Good day, ladies and gentlemen, and welcome to the Capricor Therapeutics, Inc. First Quarter 2022 Financial Earnings Call. [Operator Instructions]. At this time, I would like to turn the call over to Mr. Bergmann, Capricor Therapeutics' Chief Financial Officer. Please go ahead, sir.

Thank you. Thank you for joining today's call. Before we start, I would like to state that we will be making certain forward-looking statements during today's presentation. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our product candidates, our future research and development plans, including our anticipated conduct and timing of preclinical and clinical studies; our plans to present or report additional data; our plans regarding regulatory filings, potential regulatory developments involving our product candidates, potential milestone payments; and our possible uses of existing cash and investment resources. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the SEC, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, and we disclaim any obligation to update such statements. And with that, I'll turn the call over to Linda Marban, CEO.

Good afternoon, and thank you for joining us for our first quarter 2022 conference call. Today, I will provide updates on our lead product, CAP-1002, and as well as our exosomes platform technology. We have made significant progress this quarter, highlighted first and foremost, by securing a commercial partnership with Nippon Shinyaku for our Duchenne muscular dystrophy program, bringing in $30 million in upfront cash to fund our Phase III program. Further, we saw the publication of our Phase II HOPE-2 result in The Lancet, one of the most prestigious medical journals in the world. If you haven't read this publication, I encourage you to please do so as it will strengthen your understanding of the positive results demonstrated in the Phase II HOPE-2 trial of CAP-1002. The paper speaks to both the scientific and clinical rationale for our Phase III HOPE-3 clinical trial that I shall discuss in greater detail in a few minutes. We continue to prudently invest in the future of Capricor. The pillar of our near-term value is the CAP-1002 program for the treatment of older boys with Duchenne muscular dystrophy. We have a Nippon Shinyaku and its U.S. subsidiary, NS Pharma, and experienced, well-resourced commercial partner in the United States. We remain active in seeking further partnerships for our key markets around the world. Our goal is to partner with commercially talented companies to prepare us for global expansion of the DMD program. The second pillar of value is our bioengineered exosome program. We will have more detailed updates on this program in the future, but suffice it to say that we are extremely pleased by the progress being made in this platform technology program. We have assembled a world-class team in research, quality, manufacturing and clinical operations, yet we continue to maintain a lean…

Thank you, Linda. This afternoon's press release provided a summary of our first quarter of 2022 financials on a GAAP basis. You may also refer to our quarterly report on Form 10-Q, which we expect to become available shortly and will be accessible on the SEC website as well as the financial section of the company website. As of March 31, 2022, the company's cash and cash equivalents totaled approximately $58.3 million compared to approximately $34.9 million on December 31, 2021. Turning quickly to the financials. In the first quarter of 2022, our net cash provided by operating activities was approximately $24 million, driven by the $30 million upfront payment from Nippon Shinyaku. For the first quarter of 2022, excluding stock-based compensation, our research and development expense was approximately $4.9 million compared to approximately $3.2 million in Q1 2021. And excluding stock-based compensation, our general and administrative expense was approximately $1.9 million in Q1 2022 and approximately $1.3 million in Q1 2021. Net loss for the first quarter 2022 was approximately $7.8 million compared to a net loss of approximately $5.2 million for the first quarter of 2021. We will now open the line up for questions.

[Operator Instructions]. We take our first question from Joe Pantginis with H.C. Wainwright.

Few, if you don't mind. So first, I guess just going back to your prepared comments, Linda. HOPE-3, you talked about even potentially expanding to younger patients non-advanced in the future. Just curious if this could be something that Nippon might be interested in funding and/or accelerating? And how we could think about broadening the market there?

Yes. Joe, so great to hear your voice. Thank you so much for joining us today. We haven't discussed the younger patients, specifically with Nippon Shinyaku. We're very busy launching HOPE-3 and getting that program up and running. I will say this, the relationship is very warm with them and we're very excited at all of the opportunities ahead of us, both for the non-ambulant and the ambulant patients.

Got it. Got it. So if we focus on HOPE-3 a little bit, obviously, you said you're screening patients at the moment. I'm going to make an assumption here. So let me know if I'm sort of right or wrong or going in the right direction that there might be a decent backlog of patients that are ready to be screened either patients that were ready for HOPE-2 or just the word that's gotten around from different advocacy groups or what have you so it seems like this could enroll relatively quickly?

Yes, that certainly is our thinking. We certainly get a lot of feedback from families, from the community, from physicians that there's a lot of words sort of in the community that CAP-1002 is delaying the progression of Duchenne muscular dystrophy, both. We hear this anecdotally and also, of course, the published data supports that. So yes, we're expecting that the trial will enroll well.

Okay. Got it. And then I know you sort of said we'll get more details on exosomes in the future. I don't know if you wanted to tease us with any potential favorite indications. But maybe a specific part of that question is, I guess, level of advancements so far, like do you have the relative models in hand -- the requisite models in hand, I should say?

Yes. So as you know, I'm really excited about the exosome platform. CAP-1002 has performed as we pretended that it would. It's showing efficacy in the treatment of DMD. And we believe that our exosomes will have as brighter or brighter future as drug delivery vehicles. What we've done has been laying the groundwork, building the foundation of the home, framing it in of learning how to manufacture these things to scale, getting the agreements in place to make large numbers of exosomes, working on targeting technologies. Can we send an exosome to the liver, to the kidney, to the muscle, to the brain and then ultimately, custom loading content either on the inside or on the outside for therapeutic opportunities. What I can tell you is that we're very far ahead in the development of these sort of core technologies now and are identifying indications which we're going to be coming forward with very soon. Very soon meaning in the next couple of quarters.

Got you. Got you. That's helpful. And then maybe just shifting gears a little bit, maybe for A.J. If I read the press release correctly, you got the $30 million. This -- was it in the first quarter or the second quarter that you received the $30 million? And just curious about how you're looking to account for it?

Yes. Thanks, Joe. The money came right at the end of the first quarter. So it's booked on the balance sheet as you'll see with our cash position going up substantially, likely be turning to the accounting concept of it, we'll be ratably recognizing this income really over the duration of our clinical development program, pretty standard recognition from an accounting concept. But the money is in the bank and gives us a nice runway of well over 2 years at this point. So it's good to have.

[Operator Instructions]. It appears there are no further questions at this time. I would like to turn the call back to Linda Marban for any additional closing remarks.

Thank you for joining us today. We look forward to seeing you at meetings as we are now finally able to be out and about in the community and stay healthy during these tumultuous times. Have a good day. Bye.

That concludes today's call. Thank you for your participation. You may now disconnect.