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Athersys (NASDAQ:ATHX)

Q2 2013 Earnings Call

August 13, 2013 4:30 pm ET

Executives

Lisa Wilson

William Lehmann - President, Chief Operating Officer and Secretary

Gil Van Bokkelen - Co-Founder, Chairman and Chief Executive Officer

Analysts

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

Stephen G. Brozak - WBB Securities, LLC, Research Division

Jason Kolbert - Maxim Group LLC, Research Division

Operator

Good afternoon. My name is Candace and I will be your conference operator today. At this time, I would like to welcome everyone to the Athersys Second Quarter 2013 Financial Results Conference Call. [Operator Instructions] Thank you. Ms. Lisa Wilson, Investor Relations for Athersys, you may begin your conference.

Lisa Wilson

Thank you, and good afternoon, everyone. I'm Lisa Wilson of In-Site Communications, Investor Relations for Athersys. Thank you for joining today's call. If you do not have a copy of the press release issued at the close of market, it is available on the Athersys website at athersys.com, or you may call Libby Abelt in my office at (212) 759-5665 to receive it via e-mail.

Gil Van Bokkelen, Chairman and Chief Executive Officer; and B.J. Lehmann, President and Chief Operating Officer of Athersys, will host today's call. The call is expected to last approximately 30 to 45 minutes and may also be accessed at athersys.com. A replay will be available 2 hours after the call's completion and access information for the replay is in today's press release.

Any remarks that Athersys may make about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors, including those discussed in the company's Form 10-Q, 10-K and other public SEC filings.

Athersys anticipates that subsequent events and developments may cause its outlook to change. And while the company may elect to update these forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so.

For the benefit of those who may be listening to the replay, this call was held and recorded on August 13, 2013. Since then, Athersys may have made announcements related to the topics discussed, so please reference the company's most recent press releases and SEC filings.

With that, I would like to turn the call over to B.J. Lehmann. B.J.?

William Lehmann

Thanks, Lisa. Good afternoon, and welcome, everyone. I'm B.J. Lehmann, President and Chief Operating Officer at Athersys. I'll briefly review our financial results for the period ended June 30, 2013, and then I'll turn the call over to Gil Van Bokkelen for a corporate update, followed by a question-and-answer period.

In the second quarter of 2013, we reported total revenues of $571,000, compared to $2.7 million for the same period in 2012, reflecting a $2 million decrease in our Pfizer contract revenues. The Pfizer-related revenues, including license fees, research funding and certain manufacturing services were recognized over a 2.5-year performance period that ended in June 2012, which is responsible for the year-over-year decline.

We continue to generate some contract revenues from our collaborations, including from Pfizer and RTI Biologics, but at reduced levels from the prior year. We also continue to generate grant revenues from multiple awards, such as the SBIR Fast Track grant award that we announced last week. This new grant is expected to provide up to $2.8 million of support of a Phase II clinical study evaluating the administration of MultiStem patients who have suffered a heart attack.

Research and development expenses were $5.1 million in the second quarter of 2013 compared to $5 million in the prior year period. Clinical and preclinical development cost, which are the largest R&D expense item and represent a large proportion of the cost of our development programs, decreased $145,000 in 2013 second quarter compared to the prior-year period. Personnel costs increased $160,000 during the period compared to the prior-year period.

Patent legal fees increased $193,000 and sponsored research decreased $154,000 during the period compared to the prior-year period. General and administrative expenses increased to $1.6 million in the second quarter of 2013 compared to $1.2 million in the prior year period due to increases in advisory and other external service provider costs, legal and professional fees and personnel costs.

Income of $216,000 was recognized during the quarter ended June 30, 2013, from the change in the market value of warrant liabilities, compared to an expense of $96,000 during the prior-year period. Net loss for the 3 months ended June 30, 2013, was $5.9 million, compared to a net loss of $3.7 million for the 3 months ended June 30, 2012, with the difference largely attributable to the decrease in Pfizer contract revenues.

As of June 30, 2013, the company had cash and cash equivalents of $18.9 million compared to $25.5 million at December 31, 2012. During the first half of 2013, we used the company's equity purchase agreement to support our operating cash and capital investment needs and to offset the decline in Pfizer revenues. In the first half of the year, we generated $5.8 million in proceeds from equity sales under the purchase agreement.

We believe that the continued prudent use of the facility from time to time could support the achievement of our clinical development milestones, such as the generation of clinical data from Phase II clinical trials and of our business development objectives.

With that, I'd like to turn the call over to Gil for a corporate update. Gil?

Gil Van Bokkelen

Thanks, B.J., and good afternoon, everyone. Athersys is committed to developing novel and proprietary treatments that have the potential to address significant areas of unmet medical needs. One of the key ways we intend to achieve this goal is by developing by our off-the-shelf stem cell product, MultiStem, which we believe represents an important advancement in the field of cell therapy-based medicine. Our current regenerative medicine program have a core focus on treating specific inflammatory and immune disorders, neurological conditions and cardiovascular disease, each of which are conditions of significant unmet medical needs and represent large markets that are likely to grow substantially over time, given current population dynamics.

MultiStem is a biological product that is manufactured from human stem cells obtained from adult bone marrow or other non-embryonic tissue sources. Unlike other cell types, after isolation from a qualified donor, MultiStem may be expanded on a large-scale for future clinical use and stored in frozen form until needed. Cells contained from a single donor require no genetic modification and may be used to produce to banks, yielding hundreds of thousands and millions of doses of MultiStem, an amount far greater than other stem cell types can achieve.

Each bank is extensively characterized to ensure product consistency and safety. MultiStem consists of a special class of human stem cells that have the ability to express a range of therapeutically relevant proteins and other factors, as well as for multiple cell types. A growing body of evidence generated by Athersys scientists and independent collaborators shows that MultiStem promotes healing and tissue repair through multiple mechanisms of action. The product conveys repairing effects in multiple ways, such as through the expression of factors that reduce inflammatory damage, enhance the formation of new blood vessels in the region of ischemic injury, and protect or damaged injured tissues in the areas where otherwise healthy tissue may be at risk.

Furthermore, our research has shown that MultiStem regulates other cell types in key organ systems in the body to promote tissue repair and healing. Like a drug or conventional biologic, the cells are cleared from the body over time, although their effects on promoting healing and tissue repair appear to be quite durable and long-lasting. Five of our MultiStem programs are now in clinical development, including 3 programs in the inflammatory and immune disease space. Our partner, Pfizer, is conducting a Phase II clinical study involving administration of MultiStem cells for patients suffering from treatment-resistant or refractory ulcerative colitis. These are very sick patients with active disease for whom the current standard of care has previously failed.

Ulcerative colitis is the most common form of inflammatory bowel disease, or IBD, which includes other disorders such as Crohn's disease. Collectively, these conditions are estimated to affect 4 million people or more in the U.S., Europe and Japan a represent areas of significant unmet clinical needs. In the ongoing study being conducted by Pfizer, patients received either a single dose of MultiStem or placebo on Day 1 and are then evaluated periodically up through Week 16 post-treatment. The study requires patients to undergo an endoscopic evaluation at Phase I prior to treatment and again at Week 8, post-treatment, in addition to other clinical assessments that occur during the study.

The primary endpoints for the trial were focused on the clinical evaluation at Week 8, including the endoscopic and rectal bleeding scores. Following the Week 8 assessment, patients receive additional treatment with either intravenous MultiStem or placebo and are subsequently assessed through Week 16. As a result, the 16-week assessment, which does not include endoscopic evaluation, includes analysis of 4 subgroups: patients that received 2 doses of placebo; patients that received 2 doses of MultiStem; patients that received placebo at day 1 and MultiStem at Week 8; and patients that received MultiStem at Day 1 and placebo at Week 8.

The study is designed to incorporate approximately 22 evaluable patients in each of these groups, and we anticipate approximately 92 patients in the final cohort and enrollment of approximately 110 patients overall, reflecting a lower than anticipated discontinuation rate. Although enrollment for the trials progressed more slowly than hoped for, we believe Pfizer has taken appropriate steps to drive completion of the study and we are now nearing the end of the enrollment process. Pfizer projects completion of enrollment should probably occur sometime between early October and Thanksgiving, in any event prior to year end. This would put us on a path to have initial results from the trial in early 2014.

Turning to transplant support. As I've discussed in the past, we completed a 36-patient Phase I clinical study at the administration of MultiStem for patients suffering from leukemia or certain other blood-borne cancers in which patients undergo radiation therapy and then receive a hematopoietic stem cell transplant. These patients are at significant risk for serious complications, including graft-versus-host disease or GvHD, and imbalance of immune system function caused by transplanted immune cells that attack various tissues and organs of the patient. This program has previously been assigned orphan drug designation by the FDA, which provides us with 7 years of market exclusivity upon regulatory approval, as well as certain other advantages.

In 2011 and in 2012, we released data from the study, which demonstrated MultiStem to be well-tolerated in this indication and suggested a positive effect in reducing the incidence and severity of GvHD, as well as providing other clinical benefits, such as augmenting rates of platelet engraftment, and time of engraftment.

Based on these positive outcomes, we intend to further develop MultiStem for this indication and previously submitted a proposal to the FDA for conducting a registration-directed study in this area. In late spring, the FDA sent us their response to our proposal, which in our view, was favorable. The FDA conveyed some specific questions and recommendations regarding the proposed study design, which we have been working to incorporate and run statistical simulations around. We are optimistic that we will have reached agreement with the FDA regarding a defined protocol for this important study in the near term.

The precise timing regarding the initiation of this study will depend on the progress in our other clinical trials and the achievement of certain business development and financial objectives.

Our third clinical program in the inflammation and immune area is providing support for solid organ transplantation. The risk of rejection and the requirement for long-term immunosuppression are key challenges in donor organ transplantations, which could be addressed by administering MultiStem to transplantations. In preclinical models to solid organ transplantation, we and our collaborators have demonstrated that a treatment protocol that includes administration of MultiStem shortly after the transplant procedure enables durable organ graft acceptance without the corresponding requirement for the long-term administration of immunosuppressive drugs.

We are now collaborating with a leading transplant group with the University of Regensburg in Germany on an institutional-sponsored clinical trial, exploring the administration of MultiStem in patients following a liver transplant. Patient screening is underway for the small dose escalation study involving 12 to 24 patients and several potential candidates have been identified for possible inclusion in the trial.

We plan to provide some financial support for this investigator-sponsored Phase I study and to provide the product to conduct a trial and expect our collaborators will report data sometime in 2015.

This new transplantation study built on preclinical research conducted at Regensburg University Hospital in an established rat heart transplant model, which was published in STEM CELLS TRANSLATIONAL MEDICINE last month. The preclinical study demonstrated once more that our third-party or independent-donor derived multipotent adult progenitor cells or MAPC increased the long-term survival of organ transplants in instances where the cell donor is not related to the recipient or the organ donor. It also appeared to alleviate or eliminate the need for long-term immunosuppression.

The preclinical research was conducted using a standard heart transplant model, referred to as Heterotopic Heart Transplant model, where investigators are not replacing the endogenous heart, but rather surgically adding a second heart into the system to determine whether or not the organ allograft will be accepted or rejected by the transplant recipient.

For this study, investigators evaluated one group of animals that were treated after the transplantation with a combination of MAPCs and short-term administration of low-dose immunosuppressive drug mycophenolate, or MPA. Another group was administered immunosuppressive drugs only, while the third group received no extra treatment at all. Animals receiving MAPC and short-term immunosuppressive therapies survived long term and displayed better outcomes in relevant controls. Specifically, in the untreated group, the grafts were rejected in less than 2 weeks. MPA treatment kept and intact just a few days longer. However, animals given a combination of MPA and MAPCs exhibited 80% survival at 100 days post-graft, which is the length of the study even after treatment with MPA was stopped at 1 week, indicating a promising pathway for clinical immunotherapy.

Furthermore, the allogeneic heart grafts recovered from MAPC-treated animals were successfully re-transplanted into naïve secondary recipients without triggering rejection even when no immunosuppression drug was administered. This finding demonstrates that an immuno-privileged state, or regional immune tolerance, had been induced in the graft that can be carried into another untreated animal, illustrating the durability of the effect. By addressing several of the major hurdles that represent real challenges for transplant patients, this work demonstrates that MultiStem could have a significant impact on transplantation medicine. It also supports the broader relevance of MultiStem in the treatment of inflammatory and immune conditions that we have previously discussed.

Turning to neurology. We believe MultiStem's cascade effect can provide meaningful benefits in several ways, not just in promoting healing and recovery, but also shifting from the damaging inflammatory cycle that typically follows a neurological event, such as a stroke or traumatic brain injury, toward active repair and healing. This also has potential relevance in certain chronic neurological conditions, such as chronic progressive multiple sclerosis and other indications.

In our ongoing Phase II study, we are evaluating the administration of MultiStem therapy to patients who have suffered an ischemic stroke. This double-blind placebo-controlled trial is evaluating the safety and efficacy of MultiStem when administered to patients who have suffered a moderate to moderately severe portable stroke that result in significant disability. Patients enrolled in the study receive a single intravenous dose of MultiStem therapy or placebo 1 to 2 days following the stroke, which represents a meaningful extension of the current treatment window over the existing standard of care, thrombolytics, which must be administered within 3 to 4 hours after a stroke.

Our stroke study is dividend into 3 parts and is designed to enroll approximately 136 patients in total. The first 2 parts were dose-escalation cohorts that involve a limited number of patients that receive MultiStem or placebo. We finished the low-dose cohort which was deemed safe by an independent data safety monitoring committee. We then proceeded to the second phase of the study, which was treating patients at the high dose level. The data safety monitoring committee looked at all that data last fall and determined that this dose also demonstrated a clean and consistent safety profile. We subsequently began enrolling the remainder of the patients in the study at the high dose level. This efficacy cohort is comprised of 120 patients, with patients randomized one-to-one so that an equal number of subjects received either high-dose MultiStem or placebo, approximately 60 patients in each group.

In early April, we received formal regulatory authorization from the MHRA to include some of the leading stroke treatment centers in the U.K. in our study. The U.K. clinical centers see several times the number of patient that you would see in average stroke treatment centers here in the United States. We're very pleased to have been participating in the study alongside the 27 participating U.S. sites, the vast majority of which are already up and running.

In order to initiate the U.K. site, the preliminary ethics committee review has already been conducted, and we responded to their questions. We expect the formal sign-off at the ethics review process shortly. In anticipation of that approval, we've been preparing for site initiation of 6 leading stroke clinical centers in the U.K. to help us achieve our goal in completing enrollment and reporting initial results for the study in the first half of 2014.

Favorable Phase II trial results from this study will be an important achievement and may also guide our efforts in other acute and chronic neurological indications. Also, a positive outcome for this trial could have important ramifications for the company, both with regards to our development path here in the U.S., but also with respect to the U.K., Europe and other developed countries, where regenerative medicine is increasingly viewed as the potential solution to areas of significant unmet medical need and where legitimate options for accelerated development may exist.

Along those lines, we are pleased to see the recent progress by the FDA as it moves towards the implementation of the new breakthrough therapies and broadens accelerated approval frameworks which could speed development of novel therapies that are viewed as exhibiting a safe and effective profile, and have the clear potential to address areas of significant unmet medical need. Draft guidance documents have recently been issued by the FDA to convey how these approaches will work, and we anticipate the FDA will formalize these guidelines by the end of the year in accordance with the timetable established by the FDA Innovation and Safety (sic) [Safety and Innovation] Act and PDUFA V enacted by Congress last year.

We're also encouraged to see signs of progress in other developed markets, including Japan, which has been moving towards the creation of an accelerated regulatory path specifically designed for regenerative medicine therapies. While it's too early to say what the impact of this will be, we believe it reflects a growing awareness of the transformative potential of regenerative medicine.

We're also very pleased to announce last week that the National Heart, Lung, and Blood Institute, part of the NIH, awarded us a SBIR Fast Track grant, which will support Phase II clinical study evaluating the administration of MultiStem therapy to patients who have suffered a heart attack or acute myocardial infarction, also known as an AMI. The grant is expected to provide us the $2.8 million of support over the course of the study in connection with study progress and milestone achievements.

In the cardiovascular disease area, we believe that by administering MultiStem following a heart attack we may improve outcomes while reducing the risk of progression to congestive heart failure. Published preclinical work shows that MultiStem enhances healing and recovery in both acute and chronic ischemic injury models and promotes revascularization in areas of ischemic injury, to formation of stable, well-integrated blood vessels.

While our prior Phase II study plan has already been authorized by the FDA, we intend to make certain modifications to the study design in accordance with the grant authorized by the NIH, and we look forward to initiating the study early next year.

Progress is being made in other areas as well. Earlier this week, our collaborator, RTI, announced the first human implantation of its map3 cellular allogeneic bone graft, which incorporates our MAPC stem cell technology that we licensed to RTI. Map3 cellular allogeneic bone graft is a natural and safe alternative to autograft and provides a streamlined approach to bone grafting while supplying the 3 elements necessary for bone repair: osteogenesis, osteo induction and osteo conduction, in a single allograft. Map3 incorporates MAPC-based technology with stem cells isolated from the same donor as the other bone material. The MAPC technology represents a distinctive type of stem cell with recognized angiogenic and immunomodulatory properties. Once launched, RTI expects Map3 to be available on multiple configurations and sizes, providing bone grafting options for various bone repair, reconstruction and fusion procedures.

We also continue to make progress with our international network of collaborative relationships that has produced a steady stream of publications in high-impact journals that reflect the potential of our technologies. In the past quarter, we saw 3 meaningful publications, including the STEM CELLS TRANSLATIONAL MEDICINE publication in July, as well as 2 additional articles that were published earlier in the quarter that demonstrated the relevance of MultiStem for autoimmune disease, transplantation and peripheral vascular disease.

I mentioned both of these articles from the last earnings call, so I'll only briefly summarize it here as well as comment on their significance. First, The Journal of Immunology article described the result of the preclinical study using allogeneic islet cell transplantation, conducted jointly with Pfizer and King's College of London, which is an approach for treating Type 1 diabetes as a model to assess the ability of MultiStem cells to control the T-cell responses that play an important role in autoimmune disease and allograft rejection.

This study demonstrates that MultiStem cells suppress T-cell proliferation and inflammatory cytokine production, suppress autoreactive T-cell activity and supported the proliferation of regulatory T-cells, which resulted in durable control of potentially damaging inflammatory T-cells. Abnormal T-cell activity contributes significantly to a number of inflammatory and immune-mediated conditions, including Type 1 diabetes, graft-versus-host disease, complications associated with solid organ transplantation, inflammatory bowel disease and other autoimmune conditions, such as scleroderma, lupus and rheumatoid arthritis. Mechanistic aspects of this work were confirmed in the more recent STEM CELLS TRANSLATIONAL MEDICINE paper.

Second, an article in the journal Circulation describes the result of the study using advanced imaging technologies to evaluate the administration of MultiStem cell therapy in a rodent hindlimb ischemia model, which is reflected in peripheral vascular disease in critical limb ischemia, which affects millions of individuals in the U.S, Europe and Japan. Ultrasound imaging of the ischemic limb following treatment with our multipotent adult progenitor cells showed more complete recovery of blood flow and greater improvements in microvascular blood volume in treated versus untreated animals. The study is important because it demonstrates a novel approach to using a surrogate marker that could be used to simplify and streamline clinical development.

These and other published results further confirm that MultiStem cells are not one-dimensional. They have the capacity to act in a dynamic manner and convey robust therapeutic effects through multiple mechanisms of action, depending on the disease or condition. This is a central paradigm that distinguishes cell therapy from traditional single modality drugs and biologics and represents an important potential advancement in the treatment of a range of diseases.

We are also engaged in the development of novel small molecule therapies to treat obesity and schizophrenia among other conditions. Currently, we are focused on the development of potent highly selective compound that acts through stimulation of a specific receptor in the brain, the 5HT2c serotonin receptor. We're conducting preclinical evaluation of certain novel compounds that we have developed that exhibit favorable attributes, including outstanding receptor selectivity, as well as greater potency and activity as compared with other 5HT2c agonists. We have demonstrated that our compounds are complementary with other agents and believe these compounds could achieve best-in-class weight loss as well as superior safety and tolerability and profile.

Furthermore, we've evaluated certain of our compounds in standard preclinical models of schizophrenia and related neurological conditions. As we've said previously, we intend to enter into a partnership to advance the development of our 5HT2c agonist program either for the treatment of obesity, schizophrenia or both indications, both of which represent large market opportunities. Despite the recent approvals of other therapies, we believe that there's ample opportunity to develop safer and more effective treatment approaches.

We look forward to several catalysts over the coming months, including data from our Phase II clinical trial of MultiStem and stroke, data from Pfizer Stage II IBD study, and initiation of the SBIR Fast Track grant-funded Phase II AMI study. Meanwhile, we continue to be very active on the business development front. Partnering activities are central for our strategy and we have opportunities in multiple different areas under discussion. We're doing this very methodically and working diligently to ensure we are picking the right potential partners in constructing our alliances in the most effective way. While that takes time, we look forward to consummating the right strategic opportunities and believe were well-positioned in multiple areas. However, we intend to be very systematic and patient as we move forward to achieving our goal of building value for our shareholders and establishing Athersys as the leading biopharmaceutical company.

One final note before we open it up for questions. Our new website is in the process of going live today. This procedure can take up to 24 hours while the new site connects [ph] to the World Wide Web, but it should already be accessible to many of you. We invite you to review the new site, and we hope you like it.

With that, we'll be pleased to take a few questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Ted Tenthoff with Piper Jaffray.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

The Phase II study, when do you think that should be up and rolling?

William Lehmann

Ted, I think we're going to have that up and rolling in the early part of next year. There's a limited amount of additional planning and we have to finalize the protocol, have the FDA take a look at that, review it and give us the blessing. Some manufacturing work we have to do. But we're targeting early next year to get that launched.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

Great. And then with respect to the Pfizer data, again, another rollout here due to recruitment challenges, as it was described. Can you give us a little bit more color what that means? Is this a factor of just finding patients who aren't controlled via biologics? Remind us what the enrollment criteria are that may be making recruitment so challenging here?

Gil Van Bokkelen

Well, that is a constraint. I mean, the patients had to have failed prior forms of therapy, so that's a clear limitation. I think Ruth, who was kind enough to actually offer some perspective in the press release. She's indicated that that certainly is a serious consideration but it's also the fact that the recruiting landscape is pretty complex at the moment. So we're in competition with several other studies. And again, there a number of different, more traditional pharmaceutical or even some biologic approaches that are being developed that we're competing with enrollment for. But I think that part of it reflects the fact that during certain parts of the year, enrollment rates tend to drop down. The summer tends to be a pretty tough time in Europe, for example. [indiscernible] Yes, I think that's a big part of it. I mean they were shooting to try and actually get enrollment done sometime by mid- to late summer. They're a little bit behind that. But I think that they anticipate that they can still meet the goal and I think it's posted on clinicaltrials.gov, that they're shooting for some time for October is being their target, which would clearly put us on a path to actually have data sometime around the end of the year, but probably early in 2014. We're being a little bit more cautious about it just because things have gotten shifted back several times here. So we're kind of projecting it's probably going to happen sometime between October and Thanksgiving. But in any event, I think both we and Pfizer are very confident that it's going to happen before the end of the year, which would still put us on a path to have data sometime in Q1.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

That's helpful. And if I may, just one last one. With respect to the GvHD prevention study, I know we've been talking about potential registrational plans there. What is -- when should we be expecting a Phase III study or a Phase II/III study, however you want to term it? And what would be any holdups for beginning that trial?

Gil Van Bokkelen

Well, I think largely initiation of that study is going to be -- let me take a step back. So we have lots of investigator interest and a lot of leading transplant sites are excited about participating in the trial. And so we -- internationally. So we're seeing good levels of excitement around that. Logistically, we still have some things that we need to get final clarity on regarding some of the parameters suggested by the FDA around study design and how we need to power certain types of things. The FDA gave us some very good guidance. I mean, they've been very helpful, I would say, and are supportive in terms of how they're viewing the study and what the potential impact of the study might be, which is a great place to be. We expect to have the logistical and the planning aspects for the study done by the end of the year, give or take. And it's really then being in a position sometime in 2014 to be ready to actually initiate the study. We're not ready to give specific guidance yet on when we think that we would be ready to do that, but we expect it to be sometime in 2014, not in the too far off future, if you will. I think the primary indication is going to be the completion of some of the other things that we're focused on. So we're busy on the partnering front. This is one of the things that we're discussing, potential partnering activities around, as well as broader opportunities in the transplantation space. So we're excited about where that could go. And as you might imagine, advancing our clinical prep plans in concert with advancing our business development discussions requires multitasking on a couple of different levels, if you will. So I think that achieving goals on the partnering front and/or potentially being influenced by other things that could happen will really drive our ability to initiate that study.

Operator

Your next question comes from the Steve Brozak with the WBB Securities.

Stephen G. Brozak - WBB Securities, LLC, Research Division

I'm just going to ask one question, because obviously it's on the top of everyone's mind today that covers the regenerative medicine space. Another company basically came out and sort of just saw some interesting results on wound treatment. But candidly, I'm interested on how your product works in terms of what the advantages are in the regenerative medicine space, specifically in the clinical setting, that you guys offer in terms of standardization. And you can expound as much as you like in terms of the clinical benefits, the manufacturing benefits and everything around what a clinical product advantages are for Athersys. And I got one follow-up on that.

Gil Van Bokkelen

Yes. Well, first, the comments for those people that may not be aware of it. So Osiris actually announced some data this morning that I think were pretty compelling data actually, reflecting results from a study that they've done in the wound healing area. And obviously, we haven't had a chance to do anything more than just kind of look at the data that was -- the data summary that was in the press release. But clearly, the market liked it, and it had a very, very positive impact on their stock, which more than doubled today. I think from a global perspective, this reflects the glowing awareness and adds more data to substantiate the notion that regenerative medicine therapies can be broadly applicable across a lot of areas where traditional approaches have failed or had only limited impact. And I think the more examples of that we see, whether it's from the data we generate or from the data that others generate in the field, the better it's going to be for people that are well-positioned to be leaders in the field of regenerative medicine. And that brings me to the other aspect of your question, which is where do we stand relative to other therapies or other products that are out there, or approaches that people are taking? And as we talked about on prior conference calls, we've actually, and in fact, we even published some of this work and presented in conferences, we've gone to the trouble of doing head-to-head comparisons of our cells relative to other cell types like class 1 of these, which is what Osiris is working with, or other cell types that people are working with. And we see meaningful benefits and advantages in terms of the biological activity of the cells that we work with in terms of their immunomodulatory effects and the way they promote healing and tissue repair in other ways, such as their angiogenic and vasculogenic effects. Let me just be clear about something. I'm really thrilled for Osiris and the positive data and the impact that this has for them. I think this is a step forward for them, and I think it's a step forward for the field. I also feel very confident, and I know I speak for the entire team here, when I say this, as well as for various collaborators that have had the opportunity to work with our technology and run comparative studies against other cell types or other platforms that they have access to, that we feel very, very strong about the strengths of our approach and our product platform. And from a competitive competition, we think that we have a clear path to establishing best-in-class product opportunities in multiple different areas. And that's really where we're focused on. We talked primarily about the things that we've been doing in cardiovascular, inflammatory and immuno-neurological, but we've done studies in other areas that we've never talked about publicly. And I think it's not -- it shouldn't be terribly surprising to people that we're interested in things like wound healing or other areas, and we'll talk more about that over time as the circumstances warrant. And I think that leads us to some other very interesting opportunities for us in the business development front.

Stephen G. Brozak - WBB Securities, LLC, Research Division

And that leads me to the follow-up. Are large pharmaceutical companies, large biotech companies showing more of an interest, the same interest? What is their -- now that you have this partnership with Pfizer going for a number of years, what is the level -- not just interest, but level of understanding of your technology and how would you compare and contrast that? And I'll check back in the queue.

Gil Van Bokkelen

Yes. Well, I think the level of understanding about cell therapy and regenerative medicine is getting better generally. I think we have a clear set of things that we've been part -- that we've been focused on and hard at work at in terms of trying to illustrate to people the advantages we have in terms of scalability, biological mechanisms of action and various other aspects that are central to the overall product profile, if you will. And I think that big pharma generally still, in some cases, needs to be educated a little bit in terms where the real opportunities are and how best to attack them. But I can't say that we see more and more evidence that more and more companies get more and more big pharma companies but also other companies that have been following the space and are looking at this and they see that those companies that actually are positioned to deliver a product in a scalable way, that can actually be used to effectively address areas of unmet medical need are going to be well-positioned to capture multibillion market opportunities. And I can say that there's more and more companies that recognize that and are positioning themselves to take advantage of it. And I think that that's very good news for us, because I think we're going to be in a prime position to be able to capitalize on that.

Operator

And your next question comes from Jason Kolbert with Maxim Group.

Jason Kolbert - Maxim Group LLC, Research Division

Can you just slow down with me for a second and walk me through the timeline on stroke? When do we complete the enrollment in that trial? And once the trial is completed, when can we expect the first data points?

Gil Van Bokkelen

Yes. So the primary readout for that trial is 90 days after the subjects have been treated with -- after the patients have been treated with MultiStem. Remember, they've received a single infusion. That infusion is administered 1 to 2 days after the stroke has occurred. And what we've been shooting for is completion of enrollment sometime in Q1, which would put us on a path to actually have data sometime in Q2. So if you -- and again, since the follow-up period, the primary follow-up period is 90 days post-treatment, you can expect that roughly a month of change -- or not a month, a quarter in change after we treat the last subject in the study, that we would be in position to have top line results from the trial. Obviously, it's not exactly at the moment that you treat that last subject. There's a few days of data analysis that have to take place, and as soon as we that done with our CRO, then we'd be in a position to announce the top line results. So we're still shooting for having that data sometime in Q2, probably around the end of the quarter. And we're not just taking it for granted that enrollment through the rest of the study is going to proceed as smoothly as we'd like it to. We've been taking proactive steps, including adding a couple of extra sites here in the U.S. but also working towards getting the sites in the U.K. up and running. So that we expected that will have a great beneficial impact on meeting our goal. And we're looking at other possibilities as well.

Jason Kolbert - Maxim Group LLC, Research Division

What do you mean other possibilities as well?

Gil Van Bokkelen

Well, I think we've always been open-minded about the possibility of looking at other sites x U.S., or whether or not there's an opportunity to add sites outside the United States that may actually assist us on our recruitment goals and actually make a more international study. I mean some very interesting things, as you well know, because I think you were actually the first analyst in the industry to point this out that there's very interesting things going on in other countries, and particularly places like Japan. It's way too early for us to say right now whether or not any of those things are going to have an impact on this study or whether it's going to have an impact on subsequent studies that we might elect to run. But I think some of the possibilities are pretty exciting.

Jason Kolbert - Maxim Group LLC, Research Division

Yes. That's what I'm seeing too, Gil. I mean what I see is 2014 is just transformational because it looks like you're going to have data from stroke and from Crohn's, and we're going to have a really good idea on hand. With that said, can you go back also and just walk me through the partnership with RTI and help me understand what the next step is for them, and remind me how you win on their success?

William Lehmann

Happy to address that, Jason. So let me just talk first about the way the relationship is structured. We provided technology license to our technology that can be incorporated into their combination products, the bone allograft, plus stem cells. They are ultimately going to launch and commercialize this. They're taking a lead there. We're not providing any additional kind of support at this point. We provided some support early on with respect to the technology. And as we announced a couple of years ago when we entered into the relationship, our economic interest on a going-forward basis is going to be in the form of commercialization milestones, plus royalties. We haven't disclosed specifically the royalty levels but it will be a tiered royalty basis. And we have some pretty meaningful economic and financial potential if RTI is successful in further developing and marketing the product opportunity. So we're excited with this milestone. It's important for them. It could be important for us if they're able to be successful. And Obviously, they're going to kind of dictate the development pathway with respect to launch and commercialization. If we need to be supportive, we will to the extent we can. I would look to them for guidance and expectation about impact with respect to sales and so forth. And then once that's out there publicly, we can provide a better sense of impact for us. I think the expectation in the next several months, couple of quarters, is that the impact will probably be low as they initiate in the market space, as they kind of build this out, more and more and more opportunity for meaningful impact on the financial side.

Jason Kolbert - Maxim Group LLC, Research Division

Okay, that's helpful. Can you -- I don't want to sound silly, but how close are they to an approved product? I'm a little bit confused.

William Lehmann

Well, like Osiris, they're relying on 361 this is intended to be a minimally manipulated product. And as a result, while they plan to do clinical work, clinical trials, as my understanding is, they're also going to be in the market with implants in the relatively near term. So this would be essentially regulated under the 361 regulation that applies to things like graphics and other products out there [indiscernible] space. NuVasive has got a product [indiscernible] that are kind of relevant comparators. They've done relatively successfully, I think, in marketplace and they've built out a nice market segment north of $100 million to $150 million already.

Jason Kolbert - Maxim Group LLC, Research Division

Okay, I got it. So in other words, it isn't necessarily requiring a formalized clinical trial. They can actually be out there selling, generating revenues under 361, and they can have a trickle effect to you but it's not the same type of clinical milestone that we're looking at in the other programs.

William Lehmann

Yet, I think that's right. I mean there'll be a buildup. So as opposed to perspective clinical trial, you have the endpoints and approval and super rapid launch. This will be more of a buildup.

Gil Van Bokkelen

Yes. I mean the bone allograft market, I know you know the numbers there, Jason. It's a pretty meaningful market opportunity, right? And RTI is already pretty well-entrenched in terms of servicing that, both through their strategic relationships and other things that they're doing. So I think this could become meaningful over time. But as B.J. was indicating, we think it's going to be kind of a rolling buildup, if you will...

Jason Kolbert - Maxim Group LLC, Research Division

It's a beautiful option, and in the meantime, you're going to buildup tremendous amount of anecdotal proof-of-concept data that maybe will move people to understanding -- getting comfortable with the utility in MultiStem in that indication.

Gil Van Bokkelen

Yes, exactly, exactly.

Jason Kolbert - Maxim Group LLC, Research Division

Okay. So last question, and it's kind of switching back to the small molecule program. And how would we understand how active is that space now and how hopeful are you to still come up with a BD [ph] partnership over the next year for the 5HT2c?

Gil Van Bokkelen

Well, I can say that the area is actually very active. It's interesting that a lot of people right now are paying close attention to what's going on with both Venus and Arena in terms of their product launches. And I think both of those companies have gone out a little bit slow from the gate, if you will, in terms of what they were shooting for, in terms of the initial launches of the product. But I think part of that is for understandable logistical reasons, but I think part of it also is because it illustrates in my mind that there's a compelling opportunity for a company that develops a truly safe and effective approach to treating obesity. I think if either one of those companies develop the ideal solution, then the product will be flying off the shelves. And I think they're both getting traction, but I think it's just happening a lot slower than what they expected. I think that the momentum is probably going to increase over time and it's going to happen in fits and starts. But I think both we and, I believe, prospective partners recognize that there's ample room for improvement there. And as we talked about in prior calls, there's a whole other dimension of what we're doing that has relevance to neurological indications like schizophrenia and others, where companies -- for example, Pfizer, ran a study with a 5HT2c agonist that was a highly select compound but nonetheless actually showed some pretty interesting and persuasive data in terms of treating schizophrenic with active disease. And again, I think the challenge is making sure that you got something that you can really convince people is truly safe and effective, and there's a number of things that you need to do to be able to do that, but we believe we have the goods there. And I think that people who have gotten to know us really well are pretty optimistic that we've done that as well. We're not going to rush the completion of a partnership around this particular franchise. We're going to do it very systematically and methodically. I'm very confident that we'll establish a valuable partnership around this program. I can't guarantee the timing. Frankly, I would like it if it already happened by now, but we're more committed to getting it right than we are to doing it super fast. And so I think people just need to be a little bit patient. The good news is, is that that's not our only partnering opportunity. We have other dimensions of partnering options and opportunities as well. And we're moving these things in forward in concert so that we can pick the right opportunities for us and the right partners and then leverage that to the best interest of our shareholders. Does that help?

Jason Kolbert - Maxim Group LLC, Research Division

Yes, that helps a lot. I really appreciate it. And congratulations on the NHBLI (sic) [NHLBI] grant. I know that -- I chased that very aggressively in another life, and they don't give those grants away very easily. So it points to the significance of the AMI program, which is kind of my first love in the regen space. So I'm really excited to see that take off. Congratulations.

Gil Van Bokkelen

Thank you. Well, we're excited about that and it's a testament to the hard work of the leadership team here that really worked hard, particularly our head of cardiovascular and cardiopulmonary who really drove that process, and other members of the team as well. And I think that hard work and relentless determination paid off.

Operator

[Operator Instructions] And your next question comes from Ted Tenthoff with Piper Jaffray.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

I just have a q issue, and saw that there's about 57 million shares outstanding. So I was wondering if you could tell us how much -- how many shares you've issued to generate that $5.8 million to date. And have you issued anything subsequent to the end of the second quarter?

William Lehmann

I don't have the share count in front of me. I know in the second quarter we did take advantage of the equity line and we raised around $3.8 million. And we did that at a pretty reasonably high price point, closer to $2 per share. So you can kind of do the math there. So it's several million shares that have been issued with respect to the equity line. as we said, I think we see this as a useful tool in a going-forward basis. We use it from time to time really to kind of supplement what we're doing on the operating side. So I think there should be some expectation that we'll make some use of it over the next couple of quarters. We're not really projecting what that might be. It might be a little bit more than that, but we'll be opportunistic, we'll be very prudent. We really want to be in the best position to kind of work through and push our operations through all the important clinical milestones we have. And we feel like we're in very good shape right now, but we want to have the flexibility to continue to be that way.

Operator

And we have no further questions at this time. We'll turn the call back to Mr. Van Bokkelen for closing remarks.

Gil Van Bokkelen

Once again, I just like to thank everybody for your time and attention today. And again, I encourage you to check out the new website. We're excited about it, and we'll continue to add things to it over time. But we think it provides a very user-friendly way to get access to relevant information about the company and our programs as they continue to move forward. Thanks again for tuning in, and we look forward to updating you again in the future.

Operator

And that concludes today's conference call. You may now disconnect.

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