CAPRICOR THERAPEUTICS, INC.

Capricor Therapeutics, Inc. is a biotechnology company focused on the development and potential commercialization of cell and exosome-based therapeutics for the treatment of Duchenne muscular dystrophy (DMD), a rare genetic disorder characterized by progressive muscle degeneration and premature death, as well as other diseases with significant unmet medical need. The company's lead product candidate, Deramiocel, is a cell therapy designed to address the cardiac and skeletal muscle complications associated with DMD. The company's Biologics License Application (BLA) for Deramiocel for the treatment of DMD is currently under review by the U.S. Food and Drug Administration (FDA), with a Prescription Drug User Fee Act (PDUFA) target action date of August 22, 2026 ¹, for potential approval in the United States. The company currently has no products approved for commercial sale.

The company operates in highly competitive areas of biotechnology and pharmaceutical development characterized by extensive worldwide research conducted by pharmaceutical companies, biotechnology companies, academic institutions, government agencies and research organizations. Many of these organizations have substantially greater financial resources, larger research and development staffs and facilities, longer histories of obtaining regulatory approvals and greater manufacturing and commercialization capabilities than Capricor does. In Duchenne muscular dystrophy, competitors include Sarepta Therapeutics, Inc. with its approved therapies EXONDYS 51 (eteplirsen), AMONDYS 45 (casimersen), VYONDYS 53 (golodirsen), and ELEVIDYS (delandistrogene moxeparvovec-rokl), as well as Nippon Shinyaku Co., Ltd. with VILTEPSO (viltolarsen). Deramiocel is designed to target inflammatory and fibrotic pathways that contribute to disease progression and may be complementary to mutation-targeted approaches.

The company generates revenue through collaboration and distribution agreements, primarily with Nippon Shinyaku Co., Ltd. Capricor has entered into a Commercialization and Distribution Agreement with Nippon Shinyaku for the United States and Japan, and a Binding Term Sheet for the European region. Under these agreements, Capricor receives upfront payments, milestone payments, and a share of product revenue. The company currently has no product revenue from commercial sales. Revenue is recognized in accordance with ASC Topic 606, using a five-step model to recognize revenue when control of promised goods or services is transferred to customers.

Deramiocel is Capricor's lead product candidate, a cell therapy comprised of cardiosphere-derived cells (CDCs) isolated from qualified donated human hearts, for the treatment of Duchenne muscular dystrophy. Deramiocel is designed to slow disease progression through the immunomodulatory, anti-inflammatory, pro-angiogenic and anti-fibrotic activities of CDCs. The clinical development program includes the Phase 3 HOPE-3 trial, the Phase 2 HOPE-2 trial and its ongoing open-label extension, and the earlier Phase I/II HOPE-Duchenne clinical trial. In the HOPE-3 trial, the primary endpoint of PUL v2.0 achieved statistical significance (p=0.03) ² and the key secondary cardiac endpoint of left ventricular ejection fraction (LVEF) achieved statistical significance (p=0.04) ³. The study randomized 106 ⁴ participants across 20 ⁵ U.S. clinical sites and the average age of participants was approximately 15 ⁶ years. Approximately 90% ⁷ were receiving cardiac medications at baseline, and approximately 75% ⁸ had a clinical diagnosis of cardiomyopathy.

The StealthX exosome platform program consists of engineered exosomes for vaccine and therapeutic development. The StealthX vaccine is a proprietary vaccine developed internally by Capricor utilizing exosomes that were engineered to express either spike or nucleocapsid proteins on the surface. In 2024, Capricor was selected to be part of Project NextGen, an initiative by the U.S. Department of Health and Human Services to advance a pipeline of new, innovative vaccines for COVID-19. As part of Project NextGen, the National Institute of Allergy and Infectious Diseases (NIAID) is conducting a Phase 1 clinical study with the StealthX vaccine which is currently ongoing. Final results from the trial, including cellular immune response data, are expected in the second quarter of 2026 ⁹, subject to completion of the study by NIAID. The company is also exploring the use of the StealthX exosome platform for a broad range of therapeutic applications including targeted RNA, protein and small molecule therapeutics.

In December 2025, the company announced positive topline results from the HOPE-3 study showing that the primary endpoint of PUL v2.0 and the key secondary cardiac endpoint of LVEF achieved statistical significance (p=0.03 and p=0.04, respectively). In March 2026, additional analyses and new functional outcomes data from the HOPE-3 trial were presented, including a statistically significant reduction in myocardial fibrosis as measured by late gadolinium enhancement (LGE), corresponding to a three-segment treatment difference compared to placebo at 12 months (p=0.022) ¹⁰. In patients with baseline cardiomyopathy, treatment resulted in a 3.3 ¹¹ percentage-point improvement in left ventricular ejection fraction compared to placebo (p=0.017) ¹². A Global Statistical Test (GST), a composite including PUL v2.0, LVEF and Patient Global Impression of Severity (PGI-S), demonstrated a statistically significant overall treatment effect favoring Deramiocel (p=0.017) ¹³. On December 5, 2025, the company completed an underwritten public offering of 6,000,000 ¹⁴ shares of common stock, including the exercise in full of the underwriters' option to purchase additional 900,000 ¹⁵ shares, at a public offering price of $25.00 ¹⁶ per share for total gross proceeds of approximately $172.5 million ¹⁷. The company also established a September 2025 ATM Program for aggregate sales proceeds of up to $150.0 million ¹⁸, subsequently reduced to $125.0 million ¹⁹, and sold an aggregate of 2,682,307 ²⁰ shares of common stock under the program at an average price of approximately $28.89 ²¹ per share for gross proceeds of approximately $77.5 million ²².

For the fiscal year ended December 31, 2025, total revenue was $0 ²³ compared to $22,270,465 ²⁴ in fiscal 2024. Net loss was $105,043,946 ²⁵ compared to $40,467,186 ²⁶ in the prior year. Diluted EPS was ($2.26) ²⁷ versus ($1.15) ²⁸ in the prior year. Research and development expenses increased to $84,454,595 ²⁹ from $49,968,585 ³⁰ in 2024, an increase of approximately $34.5 million ³¹ or 69% ³². General and administrative expenses increased to $23,687,535 ³³ from $14,865,122 ³⁴ in 2024, an increase of approximately $8.8 million ³⁵ or 59% ³⁶. As of December 31, 2025, the company had cash, cash equivalents, and marketable securities totaling approximately $318.1 million ³⁷ and an accumulated deficit of approximately $304.9 million ³⁸.

The company expects to spend approximately $100.0 million to $125.0 million ³⁹ in 2026 primarily consisting of CMC expansion, product inventory buildout, clinical, regulatory and pre-commercial expenses for its Deramiocel program. For the exosomes program, the company expects to spend approximately $7.0 million to $10.0 million ⁴⁰ during 2026 on development expenses, which includes personnel, preclinical studies and manufacturing related expenses.

The primary growth vector for Capricor is the potential approval and commercialization of Deramiocel for the treatment of Duchenne muscular dystrophy. The BLA is currently under FDA review with a PDUFA target action date of August 22, 2026 ⁴¹. If approved, Deramiocel has the potential to become the first therapy designed to address both skeletal and cardiac muscle manifestations of DMD. The company is also exploring the potential use of Deramiocel in Becker muscular dystrophy (BMD), which is estimated to affect approximately 5,000 ⁴² individuals in the United States. In parallel with U.S. regulatory activities, the company has initiated regulatory engagement in Europe and Japan and is working with the relevant health authorities to determine the most appropriate regulatory pathway for Deramiocel in those regions.

A second major growth vector is the advancement of the StealthX exosome platform. The company is developing an exosome-based vaccine candidate targeting SARS-CoV-2, which is currently being evaluated in a Phase 1 clinical study conducted in collaboration with the NIH. Final results from the trial are expected in the second quarter of 2026 ⁴³. If NIAID finds that the StealthX vaccine meets its criteria for safety and efficacy, they may consider the program for a funded Phase 2 study. The company is also exploring exosome-based approaches for infectious diseases, monogenic diseases and other potential indications. The strategy for this program is to pursue strategic partnerships that may provide additional resources and capital to support further clinical development.

The company's operating expenses have increased significantly as it prepares for potential commercialization. Research and development expenses for 2025 were $84,454,595 ⁴⁴ compared to $49,968,585 ⁴⁵ in 2024, an increase of 69% ⁴⁶. General and administrative expenses for 2025 were $23,687,535 ⁴⁷ compared to $14,865,122 ⁴⁸ in 2024, an increase of 59% ⁴⁹. The company expects to continue incurring substantial losses and negative net cash flows from operating activities as it expands manufacturing capabilities, builds product inventory, and conducts clinical and regulatory activities.

The company is expanding its manufacturing capabilities to support potential commercial launch. In 2025, the company entered into an amendment to its lease for its San Diego headquarters, adding approximately 22,000 ⁵⁰ square feet of additional space to support future manufacturing scale-up, additional production suites, and expanded quality control and operational capabilities. The company's primary manufacturing facility in San Diego is designed to produce GMP Deramiocel for clinical and potential commercial use, subject to FDA approval. The FDA completed a Pre-License Inspection (PLI) of this facility in mid-2025 and subsequently confirmed that all responses to the Form 483 observations were found acceptable. The company also maintains a second manufacturing facility at Cedars-Sinai Medical Center in Los Angeles, but does not plan to extend its lease at CSMC beyond mid-2026 ⁵¹.

The company's capital allocation strategy includes significant investment in R&D and capital expenditures. For 2026, the company expects to spend approximately $100.0 million to $125.0 million ⁵² on its Deramiocel program and approximately $7.0 million to $10.0 million ⁵³ on its exosomes program. The company raised substantial capital in 2025 through a December underwritten public offering with gross proceeds of approximately $172.5 million ⁵⁴ and a September 2025 ATM Program with gross proceeds of approximately $77.5 million ⁵⁵. As of December 31, 2025, the company had cash, cash equivalents, and marketable securities totaling approximately $318.1 million ⁵⁶. The company has never declared or paid a dividend on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

The company faces several structural headwinds and constraints. The company has a history of net losses and expects to continue to incur substantial net losses for the foreseeable future. As of December 31, 2025, the company had an accumulated deficit of approximately $304.9 million ⁵⁷. The company's ability to generate product revenue and achieve profitability will depend on the successful development, regulatory approval and commercialization of Deramiocel and any other product candidates. The company may need additional funding to complete the development and potential commercialization of its product candidates. The company's exosome technologies are based on a novel therapeutic approach which makes it difficult to predict the time and cost of development and the probability of subsequently obtaining regulatory approval. The company also faces risks related to manufacturing, including the complexity of cell-based therapies, reliance on limited suppliers for critical materials, and the need to increase manufacturing capacity.

The company has identified several regulatory and macro factors that could constrain its business. The biopharmaceutical industry is subject to extensive regulatory obligations and policies that may be subject to significant and abrupt change, including due to judicial challenges, election cycles, and resulting regulatory updates and changes in policy priorities. The current presidential administration has signaled its continued commitment to significantly reduce government spending through cuts to federal healthcare programs and reductions in the workforces of key government agencies, such as the U.S. Department of Health and Human Services, FDA, and CMS. Efforts by the current administration to further limit federal agency budgets or personnel may lead to slower response times and longer review periods, potentially affecting the company's ability to progress development of its product candidates or obtain regulatory approval. The company also faces risks related to potential most-favored-nation (MFN) pricing models, including the proposed GLOBE and GUARD models, which could require additional rebates on product candidates if approved.

The company's success depends entirely on the successful development and commercialization of its product candidates, particularly Deramiocel, and it currently has no products approved for sale and generates no revenues from sales of any products. The company received a Complete Response Letter (CRL) from the FDA in July 2025 stating that the BLA for Deramiocel did not meet the statutory requirement for substantial evidence of effectiveness, and while the company has since resubmitted with a new PDUFA date of August 22, 2026 ⁵⁸, there is no assurance of approval. The company has a history of net losses, with a net loss of $105,043,946 ⁵⁹ for fiscal 2025 and an accumulated deficit of $304,878,485 ⁶⁰ as of December 31, 2025, and expects to continue incurring substantial losses. The company's exosome technologies are based on a novel therapeutic approach with no products based on exosomes approved in the United States for therapeutic use, making it difficult to predict the time and cost of development. The company depends on its exclusive distributor, Nippon Shinyaku, for the commercial sale of Deramiocel in the United States and Japan, and if Nippon Shinyaku fails to successfully commercialize Deramiocel, the company's ability to generate revenue would be materially limited. The company faces substantial competition from companies with greater financial resources, including Sarepta Therapeutics and others developing therapies for DMD.

Management's message to shareholders emphasizes the significant progress made in advancing Deramiocel through the regulatory process, highlighted by the positive topline results from the Phase 3 HOPE-3 trial and the BLA resubmission with a PDUFA target action date of August 22, 2026 ⁶¹. The strategic priorities for the period ahead include: advancing Deramiocel through the regulatory process and preparing for potential commercialization in the United States and other key markets; continuing the development of the Deramiocel program for the treatment of DMD and preparing for potential commercialization, including expanding manufacturing capabilities to support commercial supply, further developing commercial infrastructure, and securing additional partners in select international markets; evaluating potential additional therapeutic indications for Deramiocel beyond DMD; advancing the exosome platform for therapeutic development through internal research, strategic collaborations and partnerships; and selectively pursuing strategic collaborations and partnerships to accelerate development and commercialization timelines and potentially expand the pipeline. Management also noted that the company expects to spend approximately $100.0 million to $125.0 million ⁶² in 2026 on the Deramiocel program and approximately $7.0 million to $10.0 million ⁶³ on the exosomes program.