Capricor Therapeutics Inc (NASDAQ:CAPR) Just Scored A Huge Potential Payday

Capricor Therapeutics Inc (NASDAQ:CAPR) ran up close to 100% during the session on Tuesday, closing out at $1.36 a share. Many will remember this company took a dramatic hit back in May on the news that its lead development asset, a drug called CAP-1002, had failed a phase II trial. The study, called ALLSTAR, was set up to investigate the efficacy of the drug in a target population of patients who have experienced a large heart attack with residual cardiac dysfunction. As per the release that hit press in May, a planned analysis demonstrated a low probability (futility) of achieving a statistically-significant difference in the 12-month primary efficacy endpoint of the investigation, which was defined as percent change from baseline infarct size as a percent of left ventricular mass, and the study basically ground to a halt on the development.The drug, however, wasn’t written off. This one is also under investigation as a potential therapy for Duchenne muscular dystrophy (DMD) and it's this indication to which the latest few releases relate.Specifically, Capricor just announced that the FDA has granted Rare Pediatric Disease Designation to the drug, building on the already in place Orphan Drug Designation. We'll get to the importance of this shortly but, first, a bit of background.The drug consists of what are called allogeneic cardiosphere-derived cells, or CDCs, which are a type of progenitor cell that has been shown to exert potent immunomodulatory activity. The conditions it's targeting (and especially DMD) are associated with (or perhaps more accurately, are rooted in) issues with immunomodulation, so the idea is that the CDCs can reverse the underlying disease cause and, hopefully, alleviate the symptoms that a patient experiences. There's plenty of early stage evidence already in place that this immuno-modulation can help in these sorts of conditions and Capricor is trying to put together some solid clinical evidence to support this early stage hypothesis. Data from a phase I/II in this indication hit press back a few months ago and it was strongly supportive of efficacy in the DMD population.Despite this, however, and more recently, Janssen pulled out of a potential partnership and development collaboration deal with Capricor and – on the back of the former's backing away – all of the rights to CAP-1002 now rest with Capricor.Subsequent to the phase I/II data, management sat down with the FDA to discuss a pathway to registration. On the outcome of these discussions, the company plans to commence a randomized, double-blind, placebo-controlled clinical trial of intravenous, repeat-dose CAP-1002 in boys and young men with DMD in the second half of this year. We should also see some long term (12 months) follow up data from the already reported trial over the next few months.Both of these events are near term catalysts.Which brings us back to the PD designation. The importance of this is two fold. First, it brings with it a bunch of regulatory speed benefits that Capicor can benefit from as it pushes the asset towards commercialization. We're not overly bothered about that right now, however. What we are bothered about is the fact that – if the drug is eventually approved – the FDA will issue a Priority Review Voucher (PRV) to the company on approval. These are vouchers that a company can give to the FDA on submission of an NDA to get the review time cut down substantially and, in competitive spaces, they can be the difference between a successful or a failed commercialization effort. For this reason alone, they are worth a fortune. And they can be traded between biotech companies.Sarepta Therapeutics Inc (NASDAQ:SRPT) sold one earlier this year to Gilead Sciences, Inc. (NASDAQ:GILD) for $125 million. Back in 2015, AbbVie Inc (NYSE:ABBV) bought one from United Therapeutics Corporation (NASDAQ:UTHR) for $350 million.Capricor is currently valued at just $30 million. If it gets its drug past the FDA, then, it won't just be in line for gains based on the forward potential of its asset in the DMD market but also for a multi hundred-million-dollar windfall if it decides to sell its Voucher.We will be updating our subscribers as soon as we know more. For the latest updates on CAPR, sign up below!Image courtesy of FrankieLeon via FlickrDisclosure: We have no position in CAPR and have not been compensated for this article.