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 of five years. On February 26, 2025, the Company entered into a fourth lease 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 lease amendment extends the lease term to September 30, 2033, with an option to renew for an additional term of five years. The Company is not reasonably certain that it will exercise this option to renew and therefore it is not included in right-of-use assets and liabilities as of June 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 right-of-use assets. The Altman Lease, as amended, provides for a tenant improvement allowance from the landlord for a total of $1.3 million to be received in 2026. The Company has thus remeasured its lease liability and right-of-use assets to reflect such allowance.

On May 14, 2026, the Company entered into a License Agreement with ARE-SD Region No. 39 Owner, LLC (the "Landlord") commencing May 15, 2026, granting the Company temporary occupancy of a building containing approximately 171,000 rentable square feet located at 9625 Towne Centre Drive, San Diego, California (the "Towne Centre Premises") while the parties negotiated a formal lease for the same premises. No license fee is payable unless commencement of the formal lease has not occurred by August 30, 2026, in which case the Company would owe approximately $565,000 per month in license fees, operating expenses and administrative rent beginning September 1, 2026.

On July 9, 2026, the Company entered into a Lease Agreement (the "ARE Lease") with the Landlord for the Towne Centre Premises, which will serve as the Company's new corporate headquarters and will include expanded manufacturing cleanrooms, research and development laboratory space, administrative offices and other related uses. The contractual term is estimated to commence on the earlier of (i) the date on which the Company's lease contingency related to FDA approval is satisfied or waived or (ii) December 31, 2026, with rent commencing twelve months thereafter, and will end 138 months from the first day of the first full month following the rent commencement date. The ARE Lease provides the Company with two consecutive options to extend the term for five years each (each, an “Extension Right”). The initial monthly base rent is $5.60 per rentable square foot, or approximately $958,000 per month, subject to annual increases of 3.0%. The Company will receive an 18-month full abatement of base rent beginning on the rent commencement date, followed by an additional six-month period during which base rent will be payable on only 128,068 rentable square feet, after which base rent will be payable on the entire premises. The Landlord will provide a tenant improvement allowance in the maximum amount of $185 per rentable square foot, or approximately $31.6 million in the aggregate (the “Total TI Allowance”), and the Company will provide a security deposit of approximately $958,000 in cash or in the form of a letter of credit. The Company is also responsible for real property taxes, building insurance, routine maintenance and operating costs, which are variable in nature and are recognized as expense when incurred. The Company is also responsible for administrative rent equal to 1% of base rent. 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 by delivering written notice to the other party within five business days following such date.

Because the Towne Centre Premises were made available for the Company's use on May 21, 2026 and the Company subsequently executed the ARE Lease for the same premises, the Company concluded that the arrangement commenced for accounting purposes on May 21, 2026, and that the License Agreement and ARE Lease represent a single lease arrangement for the same underlying asset. The determination that the arrangement commenced prior to execution

of the ARE Lease required significant judgment. Execution of the ARE Lease provided evidence of conditions that existed as of the commencement date and has therefore been reflected in the measurement of the right-of-use asset and lease liability as of June 30, 2026. The Company classified the arrangement as an operating lease and recognized a right-of-use asset of approximately $76.3 million and a corresponding operating lease liability of approximately $75.5 million as of June 30, 2026, measured as the present value of the remaining lease payments, giving effect to the base rent abatement periods described above, using an incremental borrowing rate of approximately 7.7%. 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. In determining the rate applied to this arrangement, the Company considered market yield data for secured borrowings of entities with a comparable credit profile, adjusted for the length of the lease term, the collateralized nature of the obligation and the economic environment in which the Towne Centre Premises are located. In measuring the right-of-use asset and lease liability, the Company estimated the contractual commencement date of the ARE Lease to be August 22, 2026, the Prescription Drug User Fee Act (“PDUFA”) target action date for Deramiocel, representing management’s best estimate of the date on which the FDA approval contingency will be resolved, and the resulting rent commencement date to be August 22, 2027. As the Company is not reasonably certain of exercising the Extension Rights described above, the related periods have been excluded from the lease term used in this measurement. In determining the lease term, the Company evaluated the right of either party to terminate the ARE Lease if FDA approval of Deramiocel is not received by December 31, 2026. That right becomes exercisable only upon the occurrence of a future event that is outside the control of both the Company and the Landlord, and is not an option that either party may exercise at will; accordingly, the Company concluded that the enforceable period of the arrangement is not limited by that right. If the contingency is not resolved by December 31, 2026, or if either party exercises the termination right, the Company would reassess the lease term and remeasure or derecognize the right-of-use asset and lease liability in the period in which that event occurs. The Company elected the practical expedient not to separate lease and non-lease components. Administrative rent, which is fixed at 1% of base rent, is included in the measurement of the right-of-use asset and lease liability; real property taxes, insurance, and maintenance costs are variable in nature and are excluded from such measurement.

The Company is constructing certain leasehold improvements under the ARE Lease, a portion of which will be reimbursed through the Total TI Allowance. The improvements become the property of the landlord upon installation and may not be removed by the Company upon lease termination; accordingly, the allowance is not accounted for as a lease incentive under ASC 842. Amounts funded by the Landlord under the Total TI Allowance are accounted for as assets of the Landlord, and no portion of the Total TI Allowance has been recognized as a reduction of the right-of-use asset or as leasehold improvements of the Company as of June 30, 2026. Costs incurred by the Company in excess of the Total TI Allowance are capitalized as leasehold improvements and amortized over the shorter of their estimated useful lives or the remaining lease term. If the ARE Lease does not commence, the Company would be required to repay allowance amounts previously received, other than with respect to improvements the Landlord elects to retain, and to remove the improvements and restore the premises. As of June 30, 2026, no amounts had been received under the Total TI Allowance and, accordingly, no repayment obligation existed and no related contingent liability has been recognized.  

Los Angeles, California

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

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 $88.6 million and $13.5 million as of June 30, 2026 and December 31, 2025, respectively, and represent the Company’s right-of-use the underlying assets for the lease term. The Company’s obligation to make lease payments are 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 June 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 has 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 cost for the three months ended June 30, 2026 and 2025 were $211,181 and $353,298, respectively, and $497,475 and $722,476 for the six months ended June 30, 2026 and 2025.