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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

Greg Chodaczek - First Analysis Securities Corporation, Research Division

Athersys (ATHX) Q2 2012 Earnings Call August 13, 2012 4:30 PM ET

Operator

Good afternoon, my name is Sharon, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Athersys Second Quarter 2012 Financial Results Conference Call. [Operator Instructions] Thank you. Lisa Wilson, Head of 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 www.athersys.com or you may call Libby Abelt in my office at (212) 759-5665 to receive it by email.

Gil Van Bokkelen, Chairman and Chief Executive Officer; and BJ Lehmann, President and Chief Operating Officer of Athersys, will host today's call. The call is expected to last approximately 45 minutes and may also be accessed through our website. A replay will be available 2 hours after the call's completion, and access information for the replay is available 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 these forward-looking statements as the 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, 2012. Since then, Athersys may have made announcements related to the topics discussed, so please refer to the company's most recent press release and SEC filings.

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

William Lehmann

Good afternoon, and welcome, everyone. I'm BJ Lehmann, President and Chief Operating Officer at Athersys. This afternoon, I will briefly go through our financial results for the quarter ended June 30, 2012, and then I'll turn the call over to Gil Van Bokkelen for a corporate update, followed by a question-and-answer period.

For the second quarter of 2012, we recorded revenues of approximately $2.7 million compared to $2.4 million for the same period in 2011. The increase reflects higher contract revenues from Pfizer and RTI Biologics and also an increase in grant revenue over the prior year period. Absent any new collaborations, our contract revenues are expected to decrease in the second half of 2012 and would represent manufacturing service revenue under our Pfizer collaboration and potential milestone payments from RTI and BMS.

Our research and development expenses for the second quarter were $5 million compared to $4.4 million for the same period last year. The increase is primarily due to higher costs related to our MultiStem clinical trials, including contract research organization and clinical manufacturing costs.

We currently have 2 ongoing Phase II clinical trials: one in collaboration with our partner, Pfizer, where MultiStem is administered to treat patients with ulcerative colitis; and the second, in which MultiStem is used to treat patients who have suffered an ischemic stroke. These costs increases were partially offset by lower patent legal fee expense, sponsored research cost and other research and development expenses.

Our annual research and development expenses are not expected to increase significantly through 2012 as compared to 2011, unless we elect to fund advancement of additional clinical programs with proceeds from business development and/or additional financing activities.

General and administrative expenses for the second quarter of 2012 decreased to $1.2 million from $1.4 million in the second quarter last year. The decrease resulted primarily from lower legal and professional fees and other general and administrative costs. We expect our general and administrative expenses to continue at similar levels for the rest of this year.

We had other expense of $100,000 for the 3 months ended June 30, 2012, compared to other income of $200,000 for the prior year period, primarily due to fluctuations in the valuation of our warrant liabilities. As a result, our net loss was $3.7 million or $0.13 per share in the second quarter of 2012 compared to $3.2 million or $0.14 per share in the second quarter of 2011.

For the 3 months ended June 30, 2012, we used net cash of $5 million in our operating activities as compared to $4 million in the prior year period.

At June 30, 2012, we had $10.9 million in cash and cash equivalents. Absent any new business development deals or fundraising, we would expect to be able to fund operations through most of the first quarter of 2013.

That said, we expect to add to our capital base during the second half of this year through our business development activities and fundraising, where we deem it to be appropriate, to better position us to complete proof of concept studies in our most advanced clinical programs and continue development in other important areas.

Currently, we are in business development discussions regarding opportunities involving several cell therapy programs and our 5HT2c agonist program.

With that, I would like to turn it over to Gil for the corporate update. Gil?

Gil Van Bokkelen

Thanks, BJ. Good afternoon, everyone, and thank you for joining us call today.

As evidenced in our second quarter 2012 results, Athersys is hard at work executing our mission to discover and develop best-in-class therapeutics that we believe will have a meaningful impact on improving clinical care.

We continue to make positive advances with our ongoing clinical studies and then planning for additional clinical studies, as well as on pre-clinical development of MultiStem and our 5HT2c agonist program. We believe successful execution of these programs, either directly or through collaborations, will enable us to deliver substantial long-term value for our shareholders.

The majority of our resources are focused on developing MultiStem, our patented and proprietary stem cell product candidate for the treatment and/or prevention of diseases and conditions that are underserved or where there is significant unmet medical need.

We currently have multiple clinical stage programs that utilize and are evaluating the potential utility of MultiStem. These programs address inflammatory and immune disorders, including the treatment of inflammatory bowel disease, such as in patients with ulcerative colitis; the prevention of graft versus host disease in patients with leukemia or other conditions that require a hematopoietic stem cell transplant and transplant support; neurological conditions, notably treating damage from ischemic stroke; and cardiovascular disease, where we have focused initially on treating damage from acute myocardial infarction, commonly known as a heart attack. Success in any of these initial indications could open up a broader set of opportunities for us and our partners in related areas.

As part of our global collaboration for treating inflammatory bowel disease or IBD, our partner, Pfizer, is conducting a Phase II clinical study to evaluate the safety and efficacy of MultiStem for the treatment of refractory ulcerative colitis. This trial is under way at clinical sites in the U.S., Canada and Europe. And as described previously, we anticipate initial results from the study in 2013.

Pfizer provides us with periodic updates on enrollment for the trial, which continues to progress. Although it's worth noting, enrollment has been advancing more slowly than expected in some clinical centers during the late spring and early summer, such as the number of centers in Europe.

Ischemic stroke is another clinical indication of interest with a commercial opportunity estimated at over $15 billion annually. Our Phase II clinical trial, evaluating safety and efficacy of MultiStem to treat ischemic stroke, continues to enroll patients at leading stroke centers across the country. This study is focused on treating stroke victims in a clinically practical timeframe, within 1 to 2 days after the stroke has occurred and using simple IV administration.

The potential benefits of MultiStem therapy to treat stroke have been illustrated in multiple pre-clinical studies and data have been presented by our collaborators and leading researchers in the field at numerous international conferences as I've discussed on prior calls, and we are eager to expand this growing data -- body of data.

We made good progress in the planning stages for 2 MultiStem programs in transplantation and oncology treatment support this quarter. The more advanced of these programs is MultiStem for the prevention of graft versus host disease or GvHD in patients with leukemia or related hematological cancers or conditions, who have been treated with radiation or chemotherapy, followed by a donor-derived hematopoietic stem cell transplant to help restore the patient's blood and immune system.

Roughly half the patients that receive a traditional hemapoietic stem cell transplant will develop GvHD, which is believed to be triggered by the activation of donor-derived immune cells, such as activated T-cells that attack the transplant recipient's host cells as foreign tissue. This causes significant pain, disability due to organ damage and even death.

A therapy that can meaningfully reduce the incidence and/or severity of GvHD, without increasing relapse or infectious risk in hemapoietic stem cell transplant patients would provide substantial clinical benefits.

Previously, we have been granted orphan drug designation by the FDA for administration of MultiStem to prevent GvHD and have also -- and also have an issued patent that provides protection for the syndication through the year 2028. Based on the positive outcomes of our Phase I clinical trial, which evaluated the safety and maximum tolerated dose of a single- or repeat-dose administration of allogeneic MultiStem delivered intravenously. We believe MultiStem holds great promise for this area.

In April, we had a very productive meeting with the FDA to discuss further development of MultiStem for reducing or even preventing GvHD in leukemia and other patients that are at risk for the condition. We reviewed our initial clinical trial results with the agency, discussed our plans for the next phase of clinical development, answered questions and obtained initial feedback related to the potential study parameters and proposed trial design. The FDA requested a detailed clinical trial and statistical plan for the study, which our team has been preparing with our external clinical advisory team, including our clinical research organization. Upon completion, we will then present this information to the FDA for their review and meet with them to discuss it.

We have long believed that MultiStem could have broad relevance for providing support in a clinical transplant setting for GvHD and beyond. We were very pleased that our collaborators at a leading transplant center in Europe recently obtained authorization to initiate a clinical trial to explore the utility of MultiStem for liver transplant support. The goal is to improve organ function, following transplant and the treatment approaches for managing organ rejection.

Data from our pre-clinical studies suggest that MultiStem may provide significant benefit, and initial clinical data from these types of investigator-sponsored trials can provide important, initial evidence of clinical relevance in high-need areas.

There have been positive developments in some of our other pre-clinical programs as well, including in some areas that were rather unexpected. Recently, it was demonstrated that MultiStem has potential relevance for the treatment of a lysosomal storage disorder called MPS-I, more commonly known as Hurler's Syndrome.

Hurler's Syndrome is caused by a deficiency of a specific enzyme responsible for degrading complex sugars called glycosaminoglycans or GAGs. Accumulation of GAGs can lead to mental retardation, respiratory and cardiac complication and typically leads to death in early childhood. Hurler's Syndrome is a relatively rare condition that affects approximately 1 in 100,000 children, but it's significant because it represents an area of clear unmet medical need. Furthermore, the success in this type of indication may well signal an opportunity and other somewhat related clinical areas, such as other types of lysosomal storage disorders.

In April, the peer-reviewed journal, Cell Transplantation, published pre-clinical study results, suggesting that MultiStem cells could provide benefit to children suffering from lysosomal storage disorders, such as Hurler's Syndrome. The study demonstrated that an injection of MultiStem in neonatal MPS-I mice reduces the accumulation of GAGs in the brain, thereby resulting in improvements in behavioral and motor function in animals with the disease.

We also announced that we were granted U.S. patent covering the use of non-embryonic, multipotent stem cells for the treatment of lysosomal storage diseases, providing important foundational intellectual property in this area. The patent applies to Hurler's Syndrome and a host of other lysosomal storage disorders, including Fabry's disease, Gaucher's disease, Niemann-Pick disease and Batten's disease.

Then in July, we were granted orphan drug designation by the FDA for MultiStem to treat Hurler's Syndrome. Coupled with the new patent protection and promising pre-clinical results, this makes Hurler's an even more promising area for further development, whether by Athersys or in conjunction with a partner.

We've continued to make progress in other pre-clinical programs, developing and evaluating MultiStem and other disease areas in the cardiovascular, neurological, inflammatory and immune disorder areas. This work is conducted through our own internal research efforts and through a broad network of collaborations we have established with investigators and leading research institutions across the Unites States and in Europe. These programs include one related to treating damage from spinal cord injury that is supported by a grant from the Ohio Third Frontier Program and a second program related to treating chronic progressive multiple sclerosis, which is being supported by Fast Forward and the National Multiple Sclerosis Society.

We are in multiple discussions regarding potential collaborations for the development of MultiStem for our un-partnered clinical and pre-clinical programs. In some cases, this may involve an expansion of an existing partnership or may represent an entirely new collaboration. Furthermore, we may elect to enter into one or more business partnerships, if we feel the terms are in the best interest of the company and our shareholders.

In addition, there's been some exciting progress in our 5HT2c agonist program for the treatment of obesity and that may also have relevance in other indications, such as schizophrenia. Substantial data indicates that obesity is at near-epidemic levels in the United States. In addition to contributing directly to the escalating rate of diabetes, obesity also increases the risk of cardiovascular disease, stroke and a slew of other conditions. Medical costs associated with obesity were estimated at $147 billion in 2008 in a recent report by the CDC and are thought to have continued rising since then.

This summer, the FDA approved 2 new weight-loss drugs, Qsymia and Belviq, formerly referred to as Qnexa and lorcaserin, respectively. We believe that these represent important new options for patients, and that these approvals also represent an important step towards explicitly recognizing that obesity is not simply a lifestyle issue, it has serious medical consequences.

It's worth noting that both products will be subject to multiple post-marketing studies to further evaluate the longer-term safety of these therapies. And despite these advances, however, it is clear that there's substantial room for improvement in the pharmacological management of obesity and co-morbid conditions. In particular, we believe development of therapies, that can achieve better efficacy, tolerability and safety, will be key to maximizing the benefit to patients that need help in achieving the greatest value creation.

Given these concerns, and the fact that obesity is not being adequately addressed by diet and lifestyle changes for the vast majority of patients, we believe there remains an urgent need for new options, particularly non-surgical options.

Data from pre_clinical studies, comparing some of our potent and selective 5HT2c agonist, show that our compounds exhibit superior selectivity in comparison to what other 5HT2c agonists have been able to achieve, which is critical for safety, while also delivering substantial weight loss in well-validated models with diet-induced obesity. Furthermore, when we administer some of our compounds in combination with other agents, we are able to achieve dramatically better weight loss in either Belviq or Qsymia in a head-to-head comparison.

We have also demonstrated complementarity with multiple mechanisms of action, and we believe this illustrates that there are a range of ways for us to achieve a best-in-class profile, which we define as better efficacy, as well as superior safety and tolerability. These results are relevant because, in addition to being a major area of clinical need, obesity also represents a substantial commercial opportunity, which analysts have estimated at a multi-billion market.

We believe that we are well positioned to deliver value for our stockholders by partnering our 5HT2c agonist program with an organization that is committed to establishing itself as a long-term leader in the area of treating obesity and related conditions.

We are currently engaged in active discussions and diligence activities with multiple companies, regarding potential partnerships on several fronts, including obesity, as well as various programs in the regenerative medicine area.

In closing, we continue to execute our business model, advancing multiple clinical programs, evaluating MultiStem for diverse indications and pursuing attractive partnering opportunities. We look forward to keeping you updated on our further progress.

With that, we welcome your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Ted Tenthoff from Piper Jaffray.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

It sounds like you guys are making a lot of progress on multiple fronts here. If I may, first on MultiStem, with the feedback that you guys got from the FDA during the quarter and also with the developments from Osiris' approvals overseas, how has that changed the landscape for GvHD and maybe even just stem cell therapies in general?

Gil Van Bokkelen

So yes, that's a good question. I think that a lot of people out there have been waiting to see signs of tangible progress in terms of getting products approved by regulatory agencies here in North America, as well as in other parts of the world. And I think that -- although Osiris has not gotten approval from the FDA yet for administering Prochymal to pediatric patients that are experiencing active graft versus host disease, I do think that the approval in Canada and the subsequent approval in New Zealand are important steps in the right direction. And I think that what it signals to the community at large is that companies are making progress in terms of getting products through the regulatory pathway and approved, where they can be used by clinicians for patients that need help. So I actually reached out to Osiris right after the announcement came that they'd gotten the approval to congratulate them, because I wanted them to know that there are a lot of us out there that are cheering them on. And I think it was an important step in the right direction, not just for them but for the entire field. I think for potential partners in this space it's also a very positive sign. Because their progress, along with other groups, other companies that have already gotten products that are approved that are being used actively clinically and is showing very good impact for patients that need help, that's a really positive thing. The interesting thing that I think it -- that it also does for us is it really illustrates to people that we are kind of uniquely positioned with respect to what we're doing with MultiStem. One, our approach is a little bit different from Osiris' approach. They're waiting for patients that have actually gotten the disease before they intervene with Prochymal to treat them. What we are doing is we're actually treating on the front end. So right after the patient had undergone a transplant, the medical stem cell transplant procedure, we would be treating patients right at that time to actually prevent the graft versus host disease from ever occurring. So the analogy that I've used in the past is that essentially what we're trying to do is put the fire out when it's at the campfire stage, whereas when people are trying to treat graft versus host disease once the full-blown condition or trying to put out the forest fire after it's already started to rage. So the approaches are a little bit different. We're a little bit earlier in the process. And -- but I do think that their progress is noteworthy because it signals that regulatory agencies around the world have really opened their minds to the use of cell therapies as treatments for various conditions and that they believe that they can actually address areas of significant unmet medical need. So it’s -- I think it's a good thing.

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

One quick follow-up to that, if I may. What did -- what have you learned from Osiris' experience in the past that they've taken? Are there, not necessarily shortcuts, but anything to be really focused on as you guys design pivotal trials and ultimately filed BOA and seek overseas partnership or overseas approvals? .

Gil Van Bokkelen

Yes. Well, one, I think it's really important to develop a good understanding of the dose proportional or the dose responsiveness of the therapy that you're administering. I think sometimes when you focus too much on one narrow set of conditions that, that might come back to hurt you a little bit later. I also think that when you're choosing your clinical endpoints, you need to be careful about how you do that as well, because I think sometimes simpler is better than some of the more complex strategies that we've seen people try to pursue. So I think that -- I think there's definitely some lessons learned there. But I also think that it's one of the benefits that we have is that the FDA spent a lot of time and other regulatory agencies spent a lot of time thinking about the complexities and what they would like to see in clinical trial design when it comes to cell therapies. And I think that growing body of knowledge and awareness is very helpful, and it's not just helpful from a regulatory perspective, but it's also very helpful from a partnering perspective. Because I think that the bigger companies are becoming more and more educated about what they would like to see and what their requirements are in terms of cell therapies that can't be developed and ultimately, how they can and should be commercialized. And I think that's really where our strengths are, because we show that we have something that can be commercialized on an industrial scale, if you will, that I think has clear advantages over a lot of the other approaches that people are pursuing out there.

Operator

Your next question comes from the line of Steve Brozak from WBB Securities.

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

I've got 2, frankly, and then I'll hop back in the queue. The first one, on the PDUFA renewal that's taken place, can you give us an insight on a macro and micro level as to how that affects you, your franchise and obviously, the space of regenerative medicine? And then I'll have a one -- one more question after that, please.

Gil Van Bokkelen

Sure. Well, I think -- it's interesting. So PDUFA was just recently renewed in the last several months and as part of that renewal, there was language that was put in place that broadened the accelerated approval pathway for companies like us that are developing therapies to address significant unmet medical needs. And I think if you look at the range of indications that we are focused on, there are a number of areas that we are currently pursuing, that would fall into that category. The other thing that was part of the PDUFA renewal is that they created a new category for breakthrough medical therapies, which again, is -- this is part of the effort that I think has been now explicitly endorsed by Congress with the support of the FDA to try and enable the development of safe and effective therapies that are designed to address very serious medical condition, that conventional approaches, conventional medical intervention just simply is not equipped to deal with. So I think that's -- what that's going to do is it's going to make the development pathway somewhat more efficient for companies like us that are developing therapies that are designed or targeted at those types of conditions, those significant unmet medical needs, things that conventional approaches are simply not equipped to deal with. I think what that means from an industrial perspective is that if clinical development is taking less time and ultimately costs less than what it might otherwise take, then that actually speeds up development time. And frankly, it should have a positive impact on the investment proposition for companies that are developing therapies that can actually use the accelerated approval pathway or they are developing breakthrough therapies as defined with the PDUFA renewal. So I think that is a very important step in the right direction. The FDA's is going to take a little bit of time to kind of map out exactly how this new paradigm is going to be implemented, but I think that there are organizations out there, such as the Alliance for Regenerative Medicine and others that the biotechnology industry organization that will certainly be working with the FDA, providing input to try and help guide your thinking with respect to how these things can be implemented in a manner that is consistent with the FDA's objectives, and that is to say, that doesn't compromise patient safety and actually provides for rigorous demonstration that therapies are both safe and effective. And I think that the end result of this should be that it's going to actually create a clearer, more transparent landscape for the development of these types of therapies. And ultimately, I believe it's going to benefit companies, investors and patients in a pretty meaningful way.

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

Well, actually, you just led into my next question. Obviously, you've got a significant collaboration partnership with Pfizer, and one of the areas that everyone cares about is stroke. Without, obviously, going out there and backing you into a corner and asking you a question I can't ask, what kind of a business development partnership would you envision or several or subsets would you envision in an area like stroke, which is so devastatingly important, obviously, for patient care and obviously, so significantly important as far as scientific breakthroughs and potential compensation? Can you give us some clarity on that -- what you would see into the future? Again, and I'll hop back in the queue.

Gil Van Bokkelen

Sure, thanks. Well, I think that partnerships can have a variety of different types of forms, and I really it think depends on the therapeutic area. The interesting thing about our situation is that we have multiple distinct areas that we can partner around. And in some cases, we might rely a little bit more heavily on the partner's expertise or the types of things that they bring to bear. So it's not just about the money. It is about creating a pathway that will maximize clinical impact and actually maximize value creation over time. There are certain years that we certainly feel like we are very well positioned to have a substantial impact long term. I think one of the areas that we feel like we'll always be involved in is on the manufacturing side of things. We're investing a lot in process development and related activities that really create core competencies and extend significant strengths for us in those types of areas. I think when it comes to something like stroke or in the -- or some of the other neurological indications that we're focused on and actually we have a fair amount of activity going on across a range of different neurological indications as I referred to in my prepared comments in the conference call, is that you can imagine partnerships that either revolve around one defined type of indication or around a family of indications that fall into a general category. And we're open to both those types of possibilities. And I think that it really just depends on, for us, we're -- and I've said this previously, we don't necessarily want to have a lot of partners. We want to have very carefully chosen partners that provide the greatest strategic fit and the best path to long-term value creation for the company. And the nice thing is that because we have several different areas that we could build partnerships around, it gives us a lot of flexibility in terms of how we implement those things and how we continue to develop our partnerships in specific areas. In some cases, these partnerships may have a more global focus. In other cases, they may be more geographically delineated. And again, it really just kind of depends on what our thoughts are in terms of how to create the greatest amount of value for our shareholders over time. The same thing, and you didn't ask the question, but I think the same thing kind of relates to what's going on in the 5HT2c, in the obesity area. I think the recent approvals by Arena and VIVUS have actually had very beneficial impact in terms of the general mindset for companies that are interested in the obesity space. And those companies out there that recognize that 5HT2c agonist-selective compounds that have the right profile, may very well have relevance in other therapeutic areas like schizophrenia, as I mentioned in my comments earlier. And that also provides us with some interesting partnering options and opportunities. I think that the positive advisory committee votes that occurred earlier this year were very strong positive indicators for a lot of people, but I think it wasn't until the FDA actually approved both of these drugs that it really cemented the knowledge, if you will. But yes, there is a path actually getting obesity drugs approved and past the FDA and presumably past other regulatory agencies as well. And I think that, that whole series of events has actually had a very, very positive impact on the mindset of a number of organizations out there that are actually very interested in obesity and some of these other potential applications of 5HT2c agonist. So we are very actively exploring that, and that's something that we're very committed to. I think that it's something that could be very, very good for us as an organization and create a lot of value for our shareholders.

Operator

Your next question comes from the line of Jason Kolbert from Maxim Group.

Jason Kolbert - Maxim Group LLC, Research Division

Gil, certainly, a lot going on. I'd like to take a couple of minutes with you and kind of to zero in on the data that we might see this fall from the trial with Pfizer. Can you just remind me? This is a Phase II and equals 126-patient trial MultiStem in ulcerative colitis. So can you -- you said that enrollment is a little bit slower. Once the last patient is enrolled, how long before we get data? Can you just kind of remind me how that trial is structured and what the endpoints are?

Gil Van Bokkelen

Sure. Yes. So it's a double-blind, placebo-controlled trial that as you mentioned, it will involve approximately 126 patients. It's being conducted at clinical sites here in the U.S. as well as in Canada, as well as in various countries in Europe. And the -- so one point that I just want to be clear on. So Pfizer's goal has been to complete enrollment for this study around the end of this year and then patients would actually be monitored for 16 weeks after the last subject or after they receive treatment. So basically, you can run the clock at 16 weeks from when the last patient is enrolled in the trial and then sometimes shortly after that, presumably within several weeks, Pfizer would actually have top line results from that trial. Now their goal has been to complete enrollment by -- they were shooting for around the end of November, some time around the end of the year. But as I mentioned in my comments, the trial enrollment in the late spring and the early part of the summer appears to have been going a little bit slower than what they were hoping for when they were getting some of the sites up in Europe up and running. So it could well be that enrollment flips out a bit beyond what they were originally envisioning or anticipating. But I know that their team is very hard at work, making sure that they get enrollments completed as quickly as possible. And then, as I mentioned, it will be a few weeks actually after that process is completed before they do the last patient's last visit. Now there are 2 key follow-up points in the patients that are actually being treated in this study. One is that 8 weeks after the patient has been treated is when they'll undergo an endoscopic evaluation and then another is at 16 weeks when they come in for the remaining clinical evaluation. I think the endoscopic evaluation at week is 8 going to be especially important. Because unlike other forms of inflammatory bowel disease, such as Crohn's disease, in many cases, it's very difficult to determine whether or not the patient is actually improving and whether or not the lesions are getting healing -- or whether or not the lesions are healing. In this case, however, we and Pfizer thought it was appropriate to actually focus on patients that have treatment-refractory or treatment-resistant ulcerative colitis, because we can objectively endoscopically evaluate the patients and determine whether or not they're getting better. And that will happen -- as I mentioned, they'll get endoscopically evaluated both as base line as well as 8 weeks after they receive treatment with MultiStem. So the -- and then the 16 weeks, that follow-up visit will actually be a clinical assessment but it will not involve endoscopic evaluation at that point in time. So that puts us on path to actually have data from that study some time, obviously, next year, which is what we've been predicting all along. If Pfizer were to complete enrollment around the end of the year, then we expect it will be some time in the second quarter. But we're going to keep a watchful eye to see how enrollment goes over the course of the summer and how it goes during the early part of the fall. And then we will update people quarterly as we get additional information from Pfizer about how things are progressing.

Jason Kolbert - Maxim Group LLC, Research Division

And are there dose arms in these trial? I don't believe so. And can you just remind us, have you ever discussed what the powering assumptions are in the trial?

Gil Van Bokkelen

Well, it's not really up to us to actually discuss the specific details of the study because that's Pfizer's domain. We provided the information that Pfizer has said that they are okay with us actually laying out for the study. There are multiple different dose groups in the study in terms of how it's constructed. It's really kind of a bi-phasic study where we've got kind of an initial phase of the study and then the subsequent larger-dosing phase or larger phase of the study, which is the portion of the study that we're in now. So we haven't really broken down the details in terms of the power assumptions and the like other than to talk about the number of studies -- the number of patients that are involved, and it's 1:1 randomization in terms of patients that are actually getting MultiStem versus placebo.

Jason Kolbert - Maxim Group LLC, Research Division

And the -- and I'm sure that it's moot for me to ask you the entry criteria, specifically, for these patients. Do they all undergo an endoscopic examination prior to being enrolled? Do you have a before and after?

Gil Van Bokkelen

Yes, we do. And then -- and they will undergo that endoscopic evaluation.

Jason Kolbert - Maxim Group LLC, Research Division

Now can we check -- oh, no, great. Got it. All eight, that's pretty clear. I'm not going to push any more there. But I would like to cycle back to GvHD. I thought Ted hit the nail on the head that there's certainly a lot of things progressing, both with Osiris and with other companies in GvHD. Can you tell us what you think the next steps are? You mentioned that you met with the FDA. You had a lot of discussions. Is there any way that you can predict when you think you'll actually be prepared to start a trial?

Gil Van Bokkelen

Well, it really depends on the feedback that we get from the FDA. And I think that our plan is to actually submit the trial design and the statistical analysis plan as soon as that's done. We're actively working on it with our CRO and our clinical advisory team. I don't expect that, that process is going to take too much longer, and then we will prepare that information submit it to the FDA, request a meeting with them, sit down with them to actually review the information, see if they have any additional questions, and then see where we're at. I think it's unlikely that we would actually start that study before the end of the year. I just don't think that's going to happen. And we want to make sure that we're going to be very conservative and systematic and methodical about how we attack this. So I suspect that it will be some time next year in terms of getting you an exact time as to when we would actually look to start the study. It actually depends on several different factors. Right now, we don't really have clarity around or answers to, but I suspect we will have that in the months as we move a little further down the road.

William Lehmann

Yes. Jason, this is BJ. I think a couple of things that we're thinking through. I mean this is our first Phase III study, and one of the things we want to be absolutely right on is having the manufacturing platform optimized for Phase III production. And so we're doing some work there as well, and that will be done in parallel with the regulatory discussion. But that could affect the time line a little bit as well. So there's a fair bit of work to be done. It's going to be a large study. We expect substantial investment, so it will take some time to get that up and running. But we'll have more on that over the next months after we get FDA feedback here in the upcoming months.

Gil Van Bokkelen

Yes. I mean I think from our perspective, again, our philosophy on this thing is that it's more important to make sure you got it right than it is to do it really fast. So we're trying to be fast and efficient, but we're also really committed to making sure that we do with it the right way.

Jason Kolbert - Maxim Group LLC, Research Division

Okay, understood. And the last thing is switching gears again to obesity and the 5HT2c agonist. When can we expect to hear about a compound being selected? And once a compound is selected, what happens after that? Do you go -- and I guess, the obvious answer is you go into the clinic. But can you give me some idea of what you think the clinical program, at least initially, might look like?

Gil Van Bokkelen

Well, I actually tend to think that a lot of that is going to be decided by the group that we partner with. I think that, again, as I mentioned earlier, we're pretty in active discussions with a number of different groups out there. And again, we want to make sure we're selecting the right partner, where there's good fit, good alignment in terms of vision and how this can be developed over the longer term. And again, that may involve not just a discussion about obesity, but it may very well involve a discussion about other applications of 5HT2c agonist as well, which may be distinct. I mean one very -- one possible outcome is that you're selecting different compounds for application in obesity and schizophrenia, for example. So I think that because these are both very promising areas, we want to make sure that we're taking everything into consideration, and I do think a lot of our decision-making process is going to be influenced by who we end up partnering with.

Jason Kolbert - Maxim Group LLC, Research Division

Gil, let me ask you one last question, which is, this kind of a funny question to ask, but what do you think the greatest strength of Athersys is, as we head into the 2013?

Gil Van Bokkelen

I would say the greatest strength is the fact that we've got a diverse portfolio, which provides us with a lot of flexibility in terms of establishing partnerships and moving programs ahead for our own account. We're not a one-shot wonder. We are -- so there's really a couple of different dimensions to this. If you look at MultiStem, where we already have a fair amount of promising data and evidence across several different very distinct therapeutic areas, so inflammatory, immune, neurological, cardiovascular and the like, as well as some other areas that, frankly, we really don't talk about publicly. Each of those represent distinct partnering opportunities, where we can actually segment off a slice of the product platform, if you will, to enter into a partnership with somebody, which will create value for us and our shareholders. And even in doing that, we still have plenty of territory that we can leverage, where we can utilize a tremendous amount of value. So it's essentially partnering in some areas, using those capital resources to advance programs in other areas, continue to build validation around the franchise and the platforms that we have. And I think that also having a diversity outside of the regenerative medicine area, so being able to do partnerships in an area like the 5HT2c agonist program just provides us with even more flexibility in that regard. It's interesting, we were taking some criticism from people that we're looking at the 5HT2c agonist area as basically a dead area, a couple of years ago, when Arena and Orexigen and VIVUS were all having problems. And all of them basically ran into difficulties with the FDA, and then they all had to go on and do various things to finally get past those hurdles. Well, we absolutely believe that the right thing to do was to continue to stick to our guns, progress our programs internally, even if it meant we weren't going to be talking a lot about it because we felt like the pendulum would swing back in the other direction. And that would create some really outstanding opportunities for us at some point in time, and we were right about that. And I think that the diversity of our overall approach and our ability to pursue these things in a very cost-effective and highly efficient manner, I think, are things that we as an organization are tremendously proud of. One of the things that we've been committed to from the very early days is the fact that when companies are committed to a one-shot wonder type of strategy, where they're pursuing one specific opportunity to the exclusion of everything else, if they run into an unexpected problem at some point along the way, well, they're done. And what we've done is we've built a very careful portfolio of opportunities for ourselves that we can continue to advance. So something unexpected happens in one particular area or one particular program, we're still going to be okay. Because we've got other things that we can pursue and create substantial value around. And that's a key part of our strategy, and it has been from the very beginning.

Operator

[Operator Instructions] Your next question comes from the line of Greg Chodaczek from First Analysis.

Greg Chodaczek - First Analysis Securities Corporation, Research Division

Most of my questions were answered, and I guess it all comes down to time and money, Gil, right?

Gil Van Bokkelen

Yes, that's exactly right. And those are always critical variables in terms of we're looking at advancing things or when we're looking to actually initiate various things. But you're right, those are the 2 of the key inputs.

Greg Chodaczek - First Analysis Securities Corporation, Research Division

And regarding the obesity program, why wouldn't you take it through a Phase I and then partner than having -- it sounds like you're -- you would like to partner, maybe it's because everyone is knocking down your door but why wouldn't you do that?

Gil Van Bokkelen

Well, it is certainly a possibility. I mean, when we first started moving down the path, we had actually envisioned taking the 5HT2c program through the early phases of clinical development. But I think that our -- the interesting thing about where we're at is our success in partnering around in some areas has a very significant impact on what we may elect to do or not elect to do in other areas. So I think that we have some very good flexibility right now, and I think that we're trying to make our next set of choices, if you will, about what partnerships we do and in which areas we actually do them in a very stepwise, kind of very carefully thought-out manner, if you will. I do think that it kind of feels like this a good time for us around the 5HT2c program in the near term, so we are looking at some of the opportunities there very, very carefully. And we'll see where that goes. But the nice thing is that those aren't our only options. We have other opportunities we can pursue. And as I mentioned before, and I think that, that puts us in a pretty good position. It's frankly a position that I think a lot of companies would like to be in, but frankly are not. So we just have to make sure we choose carefully and then execute well.

Greg Chodaczek - First Analysis Securities Corporation, Research Division

And can I assume an agreement with another or with a large pharmaceutical company would be different than a -- what your agreement with Pfizer now is, because we're talking about a molecule versus stem cells? I mean -- so I'm assuming it's going to be much different.

Gil Van Bokkelen

I think that there would certainly be some differences. I don't want to comment on the degree of difference. I think that...

William Lehmann

I mean, I think it's worth saying, the strategy is to work to a transformational deal over time.

Gil Van Bokkelen

That's right. And the transformational deal could actually come in several different areas.

William Lehmann

Right. And in that sense, we would expect, given the additional validation around the platform that the economics and the structure could be substantially different. That said, we're working on a number of different initiatives that could be geographic, they could be global, they could be focused. So I wouldn't count out the possibility of doing something a little more narrowly along the way.

Gil Van Bokkelen

Yes. When you say much different, I guess, it kind of depends on what you're talking about there. I mean, there might be certain economic elements, which I think are going to be meaningfully different. Let's put it that way. But I think that -- but there might be -- another key difference would be we're not going to go into the business of doing large-scale manufacturing for 5HT2c agonist, right? I mean we don't have any small molecule development manufacturing capabilities. Around MultiStem, I think we would expect to be much more actively involved in process developments, manufacturing, as well as regulatory-type activities than, say, we might be in -- around the 5HT2c area where we might be much more actively involved, obviously, in things leading up to entering a clinical development and, I think, play a supportive role as we go. It really just kind of depends on who the partner is and their experience and capabilities might be. So I do think that there would be differences in some important areas. But again, as BJ mentioned, what we're really working to accomplish over time is transformational-type partnerships in one or potentially several different areas. And I think that the nice thing about the breadth of what we have going on is that is possible and is still -- our portfolio is broad enough, where we still have things that we can be pursuing, if you will, under our own volition.

Greg Chodaczek - First Analysis Securities Corporation, Research Division

That question was my attempt to try to get more information out of you. Just 2 quick ones, no one's really talked about AMI? Are you still moving forward with or without partner late this year?

Gil Van Bokkelen

Well, we -- we're really kind of looking at -- so I guess, the best way to say it is, we don't have an immediate-term plan to actually initiate clinical development around the AMI program. We're in a position to move quickly when we think circumstances actually allow us to do that. We've already got a Phase II study that has been reviewed and authorized, and so we feel like that when the time is right, then we can -- we could actually move fairly quickly. But again, that's one of those situations where that very well may be influenced by partnering activity in one or potentially a couple of different areas.

Greg Chodaczek - First Analysis Securities Corporation, Research Division

Okay. And last but not least, stroke data still late 2013?

Gil Van Bokkelen

That's our goal. Emrollment, actually, in the first half of the year has gone pretty well. Actually, in some respects, it's gone a little bit better than what we're originally anticipating. We still have a lot of things that we've got to get done. But I feel good about where we're at in that study as of now. And the interesting thing is right now, we're only focused on clinical sites in the United States. But we've been actively looking at some opportunities in Europe, that I think are pretty intriguing, where their clinical trial networks and other things that we might be able to link up with, they could be very beneficial for that study as we continue to advance. So I think we're in pretty good shape there.

Operator

[Operator Instructions] There are no further questions at this time. I turn the call over to the presenters.

Gil Van Bokkelen

Okay. Well, I'd like to thank everyone for listening and participating in today's call. With 2 ongoing clinical trials and additional clinical programs, with study plans under development and many additional opportunities for the company and our potential development partners, we're excited about where we're at and into the future. We're working hard to build significant value for our shareholders, and we appreciate your ongoing support. Thank you very much.

Operator

This concludes today's conference call. You may now disconnect.

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