Athersys' (ATHX) CEO Gil Van Bokkelen on Q2 2014 Results - Earnings Call Transcript

| About: Athersys, Inc. (ATHX)

Athersys, Inc. (NASDAQ:ATHX)

Q2 2014 Earnings Conference Call

August 11, 2014, 04:30 PM ET


Lisa Wilson - Investor Relations, In-Site Communications

Gil Van Bokkelen - Chairman and Chief Executive Officer

William Lehmann - President and Chief Operating Officer


Jason Kolbert - Maxim

Ted Tenthoff - Piper Jaffray

Steve Schwartz - First Analysis

Steve Brozak - WBB

Christian Glennie - Edison

Tracy Marshbanks - First Analysis


Good afternoon. My name is Jack, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Athersys' second quarter 2014 earnings call. (Operator instructions) 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 Dr. Gil Van Bokkelen, Chairman and Chief Executive Officer; and B.J. Lehmann, President and Chief Operating Officer will host today's call.

The call is expected to last approximately 45 minutes and may also be accessed at A replay will be available two hours after the call's conclusion 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. 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 11, 2014. Since then, Athersys may have made announcements related to the topics discussed, so please reference the company's most recent SEC filings and press releases.

With that, I'll turn the call over to B.J. Lehmann. B.J?

William Lehmann

Thank you, Lisa. Good afternoon and welcome, everyone. I'm B.J. Lehmann, President and Chief Operating Officer at Athersys. I'll briefly review our second quarter 2014 financial results, and then turn the call over to Gil for a corporate update, followed by a question-and-answer period.

For the second quarter of 2014 revenues decreased to $388,000 compared to $571,000 for the same period in 2013, reflecting decreases in both grant and contract revenues. Grant revenues may fluctuate from period-to-period due to the timing of grant-related activities and award and expiration of grants, while contract revenues will be driven by license, royalty and milestone payments from existing or new business collaborations.

Research and development expenses were $5.8 million in the second quarter of 2014 compared to $5.1 million in the prior-year period. The difference reflects increases in personnel cost, research supplies, stock-based compensation, sponsored research cost were partially offset by a decrease in clinical and preclinical cost.

General and administrative expenses increased to $1.8 million in the second quarter of 2014 from $1.6 million in the comparable period in 2013, due primarily to an increase in personnel cost and stock-based compensation, partially offset by a decrease in other G&A cost.

The change in the fair value of our warrant liabilities resulted in income of $7.9 million in the second quarter of 2014 compared to income in the prior period of $216,000, reflecting the impact of new warrant issuances combined with changes in our share price.

We reported net income for the second quarter of 2014 of $675,000 compared to a net loss of $5.9 million for the second quarter of 2013. The generation of net income this quarter was largely attributable to the change in fair value of our warrant liabilities, which exceeded our $7.3 million operating loss for the quarter.

Net income per share was $0.01 for the quarter ended June 30, 2014, which reflects the benefit of $0.09 per share from $7.3 million of non-cash impact from the change in warrant liability, that we just noted, less stock compensation expense.

During the second quarter of 2014, we used $6.1 million of cash in operating activities compared to $6.4 million in the second quarter of 2013. We closed the second quarter of 2014 with $38.8 million on our balance sheet and remain well-positioned to achieve important clinical development and business milestones.

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 proprietary therapeutics that have the potential to address significant areas of unmet medical need. Our current work is primarily focused on serious clinical conditions that have substantial commercial potential, and for which we believe that MultiStem, our patented allogeneic stem-cell product could have particular relevance.

Our portfolio of regenerative medicine programs are focused on developing MultiStem as an off-the-shelf therapy for the treatment of inflammatory and immune disorders, neurological conditions, cardiovascular disease and other areas, where standard of care is limited and significant medical need exist.

We are evaluating our MultiStem product in multiple clinical stage programs as well as in a range of preclinical programs. Our clinical programs are based on years of work, conducted both internally and in collaboration with leading independent labs. These preclinical studies are designed to evaluate and explore MultiStem's potential relevance in various models of human disease and injury.

In April, we reported the interim results from the double-blind, placebo-controlled international Phase 2 clinical study of MultiStem cell therapy to treat refractory ulcerative colitis or UC, which was specifically focused on patients that have failed or developed resistance to other forms of treatment.

Since I have already discussed these results in the last call, I'm not going to rehash them here, but will quickly review the salient points. This exploratory trial was designed to assess whether a single dose of MultiStem could produce a robust therapeutic effect, when administered to patients with longstanding active disease, who had previously failed, become resistant or shown intolerance to other forms of treatment.

In other words, this meant that the patient population in this study would be particularly challenging. Compounding the challenge, 67% of the patients treated with MultiStem had prior exposure to anti-TNF therapies, and as we've already described, the treatment protocol used in this study did not yield the desired clinical result.

This challenging study group was selected for this particular trial, because it represents the UC patient population with the greatest unmet need, and provided an opportunity to evaluate whether a single dose administered to patient suffering from longstanding chronic disease would achieve a meaningful response. If this has been accomplished, it would give MultiStem a very compelling competitive profile relative to other biologic and small molecules currently in use or in development.

The interim results provided additional evidence of the consistent and favorable safety profile with MultiStem and confirmed observations from the prior clinical studies that Athersys has conducted. Nevertheless, the study did not meet its primary efficacy endpoint.

While there was a statistically significant difference at four weeks in the proportion of responders in MultiStem treated patients compared to placebo, as measured by greater than 1 point improvement in the Mayo rectal bleeding score, by eight weeks this difference was reduced and no longer significant, and the trial failed to meet other secondary endpoints. This was a disappointing mess, but one from which we've already learned a great deal and expect to learn more.

The results of the trial tell us a single administration of MultiStem in this challenging patient population, while safe, was not sufficient to have a substantial therapeutic effect. A key takeaway from the Pfizer study is that it's tough to tackle longstanding chronic disease like UC with a single dose and expect a significant durable change, reversing a decade or more of damage in chronic inflammatory bowel disease. We and Pfizer realized from the outset that this was a difficult challenge clinically, which is why it is an area of unmet medical need.

Keep in mind, however, that the study did not evaluate whether a more aggressive dosing regimen might have made a difference in these types of patients. It's possible that a different dosing strategy might produce a meaningful effect over time. The study continues to gather additional data from biomarker analysis, and this plus other information from the 16-week clinical assessment could provide additional insight into the factors at work and the potential relevance for MultiStem in this area.

Once all the relevant data has been analyzed, it will add to our body of knowledge about the application of MultiStem and chronic inflammatory bowel disease, and we will coordinate with our colleagues at Pfizer to convey the results as appropriate.

As we have said many times in the past, we do not expect to be successful in each and every study we conduct or opportunity we explore. However, we mitigate this risk by advancing multiple programs in a parallel and cost-effective manner. Whatever the outcome of a particular trial, we are committed to candidly report the successes we achieve as well as the disappointments we experience.

The results from the UC study had no bearing on the progress of our other active clinical studies, nor do we believe it has any bearing on the outcome of those studies. This is because treating patients with longstanding chronic and refractor UC is very different clinically and mechanistically from other indications we are pursuing.

Based on the substantial evidence and data we have already generated here at Athersys and working in collaboration with outside independent labs, we believe that early intervention with MultiStem can make a meaningful difference and improve clinical outcomes in patients that need help in areas such as stroke, myocardial infarction and other forms of acute coronary syndrome or cardiovascular disease, and in the prevention of graft-versus-host disease. We remain highly confident in these and other programs and have made good and steady progress over the past few months.

Turning to these other clinical programs, we continue to make headway in our ongoing Phase 2 trial involving the intravenous administration of MultiStem cell therapy to patients who have suffered an ischemic stroke one to two days after the event. Ischemic stroke, which is caused by a blockage in blood flow to the brain accounts for more than 85% of all strokes according to American Heart Association estimates, with the incidence and prevalence of stroke projected to increase substantially in the next 20 to 30 years due to demographic trends and other factors.

Even more noteworthy is that neurological injury as a result of a stroke represents one of the leading causes of death, and is typically the leading cause of serious disability in the United States, Japan, Europe and other regions of the world. Current standard of care calls for the administration of a thrombolytic or clot-dissolving agent within three to four hours after a stroke has occurred, a narrow window that results in only a small percentage of patients receiving such treatment.

If MultiStem is shown to be a safe and effective therapy that can be administered in a clinically practical timeframe, and we believe that one to two days after a stroke represent both a clinically important window for intervention and a clinically practical timeframe for the vast majority of patients, we believe it could change stroke medicine as we know it.

We also believe that the potential market for a new therapy to treat stroke represents a $15 billion to $20 billion annual market opportunity or more. This is an indication that represents perhaps the greatest area of unmet medical need in medicine today, and it is a priority for healthcare systems around the world. Stroke is one of several areas that meet benefit from recent international development on the regulatory front.

As we reported previously, last November Japan's parliament passed new legislation, designed to promote the safe and accelerated development of regenerative medicine treatments using a novel conditional approval system. The legislation creates a new faster pathway for cell therapy product approval, providing the potential for rapid clinical and commercial development and entry into the Japanese market.

Since last call, we have been actively evaluating how we can utilize this new regulatory approach. We have engaged prominent, experienced consultants and advisors in Japan, and have also retained a leading Japanese CRO, which we have been working with these past few months. We are also engaged in discussions and diligence activities with several companies in Japan that are highly interested in stroke and other areas.

A few days ago, we return from our most recent trip to Japan, during which we held meetings with the Pharmaceutical and Medical Devices Agency or PMDA, which is a Japanese equivalent of the FDA here in the United States; senior representatives from the Ministry of Health Labor and Welfare or MHLW; clinical advisors and companies that are interested in partnering with us around some of our key regenerative medicine programs. These meetings were highly productive and we successfully addressed core issues related to our planned clinical development activities in Japan.

Japan faces one of the most challenging demographic shifts of any developed nation. The percentage of the population in Japan over the age of 65 is expected to double in the coming years. And the segment of the population age 80 and over will increase from 6% of the population in 2010 to more than 14% by 2030, according to projections by Organization for Economic Co-operation and Development.

This substantial expansion of the elderly population in Japan is expected to cause tremendous pressure on their national healthcare system, which healthcare policymakers in Japan believe regenerative medicine technology may help to address. This is one of the main reasons why the new accelerated regulatory pathway was adopted, to help speed the development and implementation of these new technologies.

We were one of the first regenerative medicine companies to recognize the significance of the opportunity in Japan. By utilizing the new regulatory framework, we hope to accelerate our efforts to develop and commercialize MultiStem in key areas like stroke, which represents a major public health issue in Japan and other countries around the world.

We continue to receive helpful guidance and support from the PMDA and MHLW, and from leading clinical experts in Japan that have expressed a strong interest in participating in a clinical study. Based on this positive feedback, we are committed to defining and implementing an appropriate clinical development path in this very attractive market for stroke and other programs that we believe have relevance there. And in doing so, in a manner that we believe can create substantial value for our shareholder.

It's worth noting that other regulatory agencies have recently taken actions that appear to be following Japan's leadership and visionary approach. Several months ago, the European Medicines Agency or EMA, announced a new program that's similar to the one announced in Japan, is focused on establishing a novel conditional approval pathway that is intended to accelerate development of new medicines for areas of great unmet medical need.

While this pathway was not designed specifically for regenerative medicine therapies, it clearly could have potential relevance in this sector. So we believe that if we achieve clinical success in stroke and other areas, we will be well-positioned to achieve our development goals and subsequent commercial success.

To help prepare ourselves, we have engaged outside experts to help us gather information and mass out potential reimbursement strategies in Europe and Japan, which we believe will be an important key to maximizing value. These advisors have reached out the key opinion leaders to gather information and perspectives. And while it's too early to comment on the specific findings and feedback, we are very pleased with the level of engagement and enthusiasm being expressed related to the program.

We continue to make progress in our stroke trial enrollment, which is nearing completion, and continue to receive positive feedback for the sites involved in the trial. We have 33 active sites participating in this study, including 27 sites across United States and six sites in United Kingdom.

Enrollment to the first half of the year was very steady and consistent, putting us on track to complete enrollment around the end of the summer, as previously projected. In July and early August, enrollment slowed somewhat, due in part to summer vacations at key clinical personnel as well as the annual early summer turnover in neurological residents who have played an important role at certain sites.

Assuming enrollment rates return to their previous pace soon, we anticipate the early summer slowdown will result in completion of enrollment some time around late October or November, which is just one to two months behind our target of end of summer, and puts us on track to have interim results around mid first quarter of 2015.

We remain very optimistic about the results of this trial, which we hope and anticipate will show a meaningful impact in stroke patients relative to current standard of care, particularly for those who have suffered more severe strokes. If our expectations are correct, we also anticipate that these trial results will be a major driver in shareholder value.

Stroke is not the only clinical program, where the new regulatory framework in Japan and Europe maybe relevant. As we mentioned in last quarter's call, we plan to advance our acute myocardial infarction program into Phase 2 clinical development in the next few months, with support from a grant we were awarded last year from the National Heart, Lung, and Blood Institute, which is part of the National Institutes of Health.

Myocardial infarction or heart attack is caused by the blockage of one or more arteries that supply blood to the heart. Result in injury to the heart muscle can severely effect the patients overall health and quality of life and may ultimately lead to heart failure. While statins and other medications have clearly improved the landscape for patients at risk of heart disease, it remains the leading cause of death and a leading cause of disability for many countries.

Furthermore, increasing rates of obesity and aging demographics are both expected to increase rates of heart disease. Each year, an estimated 1.7 million myocardial infarctions occur in the U.S., European countries and Japan combined. Effectively treating patients that have suffered damage from a myocardial infarction remains an area of great unmet medical need, and it also represents a significant commercial opportunity.

We are excited to advance this third program into Phase 2 development and by the potential opportunity to further utilize emerging changes to regulatory paradigms in the U.S., Europe and Japan, in our effort to both benefit patients and create shareholder value. We have engaged a CRO for this study and site recruitment is now underway.

Another clinical program in the development stage involves transplantation support. Clinical data suggest that the administration of MultiStem cell therapy may substantially reduce the incidence and severity of graft-versus-host disease, referred to as GvHD in patient suffering from leukemia or other blood borne cancers. Many of these patients after receiving radiation or chemotherapy to destroy cancerous cells, also receive a hematopoietic stem cell or peripheral blood stem cell transplant, which carry significant risk of GvHD and other complications.

In the past several months, we advanced planning and preparations for our Phase 2/3 GvHD prophylaxis study, highlighted by our ongoing discussions with the FDA regarding the revised clinical trial design. These interactions have been very productive, and we are now in the final stages of completing our design for the trial based on the FDA's recent input.

We are also engaged in parallel discussions and preparations with the EMA, and are finalizing the design of the trial such that will meet our objectives and rigorous standards. Once that's done, we look forward to initiation of the trial upon achieving certain business development and financial objectives that will provide the necessary support.

Recall that our GvHD program has been assigned orphan drug designation from both EMA and the FDA, which among other benefits assures us seven years of market exclusivity upon approval.

Our solid financial position enables us to execute in a number of development programs with our current resources, and it enables us to further progress our clinical development programs, advance our process development activities and expand our later stage development capabilities. It also strengthens our position in business development discussions relating to certain regenerative medicine programs, and to our novel 5HT2c receptor agonist program to treat obesity and neurological conditions such as schizophrenia.

Our broad development portfolio combined the important business and clinical catalyst that lie ahead, place Athersys in a strong competitive position. We will continue to execute well-designed, high-quality clinical programs, as we advance existing collaborations and new partnerships. With all of these components in place, we are confident that Athersys is on a path to delivering substantial long-term value for our stockholders.

In closing, we remain committed to advancing our portfolio of opportunities and achieving our long-term goals, and we appreciate the continued support of our shareholders.

With that, we'd be happy to take any questions.

Question-and-Answer Session


(Operator Instructions) Your first question comes from the line of Jason Kolbert with Maxim.

Jason Kolbert - Maxim

Couple of areas I'd like to explore with you. First off is stroke. Tell me a little bit in terms of stroke on, I know there's been a lot of discussion about mechanism of action and really elucidating what the cells were doing. And help me understand the difference between an acute indication like stroke and a chronic indication like ulcerative colitis? And why we should be expecting such different outcomes?

Gil Van Bokkelen

Yes. That's a great question. So we've done a lot of work and we've actually presented a substantial amount of some of the work that we've done at various neurological conferences and stroke conferences. And it illustrates the depth of the knowledge that we've gleaned over the past few years, as we've conducted study here at the company as well as working with outside independent collaborative labs.

One of the key differences, I mean stroke is generally recognized as being a very, very difficult area. A lot of pharmaceutical companies have tried to develop drugs to treat stroke, as you know, and even a few biotech companies. But one of the things that all of these therapies have in common is they tend to be therapeutics that are designed or pharmaceutical or biologics that are designed to target a single specific receptor.

One of the things that we know about stroke and there has been really a tremendous amount of literature that over the past several years really illustrates this and kind of the change of understanding about stroke is that following a stroke there is a series of cascades that occur in the days and several weeks after the original stroke has occurred.

One of the things that happen in the first few days after the stroke is this massive hyper inflammatory cascade that actually occurs, that is now recognized to be directly responsible for causing a lot of a long-term or even permanent brain damage that many stroke victims experience.

One of the things that we know about MultiStem is that MultiStem regulates this cascade and mitigates the cascade of damage that is occurring in multiple very important ways. So we have direct evidence that when we administered MultiStem that we down-regulate, not just one or two, but a whole series of very important inflammatory factors that are driving a lot of the inflammatory damage, and cause activated T-cells or other activated immune cells to go to the brain and actually create a very hostile proinflammatory environment that ultimately kills off neurons that might otherwise be saved and that are eventually replaced with scar tissue.

So again, we can say with great clarity, how cells regulate these key factors and these key pathways to specific factors within the cascade that they are regulating, and these are down-regulating proinflammatory things as well as up-regulating key factors that stimulate or drive the healing and the repair process.

And so it really is a kind of an umbrella effect, if you will, that cuts across multiple different cascades, multiple different pathways and affects all the key factors in each of these pathways. And we have quantitative data that actually illustrate these effects. In addition to that we know that the cells are stimulating the repair and the restoration of the blood brain barrier, which is compromised in stroke patients as well as in traumatic brain injury patients.

So it's really kind of the difference between doing one thing, which is why the pharmaceutical programs really have not fared all that well, and the ability to do multiple things in parallel in a dynamically regulated way. And we have a lot of evidence that shows that that's exactly what MultiStem does, which is why we think it's a true game changer in terms of stroke treatment.

Jason Kolbert - Maxim

And help me understand a little bit, because when I think about the ulcerative colitis trial and the length and time it took and I think about the stroke trial and how rapidly it's being executed. I want to understand how much clinical science went into this design? And for example, specifically, my understanding is that a lot of people who have strokes spontaneously recover. How do you adjust for that in the current clinical design of this trial?

Gil Van Bokkelen

Yes. Another great question. And that you're right. That's a well-known clinical observation, a well-known phenomenon. Sometimes patients will experience what's referred to as a TIA or transient ischemic attack, and then they will within hours after having a stroke begin to show evidenced of some spontaneous recovery.

And in fact, this is one of the big challenges that a number of pharmaceutical companies and others have run into, because typically if they're trying to administer a pharmaceutical-type drug, whether it's a neuroprotectant or something that modulates activity even ion channel, for example. They have to give that drug within the first several hours after the stroke, just like TBA.

Well, the problem with that is, is that you don't really know within the first several hours, which patient may have experienced TIA or may actually be experiencing spontaneous recovery, because the body is able to increase collateral blood flow in the region around the stroke that is really helping to minimize damage and helping the patient get back to where they want to be.

In our case, we designed our trial recognizing that we had already published data and had an extensive amount of mechanistic understanding that tells us that we appear to have a window that extends for a few days after the stroke, at least where we can administer MultiStem intravenously, and see substantial recovery. In fact, as we published from the animal studies that we've done, even when we were treating animals a few days or even a week after a stroke, we were seeing virtually complete recovery.

So in our clinical trial, we put that knowledge to use, and we designed it such that the first 24 hours is essentially an observation period for the patient, patients that might otherwise meet the enrollment criteria for our study that are spontaneously recovering. If they are already on the path of spontaneous recovery are not enrolled into our trial. So we are focused on the patients that are showing more significant deficits at 24 hours, and then treating them within one to two days after the stroke.

Now, the benefit of that is that it has the potential to eliminate a lot of the background noise, if you will, among patients that might have received placebo, but would then go on to spontaneously recover on their own. So in effect, it's creating a more informative study for us, and it also allows us to focus our efforts on precisely the types of patients that were most interested in helping.

So these are the patients that are at the more severe end of the stroke spectrum, if you will, that we believe we're going to have the greatest impact in. And if we're right about that, as I said in my earlier comments, we think it can literally change stroke medicine as we know it. And that's also the area where frankly the greatest amount unmet medical need exist is in those patients that are at the more severe end of the spectrum.

So getting back to your earlier question about what's the difference between acute and chronic, and how do we kind of compare this versus something like IBD, where we have patients that have been -- the average duration of disease actually among the patients that were enrolled in our trial with Pfizer was 10 years. And these are patients that had already failed multiple other forms of treatment.

So these patients have a substantial amount of damage that is built up and scar tissue that is built up over literally years of disease progression. And to use an analogy to focus on stroke, what we are doing with MultiStem is we are intervening early, before a lot of that damage actually has the chance to accrue and build up, and we're kind of cutting it off the path.

Now, it does raise the question of what happens if you use a cell therapy-based approach in patients that have suffered from longstanding disease from a stroke that they may have had a couple of years prior to that or sometime prior to that. And the honest answer is, we don't really know, what benefit we may be able to deliver for patients like that. Our research early on took us in the direction of early intervention, addressing stroke patients around the time of the stroke and really establishing what that near-term window is, which we, based on our pre-clinical work appears to be at least a few days.

If we can address those patients kind of at the front end of the disease spectrum, if you will, then I think that would be a dramatic step forward. But we may also have the ability to intervene and help patients that had suffered a stroke sometime prior to that. That's something that we're interested and systematically exploring over time, and we know that other are looking at that question as well.

Jason Kolbert - Maxim

I just want to ask one last question and kind of keep the topic on stroke. Given the fact that you just came from Japan and you're talking about new regulatory landscape evolving there. How does the current Phase 2 results fit into that? And could you just speculate, take a guess a little bit, on what might be required in Japan, pending good Phase 2 data in order to get MultiStem approved in that country?

Gil Van Bokkelen

So our current thought was looking at the concept of potentially expanding the current study, the current international study that we have, to possibly include sites in Japan and investigators in Japan, and just trying to pull that into the current study. But because the current study has actually progressed pretty consistently and we're approaching the finish line for enrolment here, we think that the better strategy is actually to take the information from the current study and use that to design an informative, I refer to it as a confirmatory study, that again looks at safety, but also looks to see consistency in terms of disease responsive among patients that we would treat in Japan.

And that concept is really what we've been discussing with the PMDA. I guess it's fair to say that the PMDA historically has had a bit of a reputation among companies outside Japan for being somewhat inflexible. I can tell you that our interactions with the PMDA over the past few months have been nothing, but supportive and open and very candid.

And I think that there is a lot of people in Japan, both at the PMDA and the Ministry of Health Labor and Welfare across the nation that really want this new framework to be successful. And I think, given that we're focused on one of the areas that represent perhaps the greatest healthcare challenge in Japan, we're getting a lot of good guidance and support, and I think that that bodes well for us.

So I think that the study that we're likely to run in Japan would be something that we're using in next few months to do all the preparatory work for, such that, as soon as we have the results from this current study that we can move forward into that trial in a very, very seamless and efficient manner, and then use that as a basis for moving forward under the new framework.

And I think that by doing all the groundwork now, so our discussions with the PMDA in Japan are focused on things like our manufacturing approach, what they have expressed tremendous comfort with and we answer their question and address the other points that they had around that, as well as looking at things like the safety package and other issues.

And again, the interactions have been very cordial, very supportive. They ask questions, we have good answers for their questions, and we continue to make good progress towards preparing the way for being in a position to run a study in Japan in a very efficient manner.

And by applying the knowledge and the results that we get out of this current study, we think we're going to be able to design something that doesn't necessarily have to be a large study. We think it might be a fairly modestly sized trial that really just builds up and is designed to reconfirm some of the things that we're seeing from the current study, which will put us a on a very fast path to getting to next phase of things.


Your next question comes from the line of Ted Tenthoff with Piper Jaffray.

Ted Tenthoff - Piper Jaffray

I guess maybe picking up where Jason left off. There is sort of a partnering opportunity in Japan. And again, I know you've been focused on spending a lot of time over there. The environment seems right. What are the kind of deals that Japanese pharmaceuticals companies are looking for? Are they waiting for a crucial piece of data? Are they looking for global rights? Are they looking at specific indications? How are those talks going? And kind of give us a sense of sort of what the potential opportunity is either in Japan or even through a global deals, maybe with one of the larger Japanese pharmaceutical companies.

Gil Van Bokkelen

Really good question. So first off, either one of those, either a regional deal that's focused on Japan or maybe includes potential territories in Asia or a more comprehensive global deal, either one of those are possibilities. And it kind of depends on which program we're talking about and which are the companies that we're engaged in discussions with.

Some of the companies, as you know, number of the big Japanese companies are multinational. They have a global presence or at least a far ranging presence across key geographies that we really care about and some of them are clearly thinking in kind of a larger scope in terms, if you will. The other companies are focused primarily on utilizing the new framework and what it might mean for Japan, and really driving an accelerating development, and clinical development, and commercialization efforts there as well.

So each of the companies that we're in discussions with, just kind of thinking about it slightly differently, and they all have different strengths and weaknesses or areas that they might concentrating on. Stroke in particular is something that that resonates with most of the companies that we've met with and been having discussions with in Japan. And for obvious reasons, they all recognize that it could be a true blockbuster opportunity that even if we're only talking about Japan, could carry an enormous amount of value associated with it.

So first off, in terms of the type of partnership we're looking for, we are not looking for the type of partnership that maybe people think about traditionally in terms of a biotech opportunity where they simply hand it off to the pharma partner, and then let them take it the rest of the way. We have to be involved in this development process and we fully intend to be. And each of the companies that we're in discussions with recognizes that and appreciates it.

Furthermore, we intend to be involved, and frankly on the manufacturing side where we have invested an enormous amount of time effort and energy in developed technologies and approaches that we think are unique and proprietary, and really build off of the strength of the technology platform is something that we would want to maintain complete control over. So its elements like that that actually go into the discussions.

In terms of the economics of it, obviously there are multiple ways to get to something that could make sense for both sides. I'm not really going to put any numbers on the table obviously, because that would give people targets to shoot at. Other than to say that there is general recognition of the fact that stroke is a big, big opportunity. And some of the other areas of opportunity that we're focused on as well also represent sizeable opportunity. And that's what's driving the interest there.

It's interesting, if we go back three or four years ago, we were having a difficult time really kind of making, getting meaningful traction with some of the companies in Japan that we had started to reach out to. And the game changing event was really the discussion around this new regulatory framework, but things really began to take off in earnest, I'd say, when the new framework was passed last November, that that clearly had an accelerating effect, because people saw that it was real.

There was a lot of speculation that, hey, maybe it wasn't going to be happen, maybe politically it wasn't buyable or there were too many things standing in the way, but it's become quite clear to everybody over there. And in particularly, since it passed in November, that this is something that has a tremendous amount of support from a lot of different advantage points, from a lot of different angles in Japan. And so that makes it particularly interesting to Japanese companies and also the companies like us.


Your next question comes from the line of Steve Schwartz with First Analysis.

Steve Schwartz - First Analysis

So if we could just keep it on Japan for a moment. With the new regulatory framework, it seems like you're having some very good success there. And perhaps you have almost first mover or front runner position in dealing with this new framework. Do you think that it gives you an opportunity or is there a reason for you to modify your business plan or model to maybe take advantage of some of the things you've learned through this process?

Gil Van Bokkelen

Yes. Well, in fact, we already have. I mean the reality of it is, is that we weren't really looking at Japan as kind of a near-term clinical opportunity until about a year ago, when we first became exposed to the concept of this regulatory framework, and then began to do homework and started meeting towards the end of last summer with the senior leadership at PMDA and Ministry of Health, Labor and Welfare, and started building our advisory and clinical team over there.

And then when we went back earlier this year, that was roughly dozen of the top stroke specialists across the entire country in Japan that really just cemented it in our mind, the degree of interest and enthusiasm that we were seeing about how we should think about this. Again, we started-off by thinking, well, what if we just expand the current clinical study to incorporate sites in Japan, and then kind of wrap it in or maybe increase the size of the study and approach it from that perspective.

Some of the fundamental things that we've needed to get done with our CRO over the past several months, and some of this basically just involved things like educating our CRO on what we have, the information that we already have, going through it all in a very systematic way, has taken a little bit longer than we were originally hoping, but ultimately it led us to the point where we believe that the right thing to do is move towards implementing a study in Japan, shortly after we complete this study. And then implement that knowledge in a way that we think puts us on a fast path to take advantage of this new regulatory system.

I do think that there is some truth to the concept that perhaps we're enjoying our first-mover advantage here. But I think maybe a bigger impact might be that we have established a reputation for really being very systematic and methodical about how we do things, and also the fact that we are focused on stroke. I think we're very highly regarded by regulatory agencies around the world, because we do our homework and we're very prepared when we go in and have conversations with them or have discussion.

And they see that we're not trying to shortcut anything related to safety or any of the other things that some times people have a tendency to try and navigate around as quickly as possible. Our mentality is that that we want to make sure we do it right and we convey that to the regulatory agencies and experts that we deal with and they recognize that.

So in answer to your question about changing our strategy, I'd say that it has changed and evolved pretty meaningfully since a year ago, because we see this is a pathway where we can achieve accelerated development and entry into the market and help a lot of patients, and I think it's recognized both here and in Japan that the commercial value associated with being able to do something like that is absolutely enormous.

So not only can we help a lot of patients -- our philosophy has always been, think about the patient first. Can we help patients and we can deliver a safe and effective therapy then that puts us in a good position to benefit from that from a commercial standpoint. And I think that the response we're getting in Japan is largely driven from the recognition that this is a major area of need and we're approaching it the right way. So if our clinical data delivers what we want, I think it's going to be really exciting for everybody involved.

Steve Schwartz - First Analysis

And with respect to the stroke study, the way you described the enrollment slowdown, it sounds like you understand that there is this, call it, seasonal slowdown in July and August, and you knew about it and planned for it originally, yet it sounds like this time its put you one to two months behind. Can you talk a little bit about what's going on there?

Gil Van Bokkelen

That's a fair recognition. I would say that while we recognize it as a possibility, we didn't think it was going to have as much of an impact as it had during the month of July and early August, particularly at some of the sites like in the U.K. We know that Europe in general can be a little bit finicky because of vacation schedules over there, but I guess we underestimated the potential impact actually of kind of the seasonal effect, if you will.

Steve Schwartz - First Analysis

And then setting the current timeline, you just kind of have gone back to the pattern that you are familiar with?

William Lehmann

So if you look at the enrollment rates that we experienced for months, it was very steady, very consistent. And it was only when we got to early July that we really saw kind of a meaningful drop-off. It didn't go to zero obviously, but it dropped off pretty meaningfully.

And we didn't just sit there and not do anything about it. We actually started reaching out to all the clinical sites and all the investigators, and kind of the pattern that emerged from all those conversations with the various site coordinators and the clinicians and the KOLs at each one of the sites is, hey this is what's going on.

So it was really the combination of the two factors that I mentioned, the seasonal turnover and the neurological residence that a few sites had an impact, because some of these guys were tremendously excited about the trial, and so they were really on the frontline and devoting a lot of time effort and energy to it. The senior clinical specialist, obviously are still going to continue to do that, but they have to deal with kind of the changeover of having some new residents come on board, at least in a few instances.

And then just some of the vacation schedule that happens for some of the key nursing staff and clinical site staff actually at a few other sites, but I think we're pretty much beyond that now. I expect that in the later part of August, and as we move forward from there, the things will get back up to where they were or maybe even hopefully a little bit better than that.

So we're just trying to be accurate, prudent, letting people know when we expect, that we think we're going to be able to complete enrollment. Ultimately it comes down to when the last patient is enrolled. Because that determines basically when we're going to have the topline data, but we're very optimistic that that's going to happen relatively soon and that sometime probably early in the year, we're going to have the data from the current trial.

Steve Schwartz - First Analysis

And if we have time for just one more, nuts and bolts question. Just about your sense of spending in the second half relative to the first half, the third quarter or fourth quarter?

William Lehmann

I think it would be along similar lines. We're running the stroke study. And I think that's going to be on same kind of run rate. We will initiate the AMI study. The good news there is we've got grand support for that. So I don't see a major impact. So I think we're going to be roughly kind of in the same cash use area over the next couple of quarters.


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

Steve Brozak - WBB

It seems like a lot of good questions have been asked and answered. But I do want to focus not so much on Japan, but on what Japan might bring you as far as additional questions and visibility. I'll break Japan down into a question with tree parts. Obviously, the fact that you are getting as much traction overseas with the government as you have been, is a very positive sign.

What is it bringing back to you though, let's say, in the United States? And what I mean by that is with a potential clinicians that are interested in working with MultiStem, with potential partners in addition to Pfizer that might be interested in approaching MultiStem?

And lastly, I don't want you to have any kind of index where you're measuring patient interest or people that have disabilities with their interest, but what can you tell us about that? And I'll have one follow-up question after that.

Gil Van Bokkelen

Well, it's interesting. The key opinion leaders in Japan, many of them are quite familiar with the key opinion leaders here in the United States and the key opinion leaders in Europe. So there is kind of an international community of stroke experts and specialists that talk to each other. And that get together at conferences and events that occur throughout the course of the year. The International Stroke Conference, for example, which is always a well-attended event and which we have actually presented at. And I think that it's those types of vehicle that have actually helped us build awareness in terms of who we are and what we're doing.

But there is a lot to be said for actually going to Japan and sitting down with the experts in their home environment and walking them through in a much more detailed way, the data that we generated over the past few years, that really talked about how MultiStem can deliver an impact and provide a benefit in indications like ischemic stroke.

And that's when we made the decision to do earlier this year, and we made just a special trip to Japan actually, where we literally spend an entire week meeting with leading investigators all across the country, including at the National Stroke Center in Japan and the Cerebrovascular Center. And we've got a tremendous amount of enthusiasm and interest from that.

And the good news is that when some of those people want to talk to -- and in fact, two of the leading stroke experts from here in the U.S. that are senior investigators, as part of the current study made that trip with us. So that they could talk to their colleagues in Japan, professional to professional, if you will.

So one thing obviously, we have companies there conveying the message, but we actually with the head of our neuroscience team, I actually made the trip myself and then the two senior investigators from the current stroke file all made the trip together. So that we could sit down with these colleagues and then obviously some of our key strategic advisors in Japan were there as well.

So I think together that sends a very strong message that we're very committed to this. And it really helped us educate a lot of people on what the possibilities might be. The interesting this is that we had already started to get, I mean just in recent months a little bit of media exposure in Japan, because a Japanese TV crew had actually come over to interview one of the senior investigators and one of the patients actually from the stroke clinical trial.

And then that aired just a several months ago actually in prime time in Japan. And a lot of people got a chance to see that. And so just among people that we haven't had a chance to meet with or talk to, they were exposed to what's going on in stroke medicine and how MultiStem may actually have an impact or something like this.

So the awareness has been growing, I think pretty consistently and pretty steadily. We've been doing some other things just from a communication standpoint, to try and build awareness and let people know what's going on. So I think the interactions have been very good. In terms of what that brings back it's really kind of a reaffirmation, if you will, or reinforcement.

From a partnering perspective, to get to your second question, I think it also does a lot, because people see that we're aligning ourselves with experts internationally and the ability to use the accelerated regulatory framework as a way to expedite development and validation if you will and actually get a product under the market and what is unquestionably a very substantial market opportunity, is something that is of interest, not just to Japanese companies, but to other companies internationally as well.

And so we're not just talking to any companies in Japan, we're talking to companies outside of Japan, but I would characterize the interest level in Japan is being particularly high because people really see that and recognize it for what it is and what it's intended to do. The fact that we're also building a great leadership team around us in Japan I think is noteworthy as well.

Steve Brozak - WBB

The last part of my follow-up is, given the fact that you're going to, with everything going on with potentially clinical studies in Japan, how are you preparing in? Are you packaging it so that you can use the same datasets to comeback into United States and present to FDA? And I'll hop back in the queue.

Gil Van Bokkelen

Yes. I mean the bigger the dataset that we build then obviously the more convincing and persuasive it becomes. One of the things that we're very keen to discuss with the FDA once we have the data from the current trial is how do they view our options going forward in light of some of the recent regulatory changes here in the United States, so the broadening application of the accelerated approval pathway, the potential ability to use breakthrough therapies.

I mean imagine, if we we're really the first company that delivers in a -- well, it wouldn't be fair to be say first, because Genentech truly was first with tPA for years ago, but imagine if we're a company that develops a therapy that demonstrates good consistent safety and a meaningful and robust therapeutic effect in patients that are largely viewed as being no option patients or patients that you really can't do much more than except hope pray and hopefully advance them in a rehabilitative therapy or other forms where they may begin to regain some of the lost function that they had.

I personally believe that this sets up very nicely to be able to apply some of the new regulatory frameworks here in the U.S., like breakthrough therapies or like accelerated development. But we have to have the data first to be able to make that case, and I am excited about completing the study because I think this study is going to give us data.

And similarly, I think in Europe where they -- it was actually kind of a bit surprising to me that they adopted the conditional approval pathway as quickly as they did. They've been talking about it for quite some time, but then they actually pulled the trigger on it. And I think that now to be fair, they've characterized it as kind of a pilot program, if you will.

But I think that there seems to be good regulatory consistency and buy in, both with the FDA and EMA, and obviously in Japan, where they've already implemented it. This notion of changing the regulatory system in a manner that doesn't compromise anything on safety, and of course that's something that we believe is an absolute strong suit for MultiStem is the consistent safety profile of the product.

But that also offers us the ability to get therapies that can deliver a meaningful impact to patients, to get patients those therapies faster and get into the hands of doctors faster. So I think stroke is something that just because it is such a huge area of unmet medical need, it creates some interesting possibilities, not only in Japan, but in the U.S. and in Europe as well. And we're excited about being able to sit down, as soon as we have the data, so that we can explore that in a pretty systemic way.


Your next question comes from the line of Christian Glennie with Edison.

Christian Glennie - Edison

And I mean the stroke and the Japan aspects are well-covered. It might be worth just an update on the AMI study, obviously that's approaching, that that study getting underway. Just a bit in terms of the size and scope of that study, numbers of patients, treatment duration and what you might see to highlight data from that study?

William Lehmann

I can give you that highlights. I think the plan would be to provide a little bit more information on market study, which as Gil mentioned will be later in the year. This can be a Phase 2 study as mentioned. It's going to be in the Acute MI area.

We have designed we're going to have approximately 8,100 patients and we'll be more specific about that a little bit later on, looking at safety and efficacy and the patient population focused in United States. I think the objective is to have topline data in 2016. So the launch at the end of the year will be a relatively short enrollment time. We have some experience from our Phase 1 study with this area. So we have pretty good understanding of what's going to be required.

The topline follow-ups probably be built around four-month type of endpoints, three four month endpoints. So we will be in position by 2016, I think to have topline data, at least that's the expectation now. But we'll provide more information and expect some better expectations towards the end of the year as we're initiating the study.

Gil Van Bokkelen

And just to add a little bit of color to that. It's possible that we might change the study size or design slightly, that's something that we're currently evaluating right now. Remember that in the study that we ran previously, it wasn't a very large study, it only involved about 26 patients in the total study.

And even with that, so we looked at three different dose groups and then we looked at a registry control group. And even with that, we actually saw statistically significant and very robust improvement in one of the groups that were part of. There was a consistent pattern of improvements across the patients that appear to correlate with dose as well.

But in particular, it was noteworthy that we actually saw statistically significant response and double-digit improvement and things like ejection fraction and some of the parameters that we looked at. So we don't necessarily need to run a very large study here in order to be able to generate a lot of information and something that is compelling from a clinical effectiveness standpoint.

And just one other point, we thought long and hard about the delivery strategy that we wanted to utilize for the MI clinical development program and potentially has relevance in certain other clinical programs. So we worked with a catheter system that was recommended to us by leading cardiologist at the Cleveland clinic and in other places like New York Presbyterian in New York, for example, that had evaluated a number of different delivery strategies and technologies.

And they ultimately proposed that we used this particular delivery technology because it's fast, its easy-to-use, it minimizes the amount of time that the patient have to spend on the cath lab. And so in contrast some of the other technology that people have utilized, where you have to kind of map the electrical activity in the heart and then you've got to keep the patient in the cath lab for what could be an extended period of time.

Those can be a little bit challenging and problematic. With this approach, in fact, I've shown this slide many times, the first patient that was treated at the Cleveland clinic, the entire procedure once the catheter was in place, which didn't take very long, it only took about a minute, and the cells were delivered precisely in the area that we needed them to go. And that I think showed how efficient this delivery of strategy is. And it is also exhibited a very consistent safety profile.

Now, we've looked at other delivery strategies. I think we've explored half a dozen different catheters out there, and our technology is compatible with each and every one of them. But there are certain characteristics that we look for it, the delivery approaches that we are using. First and foremost for a lot of the things we're doing, we wanted it to be easy and straightforward for the doctor or in some cases even the nurse to be able to use. Remember a lot of the indication that we're pursuing we're using IV administration and that's a very simple procedure.

And the ability to use the different types of delivery strategy that we are using is driven by the profile of the product. The fact that the cells can be easily administered using a variety of different routes, that's something that is not always possible or as easy or as efficient with certain other cell types that people have then exploring, but it is something that we are proud of and using the full advantage in a variety of different ways.

We think one of the keys long-term is to develop an off the shelf therapy that is very simple, very straightforward, very easy-to-use and is also very, very safe in addition to delivering type of efficacy that we expect to see across the range of indications that we're pursuing. That ultimately drives adoption, and that ultimately puts you in the best possible position to achieve commercial success. That coupled with our manufacturing capability, we think it's a pretty strong advantage.

Christian Glennie - Edison

And then just to be clear on the financing opportunity. You have the grant money that helps it. But as I understand you will be funding the study, which was in slight contrast to the plan or program in GvHD, where you've mentioned now and previously as well, a few times, obviously that's such dependent on other financing or business development activities, is that correct?

William Lehmann

The GvHD study is, as you refer to that, and that's to be dependent on either additional financing or business development activities. There were additional grant opportunities. So we'll see how that plays out. We're going to be ready to go around the end of the year, and then will place those things out.

I think with respect to AMI, we're going to move that forward to be a grant funding. There'll be some incremental cash that Athersys puts into the program to move it forward, but the good news for us is that the grant funding supports the lion's share of the cost associated with that program. So we're going to go ahead and move that forward.

Christian Glennie - Edison

And then just final, I believe you mentioned earlier, but just to confirm the sort of R&D spend in the second half of the year, obviously because stroke trial was obviously ongoing a bit more than they've expected, but then we'll start to wind down. But then obviously, you've got the AMI starting, so to confirm the sort of expected burn in the second half?

William Lehmann

It's going to be kind of in the same zone as in the first half. It might be a little bit higher, but it's not going to be dramatically different than the first half is our current expectation.


Your next question comes from the line of Tracy Marshbanks with First Analysis.

Tracy Marshbanks - First Analysis

I'm going to apologize for the background noise that comes up. Gil you sort of just touched on this a little bit and that's a safety. I think recently there was another trial that had a safety issue. And for you guys it remains a mundane topic. Could you just talk a little bit about, you mentioned the nature of the cell system, that's also maybe your guys thought process and approach on delivery and alike and maybe contrast that with others that seem to struggle a bit at times?

Gil Van Bokkelen

So we've spent a lot of time actually exploring the various safety parameters of MultiStem, and we see some characteristics with the cells that I think are advantaged. These cells are fairly small cells. They're not sticky, the way some other cell types are. So they don't have a tendency to kind of clump the way people have observed with certain other cell types and alike, and whether they're being administered either through a catheter-based delivery system that has a very small needle.

For example, the catheter-based system that we're utilizing, which is developed by a biotech company out in the West Coast, it's got a very, very small needle. I think that they've got 34 gauge needle which for anybody that's familiar with how they gauge the needle sizes, it's literally about the size of a human hair, it's tiny. You can barely see it. And yet even with that it's very easy and very efficient for the cardiologist to just turn a dial and delivery the cells right where they want to in the heart when the patient is receiving treatment.

In terms of overall safety profile, one of the things that we did that I think is a little bit different from the way some other companies have developed it is, we spend a lot of time literally couple of years actually, interacting with the FDA to map out a comprehensive set of studies that we ask them for their unfettered candid guidance and input on.

A lot of companies when they approach the FDA other regulatory agencies kind of their first objective is, tell me the least amount that I have to do, so that I can get into clinical development in the shortest possible timeframe. And that wasn't our mindset, when we sat down with the FDA.

In fact, in contrast to that we said, look here's what we want to do, we want to have a series of meeting and discussions with you, and we understand that this is going to take a little bit of time. But we want to have a series of discussions with you, so that you can give us your feedback and all of things you'd like to see us do before we ask for permission to advance into that first clinical trial. And that's exactly what we did.

And we conducted the studies, the FDA said, hey, we'd like you to run the following types of studies, where we have thoughts on how you can run some of those studies that you propose. And we took their guidance and their input very, very seriously, and I think that built up a lot of creditability, in terms of how we approach things.

Such that after we'd had the handful of formal meetings with the team of the FDA, we were ready to start submitting our first IND, and then as we submitted our second IND and our third after that, each time we were able to incorporate by reference a lot of the prior work that we've done and the prior interactions that we've had with the FDA.

And I think an important aspect of this strategy is we weren't trying to rush, we were trying to make sure that we were doing it exactly the way that it needed to be done, because ultimately that is what allows you to make the most persuasive case about the safety profile or other key aspects of any product that you want to take in the clinical development. So we've developed that kind of reputation, and that's something that we safeguard and that we're very, very proud of.

And I think that I'm not going to go into detail in terms of some of other -- I know what study you're referring too, and I don't really want to kind of go into detail and commenting on their program, because honestly I don't know a lot about the specifics of that.

Our general philosophy is that we're rooting for a lot of people to be successful in the regenerative medicine space. We've seen some very encouraging things that had been achieved over the past months and over the past couple of years and also some disappointing things that have transpired. But I think that one of things that we believe is going to differentiate us, is the consistency of the product and the scalability of the product, and the safety profile and then ultimately the depth of our understanding about mechanisms of action. And I think I'll just kind of leave it at that.

We don't enjoy it when other companies or other groups experience problems or disappointments or unexpected issues from it. I think we really want the field as a whole to be successful and we believe it will be. And sometimes you just kind of have to take a pause and take a step back and figure something out before you can move forward again. And I think this maybe the case there, where this other group has to kind of sort that out and get some answers to things and then move forward in the best possible way.

Tracy Marshbanks - First Analysis

And since the stroke trails are well into it and as stroke progressing, I assume safety will remain mundane.

Gil Van Bokkelen

Just for the record, I would never characterize safety is being mundane. I think it's critically part of what we do. But to your point, I think the sentiment behind it is as long as it doesn't appear to be an issue, then everybody should be happy about that. And we've enjoyed a consistent safety profile on something that we're quite proud of and certainly hope to maintain.


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

Jason Kolbert - Maxim

Gil, I just thought I'd ask a follow-up. Well, it's just two areas that I'd love to understand exactly where we are at. On the 5HT2c, any progress on the partnering front, finalizing a molecule and putting that assessment together? And also, we didn't have a chance to talk that much about solid organ transplant and the ability to essentially tolerized patients, which by the way is a very, very significant market. And I wondered if you could just touch with us on that topic and what the next steps might be to keep that program moving forward as well?

Gil Van Bokkelen

On the first question 5HT2c, our near-time priority is actually to select a clinical candidate for that program, while we continue to explore partnering opportunities and see where that takes us. Obviously, once you've got something that's ready to go in the clinical development that has a different kind of value associated with it.

We've done a lot of work on some very, very interesting compounds that have relevance in obesity and other compounds that we've developed that we think are distinct to have relevance in areas like schizophrenia and some related neurological indication. So we remain committed to this program. And we're just doing it in a very measured kind of cost-effective, methodical manner, while we continue to explore options and opportunities in a variety of different ways.

We don't feel like, we need to rush to completion on something, particularly we want to make sure that we get fair and appropriate value for any of the programs that we're focused on exploring partnerships around, and there is others that I haven't even talked about today. So I think we're really trying to be systematic in terms of how we approach that and do it right as opposed to just do it fast. I think on the second question, trying to remember, so you asked about?

Jason Kolbert - Maxim

Solid organ transplant, that's a tolerized thing and kind of what's the next step there? And if I recall to that data it was really exciting, right? And then if I was a transplantation the ability to have a tolerized organ that would be huge?

Gil Van Bokkelen

Yes. It actually generated a fair amount of buzz among some of the transplant specialists at institutions both here in the U.S. and in Europe as well. To be honest with you, we've run into problems with respect to the investigator initiated trial in Germany, just because of the way that trial was designed. It's just a very, very high bar for patient enrollment in that trial.

So we're not anticipating results from that trial anytime soon. It's just proceeding in a very slow and measured way. It has nothing to do with us, because what we did was we agreed to provide clinical products for the trial and work with the investigator in the leading transplant center there in Germany that actually support the study.

However, in the meantime, when we started doing and exploring other options, and while we also engage in accessing what our partnering opportunities might be in the area, and as you noted, the idea of being able to create and deliver a durable authentic power, such as what we showed we could do in preclinical studies is something that a lot of people find really, really interesting.

The field of organ transplantation more generally I think is undergoing some profound shifts and changes. Some of this is developed by just new techniques and technologies that are emerging. And if you think about liver transplantation generally, the impact of some of the new drugs is going to have a profound impact on liver transplantation in the years to come. And I know that's something you know a lot about, Jason, because you've written on extensively and correctly called early on some of the big success stories in some of these new drugs.

So we're thinking pretty carefully about the opportunities that we want to go after and how we want to go after them. The good news is that we have a lot of people that are really interested both in terms of leading clinicians, leading transplant centers here in the U.S. and Europe, and then potential sources that actually may provide funding for these types of programs and opportunities. So we remain excited about that.

But as we've tried to state in a very candid and clear way, we don't have the capacity to run as fast as we like in each and every area that we're going after. So we're assessing our options in parallel and really trying to prioritize things, while we finish some of the current studies that are ongoing, and then explore where that takes us in terms of opening up new avenues and new opportunities we can pursue aggressively.

Jason Kolbert - Maxim

Thanks Gil, again. Just really excited by all the things that are going on, just want to remind everybody listening that it takes a lot to get a drug approved, it's a combination of the drug itself and clinical success, and nobody should be put off by ulcerative colitis, because we see great signs here. So thanks. We really appreciate the thorough update.

Gil Van Bokkelen

Thanks Jason. I appreciate it.


There are no further questions at this time. I turn the call back over to the presenters.

Gil Van Bokkelen

Well, once again, I just like to thank all of you for your continued support. And stay tuned, as we continue to advance and hit important milestones and achieve progress in key programs. In the meantime, have a great week everyone.


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

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