CAPRICOR THERAPEUTICS, INC.

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Capricor Therapeutics, Inc., a Delaware corporation (together with its wholly-owned subsidiary, referred to herein as “Capricor Therapeutics,” “Capricor,” the “Company,” “we,” “us” or “our”), is a clinical-stage biotechnology company focused on the development and potential commercialization of transformative cell and exosome-based therapeutics for treating Duchenne muscular dystrophy (“DMD”) and other diseases with high unmet medical needs. The Company is a public company and currently trades under the symbol “CAPR” on the Nasdaq Global Select Market.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements for Capricor Therapeutics and its wholly-owned subsidiary have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and with the instructions to Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial position, results of operations and cash flows in conformity with U.S. GAAP. In the Company’s opinion, all adjustments, consisting of normal and recurring adjustments, considered necessary for a fair presentation have been included. The accompanying financial information should be read in conjunction with the financial statements and the notes thereto in the Company’s most recent Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2026, from which the December 31, 2025 consolidated balance sheet was derived. Interim results are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

Basis of Consolidation

Our condensed consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary. All intercompany transactions have been eliminated in consolidation. Management has determined that the Company operates as asingle reportable operating segment.

Reclassification

Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, (i) receivables, previously presented as a separate line item in the consolidated balance sheets, are now included in prepaid expenses and other current assets; (ii) loss on disposal of fixed assets, previously presented as a separate line item in the consolidated statements of operations and comprehensive loss and consolidated statements of cash flows, is now included in other income (loss) and other operating activities, respectively; and (iii) provision for income taxes, previously included in general and administrative expenses, is now presented separately in the consolidated statements of operations and comprehensive loss. These reclassifications had no effect on previously reported total assets, total stockholders’ equity, net loss, or net cash used in operating activities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Management uses its historical records and knowledge of its business in making these estimates. Accordingly, actual results may differ from these estimates.

Significant estimates include, but are not limited to, the determination of clinical trial accruals, fair value of stock-based compensation awards, useful lives of long-lived assets, revenue recognition under customer contracts, and the

realizability of deferred tax assets. These estimates are based on historical experience and assumptions that management believes are reasonable; however, actual results may differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of less than 90 days at the date of purchase to be cash equivalents.

Concentration of Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, principally consist of cash, cash equivalents, and marketable securities. The Company maintains accounts at several financial institutions. These accounts are insured by the Federal Deposit Insurance Corporation for up to $250,000 and/or the Securities Investor Protection Corporation, as applicable. The Company monitors the financial stability of the financial institutions with which it maintains accounts and believes it is not exposed to any significant credit risk in cash and cash equivalents. Historically, the Company has not experienced any significant losses in such accounts and does not believe it is exposed to any significant credit risk due to the quality nature of the financial instruments in which the money is held.

We are subject to supplier concentration risk, as we rely on a limited number of suppliers for our critical materials. Any disruption in the supply of materials from these key vendors could result in significant delays to our product development timelines and may require us to incur substantial additional costs to secure alternative sources for manufacturing.

Marketable Securities

The Company determines the appropriate classification of its marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. All of the Company’s marketable securities are considered as available-for-sale and carried at estimated fair values. Realized gains and losses on the sale of debt and equity securities are determined using the specific identification method. Unrealized gains and losses on available-for-sale securities are presented as accumulated other comprehensive income (loss) as a separate component of stockholders’ equity.

Cloud Computing Arrangements (“CCA”)

The Company accounts for CCAs in accordance with ASC Topic 350,Intangibles, and the capitalized implementation costs associated with these arrangements are included in prepaid expenses and other current assets and other assets on the consolidated balance sheets and are amortized on a straight-line basis over their estimated useful life.

Property and Equipment

Property and equipment are stated at cost. Repairs and maintenance costs are expensed in the period incurred. Depreciation is computed using the straight-line method over the related estimated useful life of the asset, which such estimated useful lives range from five toten years. Leasehold improvements are depreciated on a straight-line basis over the shorter of the useful life of the asset or the lease term.

Long-Lived Assets

The Company accounts for the impairment and disposition of long-lived assets in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”). Long-lived assets to be held and used are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable, or annually.

Leases

The Company accounts for its leases in accordance with ASC Topic 842,Leases (“ASC 842”), which requires lessees to recognize most leases on the balance sheet with a corresponding right-of-use asset (“ROU asset”) and a lease liability. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at lease commencement based on present value of fixed lease payments over the lease term. Variable payments that do not depend on a rate or index, which usually represent operating expenses associated with the Company’s operating leases, are not included in the lease liability and are recognized as they are incurred.

At the inception of an arrangement, the Company evaluates the specific facts and circumstances to determine whether the arrangement constitutes or contains a lease. Leases are classified as either finance or operating leases. The Company’s leases are primarily operating leases. The Company elects the short-term lease exemption for leases with a term of twelve months or less.

The Company uses its incremental borrowing rate to measure lease liabilities when the implicit rate is not readily determinable. The Company determines its incremental borrowing rate based on the rate of interest it would have to pay on a collateralized basis to borrow, over a similar term and in a similar economic environment, an amount equal to the lease payments.

The Company has elected the practical expedient to combine lease and non-lease components for real estate leases. This practical expedient is not elected for manufacturing facilities and equipment embedded in product supply arrangements.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606,Revenue from Contracts with Customers (“ASC 606”), using a five-step model to recognize revenue when control of promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled. The Company’s arrangements may include fixed consideration, such as upfront payments and milestones, as well as variable consideration, such as sales-based royalties and shared revenues. Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved.

Revenue is recognized either at a point in time or over time, depending on when control of the promised goods or services is transferred to the customer. For performance obligations satisfied over time, the Company recognizes revenue based on a measure of progress that depicts the transfer of services to the customer. Upfront payments received in advance of performance are recorded as deferred revenue.

Accounts Receivable

Accounts receivable are recorded at invoiced amounts, net of an allowance for credit losses, if any. The Company evaluates the collectability of its accounts receivable and records an allowance when collection is not probable.

Research and Development

Costs relating to the design and development of new products are expensed as research and development as incurred in accordance with FASB ASC 730-10,Research and Development.

The Company accounts for stock-based employee compensation arrangements in accordance with FASB ASC 718,Compensation – Stock Compensationand recognizes compensation expense for all share-based payment awards on the grant-date fair value. For time-based awards, expense is recognized over the requisite service period, and for

performance-based options, expense is recognized when the Company determines that achievement of the performance conditions is probable.

Income Taxes

Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s financial statements or tax returns.

Deferred tax assets are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The Company uses guidance issued by the FASB that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position, and must assume that the tax position will be examined by taxing authorities.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

Basic and Diluted Loss per Share

The Company reports earnings per share in accordance with ASC 260-10,*Earnings per Share.*Basic earnings (loss) per share is computed by dividing income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is computed similarly to basic earnings (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if the additional shares of common stock were dilutive.

2. FAIR VALUE MEASUREMENTS

The Company measures certain assets and liabilities in accordance with ASC Topic 820,Fair Value Measurement. Assets and liabilities recorded at fair value in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair value. The categories are as follows:

The valuation techniques used to determine the fair value of the Company’s Level II financial instruments, which consist primarily of U.S. government agency securities, commercial papers, and corporate bonds, are based on quoted market prices for similar instruments or model-driven valuations utilizing significant inputs derived from or corroborated by observable market data.

The following table summarizes the fair value measurements by level at September 30, 2026 and December 31, 2025 for assets and liabilities measured at fair value on a recurring basis:

Carrying amounts reported in the balance sheet of cash and cash equivalents, receivables, prepaid expenses and other current assets, accounts payable, accrued expenses, and deferred revenue approximate fair value due to their relatively short maturity. The carrying amounts of the Company’s marketable securities are based on market quotations from national exchanges at the balance sheet date. Interest and dividend income are recognized separately on the income statement based on classifications provided by the brokerage firm holding the investments. The fair value of borrowings is not considered to be significantly different from its carrying amount because the stated rates for such debt reflect current market rates and conditions.

3. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

The following table summarizes the Company’s cash, cash equivalents and marketable securities as of September 30, 2026 and December 31, 2025, respectively:

The contractual maturities of the Company's available-for-sale securities at September 30, 2026 did not exceedtwo years.

The Company does not intend to sell these investments for the purpose of realizing losses; however, the securities are classified as available-for-sale and may be sold in response to changes in market interest rates, liquidity needs, or other factors. The Company believes it is more likely than not that it will not be required to sell the investments before recovery of their amortized cost basis. Accordingly, the Company has determined that the available-for-sale securities that were in an unrealized loss position did not have any credit loss impairment as of September 30, 2026.

4. OTHER ASSETS

Cloud Computing Arrangements

The Company capitalizes costs associated with the development of its CCAs, which have estimated useful lives ranging from five toseven years. As of September 30, 2026 and December 31, 2025, capitalized implementation costs totaled approximately $2.1 million and $1.1 million, with $154,851 and $20,800 of accumulated amortization recognized, respectively. Amortization expense totaled $57,999 and $134,051 for the three and nine months ended September 30, 2026, respectively, and there wasno amortization expense for the three and nine months ended September 30, 2025.

Restricted Cash

As of September 30, 2026, restricted cash consists of funds held in a savings account pledged as collateral for a standby letter of credit issued as a security deposit for the Company’s lease of 9625 Towne Centre Drive, San Diego, California (the “Towne Centre Premises”). Because the letter of credit is required for the term of the lease, the entire balance is classified as noncurrent and is included within other assets on the condensed consolidated balance sheet. A reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheet that sums to the total of the same amounts shown in the condensed consolidated statement of cash flows is as follows:

5. PROPERTY AND EQUIPMENT

Property and equipment, net consisted of the following:

Depreciation was $900,989 and $494,725 for the three months ended September 30, 2026 and 2025, respectively, and $1,997,504 and $1,386,454 for the nine months ended September 30, 2026 and 2025. No impairment related to long-lived assets was recorded for the three and nine months ended September 30, 2026 and 2025.

6. LEASES

Long-Term Operating Leases

San Diego, California

Capricor leases 34,348 square feet of laboratory, manufacturing, and office space located at 10865 Road to the Cure, San Diego, California for our corporate headquarters from Altman Investment Co., LLC (the “Altman Lease”). The lease agreement commenced on October 1, 2021 for an initial lease term offive years. On February 26, 2025, the Company entered into a Fourth Amendment to the Altman Lease (the “Fourth Amendment”), where the rent is subject to a 3.0% annual rent increase commencing October 1, 2026 plus certain operating expenses and taxes. The Fourth Amendment extends the Altman Lease term to September 30, 2033, with an option to renew for an additional term offive years. The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in ROU assets and liabilities as of September 30, 2026. The Fourth Amendment commenced on July 1, 2025, which resulted in an increase of approximately $13.5 million in operating lease liabilities and $13.4 million in ROU assets. The Altman Lease, as amended, provides for a tenant improvement allowance from the landlord for a total of $1.3 million, all of which was received in 2026. The Company has thus remeasured its lease liability and ROU assets to reflect such allowance.

On May 14, 2026, the Company entered into a License Agreement (the “License Agreement”) with ARE-SD Region No. 39 Owner, LLC (the “ARE Landlord”), granting the Company temporary occupancy of approximately 171,000 rentable square feet at the Towne Centre Premises while the parties negotiated a formal lease. Beginning September 1, 2026, the Company began paying approximately $565,000 per month in license fees, operating expenses and administrative rent, which will continue until the formal lease commences.

On July 9, 2026, the Company entered into a Lease Agreement (the “ARE Lease”) with the ARE Landlord for the Towne Centre Premises, which will serve as the Company's new corporate headquarters, manufacturing and laboratory facility. The term will commence on the earlier of (i) satisfaction or waiver of the Company’s FDA approval contingency (the “Lease Contingency”) or (ii) December 31, 2026, with rent commencing twelve months thereafter, and will end 138 months following the rent commencement date, withtwo options to extend forfive years each (the “Extension Rights”).

Initial base rent is approximately $958,000 per month, subject to annual increases of 3.0%, plus administrative rent equal to 1% of base rent and variable taxes, insurance and operating costs. Base rent is fully abated for 18 months and partially abated for the following six months. The ARE Landlord will provide a tenant improvement allowance up to approximately $31.6 million (the “TI Allowance”), and the Company will provide a security deposit of approximately $958,000. If the Company does not receive FDA approval of Deramiocel for the treatment of DMD on terms and conditions acceptable to the Company in its sole discretion on or before December 31, 2026, either party may terminate the ARE Lease.

The Towne Centre Premises were made available for the Company’s use on May 21, 2026, and the Company concluded, using significant judgment, that the License Agreement and ARE Lease represent a single operating lease that commenced on that date. The Company recognized an ROU asset of approximately $76.3 million and an operating lease liability of approximately $75.5 million, using an incremental borrowing rate of approximately 7.7%. The Extension Rights are excluded from the lease term because the Company is not reasonably certain to exercise them, and the contingent termination right does not limit the lease term because it depends on a future event outside the control of both parties. If the Lease Contingency is not resolved by December 31, 2026, the Company will reassess the lease term. The Company elected the practical expedient not to separate lease and non-lease components.

The Company initially estimated the contractual commencement date to be August 22, 2026, the original Prescription Drug User Fee Act (“PDUFA”) target action date for Deramiocel. Following the FDA’s extension of the PDUFA target action date to November 22, 2026, the Company updated its estimated contractual and rent commencement dates to November 22, 2026 and November 22, 2027, respectively, and remeasured the lease, resulting in an increase to the lease liability and the ROU asset of approximately $73,000.

Other than amounts available under the License Agreement, the TI Allowance is not available for disbursement until the Lease Contingency is resolved, and any portion not disbursed within 24 months after the lease commencement date is forfeited. Allowances related to Company-owned improvements reduce the ROU asset when determinable and available, and amounts received before the Lease Contingency is resolved are recorded as a liability because they are repayable if the lease is terminated. As of September 30, 2026, no tenant improvement costs had been incurred andno amounts had been received under the TI Allowance.

Los Angeles, California

Capricor leased 1,892 square feet of laboratory, manufacturing and office facilities in Los Angeles, California from Cedars-Sinai Medical Center (“CSMC”), pursuant to a lease entered into in 2014 (the “CSMC Lease”). Capricor subsequently entered into several amendments modifying certain terms of the CSMC Lease. We entered into an amendment effective August 1, 2024, extending the lease term through July 31, 2026, with monthly lease payments of $11,028. The CSMC Lease expired on July 31, 2026, and the Company vacated the premises upon expiration.

Summary of Long-Term Operating Leases

The long-term real estate operating leases are included in lease right-of-use assets, net on the Company’s consolidated balance sheet, which totaled $87.1 million and $13.5 million as of September 30, 2026 and December 31, 2025, respectively, and represent the Company’s right to use the underlying assets for the lease term. The Company’s obligation to make lease payments is included in lease liabilities, current and lease liabilities, net of current on the Company’s consolidated balance sheets.

The table below excludes short-term operating leases. The following table summarizes maturities of lease liabilities and the reconciliation of lease liabilities as of September 30, 2026:

The following table contains a summary of the lease costs recognized and lease payments pertaining to the Company’s operating leases under ASC 842, excluding short-term leases, for the periods indicated:

Short-Term Operating Leases

The Company had several short-term lease arrangements for laboratory, manufacturing, and office space in Beverly Hills, Vista, and San Diego, California, all of which terminated during the first half of 2026. Short-term operating lease costs for the three months ended September 30, 2026 and 2025 were $28,394 and $335,980, respectively, and $525,869 and $1,058,456 for the nine months ended September 30, 2026 and 2025.

7. COLLABORATIONS, LICENSES AND REVENUE

Intellectual Property Rights for Capricor’s Technology - Deramiocel and Exosomes

Capricor has entered into exclusive license agreements for intellectual property rights related to certain cardiac-derived cells (“CDCs”) with Università Degli Studi Di Roma La Sapienza (the “University of Rome”), Johns Hopkins University (“JHU”), and CSMC. Capricor is also a party to an exclusive license agreement for intellectual property rights related to CDC-derived exosomes with CSMC. In addition, Capricor has filed solely-owned patent applications related to CDC and exosomes technologies developed by its own employees.

University of Rome License Agreement

Capricor and the University of Rome entered into a License Agreement, dated June 21, 2006 (the “Rome License Agreement”), which provided for the grant of an exclusive, world-wide, royalty-bearing license by the University of Rome to Capricor (with the right to sublicense) to develop and commercialize licensed products under the licensed patent rights in all fields.

Pursuant to the Rome License Agreement, Capricor paid the University of Rome a license issue fee, paid minimum annual royalties in the amount of 20,000 Euros per year, and was obligated to pay a lower-end of a mid-range double-digit percentage on all royalties received as a result of sublicenses granted, which were net of any royalties paid to third parties under a license agreement from such third-party to Capricor until expiration of the license. The minimum annual royalties were creditable against future royalty payments.

The Rome License Agreement expired on January 4, 2026.

The Johns Hopkins University License Agreement for CDCs

Capricor and JHU entered into an Exclusive License Agreement, effective June 22, 2006 (the “JHU License Agreement”), which provides for the grant of an exclusive, world-wide, royalty-bearing license by JHU to Capricor (with the right to sublicense) to develop and commercialize licensed products and licensed services under the licensed patent rights in all fields and a nonexclusive right to the know-how. Various amendments were entered into to revise certain provisions of the JHU License Agreement. Under the JHU License Agreement, Capricor is required to exercise commercially reasonable and diligent efforts to develop and commercialize licensed products covered by the license from JHU.

Pursuant to the JHU License Agreement, JHU was paid an initial license fee and, thereafter, Capricor is required to pay minimum annual royalties on the anniversary dates of the JHU License Agreement. The minimum annual royalties are creditable against a low single-digit running royalty on net sales of products and net service revenues, which Capricor is also required to pay under the JHU License Agreement, which running royalty may be subject to further reduction in the event that Capricor is required to pay royalties on any patent rights to third parties in order to make or sell a licensed product. In addition, Capricor is required to pay a low double-digit percentage of the consideration received by it from sublicenses granted and is required to pay JHU certain defined development milestone payments upon the successful completion of certain phases of its clinical studies and upon receiving approval from the FDA. The maximum aggregate amount of milestone payments payable under the JHU License Agreement, as amended, is $1,850,000. In the second quarter of 2026, Capricor paid JHU a $500,000 development milestone related to the Phase 3 study pursuant to the terms of the JHU License Agreement. Capricor’s next and final development milestone payment will be triggered, if at all, upon receipt of a full FDA market approval, for which a payment of $1,000,000 will be due.

The JHU License Agreement will, unless sooner terminated, continue in effect in each applicable country until the date of expiration of the last to expire patent within the patent rights, or, if no patents are issued, then fortwenty years from the effective date. Under the terms of the JHU License Agreement, either party may terminate the agreement should the other party become insolvent or file a petition in bankruptcy or fail to cure a material breach within 30 days after notice. In addition, Capricor may terminate for any reason upon 60 days’ written notice.

Cedars-Sinai Medical Center License Agreements

License Agreement for CDCs

On January 4, 2010, Capricor entered into an Exclusive License Agreement with CSMC (the “Original CSMC License Agreement”), for certain intellectual property related to its CDC technology. In 2013, the Original CSMC License Agreement was amended twice resulting in, among other things, a reduction in the percentage of sublicense fees which would have been payable to CSMC. Effective December 30, 2013, Capricor entered into an Amended and Restated Exclusive License Agreement with CSMC (the “Amended CSMC License Agreement”), which amended, restated, and superseded the Original CSMC License Agreement, pursuant to which, among other things, certain definitions were added or amended, the timing of certain obligations was revised and other obligations of the parties were clarified.

The Amended CSMC License Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by CSMC to Capricor (with the right to sublicense) to conduct research using the patent rights and know-how and develop and commercialize products in the field using the patent rights and know-how. In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under

the direction of Dr. Eduardo Marbán on behalf of CSMC. In the event the parties fail to agree upon the terms of an exclusive license for any future rights, Capricor will have a non-exclusive license to such future rights, subject to royalty obligations.

Pursuant to the Original CSMC License Agreement, CSMC was paid a license fee and Capricor was obligated to reimburse CSMC for certain fees and costs incurred in connection with the prosecution of certain patent rights. Additionally, Capricor is required to meet certain spending and development milestones.

Pursuant to the Amended CSMC License Agreement, Capricor remains obligated to pay low single-digit royalties on sales of royalty-bearing products as well as a low double-digit percentage of the consideration received from any sublicenses or other grant of rights. The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty-bearing product.

The Amended CSMC License Agreement will, unless sooner terminated, continue in effect on a country by country basis until the last to expire of the patents covering the patent rights or future patent rights. Under the terms of the Amended CSMC License Agreement, unless waived by CSMC, the agreement shall automatically terminate: (i) if Capricor ceases, dissolves or winds up its business operations; (ii) in the event of the insolvency or bankruptcy of Capricor or if Capricor makes an assignment for the benefit of its creditors; (iii) if performance by either party jeopardizes the licensure, accreditation or tax exempt status of CSMC or the agreement is deemed illegal by a governmental body; (iv) within 30 days for non-payment of royalties; (v) after 90 days’ notice from CSMC if Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights; (vi) if a material breach has not been cured within 90 days; or (vii) if Capricor challenges any of the CSMC patent rights. If Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights and fails to cure that breach after 90 days’ notice from CSMC, instead of terminating the license, CSMC has the option to convert any exclusive license to Capricor to a non-exclusive or co-exclusive license. Capricor may terminate the agreement if CSMC fails to cure any material breach within 90 days after notice.

Capricor and CSMC have entered into several amendments to the Amended CSMC License Agreement, pursuant to which the parties agreed to add and delete certain patent applications from the list of scheduled patents and extend the timing of certain development milestones, among other things. Capricor reimbursed CSMC for certain attorneys’ fees and filing fees incurred in connection with the additional patent applications.

License Agreement for Exosomes

On May 5, 2014, Capricor entered into an Exclusive License Agreement with CSMC (the “Exosomes License Agreement”), for certain intellectual property rights related to CDC-derived exosomes technology. The Exosomes License Agreement provides for the grant of an exclusive, world-wide, royalty-bearing license by CSMC to Capricor (with the right to sublicense) in order to conduct research using the patent rights and know-how and to develop and commercialize products in the field using the patent rights and know-how. In addition, Capricor has the exclusive right to negotiate for an exclusive license to any future rights arising from related work conducted by or under the direction of Dr. Eduardo Marbán on behalf of CSMC. In the event the parties fail to agree upon the terms of an exclusive license, Capricor shall have a non-exclusive license to such future rights, subject to royalty obligations.

Pursuant to the Exosomes License Agreement, CSMC was paid a license fee and Capricor reimbursed CSMC for certain fees and costs incurred in connection with the preparation and prosecution of certain patent applications. Additionally, Capricor is required to meet certain non-monetary development milestones and is obligated to pay low single-digit royalties on sales of royalty-bearing products as well as a single-digit percentage of the consideration received from any sublicenses or other grant of rights. The above-mentioned royalties are subject to reduction in the event Capricor becomes obligated to obtain a license from a third party for patent rights in connection with the royalty bearing product.

The Exosomes License Agreement will, unless sooner terminated, continue in effect on a country by country basis until the last to expire of the patents covering the patent rights or future patent rights. Under the terms of the Exosomes License Agreement, unless waived by CSMC, the agreement shall automatically terminate: (i) if Capricor ceases, dissolves or winds up its business operations; (ii) in the event of the insolvency or bankruptcy of Capricor or if Capricor makes an assignment for the benefit of its creditors; (iii) if performance by either party jeopardizes the licensure, accreditation or

tax exempt status of CSMC or the agreement is deemed illegal by a governmental body; (iv) within 30 days for non-payment of royalties; (v) after 90 days if Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights; (vi) if a material breach has not been cured within 90 days; or (vii) if Capricor challenges any of the CSMC patent rights. If Capricor fails to undertake commercially reasonable efforts to exploit the patent rights or future patent rights and fails to cure that breach after 90 days’ notice from CSMC, instead of terminating the license, CSMC has the option to convert any exclusive license to Capricor to a non-exclusive or co-exclusive license. Capricor may terminate the agreement if CSMC fails to cure any material breach within 90 days after notice.

Capricor and CSMC have entered into several amendments to the Exosomes License Agreement. Collectively, these amendments added additional patent applications and patent families to the Exosomes License Agreement, added certain defined product development milestone payments, modified certain milestone deadlines, added certain performance milestones with respect to product candidates covered by certain future patent rights in order to maintain an exclusive license to those future patent rights, and converted certain exclusive rights to co-exclusive rights. These amendments also obligated Capricor to reimburse CSMC for certain attorneys’ fees and filing fees in connection with the additional patent applications and patent families.

Cell Line License Agreement with Life Technologies

On March 7, 2022, Capricor entered into a non-exclusive cell line license agreement with Life Technologies Corporation, a subsidiary of Thermo Fisher Scientific, Inc., for the supply of certain cells used in connection with the development of the StealthXTM exosomes platform. An initial license fee payment was made and additional milestone fees may become due based on the progress of our development program.

Revenue Recognition for Collaboration and Distribution Agreements

The Company’s distribution agreements may entitle it to additional payments upon the achievement of milestones or shares of product revenue on sales. The milestones are generally categorized into two types: development milestones and sales-based milestones. The Company evaluates whether it is probable that the consideration associated with each milestone or shared revenue payments will not be subject to a significant reversal in the cumulative amount of revenue recognized. Amounts that meet this threshold are included in the transaction price using the most likely amount method, whereas amounts that do not meet this threshold are excluded from the transaction price until they meet this threshold.

At the end of each subsequent reporting period, the Company re-evaluates the probability of a significant reversal of the cumulative revenue recognized for its milestones and shared revenue payments, and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and net income (loss) in the Company’s consolidated statements of operations and comprehensive loss. Typically, milestone payments and shared revenue payments are achieved after the Company’s performance obligations associated with the distribution agreements have been completed and after the customer has assumed responsibility for the commercialization program. Milestones or shared revenue payments achieved after the Company’s performance obligations have been completed are recognized as revenue in the period the milestone or shared revenue payments were achieved. If a milestone payment is achieved during the performance period, the milestone payment would be recognized as revenue to the extent performance had been completed at that point, and the remaining balance would be recorded as deferred revenue.

The Company also evaluates whether a significant financing component exists in its collaboration agreements. Typically, a significant financing component does not exist because customers pay upfront for services and future shared revenue payments are not substantially within the control of the Company or the customer.

Whenever the Company determines that goods or services promised in a contract represent a combined performance obligation over time, the Company determines the period over which the performance obligations will be performed and revenue will be recognized. Revenue is recognized using either the proportional performance method or on a straight-line basis if efforts will be expended evenly over time. Percentage of completion of patient visits in clinical trials is used as the measure of performance. The Company feels this method of measurement to be the best depiction of the transfer of services and recognition of revenue. Significant management judgment is required in determining the level of

effort required under an arrangement and the period over which the Company is expected to complete its performance obligations. If the Company determines that the performance obligation is satisfied over time, any upfront payment received is initially recorded as deferred revenue on its consolidated balance sheets.

Certain judgments affect the application of the Company’s revenue recognition policy. For example, the Company records short-term (less than one year) and long-term (over one year) deferred revenue based on its best estimate of when such revenue will be recognized. This estimate is based on the Company’s current operating plan, and the Company may recognize a different amount of deferred revenue over the next 12-month period if its operating plan changes in the future.

Commercialization and Distribution Agreement (Nippon Shinyaku - United States)

On January 24, 2022, Capricor entered into a Commercialization and Distribution Agreement (the “U.S. Distribution Agreement”) with Nippon Shinyaku, a Japanese corporation and related party (see Note 8 – “Related Party Transactions”). Under the terms of the U.S. Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in the United States of Deramiocel for the treatment of DMD.

On May 7, 2026, Capricor announced that it had filed a Motion for Preliminary Injunction and Complaint for Equitable Relief (the “Complaint”) in the Superior Court of New Jersey. Capricor subsequently withdrew the motion, without prejudice, in order to resolve the dispute through arbitration, and arbitration proceedings have commenced (see Note 15 – “Commitments and Contingencies”).

Commercialization and Distribution Agreement (Nippon Shinyaku - Japan)

On February 10, 2023, Capricor entered into a Commercialization and Distribution Agreement (the “Japan Distribution Agreement”) with Nippon Shinyaku. Under the terms of the Japan Distribution Agreement, Capricor appointed Nippon Shinyaku as its exclusive distributor in Japan of Deramiocel for the treatment of DMD.

Under the terms of the Japan Distribution Agreement, Capricor received an upfront payment of $12.0 million in 2023 and in addition, Capricor may potentially receive additional development and sales-based milestone payments of up to approximately $89.0 million, subject to foreign currency exchange rates, and a meaningful double-digit share of product revenue. Nippon Shinyaku will be responsible for the distribution of Deramiocel in Japan. Capricor will be responsible for the conduct of clinical development and regulatory approval in Japan, as may be required, as well as the manufacturing of Deramiocel. In addition, Capricor or its designee will hold the Marketing Authorization in Japan if the product is approved in that territory.

The Company has evaluated the Japan Distribution Agreement in accordance with ASC 606,Revenue from Contracts with Customers. The Company determined the initial transaction price totaled $12.0 million, which was the upfront payment fee. The Company has excluded any future milestone or shared revenue payments from this transaction price to date based on probability. At this time, the Company is evaluating the regulatory pathway to achieve potential product approval in this territory. Until such time, the Company cannot identify any distinct performance obligation. As such, the Company has recorded the entire upfront payment fee of $12.0 million as current deferred revenue on the Company’s consolidated balance sheets as of September 30, 2026.

Summary of Collaboration Revenue

In total, for the three and nine months ended September 30, 2026 and 2025, the Company didnot recognize any revenue from its collaboration and distribution agreements with Nippon Shinyaku, and hasno accounts receivable related to such agreements as of September 30, 2026 or December 31, 2025.

As of September 30, 2026 and December 31, 2025, the Company hadno deferred revenue related to the U.S. Distribution Agreement. The Company recorded $12.0 million of deferred revenue related to the Japan Distribution Agreement, which represents the upfront payment received for whichno performance obligation had been satisfied as of September 30, 2026 or December 31, 2025.

8. RELATED PARTY TRANSACTIONS

Consulting Agreements

In 2013, Capricor entered into a Consulting Agreement (the “Consulting Agreement”) with Dr. Frank Litvack, the Company’s Executive Chairman and a member of its Board of Directors, whereby Capricor agreed to pay Dr. Litvack $10,000 per month for consulting services. The agreement was terminated effective September 1, 2026. Under this consulting arrangement, the Company incurred consulting fees of $20,000 and $30,000, respectively for the three months ended September 30, 2026 and 2025, and $80,000 and $90,000, respectively, for the nine months ended September 30, 2026 and 2025. As of September 30, 2026 and December 31, 2025, $0 and $10,000 were recorded in accounts payable related to the Consulting Agreement, respectively.

Commercialization and Distribution Agreements

As noted above, Capricor is party totwo commercialization and distribution agreements with Nippon Shinyaku, which holds more than 5% of the outstanding capital stock of Capricor Therapeutics based on information supplied in Schedule 13G/A filed with the SEC on September 24, 2024 (see Note 7 – “Collaborations, Licenses and Revenue”). There wereno outstanding receivables or payables as of September 30, 2026 or December 31, 2025.

9. GOVERNMENT GRANTS AND OTHER INCOME

CIRM Grant Award

In 2016, Capricor entered into an award agreement with the California Institute for Regenerative Medicine (“CIRM”) for approximately $3.4 million to support, in part, the Company’s Phase I/II HOPE-Duchenne clinical trial.

The Company accounted for the award as a liability rather than income because the Company had the option to convert the award into a loan. In the second quarter of 2026, the Company entered into a loan repayment agreement with CIRM providing for repayment intwo installments. As of September 30, 2026, the Company had fully repaid approximately $6.3 million, consisting of approximately $3.4 million of principal and approximately $2.9 million of accrued interest, satisfying its repayment obligation under the award. Although the CIRM loan has been fully repaid, the Company remains subject to certain reporting and other obligations under the applicable CIRM agreements and policies.

10. ACCRUED EXPENSES AND CLINICAL TRIAL ACCRUALS

Accrued Expenses

Accrued expenses consist of the following:

11. STOCK-BASED COMPENSATION

For stock options, the Company estimates the fair value of the awards on the date of grant using an option-pricing model. The portion of the award expected to vest is recognized as expense in the Company’s statements of operations and comprehensive loss over the requisite service period for time-based awards and upon determining that the performance condition is probable for performance-based awards. The Company estimates the fair value of stock-based compensation

awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables. The variables take into consideration, among other things, actual and projected stock option exercise behavior. For employees and directors, the expected life was calculated based on the simplified method as described by the SEC Staff Accounting Bulletin No. 110, Share-Based Payment. For other service providers, the expected life was calculated using the contractual term of the award. The Company’s estimate of expected volatility was based on the historical stock price of the Company. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options.

For restricted stock awards, the Company determines the fair value using the Company’s adjusted closing stock price on the grant date.

Warrants

The following table summarizes all warrant activity for the nine months ended September 30, 2026:

The warrants outstanding at September 30, 2026 expire on October 3, 2030.

Stock Awards

The Company maintains several equity incentive plans. The Company currently grants stock options and restricted stock awards only under the 2020 Equity Incentive Plan, the 2021 Equity Incentive Plan, and the 2025 Equity Incentive Plan (the “2025 Plan”). No new awards are granted under the Company’s prior equity plans.

In May 2025, the Company’s stockholders approved the 2025 Plan, which authorized 3,500,000 shares of common stock for future awards. The 2025 Plan provides for an annual automatic increase in the number of shares available for issuance on January 1 of each year through 2035, equal to 5% of the Company’s outstanding shares of common stock as of the last day of the preceding fiscal year. Accordingly, on January 1, 2026,2,868,420 shares were added to the 2025 Plan. Following approval of the 2025 Plan, no further automatic share increases will be made to the 2021 Equity Incentive Plan. As of September 30, 2026,4,434,633 shares remained available for issuance under the Company’s equity incentive plans.

The plans are administered by the Board and its compensation committee, which determine the recipients, award types, number of shares, exercise price and vesting terms. Stock options are granted at an exercise price not less than the closing price of the Company’s common stock on the grant date, generally vest overone tofour years, and have a maximum term often years.

Stock Option Awards

The estimated weighted average fair value of the options granted during the three months ended September 30, 2026 and 2025 was approximately $17.92 and $5.50 per share, respectively. The estimated weighted average fair value of the options granted during the nine months ended September 30, 2026 and 2025 was approximately $21.44 and $12.01 per share, respectively.

The Company estimates the fair value of each option award using the Black-Scholes option-pricing model. The Company used the following assumptions to estimate the fair value of stock options issued during the nine months ended September 30, 2026 and 2025:

Employee and non-employee stock-based compensation expense was as follows:

The Company does not recognize an income tax benefit as the Company believes that an actual income tax benefit may not be realized. For non-qualified stock options, the loss creates a timing difference, resulting in a deferred tax asset, which is fully reserved by a valuation allowance.

As of September 30, 2026, the total unrecognized fair value compensation cost related to non-vested stock options was approximately $60.5 million, which is expected to be recognized over a weighted average period of approximately 2.2 years. As of September 30, 2026, the Company had approximately $5.7 million of total unrecognized stock-based compensation expense related to performance-based options subject to the achievement of certain performance conditions over aone-year performance period. Compensation cost associated with these awards will be recognized only if and when the applicable performance conditions are determined to be probable of achievement. As of September 30, 2026, the Company concluded that achievement of the performance conditions was not considered probable, and accordingly, no stock-based compensation expense related to these awards has been recognized.

The following is a schedule summarizing employee and non-employee stock option activity for the nine months ended September 30, 2026:

The aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock for each of the respective periods.

Restricted Stock Units

The Company has granted restricted stock units (“RSUs”) under the 2025 Plan. Each outstanding RSU will be exchanged forone share of the Company’s common stock. The Company estimates the fair value of each RSU using the Company’s adjusted closing stock price on the grant date.

The following table summarizes the activity of the Company’s RSUs for the nine months ended September 30, 2026:

12. STOCKHOLDERS’ EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME

December 2025 Underwritten Public Offering

On December 5, 2025, the Company entered into an underwriting agreement with Piper Sandler & Co. and Oppenheimer & Co., Inc. as representatives of the underwriters (the “Underwriters”), pursuant to which the Company agreed to sell and issue, in a public offering an aggregate of 6,000,000 shares of common stock, including the exercise in full of the Underwriters’ option to purchase an additional 900,000 shares to cover over allotments, at a public offering price of $25.00 per share for total gross proceeds of approximately $172.5 million, before deducting underwriting commissions and other offering expenses payable by the Company. The Company paid cash commissions on the gross proceeds, plus reimbursement of expenses to the Underwriters, as well as legal and accounting fees in the aggregate amount of approximately $10.5 million.

September 2025 ATM Program

On September 10, 2025, the Company established an at-the-market offering under a prospectus supplement for aggregate sales proceeds of up to $150.0 million (the “September 2025 ATM Program”), pursuant to an Equity Distribution Agreement with Piper Sandler and Oppenheimer (collectively, the “Agents”), by which the Agents may sell our common stock at the market prices prevailing at the time of sale. The Agents are entitled to compensation for their services at a commission rate of 3.0% of the gross sales price per share of common stock sold plus reimbursement of certain expenses. Effective December 5, 2025, the Company reduced the maximum offering amount from $150.0 million to $125.0 million.

Through December 31, 2025, the Company sold an aggregate of 2,682,307 shares of common stock under the September 2025 ATM Program at an average price of approximately $28.89 per share for gross proceeds of approximately $77.5 million. The Company paid approximately $2.4 million of aggregated fees related to these sales. From January 1, 2026 through the date of this filing, no additional shares have been sold under the September 2025 ATM Program.

Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) generally represents all changes in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders. The Company’s comprehensive loss was approximately $42.6 million and $25.1 million for the three months ended September 30, 2026 and 2025, respectively, and $117.8 million and $75.1 million for the nine months ended September 30, 2026 and 2025, respectively. The Company’s other comprehensive income (loss) is related to a net unrealized gain (loss) on marketable securities. For the three months ended September 30, 2026 and 2025, the Company’s other comprehensive income (loss) was $9,648 and $(543,452), respectively, and $(437,047) and $(182,833) for the nine months ended September 30, 2026 and 2025, respectively.

The following summarizes the changes in accumulated other comprehensive loss:

Net Loss and Net Loss Per Share

For the nine months ended September 30, 2026 and 2025, warrants and options to purchase 16,946,018 and 17,748,407 shares of common stock, respectively, have been excluded from the computation of potentially dilutive securities. Potentially dilutive shares of common stock, which primarily consist of stock options issued to employees, consultants, and directors as well as warrants issued, have been excluded from the diluted loss per share calculation because their effect is anti-dilutive. Because the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per share for the three and nine months ended September 30, 2026 and 2025.

13. INCOME TAXES

Significant judgment is required in determining the Company’s provision for income taxes, including the recognition and measurement of deferred tax assets and liabilities and the assessment of the related valuation allowance. Deferred tax assets are recognized for deductible temporary differences and net operating loss carryforwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

In evaluating the realizability of its deferred tax assets, the Company considers both positive and negative evidence, including cumulative losses in recent periods and the lack of sufficient objectively verifiable future taxable income. Based on this evaluation, the Company concluded that it is more likely than not that its deferred tax assets will not be realized. Accordingly, a full valuation allowance has been recorded as of September 30, 2026 and December 31, 2025.

The Company reassesses the realizability of its deferred tax assets at each reporting period.

14. RECENT ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements

In December 2025, the FASB issuedASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies. Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with U.S. GAAP. ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted. The Company is currently evaluating the impact of this ASU on its financial statements.

In September 2025, the FASB issuedASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the guidance in ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. The ASU is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact this guidance will have on its financial statements.

In November 2024, the FASB issued ASU No. 2024-03,Disaggregation of Income Statement Expenses (Subtopic 220-40). The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted. The Company is currently evaluating the impact this guidance will have on its financial statement disclosures.

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC, did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures.

15. COMMITMENTS AND CONTINGENCIES

Legal Contingencies

On July 17, 2025, a putative securities class action was filed in the Southern District of California, naming Capricor Therapeutics, Inc. and the Chief Executive Officer of the Company. The action alleges certain violations of the U.S. federal securities laws and seeks unspecified damages.

On August 1, 2025, a derivative action was filed in the Southern District of California by Leonel Zamora naming each of the directors on the Board of Capricor Therapeutics, Inc. The action alleges, among other things, breaches of fiduciary duties and seeks unspecified damages.

On October 2, 2025, the Company received a Section 220 Shareholder Demand Letter dated September 30, 2025 to inspect and make copies of certain books and records of the Company. The stockholder's demand is related to, among other things, alleged false and misleading statements purportedly made by officers and directors of the Company, as well as the alleged failure to disclose material adverse facts about the Company's business, operations, and prospects.

On November 24, 2025, a second derivative action was filed in the Southern District of California by Michael Rosen naming each of the directors on the Board of Capricor Therapeutics, Inc. The action alleges, among other things, breaches of fiduciary duties and seeks unspecified damages.

On May 7, 2026, Capricor announced that it had filed a Motion for Preliminary Injunction and Complaint for Equitable Relief (the “Complaint”) in the Superior Court of New Jersey. against Nippon Shinyaku Co., Ltd and NS Pharma, Inc. (collectively, “NS”) with respect to the distribution of Deramiocel. The Complaint alleged that the defendants named therein, NS, failed to adequately prepare for the commercial launch of Deramiocel in the United States pursuant to the U.S. Distribution Agreement (“Distribution Agreement”), and have otherwise materially breached the terms of the Distribution Agreement. In the Complaint, the Company sought rescission of the Distribution Agreement, declaratory judgment that the Company has the right to distribute Deramiocel directly or through distributors other than NS, and other equitable remedies. Capricor subsequently withdrew its application for a preliminary injunction, without prejudice, having determined that resolving this contractual dispute in arbitration following the FDA’s decision would give the parties a more complete regulatory record to work from.

In the arbitration, NS filed a complaint for Breach of Contract against Capricor and demands declaratory and injunctive relief holding that Capricor breached the Distribution Agreement, that the Distribution Agreement remains in full force and effect, and requiring Capricor to perform its obligations thereunder. In the arbitration, Capricor filed counterclaims for breach of contract (repudiation and failure to perform), breach of the implied covenant of good faith and fair dealing, rescission based on mutual mistake, declaration of Capricor's right to distribute Deramiocel, and unjust enrichment, reserving claims for unilateral mistake and frustration of purpose. Capricor seeks damages for NS's breaches and repudiation, declaratory and injunctive relief holding that the Distribution Agreement has been repudiated and/or is

rescinded such that Capricor is entitled to distribute, or hire another company to distribute, Deramiocel, and in the alternative Capricor seeks restitution for unjust enrichment.

On May 20, 2026, Capricor received a shareholder litigation demand from Jennifer Godin, a beneficial owner of Capricor common stock, to take action to remedy alleged breaches of fiduciary duties and other violations of law. The demand alleged false and misleading statements purportedly made by officers and directors of the Company, as well as the alleged failure to disclose material adverse facts about the Company's business, operations, and prospects. No settlement amount has yet been requested.

On July 16, 2026, Mesoblast filed a patent infringement and declaratory judgment action in the District of Delaware against Capricor, alleging unauthorized manufacture, use, sale, and importation of the cardiosphere-derived cell product Deramiocel for the treatment of DMD. The complaint asserts infringement ofthree patents relating to mesenchymal stem cell compositions, preparations, and methods. Mesoblast alleges direct, induced, and contributory infringement and seeks injunctive relief, damages, attorneys' fees and a declaratory judgment of infringement.

On July 30, 2026, Darren Ngasseu Nkamga, individually and on behalf of all others similarly situated, filed a putative securities class action in United States District Court, Southern District of California against Capricor Therapeutics, Inc. and certain officers of the Company for alleged violations of the Federal Securities Laws, alleging that defendants had made materially false and/or misleading statements regarding the Company’s business, operations and prospects.

On August 7, 2026, a derivative action was filed in the Southern District of California by Michael Rosen naming each of the directors on the Board of Capricor Therapeutics, Inc. and certain officers of the Company. The action alleges, among other things, breaches of fiduciary duties and seeks unspecified damages and certain declaratory relief.

On August 20, 2026, Capricor received a stockholder litigation demand from Maria Barragan, a shareholder of Capricor, to take action to remedy alleged breaches of fiduciary duties and other violations of law and alleging that the officers made false and misleading statements to investors concerning the safety and efficacy data from the Company’s Phase 2 trial.

On September 28, 2026 Robert Novick filed a putative securities class action in the Southern District of California against Capricor, its Chief Executive Officer and its Chief Financial Officer, alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder.

In 2026, the Company received certain employment-related claims from former employees of the Company.

In addition, from time to time, the Company may become involved in various other legal proceedings that arise in the ordinary course of its business or otherwise. The Company records a loss contingency reserve for a legal proceeding when it considers the potential loss probable and it can reasonably estimate the amount of the loss or determine a probable range of loss. The Company has not recorded any material accruals for loss contingencies as of September 30, 2026.

Accounts Payable

During the normal course of business, disputes with vendors may arise. If a vendor disputed payment is probable and able to be estimated, we will record an estimated liability.

Other Funding Commitments

The Company is a party to various agreements, principally relating to licensed technology, that require future payments relating to milestones that may be met in subsequent periods or royalties on future sales of specific products (see Note 7 – “Collaborations, Licenses and Revenue”).

Additionally, the Company is a party to various agreements with contract research, manufacturing, commercialization and other organizations that generally provide for termination upon notice, subject to certain time

periods, with the exact amounts owed in the event of termination to be based on the timing of termination and the terms of the agreement. As of September 30, 2026, approximately $26.1 million of the Company's outstanding purchase orders represented non-cancellable purchase commitments. In the event the Company seeks to terminate these commitments, it may negotiate alternative arrangements with the applicable counterparties.

Employee Severances

The Board from time to time may approve severance packages for specific full-time employees based on their length of service and position ranging up to twelve months of their base salaries, in the event of termination of their employment, subject to certain conditions. No liability under these severance packages has been recorded as of September 30, 2026.

Workforce Reduction

In September 2026, the Company implemented a workforce reduction affecting approximately 10% of its employees as part of an initiative to reduce operating expenses and better align its resources with its strategic and operational priorities.

In connection with the workforce reduction, the Company recognized approximately $579,000 of one-time termination benefits during the three and nine months ended September 30, 2026, which were recorded within research and development expenses and general and administrative expenses in the accompanying condensed consolidated statements of operations. The Company does not expect to incur material additional costs in connection with the workforce reduction.

16. SEGMENT INFORMATION

The Company operates as asingle operating segment. The Company’s Chief Executive Officer, who serves as the Chief Operating Decision Maker (“CODM”), is responsible for allocating resources and assessing performance. The CODM reviews the Company’s operating results on an aggregate basis to make decisions about resource allocation, evaluate financial performance, and manage the overall business. Accordingly, the Company’s operations are managed asone reportable segment focused on the development and commercialization of its therapeutic candidates.

The following table represents consolidated net loss summarized by the significant segment expenses regularly reviewed by the CODM for the three and nine months ended September 30, 2026 and 2025.

The asset information provided to the CODM for the single operating segment is consistent with the amounts reported in the consolidated balance sheets.

17. SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date through the date of this filing. Based on this evaluation, the Company has determined that there are no other subsequent events that require adjustment to or disclosure in the financial statements.