Capricor (CAPR) upcoming FDA timelines
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 update on a 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/
There are three main threads that I’d like to touch on in this discussion.
- What data is being presented to the FDA in the type B meeting
- Are there any clues that can help gauge a better timeline?
- What are the updated odds based on the recent events?
FDA ‘Type B’ Meeting
On the first topic – the debate is really between whether the data coming out “in a major peer-reviewed journal” (as was stated recently) is the HOPE-2 FINAL data or the OLE supporting data. Make no mistake – this data has to be the FINAL Hope-2 data and not the OLE data as has been mentioned by many. What we need to understand here is that the purpose of HOPE-2 was to determine a STATISTICAL benefit whereas the main purpose of the OLE is to co-relate a CLINICAL benefit to the statistical benefit determined in HOPE-2. Simply put – a statistical analysis would be next to impossible on the OLE (something that would be expected in a peer-reviewed publication)
If you’re still on the fence about this, take a good look at the above slide presented at the PPMD conference on June 23rd 2021. The “final data pending publication” is clearly referring to the HOPE-2 data and not the OLE data that is still being collected for preliminary analysis. The next question everyone seems to be asking is “When is this data getting published?”. In my opinion, a better question would be “WHY is this data being published?”. If someone went through the effort of not just collecting this data, but to push for publication in a prestigious journal as well as push the FDA for a second look, then directionally the data must be worth the effort. The pursuit – and the lack of Phase III – also makes sense if you consider that the HOPE-2 data was almost statistically significant in itself with regard to the primary endpoint of (Shoulder + Mid + Distal PUL 2.0 -> 94.7% as opposed to the “Gold Standard” of 95% statistical significance – and that includes a penalty for early unblinding). So even a very slight shift in direction has the potential to make the whole data both statistically significant and clinically meaningful.
Regarding “when” this data is getting published – that is much more difficult to pinpoint with possibly the FDA embargo rules in effect. If I had to venture a guess, I’d say closer to Mid-August – when the next earnings call is likely to happen – would be a good timeframe to expect an update on this front.
Closer look at timelines – the clues
Now that we’ve looked at the timelines of the HOPE-2 final data, the next focus should be on the OLE data that’s also maturing simultaneously. In this regard, the following slide presented at the PPMD conference deserves a closer examination.
Two things immediately jump out when you see this – Firstly, as we discussed earlier, the OLE data is trying to establish a clinical meaningfulness to the statistical evidence in HOPE-2. This is straight out of the Sarepta / NS Pharma playbook -> establish a clinical meaningfulness to DYSTROPHIN levels which are statistically significant and then use that as a justification for approval. Capricor is attempting to link PUL 2.0 to a clinically meaningful outcome and use that as a basis for a BLA. The second thing to note is the statement about OLE “All subjects were off the study for at least 9 months prior to OLE”. This means that the timeline with respect to OLE should be as shown below. Given that the “Top line” Hope 2 data came out in May 2020, the last infusion should have been four months prior (last data collection 3 months after infusion, one month to collate data, one month to announce) – i.e. Jan 2020. Which means, allowing for the 9 month for initiation of OLE, the OLE should have started infusions on Oct 2020 with infusions in October 20, January 21, April 21 and July 21. Which means that the OLE results would be available to Capricor management for analysis earliest on mid-August this year and they should expect to know the FDA’s reaction to this by September 2021. This is the reason for the consistent Q3 guidance.
Updated odds based on the latest happenings
To get into this – let me share a comment from the last earnings call on May 13th where it was revealed that the new data package (HOPE-2 FINAL and *not* OLE) was submitted to the FDA. It should be clear from the discussion so far that the strategy is to highlight the statistical benefit (“new data package”) and then link it to a clinical benefit (“OLE Data”). At this point, we don’t have visibility to the new HOPE-2 “Final” data (pending FDA embargo and pending peer review) but we do know that the data is significant enough to ask for a second look and significant enough to require publication.
I’m on record saying consistently even before the PPMD meeting and before the previous earnings call that the Accelerated Approval decision (approval of the package based on Phase-II data) has been a coin toss (55% odds of this happening, 45% chance of Phase III requirement). The fact that the FDA is pondering over this and that Capricor is collecting OLE data is enough to raise those odds but the real “tell” lies in the S3 filed on March 16th. What did Capricor know on or around March 16th that made them believe they could raise significant capital at higher prices? Based on the timeline analysis (data was with FDA in mid-May, Package must have been prepared from mid-April, so initial data must have been available…mid-March? I’d previously speculated that the S3 was for an impending partnership in the exosomes space – but that was before the FDA package submission was revealed. So, the pieces are definitely falling in place with the next shoe to drop likely in the next earnings call in mid-August.
Disclosure: I am long CAPR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.