of that development, it doesn't really seem like it would be expensive to be running those initial studies. Just wondering if you have any thoughts on where to apply the much greater balance sheet that you may be coming into? Thanks.

Linda Marban, CEO

Yes. Thank you, Leland. We really appreciate the question, and it's been an area of exploration within the company right now. We're looking at all types of opportunities, not only in terms of label extension for skeletal muscle myopathy of Duchenne and Becker, which can further enhance our balance sheet as we move forward. Yes, we are focusing on our exosome pipeline. I talked about that. It is behind deramiocel. We’ll keep the market updated as we evaluate opportunities to move this company forward over the next few years.

Operator, Operator

Thank you. And your next question comes from the line of Joe Pantginis from H.C. Wainwright. Please go ahead.

Joseph Pantginis, Analyst

Hey, Linda and A.J., thanks for taking the questions. So first, maybe for A.J., this is fantastic news. Also, Linda you just announced about the new expanded 25,000 square foot facility. Are you able to sort of define the costs and timeframe for this facility?

A.J. Bergmann, CFO

Yes. Thanks, Joe. Yes, we are excited about the expansion. It's in our current footprint here in San Diego, basically the floor above where we're already operating, and we’re starting all the planning right now. We haven't released a formal estimate, but I will say we built our original commercial qualified clean room here in San Diego for just under a couple of million dollars. So we have the plans and team in place. We already have construction operations underway. We envision we can do this for a reasonable cost, and we'll provide more updates in the coming months as we move ahead.

Joseph Pantginis, Analyst

Got it. And then I guess second question is obviously you have no indication that there's going to be an AdCom right now. When do you think you might hear an answer? And for example, if there were an AdCom, would that be a place that they might want to not necessarily require, but maybe force a discussion regarding HOPE-3?

Linda Marban, CEO

Yes. Thanks, Joe. We are waiting daily to hear from them on whether they would want an AdCom. They will need time to put it together. We are actively prepping for one, but they need to provide us time to prepare as well. We expect to hear soon. I think part of the delay is just based on some turmoil that's going on in the government right now. I believe things are moving at a different pace than a few months ago. When we know, we'll let everyone else know. We see an AdCom neither as a benefit nor a risk. We firmly believe in our application. We have clinically and statistically significant data. However, if we need to present, we will absolutely be ready. As for HOPE-3, they’ve informed us they are not considering it for this BLA that they understand the primary efficacy endpoint of HOPE-3 is skeletal muscle and would be used for post-approval label extension.

Joseph Pantginis, Analyst

Also very helpful, and thanks for the repetition there. Quickly just on the discussion about cash usage going forward, obviously, you talked about some of the obvious things, since you guys really have a specialty in cellular therapy here. Would you consider in-licensing, number one? And then second, with regard to Europe, I know you can't necessarily describe the first part of the question, but what are the outstanding issues that you still need to address regarding the potential signed NS partnership, and what are the outstanding questions you feel are important for your EMA discussions?

Linda Marban, CEO

Yes. Thanks, Joe. That's a multi-pronged question. In terms of in-licensing, we are evaluating opportunities as they become available. Right now, we are laser-focused on getting deramiocel approved and ready to launch. This will drive our cash value and our ability to look at new opportunities. I will say this: we have become experts in translational medicine, bringing things from the bench to commercial. We wouldn't rule out the right opportunity if presented to us. Regarding your second question about EMA, we are focusing on getting deramiocel to Europe. We are working right now with EMA and external consultants to build that program. We hope to meet with the EMA in the second quarter of this year to further understand their requirements for approval of deramiocel. Because we are working directly with Europe and achieving designations in Europe of ATMP while working with EMA, we are slightly slowing down our conversations to ensure we have the best path forward for deramiocel in Europe. We are still negotiating with NS and have an active conversation around the definitive agreement, feeling very positive about their commitment to the therapeutic.

Joseph Pantginis, Analyst

Really appreciate all the color. Thanks a lot.

Linda Marban, CEO

Thanks, Joe. Take care.

Operator, Operator

Thank you. And your next question comes from the line of Kristen Kluska from Cantor. Please go ahead.

Kristen Kluska, Analyst

Hi, everyone. Congrats on the data this week and the recent filing acceptance. I know your mechanism is complementary to gene therapy, but after yesterday's unfortunate news regarding the patient on Elevidys, we are hearing doctors emphasize the need for treatment options for non-ambulatory patients in particular. So can you just remind us what percent of the later stage population would have cardiomyopathy? While label extension could come later, could you reference some of your poll data if you receive approval as perhaps supportive evidence?

Linda Marban, CEO

Yes. Thanks, Kristen. I think the entire community is reeling from the death of that young man. It's a small patient community, and so the loss of one life is always tragic, particularly in this community. Most of our treated patients have been non-ambulant. They primarily have the cardiomyopathy manifestations, although we've been messaging the importance of addressing the scar that causes the ultimate decline in cardiac function. We will try to treat patients as early as possible. Yes, most of our patients are later stage non-ambulant. The focus of this application is on cardiomyopathy. We have shown year-over-year improvement in performance of the upper limb in our open label extension groups, and all those patients are non-ambulant. We believe deramiocel is, has been, and will continue to be a very good option for those later stage, non-ambulant patients with the disease, and we look forward to taking that across the line as well in the future.

Kristen Kluska, Analyst

Thank you for that. Another question is, I know you have robust safety data as we consider the potential to move to commercialization with more patients receiving treatment at once. Is there anything we should consider from a safety protocol? Will physicians want to treat a few patients first, or will doctors require more extensive testing? I ask this as we see with some gene therapies that there are many specialists involved due to some known safety risks.

Linda Marban, CEO

Yes. Thanks. The Duchenne community has been discussing the care teams required for gene therapy for several years. Gene therapies are complicated due to using viral vectors. The immune system typically reacts against viral introduction. For deramiocel, it’s a cell therapy, and we are not performing any genetic manipulation. We have conducted over 700 infusions with no serious safety events occurring since early stage hypersensitivity, which has been managed with antihistamines and steroids. To err on the side of caution, we will conduct our infusions at infusion centers or care centers in case a hypersensitivity reaction happens. We do not anticipate needing a care team since infusions are simple, and the side effects we’ve observed are mild flu-like symptoms easily managed by our investigators. Therefore, I don’t think it will have the same complicated introduction or care paradigm needed as gene therapy.

Kristen Kluska, Analyst

Thank you so much again.

Operator, Operator

Thank you. And your next question comes from the line of Catherine Novack from JonesTrading. Please go ahead.

Catherine Novack, Analyst

Hi. Good afternoon, everyone. Thanks for taking my question. I'm just wondering if you can discuss in the past, the FDA had made comments regarding issues of single-arm studies in DMD due to the disease heterogeneity. Can you give us some perspective on FDA’s view on cardiac outcomes shown in HOPE-2 OLE and why they might take a different approach?

Linda Marban, CEO

I believe what you’re asking is about the FDA's consideration of data that is not placebo-controlled. Yes, we have had access to propensity-matched age-function medication matched sets of patients from the Vanderbilt Natural History Cardiac Consortium Study, funded by the FDA, allowing us to utilize it as a placebo group. This enables us to compare the natural history of cardiomyopathy to the open label extension groups year-over-year. Typically, this would be an issue with a volitional measurement. In this case, the beauty of the dataset is nothing about cardiac MRI is volitional. You cannot wish your heart better. Therefore, the FDA has been willing to consider this data closely as our results reflect a statistically significant treatment effect, minimal chance of randomness, allowing us confidence that this single-arm study has relevance due to its real-world evidence component.

Catherine Novack, Analyst

Got it. Thanks so much.

Operator, Operator

Thank you. And your next question comes from the line of Aydin Huseynov from Ladenburg. Please go ahead.

Aydin Huseynov, Analyst

Hi. Good afternoon, everyone. Congratulations on the progress this quarter. A couple of questions from us. Linda I think you mentioned heart diseases where deramiocel might be helpful; obviously, Becker muscular dystrophy is in your corporate presentation. When do you think we will have updates on the potential Becker muscular dystrophy trial design? Will it look like HOPE-2? Could you provide insights into your clinical strategy for Becker muscular dystrophy?

Linda Marban, CEO

Thanks, Aydin. Yes, it's funny. I thought about you while preparing my remarks. We’re currently working with the agency on initial steps to get our program going for Becker. We've recently submitted some requests to them. Our focus is to get deramiocel approved for Duchenne and then begin building towards Becker, in which we hold all the economics. Our goal will be to convince the agency that the cardiomyopathy associated with Becker is functionally similar to Duchenne cardiomyopathy, and we hope to move towards an accelerated pathway in Becker. We are bringing in key opinion leaders and medical expertise to assist us in building our Becker program, and I expect to have more updates over the next quarter or two.

Aydin Huseynov, Analyst

Okay. Understood. Thank you. Thank you for the update. What are other heart diseases where you think deramiocel can make a meaningful difference? I'm just trying to understand the whole commercial potential for deramiocel beyond DMD and BMD.

Linda Marban, CEO

This is an area of great interest to Capricor right now. We have a very powerful therapeutic with a defined mechanism of action, which is immunomodulatory that drives anti-fibrotic activity. We’re evaluating orphan cardiomyopathies to determine the best deployment options. Many physicians and experts in the field may have insights into this, and we will provide updates on pipeline expansion into orphan cardiomyopathies as we identify and set the best path forward.

Aydin Huseynov, Analyst

Okay. Thank you. Thanks so much.

Linda Marban, CEO

Yes. Thank you. Have a great day.

Operator, Operator

Thank you. And your last question comes from the line of Madison El-Saadi from B. Riley Securities. Please go ahead.

Madison El-Saadi, Analyst

Hey, Linda and A.J. Thank you for taking our question, and congrats on the progress. I'm coming away from MDA, so my questions may be a bit academic, so forgive me. Based on what you've seen through the course of deramiocel development, what do you think is the ideal baseline ejection fraction where impact will be the highest? Is it in the less than 35% range or more than 35% to 45%? Furthermore, you mentioned that you expect 7,500 boys to be eligible. Would this be based on a hard ejection fraction threshold, given that cardiac treatment in this population is often the result of shared decision making?

Linda Marban, CEO

Yes. Madison, thank you, and I hope you enjoyed the MDA. What we understand about the cutoff for ejection fraction is that treatment early yields the greatest long-term benefits in stabilizing disease progression. In patients with ejection fractions of 45% or greater, we see the most substantial stabilization over years. Some patients haven’t seen any decline in ejection fraction for years, due to what we believe is the preservation of healthy heart tissue through immunomodulation and anti-fibrotic effects. That said, we have treated patients with lower ejection fractions too, where we see stabilization in the disease process. Overall, our messaging is that early treatment is better because it provides a greater opportunity to treat the disease, preserve cardiac function, sustain quality of life, and hopefully sustain life. We remain open to treating various ejection fractions with clinical decisions driven by care providers. We are actively engaging with cardiologists treating Duchenne patients, both pediatric and adult, to familiarize them with deramiocel as part of the treatment paradigm for DMD cardiomyopathy.

Madison El-Saadi, Analyst

Understood. Thanks.

Linda Marban, CEO

Thank you for your question.

Operator, Operator

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

Linda Marban, CEO

Thank you for joining today's call. We look forward to updating you on our continued progress over the coming months, and I hope you have a nice evening.

Operator, Operator

Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.