CAPR CAPRICOR THERAPEUTICS, INC. 10-Q 2026-09-30 section summaries

Capricor Therapeutics (CAPR) — Q3 and nine months ended September 30, 2026

Capricor is a clinical-stage biotechnology company developing cell- and exosome-based therapies, including Deramiocel for Duchenne muscular dystrophy (DMD). It has one reportable segment and generated no revenue in either Q3 or the first nine months of 2026, or in the comparable 2025 periods.

Consolidated results

Spending increased substantially, widening operating and net losses. DMD program expense was $11.492M in Q3 and $37.577M in 9M 2026, compared with $7.3101M and $24.854M, respectively, in 2025. Exosome-platform research expense declined to $0.67349M in Q3 and $2.0063M in 9M, from $1.4749M and $4.1600M. G&A growth reflected higher compensation and professional and consulting fees, pre-commercial initiatives, insurance, facilities and IT. The 9M net loss included a $1,600 income-tax provision. In September, Capricor reduced its workforce by approximately 10%, recording $579,000 of termination benefits; it expects no material additional costs.

Cash flows and liquidity

Capital expenditures combine purchases of property and equipment, leasehold improvements and construction in progress. Cash, cash equivalents and restricted cash decreased by $242.610M during 9M 2026, to $45.238M from $287.847M. Investing activities used $143.498M, including net purchases of marketable securities; financing activities used $2.684M. Financing included approximately $6.340M paid against the CIRM obligation, partly offset by $3.656M of option-exercise proceeds.

The available-for-sale securities had $197.735M amortized cost and a $153,893 net unrealized loss at September 30. Management reported no credit-loss impairment and did not expect to sell securities, or be required to sell them, before recovery of amortized cost. Securities maturities were within two years.

Common shares outstanding were 57.371M at December 31, 2025 and 58.139M at September 30, 2026; the comparable 2025 period began with 45.582M and ended with 45.717M shares. Capricor’s December 2025 underwritten offering raised approximately $172.5M gross from 6.0M shares at $25 per share, with approximately $10.5M of offering costs. No further ATM shares were sold in 2026 through the filing date.

Facilities, commitments and obligations

Capricor is moving headquarters, manufacturing and laboratory operations to the approximately 171,000-square-foot Towne Centre premises. Its lease arrangement is contingent on FDA approval of Deramiocel for DMD on acceptable terms by December 31, 2026. Following the PDUFA-date extension, the company estimated contractual commencement on November 22, 2026 and rent commencement on November 22, 2027; either party may terminate if the contingency is unmet. Pending formal commencement, Capricor began paying approximately $565,000 monthly in license fees, operating expenses and administrative rent on September 1.

The lease’s initial base rent is approximately $958,000 monthly, subject to 3% annual increases, with 18 months of full base-rent abatement and six months of partial abatement. The landlord may provide up to approximately $31.6M for tenant improvements, but none had been received and no tenant-improvement costs incurred by September 30. At that date, operating lease liabilities totaled $92.230M ($1.519M current and $90.711M noncurrent), and future minimum payments were $157.165M before $64.935M of imputed interest. Lease ROU assets were $87.130M, versus $13.538M at year-end 2025. The Towne Centre arrangement was initially recorded with an approximately $76.3M ROU asset and $75.5M liability. Non-cancellable purchase-order commitments were approximately $26.1M.

Capricor repaid its CIRM award/loan obligation in Q2 2026: approximately $6.3M, comprising $3.4M principal and $2.9M accrued interest. The company also recorded $18.084M of stock-based compensation in 9M 2026, versus $13.384M in 9M 2025. At period-end, outstanding options totaled 13.600M, with a $9.39 weighted-average exercise price; unrecognized compensation was approximately $60.5M for non-vested options, plus $5.7M for performance-based options whose conditions were not considered probable. Deferred tax assets were fully reserved.

Licensing, commercial arrangements and risks

Capricor recognized no collaboration or distribution revenue and had no related receivables in the three- or nine-month periods. The $12.0M upfront payment under its Japan Deramiocel agreement remained deferred revenue at September 30, 2026. That agreement includes potential development and sales milestones of up to approximately $89.0M and a meaningful double-digit share of product revenue; these amounts remain outside the transaction price pending probability assessment and clarification of the regulatory pathway. Capricor remains responsible for Japanese development, approval and manufacturing. Its U.S. distribution dispute with Nippon Shinyaku/NS Pharma is in arbitration; the parties assert competing claims over the agreement and distribution rights.

The JHU CDC license carries low-single-digit royalties, low-double-digit sublicense consideration and development milestones capped at $1.85M. Capricor paid a $500,000 Phase 3 milestone in Q2 2026, with a final potential $1.0M milestone upon full FDA approval. CSMC licenses also impose development obligations, royalties and potential milestones; failure to meet obligations could affect licensed rights. The University of Rome license expired January 4, 2026.

Capricor is defending securities class actions and shareholder derivative matters, and Mesoblast sued in July 2026 alleging patent infringement related to Deramiocel. These claims were not adjudicated, and no material loss-contingency accrual was recorded. The company also identifies reliance on a limited number of suppliers for critical materials, which could delay development or increase sourcing costs.

Business and regulatory outlook

Capricor has no approved products or commercial sales, and its financial outlook depends heavily on FDA action on Deramiocel, its lead cell therapy for Duchenne muscular dystrophy (DMD). The FDA’s current PDUFA target date for the BLA is November 22, 2026, following an FDA-requested major amendment. Capricor expects continued substantial losses and may need additional funding.

The FDA issued a Complete Response Letter in July 2025, citing insufficient substantial evidence of effectiveness and requesting additional clinical data. After a July 2026 advisory committee meeting, members voted 3–9 against whether the evidence supported effectiveness for DMD cardiomyopathy. The committee did not vote on the skeletal-muscle primary endpoint or overall benefit-risk, and its recommendation is nonbinding. Capricor submitted a major amendment in August 2026 with 24-month HOPE-3 open-label extension data and additional analyses, supporting a refined proposed indication for upper-limb impairment in patients older than 9, consistent with the trial population and primary endpoint.

HOPE-3 met its primary endpoint at 12 months, with a statistically significant treatment difference versus placebo in PUL 2.0 upper-limb score (p=0.029). In the open-label extension, patients who switched from placebo to Deramiocel in year two had 76% slower upper-limb decline than in their first placebo year (1.56-point difference; 95% CI 0.47–2.64); these descriptive analyses were not powered for statistical comparison. Cardiac analyses found reduced myocardial-fibrosis progression and an approximately 2.8-percentage-point difference in left ventricular ejection fraction favoring Deramiocel among patients with cardiomyopathy at baseline (nominal p=0.0165).

A July 2026 FDA BIMO inspection resulted in one Form 483 observation, primarily concerning SOPs, documentation, vendor oversight and audit-report timeliness for HOPE-3. Capricor says it believes the observation does not affect data integrity or reliability, has responded, and is awaiting FDA feedback. Review outcome and timing remain uncertain.

Capricor is preparing for a potential launch, including distribution, patient support, market access, reimbursement and physician education. Its San Diego cGMP facility is intended to support initial commercial supply if approved; expansion and cleanroom validation are targeted for the first half of 2027, subject to regulatory and inspection risks. The company has also begun regulatory engagement in Europe and Japan. Studies in younger DMD patients and Becker muscular dystrophy remain contingent on the U.S. regulatory outcome.

Financial performance

Amounts in $ millions.

R&D expense rose 45% in Q3 and 40% in 9M, driven mainly by higher Deramiocel activity, headcount, launch preparation, facility expansion and stock compensation. In 9M, Deramiocel program expense was $37.577 million versus $24.854 million; personnel was $27.997 million versus $20.290 million; and facilities was $6.365 million versus $3.841 million. Exosome research declined to $2.006 million from $4.160 million as the company prioritized Deramiocel. G&A increased 155% in Q3 and 119% in 9M, reflecting hiring, facilities, professional services and regulatory and pre-commercial work; 9M professional-services expense was $10.829 million versus $1.818 million, and facilities expense was $4.707 million versus $0.345 million. Capricor spent approximately $41.9 million on Deramiocel in 9M 2026, excluding personnel, and approximately $2.2 million on exosomes, excluding personnel.

Liquidity, cash flows and financing

Liabilities included $92.2 million of lease liabilities, $16.4 million of accounts payable and accrued expenses, and $12.0 million of deferred revenue. Accumulated deficit was $422.2 million. Capricor said available resources should fund operating requirements for at least 12 months from issuance of the financial statements, but cautioned that it may need funds sooner or in greater amounts.

Higher operating cash use principally reflected the larger net loss and unfavorable receivables and payables/accrual movements. Investing cash flows reflected marketable-security transactions and facility spending. Financing cash use primarily reflected repayment of the California Institute for Regenerative Medicine (CIRM) obligation, partly offset by stock-option proceeds. Capricor repaid approximately $6.3 million to CIRM by September 30, 2026 ($3.4 million principal and $2.9 million accrued interest); certain reporting and other obligations remain.

The company raised $172.5 million gross in a December 2025 offering of 6.0 million shares at $25 per share, with approximately $10.5 million of fees and expenses. Its 2025 ATM sales totaled 2,682,307 shares at an average $28.89 for $77.5 million gross proceeds; no additional ATM shares were sold from January 1, 2026 through the filing date. Further financing may involve equity dilution, debt covenants, or partnership terms that require relinquishing rights. Capricor reports no off-balance-sheet arrangements.

Commercialization, programs and other considerations

A dispute with Nippon Shinyaku (NS) creates uncertainty over U.S. distribution. Capricor alleges NS failed to prepare adequately for launch and breached the agreement; it seeks rescission or a declaration permitting direct distribution or another distributor. NS argues the agreement remains in force. Capricor withdrew its preliminary-injunction application without prejudice and is pursuing arbitration; route to market and related spending depend partly on the outcome. Under the separate Japan agreement, NS is the exclusive distributor. Capricor received $12.0 million upfront in 2023 and may receive up to approximately $89.0 million in development and sales milestones plus a meaningful double-digit share of product revenue; Capricor remains responsible for development and manufacturing in Japan.

Deramiocel has been administered in more than 1,300 infusions to approximately 125 DMD patients across three trials. StealthX, an exosome vaccine studied by NIAID in a Phase 1 Project NextGen trial, was generally well tolerated, but early analyses showed limited neutralizing-antibody responses at tested doses; final results, including cellular immune-response data, are expected in the first half of 2027, subject to study finalization. Clinical-trial accruals depend on estimates of services, enrollment and vendor information; actual costs may differ from accruals. Stock-based compensation is non-cash and expected to remain potentially significant. Capricor is evaluating new accounting standards on interim reporting and internal-use software costs; adoption of the expense-disclosure standard is expected to add disclosures.

Market Risk

As of September 30, 2026, Capricor held approximately $198.5 million in cash, cash equivalents, restricted cash, and marketable securities, measured at combined fair value. The portfolio consisted primarily of bank checking and savings accounts, money market funds and bank money market accounts, commercial paper, corporate bonds, U.S. Treasury securities, and government agency bonds.

Interest-rate exposure is the primary market risk for these holdings: changes in rates could affect both interest income and investment fair values. Capricor does not hedge this exposure. It states that the portfolio’s relatively short maturities mean a hypothetical 100-basis-point increase or decrease in interest rates would not materially affect fair value. Its investment policy focuses on highly rated issuers and limiting credit exposure to reduce default and market risk, with investments evaluated on an ongoing basis.

Management, including the CEO and CFO, evaluated the company’s disclosure controls and procedures as of September 30, 2026, and concluded they were effective at the reasonable-assurance level. During the quarter, no changes materially affected, or were reasonably likely to materially affect, internal control over financial reporting.

Capricor reported no material changes to previously disclosed risk factors other than the additions and modifications summarized below.

Deramiocel regulatory uncertainty

On July 29, 2026, the FDA’s Cellular, Tissue and Gene Therapies Advisory Committee voted 3–9 against whether available evidence supported Deramiocel’s effectiveness for DMD-associated cardiomyopathy. The committee question was narrower than Capricor’s proposed indication and did not address the HOPE-3 primary endpoint of upper-limb function or Deramiocel’s overall benefit-risk profile. Capricor submitted a BLA amendment that the FDA has indicated it is willing to review, but the timing and outcome remain uncertain. The FDA could delay approval or issue a complete response letter if it requires additional evidence or testing. The PDUFA target action date was extended to November 22, 2026.

U.S. distribution dispute and commercialization dependence

Capricor alleges that Nippon Shinyaku (NS) failed to prepare adequately for a U.S. launch and materially breached the U.S. Distribution Agreement. Capricor initially sought rescission and the right to distribute Deramiocel directly or through another distributor, but withdrew its preliminary-injunction application without prejudice while pursuing arbitration after the FDA decision. NS seeks a ruling that the agreement remains in force and Capricor must perform its obligations. Capricor’s counterclaims seek damages and relief establishing its distribution rights, including rescission or restitution.

The arbitration’s outcome is uncertain. It could be prolonged and costly, distract management, generate negative publicity and commercial uncertainty, and adversely affect potential revenue, financing terms and the stock price. If Capricor loses, a substantial portion of its potential revenue for the foreseeable future may depend on milestone, revenue-sharing and other payments under agreements granting NS exclusive Deramiocel distribution rights in the United States and Japan for a significant period, with limited termination rights. Weak commercialization by NS or a future distributor could materially constrain revenue.

Launch readiness, partnerships and execution

Capricor has no experience marketing, selling or distributing products at commercial scale. It is building sales, marketing, market-access, patient-support and compliance capabilities for a potential Deramiocel launch, but the cost, scope and timing are uncertain. Approval is pending, and the launch model depends partly on the NS arbitration. Capricor could spend prematurely or fail to build capabilities in time. A first commercial launch also entails hiring, distribution, supply-chain and regulatory-compliance challenges. Infusion logistics, treatment-center capacity, site-of-care requirements, safety and labeling, competition, reimbursement and physician and patient adoption could limit uptake even if the product is approved.

Capricor is exploring partnerships for Deramiocel in the United States and other territories, as well as for its exosome candidates. Partnerships could provide development or commercial resources but may require relinquishing rights or control and expose the company to partner underinvestment, delays, termination, financial difficulties, competing programs or disputes. Proceeding independently would require costly development and commercialization efforts.

Funding, growth and other risks

Capricor has a history of net losses, expects substantial losses to continue for the foreseeable future, has no FDA-approved product and may never achieve or sustain profitability. It expects to need additional capital to fund clinical trials and development programs. Results may fluctuate with clinical and regulatory timelines, product viability, commercialization spending and the NS dispute.

Execution risks also include manufacturing capacity and reliance on third-party manufacturers, intellectual-property claims (including a recent claim by Mesoblast), reimbursement, competition and protection of licensed intellectual property. Reaching near-term development milestones may require expansion of facilities, systems, management capacity and qualified staffing, potentially including international operations and a commercial organization. The scale of expansion depends partly on the NS dispute and whether Capricor launches directly or through distributors; ineffective management of growth could harm the business.

During the three months ended September 30, 2026, no Company directors or executive officers adopted or terminated Rule 10b5-1(c) trading plans or other non-Rule 10b5-1 trading arrangements.