Capricor CAPR August 2021 Update

Capricor CAPR August 2021 Update

August 10, 2021 0 By LineBacker04
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Hello everyone!

By way of introduction, I’m a veteran in the Life Sciences industry and manage a narrow portfolio of select stocks in this sector. The investing philosophy is that there are clear winners and losers in this sector and I use my expertise to focus on select investments that are attractive based on science, valuation and positive triggers.  I’ve been a frequent poster on Stocktwits (https://stocktwits.com/LineBacker04) and was invited to post here by the Kamet team. This is my second post on the Kamet website.

This is an ongoing update on a series of previous analysis I’d presented on what’s been going on with Capricor. If you’re new to this or looking for prior context, it might be a good idea to go through my previous thoughts on this topic that can be found here -> https://kametresearch.com/capricor-capr-final-countdown/ and here -> https://kametresearch.com/capricor-capr-upcoming-fda-timelines/

This installment will be focused on the most recent happenings at Capricor with an eye on the earnings call that is due on Thursday 12th August 2021. The key points of discussion are:

  • Three distinct swim lanes
  • INSPIRE Update and expectations
  • The impact of Institutional Ownership and Key Personnel changes

Three Distinct Swim Lanes

On the first topic – when you look at the near-term product pipeline, there are three distinct product candidates that could contribute to a near term revenue stream for Capricor.

Capricor

Capricor

These are:

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Normally, when you find a clinical stage company that gets closer to commercialization, you expect a Market Capitalization of somewhere between $300M to $500M depending on the indication being pursued. A market Cap of just around $100M is mostly unheard of for a late-stage biotech. So let’s look at some of the triggers that could lead to an upward correction in valuation.

 

INSPIRE Update and expectations

One of the trials for which I’m expecting a major update in the earnings call is the INSPIRE trial for which Capricor has been enrolling 60 patients since late last year. One of the main reasons for the slow enrollment is likely the strict enrollment criteria of low Oxygen saturation (below 92%) or a low cardiac ejection fraction score of below 50% as shown below which really limits the patient population.

Capricor

Capricor

However, the same criteria could be a well thought strategy for Capricor because it allows them to showcase the biggest strength of their CAP-1002 Clinical product. Based on previously published data, it would be a fair bet to expect CAP-1002 to drive a positive outcome for patients with low Oxygen Saturation and/or low Cardiac Ejection Fraction. There’s also a ton of supporting data that suggests that such patients really face long odds without proper intervention. One of the key things I’m looking for with INSPIRE is a recruitment update during the earnings call and some sort of guidance that provides a pathway to Emergency Use Authorization (EUA) for CAP-1002 as a COVID treatment before the end of the year.

 

Recent Institutional Ownership

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One of the major ownership changes recently with regard to Capricor has been the acquisition of a 9.78% Passive stake by Oracle Partners’ Larry N. Feinberg on Feb 9th 2021 followed by a filing that indicated they had closed their entire position by early August. Some of the effects of this investment and subsequent exit has been:

  • Capped Share price and Market Cap – very likely we would have been trading in the $6-$8 range by now based on the guidance provided during the PPMD conference had it not for the constant SELL pressure on the weight of 2 Million+ shares that needed to sold to help Oracle close this position
  • Low volume since the exit -we hardly get 300K+ shares traded on a given day
  • Very limited updates and PRs during the entire timeframe

 

One of the things I’ve always wondered lately is whether the complete Radio silence from Capricor over the last few months was deliberate (i.e., controlled by Capricor) or something completely out of their hands (i.e. DMD HOPE-2 being dependent on FDA, INSPIRE being dependent on enrollment, etc.). I believe both factors may have contributed to this – the whole transaction by Oracle partners appears to be some sort of a Proxy fight with Larry whereby there was a deliberate attempt to not help them benefit from any announcements – which would explain why things that are 100% under Capricor’s control such as filing an IND for the vaccine, striking a partnership deal, etc. never really materialized. So, if this is accurate (and really no way to know for sure without being an insider), then we should see much more frequent and substantial updates from Capricor in the next few months. The fact that they have open positions on the Manufacturing side (such as a Quality Control Manager) is *indicative* of some sort of advancement in the FDA DMD conversations – whether that leads to better guidance and clarity on the DMD front – we will see in a few days.

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