Capricor Therapeutics, Inc. (CAPR): A Bear Case Theory

We came across a bearish thesis on Capricor Therapeutics, Inc. on Alpha Talon Investment Research’s Substack by AT Investment Research. In this article, we will summarize the bulls’ thesis on CAPR. Capricor Therapeutics, Inc.'s share was trading at $26.55 as of December 15th.

Capricor Therapeutics, Inc., a clinical-stage biotechnology company, develops transformative cell and exosome-based therapeutics for treating Duchenne muscular dystrophy (DMD) and other diseases with unmet medical needs in the United States. CAPR remains a structurally challenged, chronically unprofitable biotech company whose valuation is disconnected from fundamentals. Despite years of promoting Deramiocel (CAP-1002) as a potential treatment for Duchenne muscular dystrophy (DMD), the company has yet to generate meaningful revenue, relying instead on repeated capital raises and marketing narratives to sustain operations.

The FDA’s Complete Response Letter (CRL) earlier this year highlighted the regulatory fragility of Deramiocel, but the market continues to assign CAPR a roughly $300 million market cap, reflecting hope rather than evidence. The company’s pipeline beyond Deramiocel is largely preclinical and speculative, offering no de-risked assets to offset its reliance on a single, controversial therapy, leaving its future structurally tied to cycles of dilution, hype, and sentiment-driven resets. The recently released HOPE-3 trial results, while technically meeting primary and key secondary endpoints, do not materially change the regulatory outlook.

Statistical significance was achieved only by the thinnest margins (PUL: p=0.029; LVEF: p=0.041), highlighting the fragility of the data, and efficacy claims are largely optical, derived from percentage slowing of progression in a late-stage, non-ambulatory patient population where functional measurements are inherently noisy. Safety reporting remains limited, and pivotal cardiac endpoints are based on a thin sample size, providing support but not decisiveness.

As a result, the FDA’s approval probability remains uncertain, with HOPE-3 improving sentiment but not fundamentally de-risking the asset. While headlines may drive short-term stock pops, the underlying business model, dependence on speculative clinical outcomes, and marginal trial data suggest prolonged regulatory friction and a likely eventual reset closer to cash value, reinforcing the bearish thesis for investors seeking evidence-based returns.

Previously, we covered a bullish thesis on Capricor Therapeutics, Inc. (CAPR) by androidmj in March 2025, which highlighted the company’s strong financial position, FDA catalysts for Deramiocel (CAP-1002), and potential upside from milestone payments. The company's stock price has appreciated by approximately 109.88% since our coverage. The thesis still stands as CAPR’s pipeline and binary catalyst define its risk/reward. AT Investment Research shares a contrarian perspective but emphasizes regulatory fragility and marginal HOPE-3 results.

Capricor Therapeutics, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held CAPR at the end of the third quarter which was 9 in the previous quarter. While we acknowledge the potential of CAPR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.