Here's Why This Biotechnology Skyrocketed by 439% in December

Capricor Therapeutics (NASDAQ: CAPR) stock rose an incredible 439.4% in December, according to data provided by S&P Global Market Intelligence. The move followed the company's announcement of positive top-line results from a Phase 3 trial of Deramiocel, a cell therapy for the treatment of Duchenne muscular dystrophy (DMD). However, the story is not quite as simple as a Phase 3 trial hitting its primary endpoints, as you will soon see.

What happened in December

DMD is a genetic disorder occurring in 1 in 3,500 to 5,000 births. There are about 15,000 sufferers in the U.S. and 200,000 worldwide. Nearly entirely impacting boys, it's a severe disorder that causes a weakening of muscles and atrophy because a genetic mutation prevents the body from producing sufficient dystrophin. That matters because dystrophin is a structural protein that helps strengthen muscle fibers and protect them from damage during contraction.

Deramiocel is a cell therapy derived from cardiosphere-derived cells (CDC) that slows disease progression by reducing inflammation and stimulating tissue regeneration in DMD.

The good news is that the Phase 3 HOPE-3 trial met its primary and secondary endpoints, demonstrating statistically significant slowing of the rate of performance of upper limb (PUL v2.0) functional decline (primary endpoint) by 54% and slowed the decline in left ventricular ejection fraction (LVEF) by 91% (secondary endpoint). The biotechnology company plans to submit its response to a Complete Response Letter (CRL) to the Food and Drug Administration (FDA), incorporating the Phase 3 results. It could receive approval in 2026, with a commercial launch later.

Where next for Capricor Therapeutics

A few days after the announcement, the company raised $150 million in a well-received public stock offering. While it's too early to talk about pricing, the fact that Capricor signed deals with Japanese pharmaceutical company Nippon Shinyaku for the commercialization and distribution of deramiocel in the U.S., Japan, and Europe, with potential milestones totalling $1.5 billion, is an indication of how valuable this treatment could be.

Image source: Getty Images.

Capricor's approval pathway

That said, investors should bear in mind that the FDA didn't approve a Biologics License Application (BLA) in July, with the FDA arguing that "The HOPE-2 study failed to demonstrate efficacy for its prespecified primary efficacy endpoint" among other points.

Capricor then met with the FDA in September and agreed to submit the HOPE-3 data, which is discussed above, as part of its complete response to the FDA's CRL. That's the next step, and management and investors appear confident that Capricor will win approval for a life-changing treatment for DMD sufferers.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.