Kaos Capital Calls on Capricor (NASDAQ: CAPR) Shareholders

The full text of the letter follows:

Dear Fellow Capricor Shareholders:

We are shareholders because we believe deramiocel may still have meaningful value for patients and because we recognize the potential inherent in Capricor's cell-therapy and exosome capabilities. But conviction in a lead program is not a license for a Board to concentrate all of a public company's capital, risk, and future in a single regulatory outcome.

The Company reported $237.9 million of cash, cash equivalents, and marketable securities at June 30, 2026, down approximately $80.2 million from year-end 2025. During the first half of 2026, Capricor reported $79.7 million of total operating expense, including $23.5 million of general and administrative expense--approximately double the comparable 2025 G&A figure.¹ The Company must now treat cash preservation as imperative, not optional.

We therefore request an immediate meeting between the Board, Kaos Capital, and a representative group of Capricor's substantial shareholders. The Board should confirm the meeting in writing within five business days of this letter and convene it no later than fifteen business days after this letter. The agenda must be clear: the discussion has to focus on how best to preserve the Company's cash position; refreshing the Board; assessing strategic acquisitions and partnerships; and establishing a credible plan to resolve the legal overhang that has turned Capricor's corporate environment reactive and adversarial.

A Shareholder-Led Governance Reset

Kaos Capital intends to nominate two independent director candidates with meaningful experience in biotechnology transactions, capital allocation, public-company governance, and complex restructurings. Subject to applicable law, the Company's bylaws, and the timing of the next shareholder meeting, we will ask our fellow shareholders to support these nominees.

One shareholder-backed director should chair a newly created M&A and Strategic Alternatives Committee of the Board. The Committee must be composed of independent directors and must engage directly with a confidential shareholder advisory council comprising major long-term holders. The purpose is not to substitute shareholder opinion for Board judgment. The purpose is to ensure that the Board hears directly from the owners of the Company before making irreversible decisions about its cash, pipeline, leadership, or strategic direction.

Capricor needs more than distinguished résumés. It needs directors who have repeatedly bought, sold, financed, restructured, and integrated life-sciences businesses. The Committee should retain independent financial and legal advisers, adopt transaction criteria, and report a defined timeline to shareholders.

Cash Preservation Must Come Before Expansion of Spending

The Company's disclosed $79.7 million first-half operating expense is a broad operating-cost figure, not SG&A alone; disclosed G&A was $23.5 million.¹  Both deserve immediate scrutiny. We call for a top-to-bottom review of every discretionary program, external adviser, commercial-preparedness initiative, headcount plan, manufacturing commitment, and corporate overhead item.

The Board should adopt a Cash Preservation Plan that is publicly explained and independently monitored. The plan should include: a near-term freeze on nonessential spending; a zero-based review of G&A; stage gates for programs and commercial investment that are not essential to the present regulatory path; enhanced approval requirements for material commitments; and quarterly reporting on cost reductions, cash runway, and uses of capital. No Board should permit the cash balance to erode without a parallel effort to reduce fixed costs and diversify the sources of future value.

Use Capricor as a Disciplined Biotech Platform, Not a Single-Asset Bet

We are not asking Capricor to abandon deramiocel. We are asking the Board to protect shareholders from having every dollar and every future financing decision depend upon one program. The present market offers an opportunity to acquire, license, or partner around high-quality science trapped inside undercapitalized vehicles.

The M&A and Strategic Alternatives Committee should immediately begin evaluating assets that can complement Capricor's existing cell-therapy and exosome foundation. The mandate should include capital-efficient programs addressing inflammation, fibrosis, tissue repair, targeted delivery, and regenerative medicine. In particular, Capricor should examine advanced small-molecule pharmacology directed at the inflammatory and fibrotic microenvironment, including NLRP3/inflammasome signaling, alongside delivery technologies and clinically credible regenerative platforms. Those are examples of the type of adjacent science that could reduce concentration risk and create a broader, multi-modality biotechnology company.

The standard must be disciplined. Each potential transaction should demonstrate strategic fit, credible clinical or preclinical evidence, durable intellectual property, manageable capital requirements, acceptable dilution, and a clear path to increasing the value of the Company's cash and public-company platform. This is a roll-up strategy only if it is value-accretive, fully diligenced, and governed by dealmakers with a track record of execution.

Bring in World-Class Legal Advisors and End the Adversarial Cycle

Capricor's public disclosures identify numerous legal matters and shareholder demands, including securities and derivative actions, a Section 220 books-and-records demand, a shareholder litigation demand, a patent action, a distribution dispute, and employment-related claims.² A further 2026 securities class action has been filed against the Company and certain officers.³ These are allegations and proceedings, and we make no accusation of wrongdoing against any individual.

Nonetheless, this legal overhang carries cost, distraction, reputational risk, and governance consequences. We call on the Board to retain premier independent litigation, governance, and settlement counsel to conduct a rapid review of each material matter, protect the Company's legal position, and seek prompt, commercially rational resolutions where appropriate. The goal must be to transform Capricor into a shareholder-friendly company with a constructive culture of disclosure, engagement, and accountability--not a company defined by avoidable disputes and reactive public relations.

The Board should also commission an independent review of the oversight, disclosure-control, contracting, compensation, and capital-allocation processes implicated by its public litigation disclosures. A concise public summary of the review's recommendations and implementation milestones should follow, subject to legal privilege and the Company's legitimate interests.

Our Request to Fellow Shareholders and the Board

1. An immediate meeting. The Board should confirm a meeting in writing within five business days and convene it no later than fifteen business days after this letter with Kaos Capital and representatives of substantial shareholders.
2. Two independent nominees. The Company should engage constructively with Kaos Capital's two proposed director candidates and permit shareholders to decide their candidacies through the applicable corporate process.
3. An M&A and Strategic Alternatives Committee. The Board should form an independent committee chaired by a shareholder-backed director, advised by experienced M&A and legal professionals, and accountable to a defined timetable.
4. A formal Cash Preservation Plan. The Board should immediately investigate the $79.7 million first-half operating-cost base, including the $23.5 million G&A component, and disclose cost-reduction and cash-runway targets.
5. A biotech-platform mandate. The Committee should evaluate capital-efficient acquisitions, licenses, and collaborations in adjacent small-molecule, inflammation, fibrosis, delivery, and regenerative-medicine technologies.
6. A litigation-resolution and governance program. The Company should hire premier independent advisers to reduce legal overhang, improve disclosure and oversight, and rebuild a shareholder-friendly corporate culture.

We are prepared to work constructively with the Board and with other substantial shareholders. However, engagement must be real and prompt. If the Board does not confirm and convene the requested meeting on the timetable above, Kaos Capital will begin the process of seeking shareholder support to elect its two independent nominees, replace the directors responsible for the current course, and empower a reconstituted Board to evaluate the removal and replacement of senior management. We do not take that step lightly, but continued inaction would leave shareholders no reasonable alternative.

The choice is straightforward. Capricor can use its capital base and public platform to build a broader, more resilient biotechnology enterprise, or it can remain exposed to the next decision point, the next financing need, and the next avoidable controversy. We believe shareholders deserve the former, and we will pursue the leadership and governance changes necessary to achieve it if the Board refuses to engage.

Sincerely,

Adam Arviv

Chief Executive Officer

Kaos Capital Ltd.

Significant and Growing Shareholder of Capricor Therapeutics, Inc.

cc: Walied Soliman, KC

Canadian Chair, Norton Rose Fulbright

Norton Rose Fulbright Canada LLP

Public-Disclosure Source Notes

The citations below identify public disclosures supporting factual statements in this letter. Legal matters described herein are allegations and proceedings unless and until adjudicated otherwise.

¹ Capricor Therapeutics, Second Quarter 2026 Financial Results, Aug. 13, 2026. Open source

² Capricor Therapeutics, Form 10-Q -- Commitments and Contingencies, quarter ended June 30, 2026. Open source

³ Nkamga v. Capricor Therapeutics, Inc. et al., No. 3:26-cv-04385 (S.D. Cal.), docket summary. Open source

About Kaos Capital

Kaos Capital Ltd. is a Miami-based investment firm with offices in The Bahamas and Toronto. The firm focuses on constructive activist investing in Canadian and U.S. public companies and seeks to partner with management teams and boards to improve operations, strategy, governance, and long-term shareholder value.

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SOURCE KAOS Capital