SAN DIEGO - Capricor Therapeutics (NASDAQ: NASDAQ:CAPR), a biotech firm focused on cell and exosome-based therapies for rare diseases, has announced a significant financial agreement with Nippon Shinyaku Co., Ltd., a Japanese pharmaceutical company. The deal includes a $15 million equity investment at a 20% premium and an upfront payment of $20 million, with additional milestones that could total up to $715 million, as well as a double-digit percentage of future product revenues.
The investment and upfront payment are expected to extend Capricor's financial runway into 2026. The terms of the binding term sheet are set to be finalized in a definitive agreement in the fourth quarter of 2024. The agreement will facilitate the commercialization and distribution of Capricor's leading candidate, deramiocel, for the treatment of Duchenne muscular dystrophy (DMD) in Europe. This follows similar agreements for the United States and Japan and could potentially expand deramiocel's global reach.
Nippon Shinyaku has agreed to purchase approximately 2.8 million shares of Capricor common stock at $5.36 per share, a 20% premium over the 60-day volume-weighted average price. The closing of this offering is anticipated to occur around September 20, 2024. The funds raised are expected to support product development and general corporate purposes.
Capricor's CEO, Linda Marbán, Ph.D., emphasized the importance of the extended partnership with Nippon Shinyaku for global distribution and the advancement toward potential approval of deramiocel in the United States and other regions. She also noted the company's successful pre-BLA meeting with the FDA and ongoing discussions to refine the approval pathway for deramiocel in the U.S.
Deramiocel (CAP-1002) is an allogeneic cardiosphere-derived cell therapy that has shown promise in preclinical and clinical studies for its immunomodulatory, antifibrotic, and regenerative actions in dystrophinopathy and heart failure. DMD is a genetic disorder that leads to progressive muscle weakness and chronic inflammation, with limited treatment options and no cure. The therapy has received Orphan Drug Designation and the RMAT (Regenerative Medicine Advanced Therapy Designation) from the FDA.
The transaction is being conducted privately and will require the filing of a registration statement with the Securities and Exchange Commission for the resale of the shares purchased by investors. This press release is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Capricor Therapeutics has shared updates on its progress and financials during its second-quarter earnings call. The company is progressing with deramiocel for Duchenne muscular dystrophy treatment and is exploring its use for Becker muscular dystrophy. Capricor reported a strong partnership with Nippon Shinyaku, with potential milestone payments totaling up to $700 million, and holds a cash position of $29.5 million, expected to fund operations into the first quarter of 2025. The company is also preparing for a potential commercial launch of deramiocel and is in discussion with the FDA for label expansion. Revenue for Q2 2024 was approximately $4 million, with a net loss of $11 million. Capricor is planning to submit a rolling Biologics License Application (BLA) for deramiocel within 60 days. Furthermore, the company is in advanced partnership talks for distribution in Europe and has been included in the Russell 2000 and Russell 3000 Indexes.
InvestingPro Insights
As Capricor Therapeutics (NASDAQ: CAPR) solidifies its financial foundation through a strategic partnership with Nippon Shinyaku, it's important for investors to consider the company's financial health and market performance. According to InvestingPro, Capricor holds more cash than debt on its balance sheet, which is a positive sign of the company's ability to sustain its operations and invest in growth opportunities.
However, it's worth noting that Capricor is quickly burning through cash, which could be a point of concern for long-term sustainability, especially as the company continues to develop its therapies. This is further underscored by the fact that analysts have revised their earnings downwards for the upcoming period, indicating potential headwinds in profitability. In addition, Capricor has been experiencing weak gross profit margins, with the last twelve months as of Q2 2024 showing a gross profit margin of -37.73%.
On the market front, Capricor's stock price movements have been quite volatile, which may be a factor for risk-averse investors to consider. Despite a strong return over the last month, with a 1 Month Price Total Return of 15.91%, the 6 Month Price Total Return shows a decline of -28.17%, reflecting the unpredictable nature of the biotech sector.
Investors may find additional context in the company's valuation metrics, with a Price / Book ratio of 12.48 as of Q2 2024, which could suggest that the stock is trading at a premium compared to its book value. This aligns with the InvestingPro Tip that Capricor is trading at a high Price / Book multiple. For those interested in further analysis and metrics, InvestingPro offers a total of 12 additional tips on Capricor, which can be found at InvestingPro.
InvestingPro Data:
- Market Cap (Adjusted): $143.5M
- P/E Ratio (Adjusted) LTM: -5.14
- Revenue Growth LTM: 187.15%
This real-time data and the additional insights from InvestingPro can help investors make more informed decisions as they assess Capricor's potential in the biotech industry and the implications of its recent financial agreement.
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