Exhibit 10.39


 





SIGN AND RETURN THIS PAGE TO
CIRM DR2A-05735


 


NOTICE OF LOAN AWARD – CIRM RFA
10-05: Disease Team Therapy Development

 Research Awards


California Institute for Regenerative
Medicine


 


Issue Date: February 1, 2013


	
        Loan Number:

        Loan Recipient Name:
	
        DR2A-05735

        Capricor, Inc.
	Budget Period: 	1/1/2013
	Organization ID:  	PR-Y0027A-SF	Project Period Start:	1/1/2013
	Principal Investigator:	Rachel Smith	Project Period End:	12/31/2016
	Co-Principal Investigator (s): 	Michelle Kreke	 	 
	Project Title:	Allogeneic Cardiac-Derived Stem Cells for Patients Following a Myocardial Infarction


 


 


	Authorized Organizational Official and Address:	Official and Address to Receive Payments:
	
        Linda Marban, CEO

        Capricor, Inc.

        8840 Wilshire Blvd, 3rd Floor

        Beverly Hills, CA 90211
	
        AJ Bergmann

        Capricor, Inc.

        8840 Wilshire Blvd, 3rd Floor

        Beverly Hills, CA 90211



 


The California Institute for Regenerative Medicine hereby awards
a loan in the amount of $19,782,136 to be disbursed over a total period of 3.5 years to Capricor, Inc. (Organization
ID PR-Y0027A-SF) in support of the above referenced project. This award is made pursuant to the California Stem Cell Research
and Cures Act (Health and Safety Code section 125290.10 et. seq.) and is subject to the Terms and Conditions referenced
below. (Capitalized terms are defined herein or in the CIRM Loan Administration Policy, (LAP) a copy of which may be found
on the CIRM website at: http://www.cirm.ca.gov/files/Regulations/NPGAP_11012012.pdf).


 


By accepting this Loan, the Loan Recipient warrants to CIRM
that any funds expended under the award will be used for the purposes set forth in the approved application and this Notice of
Loan Award (NLA) and agrees to comply with all applicable CIRM regulations and standards.


 


To accept this Loan, the Principal Investigator and Authorized
Organizational Official must sign and return this NLA to CIRM within 45 days of the issue date. Payment will be issued only after
the signed NLA is received by CIRM. Grant funds will be sent to the organization’s address listed above under Official
and Address to Receive Payments unless an updated address is provided in the box below. If the applicant cannot accept the
award, including the legal obligation to perform in accordance with the provisions of this NLA, it should notify CIRM immediately.


 


If you have any questions about this award, please contact the
CIRM staff referenced on page 5.


 











	 	Updated Address to Receive Payments:
	 	 
	 	Capricor, Inc.
	 	8840 Wilshire Blvd., 3rd Floor
	 	Beverly Hills, CA 90211
	 	Attn: AJ Bergmann 
	 	 
	 	 
	/s/ Ellen Feigal	 
	Ellen Feigal, M.D.	 
	Senior Vice President, Research & Development	 
	California Institute for Regenerative Medicine	 


 


AWARD ACCEPTANCE: The Principal Investigator and Authorized
Organizational Official must sign below and return the entire NLA to CIRM to accept the Grant award on the terms provided herein
and in the Appendices which are attached hereto and incorporated herein.


	 	Principal Investigator	Authorized Organizational Official
	Name	Rachel Smith	Linda Marban
	Signature	/s/ Rachel Smith	/s/ Linda Marbán
	Date	2/5/2013	2/4/2013


 






    	 



    	 



    

 








	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine


 





TERMS AND CONDITIONS OF AWARD


 


A. This award is based on the
application submitted to CIRM, and as approved by the Independent Citizens' Oversight Committee (ICOC) on the above-titled project
and is subject to the terms and conditions incorporated either directly or by reference in the following:


 


		1.	The California Stem Cell Research and Cures Act
(Health and Safety Code Section 125290.10 et. seq.) and regulations adopted by the ICOC.



 


		2.	The CIRM Loan Administration Policy (Cal. Code
Regs., tit. 17, § 100800 et seq.), the CIRM Scientific and Medical Accountability Standards (Cal. Code Regs., tit.
17, § 100100 et seq.), the CIRM Intellectual Property and Revenue Sharing Requirements for Non-Profit and For-Profit Grantees
(Cal. Code Regs., tit. 17, § 100600 et seq.).



 


		3.	The terms and requirements detailed in RFA 10-05: CIRM
Disease Team Therapy Development Research Awards.



 


		4.	The Progress Milestones and Go/No Go Milestones set
out in Appendix A to this NLA and in the CIRM Loan Agreement executed by CIRM and Loan Recipient, attached hereto as Appendix
B. In the event of a conflict between this Notice of Loan Award and the Loan Agreement, the terms of the Loan Agreement will prevail.



 


		5.	Budget detail for the Principal Investigator and the
Co-Principal Investigator(s) set out below.



 


		B.	In applying for CIRM funding, Loan Recipient represented
to CIRM that it possesses certain intellectual property relevant to the CIRM-funded project (prior IP). These representations
were material to CIRM’s funding decision. Accordingly, Loan Recipient shall take all appropriate steps to maintain and preserve
its patent rights in such prior IP, and shall not abandon any such rights without prior written approval of CIRM.



 


		C.	If CIRM determines, in its sole discretion, that Loan
Recipient has not satisfied a Progress Milestone, CIRM may suspend Disbursements until such time as Grantee satisfies the Progress
Milestone. Upon suspending Disbursements, CIRM may convene its progress Evaluation Committee and may seek input from Loan Recipient
in order to evaluate the circumstances of the delay, including but not limited to, its cause, impact and any mitigating factors;
provided, however, that CIRM may permanently cease Disbursements if Loan Recipient does not satisfy the Progress Milestone within
four (4) months of the date that the Progress Milestone was scheduled to have been satisfied, or if the delay is not addressed
to CIRM’s satisfaction, as determined by CIRM in its sole discretion.



 


		D.	Subject to the provisions of Section 4.4(c) of the Loan
Agreement, CIRM may suspend or permanently cease Disbursements if CIRM determines, in its sole but reasonable discretion, that
a No Go Milestone has occurred (as defined in the Loan Agreement) or that Loan Recipient has not satisfied a Go/No Go Milestone.



 


		E.	CIRM has the right to attend key Food and Drug Administration
(FDA) meetings regarding the funded project, including but not limited to any pre- pre-IND meeting, pre-IND meeting, clinical
milestone meeting, or clinical hold meeting (FDA Meetings). CIRM also has the right to review any data package(s) or other information,
including confidential and/or proprietary information, provided by Loan Recipient to the FDA in connection with such FDA Meetings,
as well as any FDA Meeting minutes, and to share such information with CIRM’s confidential advisers. To facilitate CIRM’s
participation in FDA Meetings, Loan Recipient shall notify CIRM as soon as practicable after it has scheduled an FDA Meeting,
and shall, upon request, provide CIRM a copy of any data package or other information it intends to provide or has provided to
the FDA, as well as any FDA Meeting minutes.



 


		F.	Loan Recipient shall not conduct CIRM-funded clinical
trials for which no milestones and/or success criteria have been established by CIRM. Before any such CIRM-funded clinical trial
work commences, CIRM shall have the right to establish new milestones, success criteria, or other funding requirements.



 


		G.	The timing of the distribution of funds pursuant to this
award shall be contingent upon the availability of funds in the California Stem Cell Research and Cures Fund in the State Treasury,
as determined by CIRM in its sole discretion.



 


Please check the CIRM website for updated policy documents:
http://www.cirm.ca.gov/cirm-operations/Regulations


 






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AWARD DETAIL (U.S. Dollars):


 


	 	Year 1	Year 2	Year 3	Year 4 (6 months)
	Total CIRM Project Costs	 	 	 	 
	CIRM Principal Investigator	$2,789,289	$8,206,629	$4,290,520	$2,030,926
	CIRM Co-Principal Investigator (1)	$1,172,444	$1,186,599	$105,729	$0
	APPROVED BUDGET TOTAL	$3,961,733	$9,393,228	$4,396,249	$2,030,926


 


PI: Rachel Ruckdeschel Smith


 


	 	Year 1	Year 2	Year 3	Year 4 (6 months)
	Personnel Costs	[...***...]	[...***...]	[...***...]	[...***...]
	Travel	[...***...]	[...***...]	[...***...]	[...***...]
	Supplies	[...***...]	[...***...]	[...***...]	[...***...]
	Equipment	[...***...]	[...***...]	[...***...]	[...***...]
	Consultants/Subcontractors	[...***...]	[...***...]	[...***...]	[...***...]
	Total Direct Project Costs	[...***...]	[...***...]	[...***...]	[...***...]
	 	[...***...]	[...***...]	[...***...]	[...***...]
	Facilities Costs	[...***...]	[...***...]	[...***...]	[...***...]
	Indirect Costs	[...***...]	[...***...]	[...***...]	[...***...]
	APPROVED BUDGET TOTAL	[...***...]	[...***...]	[...***...]	[...***...]


 


Co-PI: Michelle Kreke


 


	 	Year 1	Year 2	Year 3	Year 4 (6 months)
	Personnel Costs	[...***...]	[...***...]	[...***...]	[...***...]
	Travel	[...***...]	[...***...]	[...***...]	[...***...]
	Supplies	[...***...]	[...***...]	[...***...]	[...***...]
	Equipment	[...***...]	[...***...]	[...***...]	[...***...]
	Consultants/Subcontractors	[...***...]	[...***...]	[...***...]	[...***...]
	Total Direct Project Costs	[...***...]	[...***...]	[...***...]	[...***...]
	 	[...***...]	[...***...]	[...***...]	[...***...]
	Facilities Costs	[...***...]	[...***...]	[...***...]	[...***...]
	Indirect Costs	[...***...]	[...***...]	[...***...]	[...***...]
	APPROVED BUDGET TOTAL	[...***...]	[...***...]	[...***...]	[...***...]


 


 


RESTRICTION ON THE USE OF FUNDS


CIRM has established the following restrictions on the use of
the award contingent on defined preconditions shown below. CIRM funds allocated to one sub-project may only be used for that sub-project.
Loan Recipient may reallocate funds from one sub-project to another, without advance approval from CIRM, as long as the funds for
each sub-project stay within 10% of its original allocation.


 


 





*Confidential Treatment Requested











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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine


 


 





The Phase II work cannot commence until certain milestones are
met, so funds for those sub-projects may not be used for costs incurred before those milestones are met. The sub-projects and the
preconditions are shown in the following table.


 


	Sub-Project	Project Costs	Precondition to use
	Pre-Phase II Work	$893,934	[...***...]
	Phase II Work	$18,888,202	[...***...]


 


SEMI-ANNUAL INSTALLMENTS ON CIRM DISBURSEMENTS


Disbursements will be made in semi-annual installments, issued
at the beginning of each 6-month period. These periods will be tied to the project start date and payments will be made based on
the figures provided above. The disbursement schedule for Years 2, 3 and 4 assumes that all Go/No-Go and Progress milestones are
met. If some milestones are unmet at the end of Year 1, 2, or 3, CIRM may adjust the disbursement schedule for subsequent years,
based on the Project Costs associated with the elements of the milestones that are unmet, after consultation with the Loan Recipient.


 


Disbursement Schedule:


 


	Payment #:	Type	Schedule Date	Amount
	1	Pre-Award Financial Due Diligence*	2/4/2013	$36,667
	2	Pre Phase 2 Trial Payment	2/4/2013	$857,267
	3	Year 1 Phase II Payment	7/1/2013	$3,067,799
	4	Year 2 Financial Due Diligence*	1/1/2014	$16,667
	5	Year 2 Q1Q2 Payment	1/1/2014	$4,679,947
	6	Year 2 Q3Q4 Payment	7/1/2014	$4,696,614
	7	Year 3 Financial Due Diligence*	1/1/2015	$16,667
	8	Year 3 Q1Q2 Payment	1/1/2015	$2,181,458
	9	Year 3 Q3Q4 Payment	7/1/2015	$2,198,124
	10	Year 4 Q1Q2 Payment	1/1/2016	$2,030,926


*Amounts specified in section 4.6 (b) of the Loan
Agreement will be delivered by CIRM directly to the service provider.


 


REPORT SCHEDULE


	Report Type	Period	Due Date
	Quarterly Progress Report	Year 1 Q1	4/1/2013
	Quarterly Cash-on-Hand Report	Year 1 Q1	5/1/2013
	Financial Milestone Check-in	Year 1 Q2	6/1/2013
	6-Month Progress Report	Year 1 Q2	7/1/2013
	Quarterly Cash-on-Hand Report	Year 1 Q2	8/1/2013
	Quarterly Progress Report	Year 1 Q3	10/1/2013
	Quarterly Cash-on-Hand Report	Year 1 Q3	11/1/2013
	Financial Milestone Check-in	Year 2	12/1/2013
	Annual Progress Report	Year 1	1/1/2014
	Annual Financial Report	Year 1	4/1/2014
	Quarterly Progress Report	Year 2 Q1	4/1/2014
	Quarterly Cash-on-Hand Report	Year 2 Q1	5/1/2014
	Financial Milestone Check-in	Year 2 Q2	6/1/2014
	6-Month Progress Report	Year 2 Q2	7/1/2014
	Quarterly Cash-on-Hand Report	Year 2 Q2	8/1/2014



 


 





*Confidential Treatment Requested











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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine





 





	Quarterly Progress Report	Year 2 Q3	10/1/2014
	Quarterly Cash-on-Hand Report	Year 2 Q3	11/1/2014
	Financial Milestone Check-in	Year 3	12/1/2014
	Annual Progress Report	Year 2	1/1/2015
	Annual Financial Report	Year 2	4/1/2015
	Quarterly Progress Report	Year 3 Q1	4/1/2015
	Quarterly Cash-on-Hand Report	Year 3 Q1	5/1/2015
	Financial Milestone Check-in	Year 3 Q2	6/1/2015
	6-Month Progress Report	Year 3 Q2	7/1/2015
	Quarterly Cash-on-Hand Report	Year 3 Q2	8/1/2015
	Quarterly Progress Report	Year 3 Q3	10/1/2015
	Quarterly Cash-on-Hand Report	Year 3 Q3	11/1/2015
	Financial Milestone Check-in	Year 4	12/1/2015
	Annual Progress Report	Year 3	1/1/2016
	Annual Financial Report	Year 3	4/1/2016
	Quarterly Progress Report	Year 4 Q1	4/1/2016
	Quarterly Cash-on-Hand Report	Year 4 Q1	5/1/2016
	6-Month Progress Report	Year 4 Q2	7/1/2016
	Quarterly Cash-on-Hand Report	Year 4 Q2	8/1/2016


 


 


For an explanation of reporting requirements, please refer
to the Loan Administration Policy (Rev May 2012; http://www.cirm.ca.gov/files/transcripts/pdf/2012/09-05-12.pdf)
as well as the “Reporting Requirements for Disease Team Research Awards” document provided separately.


 


CIRM CONTACTS:


Gabriel Thompson, Deputy Grants Management Officer





	Phone: 415-608-6835	Email: gthompson@cirm.ca.gov	Fax: (415) 396-9141


 





Ingrid Caras, Science Officer





	Phone: 415-396-9114	Email: icaras@cirm.ca.gov	Fax: (415) 396-9141


 





CIRM Mailing Address:


California Institute for Regenerative Medicine


Attn: Grants Management Office


210 King Street


San Francisco, CA 94107


 


The CIRM home page is at http://www.cirm.ca.gov


 









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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine





 


 


APPENDICES


 


Appendix A                     Research Milestones


 


 


 


Appendix B                      Loan Agreement


 


  


 


 


 


 


 


 


 


 





	CIRM USE ONLY: 6445-601-6047001/H&S Code 125291.20 Statutes 2004


 


 






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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine


 













APPENDIX A – CIRM RFA-10-01: (RFA
10-05) Disease Team Therapy Development Awards


 


California Institute for Regenerative
Medicine


 


	 	
        Grant Number:

        Grantee Name:
	
        DR2A-05735

        Capricor, Inc.
	Budget Period: 	Annual as of 1/1/2013
	 	Grantee ID:  	 	Project Period Start:	1/1/2013
	 	Principal Investigator:	Rachel Ruckdeschel Smith	Project Period End:	6/30/2016
	Co-Principal Investigator (s): 	 	 
	Project Title:     Allogeneic Cardiac-Derived Stem Cells for Patients Following a Myocardial Infarction	 
	 	 	 	 	 	 	 


 


	
        Milestone achievement is an important indicator of progress
        and is a major factor in review of progress reports. Insufficient progress through milestones may result in loss of further funding.
        The milestones summarized below replace the milestones proposed in the original Application. These milestones will be used
        as a basis for review in the progress reports and progress Evaluation Meetings unless further modified with Prior Approval from
        CIRM.

         



RESEARCH MILESTONES


 


Year 1 Milestones


	 	Milestone	Target completion date  	Progress or Go/No Go	Comments, Assumptions, Risks 
	CMC	[...***...]	
        Q2 2013

         

         

         

         

         

         

        Q4 2013

         

         

         

         

         
	
        Progress

         

         

         

         

         

         

        Progress

         

         

         

         

         
	[...***...]
	Pharm/tox	 	 	 	 
	Clinical/ Regulatory	[...***...]	
        Q3 2013

         

         

         

         

         

        Q3 2013

         

         

        Q4 2013

         
	
        Go /No Go

         

         

         

         

         

        Progress

         

         

        Progress

         
	[...***...]


 


 





*Confidential Treatment Requested




 






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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine


 








Year 2 Milestones


 


	 	Milestone	Target completion date  	Progress or Go/No Go	Comments, Assumptions, Risks
	CMC	[...***...]	
        Q2 2014

         

         

         

         

         

        Q3 2014

         

         

         

         
	
        Progress

         

         

         

         

         

        Progress

         

         

         

         
	[...***...]
	Pharm/tox	 	 	 	 
	Clinical/ Regulatory	[...***...]	
        Q1 2014

         

         

         

         

        Q2 2014

         

         

        Q3 2014
	
        Progress

         

         

         

         

        Progress

         

         

        Progress
	[...***...]


 


 


Year 3 Milestones


 


	 	Milestone	Target completion date  	Progress or Go/No Go	Comments, Assumptions, Risks
	CMC	[...***...]	
        Q1 2015

         

         

         

         

         

        Q4 2015
	
        Progress

         

         

         

         

         

        Progress
	
        [...***...]

         

         




 


 





*Confidential Treatment Requested











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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine


 


 





	Pharm/tox	 	 	 	 
	Clinical/ Regulatory	[...***...]	
        Q1 2015

         

         

         

        Q2 2015

         

         

        Q4 2015

         
	
        Progress

         

         

         

        Progress

         

         

        Progress

         
	 


 





Year 4 Milestones


 


	 	Milestone	Target completion date  	Progress or Go/No Go	Comments, Assumptions, Risks
	CMC	 	 	 	 
	Pharm/tox	 	 	 	 
	Clinical/ Regulatory	[...***...]	
        Q2 2016

         

         

         

         

         

        Q3 2016

         

         

         

        Q4 2016
	
        Progress

         

         

         

         

         

        Progress

         

         

         

        Progress
	[...***...]


 


 


All target completion dates are subject to revision due
to the occurrence of any of the risks defined above or other unforeseen circumstances. CIRM and Capricor shall endeavor to reach
a mutual understanding in resetting any of such milestones if the circumstances so require.  


 


 





*Confidential Treatment Requested











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	NOTICE OF LOAN AWARD	DR2A-05735	 
	California Institute for Regenerative Medicine





 


 


Release Criteria


 


 









MCB Specification


 


 









	Attribute     Method	Criteria


 





 






 


 


 


[...***...]


 


 












 


 


 


 






 






 












Patient Batch Specification


 


 








 


 


 


 


[...***...]


 


 


 


 


 


 


 





 



 


 


 


 


 






 


 





*Confidential Treatment Requested




 






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