Disappointing interim trial data suggesting that Capricor Therapeutics Inc.'s lead candidate is unlikely to best a placebo in reducing scar size after heart attack dimmed expectations that Janssen Biotech Inc. would exercise its option to take an exclusive license on the cell therapy, sending Capricor's shares (NASDAQ:CAPR) down 62 percent to close at $1.16, near a 52-week low. The companies are still in active talks, said CEO Linda Marbán, but Capricor is already cutting its work force and reducing the scope of its operations to focus on applying the candidate, CAP-1002, to Duchenne muscular dystrophy (DMD)-associated cardiomyopathy, where recent trial data have been more encouraging.

Janssen has an exclusive option to license CAP-1002, bound by a 60-day countdown that will be triggered when Capricor delivers a dossier of six-month data from the trial, called ALLSTAR, something it expects to do later this month. While Janssen's option was originally negotiated as being "in the field of cardiology," Capricor has played coy about whether DMD-associated cardiomyopathy would be covered in Janssen's option or a new option. During a conference call held Friday, Marbán said her company was still in negotiations with Janssen but is planning to move ahead with the program "with or without Janssen in the picture."

Decompensated heart failure is a common cause of death for individuals with DMD suffering cardiomyopathy and, as an indication, could prove CAP-1002's savior. At the end of April, the Los Angeles-based company reported six-month data from an ongoing exploratory phase I/II trial, called HOPE-Duchenne, showing that it improved measures of cardiac structure and upper limb function in patients with DMD and advanced heart disease. (See BioWorld Today, April 26, 2017.)

Top-line 12-month results from HOPE-Duchenne are due in the fourth quarter. Meanwhile, subject to regulatory approval, Capricor hopes to begin enrolling DMD patients in a new trial that would deliver CAP-1002 via intravenous infusion, as opposed to intracoronary infusion, which was done in both the ALLSTAR and HOPE trials. I.V. delivery should be more compatible with giving multiple doses and higher doses of CAP-1002 over time than intracoronary administration allowed. The therapy is composed of allogeneic cardiosphere-derived cells.

How much the trial might cost or how many patients would be required isn't yet known, Marbán said, and likely won't be until the conclusion of the company's meeting with the FDA. That talk and other conversations with the agency could potentially be aided by Capricor's plans to seek the FDA's new regenerative medicine advanced therapy designation for CAP-1002 by the end of the month. But the details of the company's current and anticipated financial picture, including further details about how much money the staffing cuts will save, will have to wait for May 15, when the company announces its first-quarter financial results.

At the end of 2016, Capricor had about $16.2 million in cash, cash equivalents and marketable securities. On May 8, just ahead of the ALLSTAR data release, it raised a further $3.7 million in a private placement led by Cedars-Sinai Medical Center. It's too early to say whether ALLSTAR's negative interim readout would qualify as a "no-go milestone" that would – in the case Capricor abandons the study – allow for forgiveness of a $19.8 million loan that the California Institute of Regenerative Medicine provided to support the study.

For now, the ALLSTAR phase II study will continue. The randomized, double-blind, placebo-controlled study has enrolled 142 adults who've experienced a large heart attack with residual cardiac dysfunction. So far, Capricor said, it has demonstrated a low probability of achieving a statistically significant difference in the 12-month primary efficacy endpoint: percent change from baseline infarct size as a percent of left ventricular mass, measured by cardiac MRI.

The outcome was at odds with two earlier studies: The ALLSTAR phase I trial and another phase I study called CADUCEUS. In the ALLSTAR phase I, MRI demonstrated that the patients treated with CAP-1002 experienced a significant improvement in scar size, viable heart mass and regional function. Ejection fraction, a global measure of the heart's pumping ability, improved in treated patients, too.

In CADUCEUS, a 17-patient phase I study of CAP-1001, another Capricor cell therapy employing autologous cardiosphere-derived stem cells, the cells appeared to be effective in reducing scar within several months of a heart attack.

Marbán said Friday that, while investigators did see some improvement in scars in patients treated with CAP-1002, the corresponding decrease in scar in the control patients "made the entire data set difficult to interpret." Furthermore, she suggested, ALLSTAR's fate might have been the result of the scar measurement technique not being well-suited to larger studies where scanning conditions cannot be as carefully controlled and image analyses cannot be as carefully curated as in smaller clinical trials.

Despite the endpoint miss, the company said it still saw some initial bright spots in the data. At six months, a near-statistically significant (p=0.05) reduction of mean end-diastolic volume, as well as a trend of reduction of mean end-systolic volume, were seen in the CAP-1002 treatment group. It also said there was no notable difference between treatment groups with respect to the change in ejection fraction and no safety signals in the CAP-1002 treatment cohort.