Capricor Shares Fall 15% on Stock Sale, Eclipsing Drug Trial Win
The move to raise capital comes just one day after the company announced positive Phase 3 results for its Duchenne muscular dystrophy therapy, Deramiocel.
Shares of Capricor Therapeutics (NASDAQ: CAPR) plunged more than 15% in trading on Thursday after the biotechnology firm announced a proposed public offering of its common stock, sparking immediate concerns over shareholder dilution.
The sell-off sent the stock to approximately $25.40, erasing a significant portion of gains from the previous session. The move to raise capital comes just 24 hours after Capricor reported highly positive results from a pivotal Phase 3 trial for its lead drug candidate, Deramiocel, for the treatment of Duchenne muscular dystrophy (DMD).
On Wednesday, the company announced that its HOPE-3 trial met its primary and key secondary endpoints, demonstrating statistically significant improvements in both skeletal and cardiac function in patients with DMD, a rare and fatal genetic disorder. The data showed Deramiocel slowed the progression of skeletal muscle disease by 54% and cardiomyopathy progression by 91%, a significant development for a disease with limited treatment options.
The successful trial data fueled a surge in Capricor's stock, providing a favorable market window for the capital raise—a common strategy for development-stage biotech companies looking to fund expensive commercialization efforts. According to a company press release, the net proceeds from the offering are intended for continued product development, manufacturing, working capital, and other general corporate purposes. Piper Sandler and Oppenheimer & Co. are acting as joint book-running managers for the offering.
Public stock offerings increase the number of shares outstanding, which can dilute the ownership stake of existing shareholders and often puts near-term pressure on a company's stock price. While the market's reaction was sharply negative, the capital injection is aimed at strengthening Capricor's financial position as it prepares to submit the trial data to the U.S. Food and Drug Administration (FDA).
Capricor's latest financial results from the third quarter, which ended September 30, 2025, showed the company held approximately $98.6 million in cash and equivalents, which it projected would fund operations into the fourth quarter of 2026. However, research and development expenses have been rising as its clinical programs advance, making the additional capital crucial for the path ahead.
Despite the market's reaction to the dilution, some Wall Street analysts remain focused on the long-term potential of Deramiocel. Following the positive trial results, analysts at H.C. Wainwright significantly raised their price target on Capricor from $24 to $60, suggesting a strong belief in the drug's commercial prospects. This outlook contrasts with the stock's immediate decline, highlighting the conflict between short-term market mechanics and long-term fundamental value.
Investors will now be closely watching for the successful completion of the offering and Capricor's subsequent regulatory filings with the FDA. The company is leveraging a major clinical victory to fortify its balance sheet, a calculated trade-off that sacrifices short-term stock performance for a more secure long-term strategic position in bringing a new DMD therapy to market.