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Capricor Therapeutics Inc (NASDAQ:CAPR) Continues To Be A Strong Biotech Pick

Capricor Therapeutics Inc (NASDAQ:CAPR) Continues To Be A Strong Biotech Pick
Written by
Chris Sandburg
Published on
September 20, 2017
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Here is one that has been a real winner for us over the last couple of months – Capricor Therapeutics Inc (NASDAQ:CAPR). The company was trading for less than one dollar a share last time we covered it and our conclusion to that coverage was as follows:

"We expect markets to load up on Capricor stock ahead of this initiation and – by proxy – we expect the company to appreciate into the close of 2017 and beyond."

The initiation in question is a pivotal study for the company's lead Duchenne muscular dystrophy (DMD) asset, a drug called CAP-1002. The trial is set to kick off at some point during late 2017 and, if successful, will underpin a registration application in the US for the drug in question in this indication. CAPR Daily ChartAt its most recent close, Capricor went for $2.25 a share. That's a circa 125% appreciation on the price at which we made the above conclusion.So why is the stock running?Well, as we said, we were looking for speculative loading ahead of a pivotal trial initiation to get the stock moving. We predicted that this would happen regardless of management action. However, over the last week or so, management has been doing everything it can to compound this loading up phenomena.Specifically, and as per Capricor's latest announcement, the company is set to take the stage at the 22nd International Congress of the World Muscle Society on October 4, 2017, and – as part of its presentation – will present data from a six-month follow-up study on the company's so-called HOPE trial, which is the study that predates the upcoming pivotal investigation.A few things are important here.The first is that the early data was widely misinterpreted (as far as we were concerned) and markets didn't appreciate the impact that the drug actually had in the lives of the DMD patients that were under investigation. This led to an under-response to the release and, in turn, to the opportunity that we spotted as far as this one being undervalued was concerned. This presentation is an opportunity for management to set the record straight and demonstrate just how good this initial data was, and then, reinforce it with some six-month follow-up later.Which brings us to the second important point.If this data wasn't good, there is a very small chance that management would submit it as a late-breaking presentation at this important industry event and get up on stage to present with numbers. This suggests that the numbers will be strong and reinforce the early data as outlined above.Finally, our third important point: points one and two taken together suggest that the loading up we expected near-term could very well happen on the back of the upcoming conference event and this makes the stock very much want to watch right now. It seems markets are already expecting positive news and, by proxy, large-scale speculative volume inflow for Capricor – the company gained more than 25% on Monday and advanced a further 70% on Tuesday. That's not the action of a market uncertain about the impact that this drug could have in its target population, suggesting our initial thesis, at least, that the under-reaction would eventually correct, is very much valid.So what's next?Now it is all about getting a look at the upcoming data release and seeing where it fits into the program as a whole. If indeed it does reinforce the initial numbers, chances are this one is going to continue to run heading into the pivotal investigation. The risk here is that the numbers disappoint and we see the stock sell off on the fact. With everything taken into consideration right now, however, this risk seems minimal.Check out our previous coverage of this stock here. We will be updating our subscribers as soon as we know more. For the latest updates on CAPR, sign up below!Image courtesy of NASA Goddard Space Flight Center via FlickrDisclosure: We have no position in CAPR and have not been compensated for this article.

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