On September 11, 2025, Roth Capital Partners analyst Boobalan Pachaiyappan, Ph.D., reiterated a Buy rating on Capricor Therapeutics Inc. (CAPR:NASDAQ), with an unchanged price target of US$12.00, representing 90% upside from the current share price at the time of the report of US$6.33.
The analyst characterized the ongoing situation as "a tug-of-war with the FDA regarding Deramiocel's BLA for the proposed treatment of DMD cardiomyopathy," with Type A meeting minutes expected to provide clarity on the regulatory path forward.
FDA Complete Response Letter and Regulatory Dispute
On July 9, 2025, the FDA's Center for Biologics Evaluation and Research, under newly appointed Director Dr. Vinay Prasad, issued a Complete Response Letter to Capricor Therapeutics Inc. indicating that deramiocel's Biologics License Application did not meet the requirement for substantial evidence of effectiveness, along with Chemistry, Manufacturing and Controls deficiencies.
The FDA's primary concerns centered on the Phase 2b HOPE-2 study, which included seven patients who completed 12 months of deramiocel treatment versus nine in the placebo group. According to the agency, both the primary and secondary endpoints failed to demonstrate efficacy, and the 50 secondary and exploratory endpoints, including post hoc analyses of 26 cardiac MRI assessments, could only be deemed exploratory and hypothesis-generating rather than evidence of drug effectiveness because they were not pre-specified for hypothesis-testing.
Additionally, the FDA indicated that data from the HOPE-2 open-label extension study, with 12 patients who completed 36 months of treatment at the time of BLA filing, may not be considered supportive due to potential Type 1 error. The agency requested an adequate and well-controlled study evaluating the impact of deramiocel on cardiac outcomes in Duchenne muscular dystrophy cardiomyopathy patients.
Pachaiyappan noted that "the new CBER leadership that issued the CRL did not mention the clinical utility of Left Ventricular Ejection Fraction (LVEF; the % of blood ejected with each contraction) in DMD cardiomyopathy patients — an endpoint that appeared to have impressed the previous CBER leadership."
Company Response and Statistical Arguments
On July 16, 2025, Capricor submitted its preliminary response, which Pachaiyappan characterized as implying "that the FDA's interpretation of Biostatistics could be erroneous." The company contended that the primary endpoint was appropriately analyzed using a non-parametric form of the pre-specified model and met the statistical test for significance with a p-value of 0.0014.
Capricor argued that the inclusion of cardiac endpoints in the HOPE-2 and HOPE-3 studies is relevant given that most patients develop cardiomyopathy during their early teens, supported by academic research. The company maintained that all secondary and exploratory endpoints were pre-specified for hypothesis testing, though not adjusted for multiplicity. Of the 22 cardiac measures, 21 were consistent and favored deramiocel use in Duchenne muscular dystrophy cardiomyopathy.
Furthermore, Capricor asserted that benchmarking deramiocel efficacy against propensity-matched external cardiac data from natural history patients was pre-specified in the Statistical Analysis Plan and was discussed at the pre-BLA meeting with the prior Center for Biologics Evaluation and Research leadership in 2024.
Phase 3 Trial and Near-Term Catalysts
The ongoing Phase 3 HOPE-3 study includes 103 patients, with topline data expected in the fourth quarter of 2025, updated from prior guidance of the third quarter 2025. Pachaiyappan emphasized that "demonstrating positive results in the ongoing Phase 3 study (HOPE-3; n=103; top-line data expected in 4Q25; prior guidance: 3Q25) is necessary to revive the program and bolster investor confidence."
A Type A meeting between Capricor and the FDA occurred in mid-August 2025, with meeting minutes expected in September. The analyst suggested that Type A meeting minutes "should offer clues regarding who is gaining the lead" in the regulatory dispute, noting that positive HOPE-3 results demonstrating clinically meaningful left ventricular ejection fraction improvements "might ultimately favor CAPR, in our view, provided the FDA recognizes this endpoint."
Financial Position and Projections
At the end of the second quarter of 2025, Capricor reported US$122.8 million in cash, cash equivalents, and marketable securities, with expected cash runway extending beyond 2026. The company has no debt on its balance sheet.
For fiscal year 2025, Pachaiyappan projects no revenue with estimated GAAP earnings per share of negative US$2.37, compared to negative US$1.15 in 2024. However, the analyst forecasts a dramatic turnaround in 2026, with total revenue of US$232.0 million and earnings per share of US$3.47, predicting US launch in the fourth quarter of 2026.
Market Position and Strategic Outlook
Pachaiyappan noted that "for the first time in history, Capricor has carved a sub-market (i.e., DMD cardiomyopathy; ~9,000 U.S. patients) within the broader DMD indication (TAM: ~12K to 15K U.S. patients) and had shown clinically meaningful and statistically significant improvements with Deramiocel treatment, though the FDA begs to differ on clinical biostatistics."
The analyst expects the new Center for Biologics Evaluation and Research leadership "will likely use the meeting minutes as an attempt to defend its tangential stance that thwarted Deramiocel's pathway to approval." However, the FDA may consider left ventricular ejection fraction as a new approvable endpoint "given the preponderance of evidence emanating from academic research that supports its use."
Valuation Methodology and Investment Risks
The US$12.00 price target derives from a discounted cash flow methodology employing a 55% probability of approval, 12% discount rate, and 0% terminal growth rate, yielding a market value of US$531.5 million. The valuation assumes deramiocel could launch in the US in the fourth quarter of 2026, with potential loss of exclusivity beginning in 2039, and does not account for ex-US revenue contributions due to lack of visibility.
Key risks include regulatory setbacks or failure to receive US approval, delays in launch, slower-than-anticipated market penetration, lack of regulatory alignment in the US and EU for pipeline programs, potential partnership risks, and potential near- and medium-term dilution risk.
Stock Performance and Analyst Outlook
Capricor shares have declined approximately 44% since the Complete Response Letter news was released on July 11, 2025, compared to a 7.3% gain in the SPDR S&P Biotech ETF during the same period. The stock trades within a 52-week range of US$4.05 to US$23.40, with a market capitalization of US$289.39 million based on 45.72 million shares outstanding.
Pachaiyappan concluded that "upon Capricor's release of Type A meeting minutes to the extent that it is deemed comprehensive and answers investors' lingering questions, a trend reversal could occur."
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Disclosures for Roth Capital Partners, Capricor Therapeutics Inc., September 11, 2025
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Disclosures: Rating and Price Target History for: Capricor Therapeutics, Inc. (CAPR) as of 09-10-2025 25 20 15 10 5 0 Q2 Q3 2023 Q1 Q2 Q3 2024 Q1 Q2 Q3 2025 Q1 Q2 Q3 05/20/25 I:B:$31 07/14/25 B:$12 Created by: BlueMatrix Each box on the Rating and Price Target History chart above represents a date on which an analyst made a change to a rating or price target, except for the first box, which may only represent the first note written during the past three years. Distribution Ratings/IB Services shows the number of companies in each rating category from which Roth or an affiliate received compensation for investment banking services in the past 12 month. Distribution of IB Services Firmwide IB Serv./Past 12 Mos. as of September 11, 2025 Rating Count Percent Count Percent Buy [B] 363 76.10 107 29.48 Neutral [N] 85 17.82 8 9.41 Sell [S] 1 0.21 0 0 Under Review [UR] 28 5.87 4 14.29 Our rating system attempts to incorporate industry, company and/or overall market risk and volatility. Consequently, at any given point in time, our investment rating on a stock and its implied price movement may not correspond to the stated 12-month price target. Ratings System Definitions - ROTH Capital employs a rating system based on the following: Buy: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return of at least 10% over the next 12 months. Neutral: A rating, which at the time it is instituted and or reiterated, that indicates an expectation of a total return between negative 10% and 10% over the next 12 months. Sell: A rating, which at the time it is instituted and or reiterated, that indicates an expectation that the price will depreciate by more than 10% over the next 12 months. Under Review [UR]: A rating, which at the time it is instituted and or reiterated, indicates the temporary removal of the prior rating, price target and estimates for the security. Prior rating, price target and estimates should no longer be relied upon for UR-rated securities. Not Covered [NC]: ROTH Capital does not publish research or have an opinion about this security. ROTH Capital Partners, LLC and its affiliates expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2025. Member: FINRA/SIPC.
