Athersys, Inc.
Q4 2017 Earnings Call Transcript

Published: 14 Mar 2018

[Operator:]

Good afternoon. My name is Erica and I'll be your conference operator today. At this time, I would like to welcome everyone to the Athersys' Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Ms. Laura Campbell, you may begin your conference.

[Laura Campbell:]

Thank you and good afternoon, everyone. I'm Laura Campbell, Senior Vice President of Finance for Athersys. Thank you for joining today's call. If you do not have a copy of the press release issued at close of market, it is available on the Athersys' website at athersys.com, or you may call Matt Celesnik at 216-431-9900 to receive it via e-mail. Dr. Gil Van Bokkelen, Chairman and Chief Executive Officer; and I will host today's call. BJ Lehmann, our President and Chief Operating Officer will also be available for the question-and-answer session that will follow our corporate update. The call is expected to last approximately 30 to 45 minutes, and may also be accessed at athersys.com. 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 we 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 disclosed in our Forms 10-Q, 10-K and other public SEC filings. We anticipate that subsequent events and developments may cause our outlook to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. For the benefit of those who may be listening to the replay, this call was held and recorded on March 13 of 2018. Since then, we may have made announcements related to the topics discussed, so please reference our most recent press releases and SEC filings. Now, I'll briefly review our fourth quarter and annual 2017 financial results and then turn the call over to Gil for a corporate update followed by the question-and-answer period. For the fourth quarter of 2017, our contract revenues were 955,000, compared to 828,000 for the same period of 2016. We expect our future contract revenues to be comprised primarily of revenues associated with our collaboration with Healios, royalty payments and potential commercial milestone payments from RTI Surgical, and potential proceeds from any new collaborations. Our grant revenue increased to 215,000 in the fourth quarter of 2017 from 155,000 in the prior year’s fourth quarter. Grant revenues fluctuate from period to period with the timing of grant related activities and with the award and expiration of grants. Research and development expenses increased to 12.1 million in the fourth quarter of 2017 compared to 7.1 million in the fourth quarter of 2016. It's important to note that in the fourth quarter of 2017, we expensed $4.7 million as a non-recurring charge related to a settlement and license agreement with Garnet BioTherapeutics to resolve the longstanding intellectual property dispute. Furthermore, of this 4.7 million amount, 3.2 million was non-cash expense for the issuance of Athersys’ stock as part of the settlement and license agreement. After factoring in this one-time charge, the remaining difference of 300,000 from period to period was primarily due to increased clinical and pre-clinical development costs, which vary based on trials underway, clinical manufacturing and process development activities. General and administrative expenses were relatively consistent at 2.1 million and 2.0 million in the fourth quarter of 2017 and ’16 respectively. We had a net loss for the three months ended December 31, 2017 of 13.1 million compared to a net loss of 7.1 million in the same period last year. As stated previously, 4.7 million of this increase was due to the one-time license fee expense related to the agreement with Garnet. We also had a 1.1 million non-cash gain in the fourth quarter of 2016 from a change in the fair value of our warrant liabilities. We had no corresponding warrant activity in the 2017 fourth quarter since the warrants were either exercised or expired early in 2017. Turning to the results of the full year, our contract revenues were 2.8 million in 2017 and 16.2 million in 2016. This variance relates primarily to the $15 million payment from Healios in January 2016 for our stroke collaboration in Japan, partially offset by a 1 million milestone payment in 2017 from our collaboration with RTI Surgical and manufacturing and service proceeds from Healios. Grant revenues were relatively consistent at $865,000 and $1.1 million in 2017 and ’16 respectively. Research and development expenses increased to 27.8 million for the year ended December 31, 2017 from 24.8 million for the year ended December 31, 2016. After factoring in the one-time charge of 4.7 million for the agreement with Garnet referred to earlier, the decrease in research and development expenses year-over-year of 1.7 million related primarily to reduced spending and research supplies of approximately $900,000 and on sponsor research of $500,000 General and administrative expenses increased to 8.5 million in 2017 from 7.8 million in 2016. The $700,000 increase was due primarily to increased personnel costs and legal and professional services. Net loss was 32.2 million in 2017, compared to 15.3 million in 2016. To recap, this sizable difference of 16.9 million reflects the following. The 4.7 million non-recurring Garnet license fee expense in 2017 of which 3.2 million was non-cash, the 15 [ph] million Healios revenue in 2016 from the stroke collaboration in Japan, a 1.3 million increase gain in 2017 in the fair value of warrant liabilities whereby these warrants were either exercised or expired early in 2017, $700,000 of insurance proceeds in 2016 related to damage from a flood and other operational variances described previously. Cash used in operating activities was $24 million and $10.9 million for the full year 2017 and the full year 2016 respectively, which takes into account the $15 million license fee from Healios in 2016 and the other variances discussed. As of December 31, 2017, we had 29.3 million in cash and cash equivalents compared to 14.8 million at December 31, 2016. As Gil will describe next, we also announced this morning an expansion to our Healios collaboration which will provide additional capital to our balance sheet. With that, I’d like to turn the call over to Gill for a corporate update. Gil?

[Gil Van Bokkelen:]

Thanks, Laura. Good afternoon, everyone. Thanks for joining the call today. During the fourth quarter and more recently, as we announced earlier today, we've made some significant progress towards the achievement of our key goals. As we said in the last earnings call, our recent priorities have been evaluating and successfully establishing new partnerships and collaborations to strengthen our financial position and advance our portfolio of programs, supporting Healios in the conduct of the TREASURE trial in Japan, which is evaluating the administration of MultiStem therapy to patients in Japan that have suffered an ischemic stroke, preparing for the initiation of the MASTERS-2 clinical trial, our pivotal Phase 3 study that will evaluate the administration of MultiStem cells to ischemic stroke patients in North America and Europe, maintaining a solid balance sheet and financial position, building awareness through our media relations, corporate communications and investor relations activities and strengthening and expanding our capabilities. These objectives are critical to achieving our overarching goal to establish Athersys as a leading biopharma company by developing innovative therapies with the potential to address areas of substantial unmet clinical need. As I mentioned on the last earnings call in November, our recent focus has been heavily concentrated on evaluating potential collaborative and partnering activities. Earlier today, we were pleased to announce that we have entered into a binding letter of intent to significantly expand our existing development and commercialization collaboration with Healios. Our initial collaboration with Healios began in 2016 with a license to develop MultiStem for the treatment of ischemic stroke in Japan. And since that time, we and Healios have worked closely on the design and launch of their ongoing registrational trial in Japan referred to as the TREASURE study. In connection with the envisioned expansion, Healios is making a $21.1 million equity investment at a price of $1.76 per share via the purchase of 12 million shares of our common stock, reflecting a 13% premium to yesterday's closing price. In addition, Healios will deposit $10 million into an escrow account that represents a guaranteed license fee payment to us, while we work to finalize the agreements related to a broad collaboration expansion over the next several weeks. Under the terms of the collaboration expansion agreement that we are actively working on and intend to complete by April 30, Healios would obtain an expanded and exclusive license to develop MultiStem for additional indications in Japan, including for the treatment of acute respiratory distress syndrome or ARDS and trauma as well as the use of MultiStem in their organ bud technology for organ specific disease and a license to develop MultiStem for certain ophthalmological indications on a global basis among other rights. Importantly, Healios would also obtain an exclusive option for a license to develop and commercialize MultiStem for the treatment of Ischemic stroke, ARDS and trauma or any combination thereof in China. If we enter into the broader collaboration expansion and Healios elects to exercise its option for a license in China following the result of the TREASURE trial, Healios would pay Athersys license fees, milestone payments and escalating royalties or profit share for each indication in China. In exchange for the broader collaboration rights, including the licenses and the option for a license in China, upon execution of the broader collaboration expansion agreement and associated documents, Athersys would receive $35 million in guaranteed payments, reflecting payment of license and option fees. These payments include the initial $10 million payment from the escrow account, which is required to occur by April 30, 2018 and an additional $25 million in license and option fees, which is required to be paid in installments on a quarterly basis. Once the collaboration expansion agreement becomes effective by May 1, the $25 million payment obligation may not be terminated or otherwise abrogated over time. And although the payments are nonrefundable, the funding from these quarterly payments could be used by Healios as a credit against certain milestone payments due under the MultiStem license for stroke, ARDS or trauma in Japan. As I noted a moment ago, in conjunction with the execution of the LOI and in addition to the equity investment, under the binding portion of the LOI, Healios is required to fund $10 million into escrow. That amount will be released to Athersys as either the initial portion of the $35 million in payments associated with the execution of the broad collaboration expansion agreement described a moment ago or if such agreement is not executed on or before April 30, 2018, as payment for expanding the scope of the current Japan license to include ARDS, certain ophthalmological indications and the use of MultiStem for organ buds for organ diseases. In addition to its purchase of 12 million shares of common stock as the initial equity investment, Healios will also receive a warrant that will give it the right, but not the obligation to purchase additional shares of Athersys’ common stock until September 1, 2020 subject to certain conditions and limitations, including a fixed exercised price with respect to certain of the warrant shares and a floating exercise price with respect to other warrant shares that will be based on the greater of a minimum floor price that escalates over time in the then current market price. Furthermore, there is a cap on the total number of shares that Healios may acquire during the term of the warrant of 19.9% of Athersys’ outstanding common stock. The warrant becomes exercisable only if the collaboration expansion becomes effective in April, but not if the narrower license for ARDS and the other conditions I mentioned in Japan is implemented under our 2016 license and we fail to execute the broader collaboration agreement. A key goal of this transaction is to expand and accelerate our development programs with Healios in Japan under the recently implemented regenerative medicine framework. It puts Healios in a potential position to develop MultiStem for multiple indications in a rapid, efficient and cost effective manner and also provides global development opportunities where they have established expertise and a strong competitive position. From an Athersys perspective, this transaction provides us with access to meaningful capital that is sufficient to see us through TREASURE and other important initiatives, including the ability to conduct our MASTERS-2 trial. Perhaps just as importantly, it is a clear signal of strong mutual commitment, respect and alignment. We are pleased to announce that as part of Healios equity investment, if the collaboration expansion agreement is entered into in April, Dr. Hardy Kagimoto, CEO of Healios would be nominated for election to the Athersys board of directors at the next scheduled annual stockholders' meeting in June of 2018. Having had the opportunity to work with Hardy over the past several years, I'm especially pleased that subject to election by our shareholders, he will be joining our Board of Directors as I regard him to be a visionary CEO and a highly effective leader with an outstanding track record of accomplishments. As I mentioned, I believe our visions are strongly aligned, both at the leadership level and throughout Healios and Athersys organizationally. In summary, with regards to the announcement earlier today, this expansion of our collaboration with Healios will provide meaningful capital resources with a commitment of $56.1 million to Athersys through the enactment of the broader collaboration expansion of which 31.1 million is guaranteed now with the potential for additional substantial equity investments and meaningful payments over time and establishes even stronger organizational alignment between the companies. From an Athersys shareholder perspective, it enables us to move forward with confidence and in a strong financial position. We’ll provide additional information to our shareholders in the coming weeks as we move forward and complete these activities with Healios. In addition to our progress with Healios regarding an expansion of our collaboration, there has been further progress in the TREASURE trial with the enrollment of additional patients and the addition of clinical sites. As Healios and we have conveyed previously, there is a strong commitment to completing the enrollment of the trial as soon as possible. As some of our shareholders already know, during their February earnings call, Healios adjusted the timetable for the completion of the TREASURE trial to reflect the impact of the manufacturing issues we experienced with Lonza, our contract manufacturer last year and the temporary suspension of the trial last fall due to the incorrect formulation of placebo. To be clear, they intend to complete enrolment of the trial sometime in 2019 and the top line data will be available several months after the last patient enrolled has been assessed at their 90-day visit. After the top line data is subsequently collected, organized, verified and analyzed, the top line results will then be announced. If the results are as we and Healios hope and anticipate, they would provide the basis for a submission for approval to the PMDA. Some of our shareholders have been a bit confused by the fact that patients will be evaluated for a full year in the trial and what that one year evaluation might have on the impact of the timing of the announcement of results or a potential submission for approval. So to clarify, while patients will be evaluated in a double blind manner for a full year following enrolment and neither the patients nor their physicians will know whether they received MultiStem or placebo during that time, as was the case in the MASTERS-1 trial previously, the 90-day data will provide the basis for the primary clinical assessment or primary endpoint of the study. These results will provide the basis for a submission to PMDA for either conditional or full approval if the trial is successful. While the study will continue for approximately one year beyond the enrollment of the last patient in the trial and Healios has projected that this one year evaluation process is expected to continue until the latter part of 2020, the primary results from the TREASURE trial will be available approximately eight months earlier following the final three month visit and then several more weeks for the collection, verification and analysis of the data. While this adjustment was necessary as a result of the issues and obstacles we experienced last year, it also serves to underscore an important point. Throughout these challenges, we and Healios work in a productive and coordinated manner to address issues as we needed to and we’ve remained and are fully aligned. That strong alignment is one of the keys that led to the mutual decision to expand our partnership. Over the past few weeks, we've also worked with the Healios team to engage in additional interactions with PMDA regarding other indications of common interest, such as ARDS, which is another area of considerable unmet clinical need in Japan. As we approached the completion of our ongoing trial here in the US and UK, we and Healios believe that we are well positioned to effectively apply the knowledge gained from the results of the ongoing trial in a subsequent ARDS study that will be conducted in Japan. Healios has already engaged key clinical experts and is actively preparing for such a trial by engaging with the PMDA and we're assisting them in that process. Another area of common interest is in trauma. Over the past few years, working with several leading independent research groups, we have published multiple studies that illustrate how MultiStem could be beneficial in a range of models, reflecting damage from trauma, specifically in the neurological area. Some of our collaborators and others that follow the company closely noticed that this can indicate potential relevance more broadly in the treatment of trauma. According to the Centers for Disease Control or CDC, trauma is the leading cause of death for individuals under the age of 45 and the third leading cause of death in the US as well as the leading cause of a serious disability and it accounts for approximately 180,000 fatalities each year. Among its -- being a cause of serious disability, it’s especially significant among young people that suffer trauma and members of the military. The CDC reports that in the most recent year evaluated, which is 2013, there were more than 2.5 million emergency department visits for traumatic brain injury or TBI and more than 282,000 hospitalizations. Of 5 million people in the US that are living -- over 5 million people in the US are living with a TBI related disability and an estimated 80,000 to 90,000 people suffer serious disability from TBI each year in the US at an estimated cost of $37.8 billion annually. 75% of trauma related deaths occur in the first three days after injury and are primarily due to uncontrolled bleeding in TBI. After three days, the remaining 25% of deaths occur at a low, but steady rate and result from inflammation or immune complications, blood vessel damage and poor clotting associated with the initial injury, shock and resuscitation. These inflammatory related complications include systemic inflammatory response syndrome, acute kidney injury, acute respiratory distress syndrome or ARDS, venous thromboembolic disease, multiple organ failure, neurological swelling and tissue death after TBI as well as secondary infections. Our preclinical data consistently indicates that administration of MultiStem following traumatic injury mitigates the inflammatory cascade that occurs and it causes considerable damage to end organs such as the lungs and kidneys. We and leading independent experts in the field believe MultiStem has the potential to respond to signals of inflammation and tissue damage in various ways, including protection of injured cells, stimulation of new blood vessels and the recruitment of other cell types to promote tissue repair and healing as well as the reduction of complications following the initial injury. Accordingly, we will soon announce plans for the conduct of the Phase 2 clinical trial, evaluating Athersys’ MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury, working with one of the leading level one trauma centers in the US with funding and support provided from both the consortium that collaborates with multiple government agencies and the participating trauma center. As I described earlier, trauma is one of the indications that would be included as part of the collaboration expansion with Healios who has followed our work in the area closely. This serves as another illustration of our ability to work successfully with various institutions as partners and collaborators and to secure funding to support focused pre-clinical and clinical development initiatives. As mentioned earlier, another key objective has been to maintain a solid balance sheet and as Laura described a few minutes ago, we've done just that. This leads me to some of the questions that we've received from some of our shareholders in recent weeks. Although in the last call, I associated names with each question, we've received so many questions from people this time around, I'm simply going to present representative questions and the corresponding answers. Several shareholders have asked about the intent and the significance of the recently announced Aspire vehicle and whether we have used that vehicle yet. The significance of the Aspire vehicle is that it provides a backstop form of financing that we could utilize to maintain a healthy balance sheet. We can use it whenever we want or whenever we feel the need to, but we're under no obligation to sell additional shares to Aspire if we choose not to. In effect, the facility is a form of an insurance policy. Over the past several quarters, we've used the prior facility to maintain a stable balance sheet and avoid the risk of doing an excessively dilutive financing. Some of our shareholders recognize and appreciate the importance of that and have thanked us for taking proactive steps to protect their interest and our own and we appreciate that. Other shareholders have asked whether we have used the new Aspire vehicle yet. Other than the Aspire’s $1 million upfront investment, which was made at $2 per share, the answer is no. We have not used it. Our Board always retains the rights or the option to do whatever we feel is appropriate, given the circumstances, but we have no immediate plans or no immediate intention to use the vehicle. Other shareholders have asked whether we are currently planning an institutional financing or whether we even engage an investment banker to conduct such a financing. The answer is no. We have no immediate term plans to conduct such a financing, but as always, the board reserves the right to do whatever it feels is prudent and appropriate to serve the interest of our shareholders. Another shareholder asked whether there's been any progress with regards to the TREASURE trial in Japan as Healios enrolled additional patients. I addressed this in my earlier comments, but just to reaffirm, yes, they have enrolled multiple patients and we are both pleased with the recent progress in the trial. Another shareholder asked when we intend to initiate the MASTERS-2 trial? We're on track to initiate the study in the second quarter and are excited about doing so. Another shareholder asked about the recent developments coming out of China in regards to accepting outside clinical trial results and whether it is likely that Athersys can get MultiStem approval in China based off of the TREASURE trial results. This is a good question and we don't have the answer for that yet, but it could be a possibility. My conservative expectation is that we would have to conduct one or more trials in China, but that is something that we and Healios will explore together. A final question that has been posed earlier today is in regards to whether we are still engaged in the evaluation of potential partnering opportunities. The short answer is yes. We continue to evaluate such opportunities. Those are some of the major questions that have been submitted by our shareholders, although we received quite a few about when we might announce a new partnership. I think we may -- we have effectively addressed that one for the time being. So with that, I'd like to open it up for a few questions from people calling in.

[Operator:]

[Operator Instructions] Your first question comes from Steve Brozak with WBB.

[Steve Brozak:]

Hi, gentlemen and thank you for taking the question. With this Healios pact or – in looking at it, it gives you some flexibility and other opportunities in terms of shots on goal for technology, technology development. Can you give us an idea of what the differences are between the Japanese healthcare system -- approval system and what we see in the United States? And I’ve got a follow-up question after that please.

[Gil Van Bokkelen:]

Sure. Thanks, Steve for joining in and appreciate the question. I mean, the biggest difference I think is that the regulatory environment in Japan includes this entire framework that was set up specifically to accommodate regenerative medicine products or cell therapy products. Certainly, the FDA has done some things recently over the course of the past 18 months or so under 21st Century Cures and other initiatives that they've implemented that I think is really designed to specifically expedite the development of regenerative medicine and cell therapy or other advanced therapy products. But I think Japan was a bit ahead of the curve. So when they implemented the regenerative medicine framework that we've talked about on many prior calls, they really did it with an eye towards making it possible to expedite development and create a few paths. One, involving conditional approval, which would essentially be an approval that would last for seven years, but would also include full reimbursement under the Japanese health care system. So another key difference is that the Japanese health care system is truly a national health care system, whereas in -- here in the United States, we don't have that. Right? So we have different -- kind of different challenges and complications or obstacles if you will. From Healios perspective, I think they understand this new system exceedingly well and we worked with them and had many, many meetings with the PMDA and others that are important to the utilization of the system and I think we are both convinced that we are extremely well positioned to take advantage of this, to use this new system I should say in a manner that would allow us to accelerate development of MultiStem for multiple indications and that's really what is driving us. If you think about it, it is kind of unprecedented to be able to enter into a partnership like this where you might only have to run one meaningful clinical trial in each of the clinical indications you're going after and be able to get multiple -- get approval for multiple indications on the market. I mean that’s pretty unheard of and the reason why we're in that position is number one, we have substantial safety data that we can rely on from multiple indications that we've looked at and number two, because we've done this in a very thoughtful way, both before we were partner with Healios and ever since we've been partnered with Healios in terms of our interactions with the PMDA. So I think recognizing that, Hardy and the leadership team at Healios saw that they wanted to make sure that we were working together as closely as possible to leverage that in all the different ways that we can envision doing it and that's exactly what this new partnership is set up to do.

[Steve Brozak:]

Okay. I appreciate the clarity there. Now, going back to obviously the benefits and the instant benefits for Athersys, you had mentioned something earlier in the call, talking about the financial support that this provides for you and specifically how it pretty much defrays the trial support that you're currently looking at. Can you give us much detail on that? And also any kind of insight in terms of whatever other support or deals that you might envision into the future that still might be allowable, given the pact that you just had with Healios and I’ll jump back in the queue after that.

[Gil Van Bokkelen:]

Yeah. Well again, at a high level, we’re both focused on completing the broader collaboration expansion agreement and getting that done by the end of April. And once we do that, that would result in a guaranteed $56.1 million of capital that comes our way, both in the form of the initial equity investment and the license and option fees that would be payable. But if you also fold into that the additional opportunity for other equity investments that Healios could make over time through the acquisition of the warrant that we talked about, which would be done on very reasonable terms, as I described earlier, I think that certainly bodes well from an overall perspective and that’s aside from any of the other payments that we might receive during the course of this partnership. We're going to give more clarity once we get beyond the other -- the April date and ideally in what we intend to be the successful completion of the collaboration expansion at that point in time, so we'll get more visibility on some of the other parameters and aspects of the partnership. But by agreement with Healios, we’re really not providing a lot of additional detail on that right now. We have a very clear framework established. It’s pretty comprehensive in terms of how we've mapped it out. So I think we're very much on the same page about what we will be doing. But at this point in time, we’re really not going to comment on that further.

[BJ Lehmann:]

Hi, Gil. This is BJ. Steve, one thing that’s worth noting is that we have reserved our rights to our core indications in major markets like the United States and Europe. So we will have tremendous flexibility as we go forward should we choose to do it to do additional business development, but we also have a flexibility, be carried through development and to get maximum value when we do do a partnership.

[Gil Van Bokkelen:]

Yeah. That's a great point. And Steve, I'm sorry, I neglected to answer the second part of your question. But BJ, thank you for that.

[Steve Brozak:]

No. Thank you again for the clarity on that, because it was one of those items where when you made the announcement and congratulations on it. It was one of the things that obviously you want to look at and say, okay, where exactly does this position you and you explained it well.

[Operator:]

And your next question comes from Chad Messer from Needham and Company.

[Chad Messer:]

Great. Thanks. Good afternoon and congrats on all the progress, in particular, this recent deal with your partner, Healios. It sounds like you've got some details you want to wait till you have ironed out in a final deal with them, but I'm looking at this and you have a pretty good definition of what Healios wants and gets from you and you’ve kind of worked out a lot of the financial terms and there are certain things that are guaranteed. Can you just maybe -- at a high level group for us what kinds of things still remain to be discussed in terms of, what I guess isn't already on the table and guaranteed now, what's at risk if you will?

[Gil Van Bokkelen:]

Yeah. So one, I think I can confidently say that both sides are fully committed to getting this done. From an economic perspective, Chad, we've mapped out all the key economic parameters. That's already defined, but we do have some additional work in terms of some of the specific contracts related to various activities that are actively being worked on. Look, there's always a risk that we might not be able to get closure. I personally think that that’s not a very substantial risk, because I know that both sides are absolutely committed to making this happen. They're very excited about this deal, they're excited about the opportunity, what it could mean for them and what it could mean for us and obviously our success is now their success in multiple different ways, because as our largest shareholder, that would bode very well for them. So I don't want to trivialize what remains to be done, because I think we've got a few weeks more worth of work here where we have to map – map out specific dimensions or we have to refine or map out precisely some of the contractual elements of this, but I can’t say that the broad framework has been pretty firmly established at this point, including the key economic parameters.

[Chad Messer:]

I mean I certainly read the deal as a strong vote of confidence from Healios and they're obviously in a position to know a lot about MultiStem?

[Gil Van Bokkelen:]

It's interesting, sorry, to just interject, if you read their press release, they talk about how they’ve actually worked with the technology, with their own scientists, because we've enabled them to do that and so they're coming at this from a position of confidence and knowledge because we worked so closely with them and allowed them to look at specific types of things. So I think that that should give people even more assurance about the fact that they're at the level of their commitment and they are a great organization to work with. I can tell you. One of the things I talked about in a lot of prior earnings calls is the importance of alignment between the partners and all the different partnering transactions that we've engaged in over 20 some odd years, I can honestly say that we have never been -- in fact, there is not even a close second. We have never been more fully aligned with a partner than we are with Healios.

[Chad Messer:]

Congrats again. I can tell you that this deal certainly exceeded expectations of what I was hoping you guys were going to get done in this timeframe and I think it speaks volumes. Can you perhaps just remind us of what their organ bud technology is and is this something specific to Healios and their -- what's their interest in ophthalmological indications?

[Gil Van Bokkelen:]

So I’ll start with the second question first. So Hardy, by training, I mean he is an MD, but he was trained actually as an ophthalmological clinician. So that’s basically his background and so when he started Healios, it wasn’t an accident. So, in a prior company that he started, he was focused on ophthalmological technology and then when he started Healios, their first indication that they were concentrating on was the use of iPSC-derived RPE cells, retinal pigment epithelial cells for the treatment of macular degeneration. And so Hardy and I talked many, many times and various members of our teams have talked about the potential application of MultiStem, either in an adjusted way or as a standalone therapy could have relevance in specific ophthalmological indications. And again, I think over the course of time, as a result of various activities and things I won't go into, they become pretty convinced that that's the case that there is relevance for the technology there. And I'm forgetting your first question. I'm sorry I am a little sleep deprived. So if I am sounding a little groggy today, it’s because that I've been short of sleep for the past few days. What’s the first part of the question?

[Chad Messer:]

Understood. I was asking about their organ bud technology?

[Gil Van Bokkelen:]

Oh, yeah. Organ bud. So that was actually something that -- that was included in the original, in a limited way, it was included in the original license that we entered into. So briefly what organ bud means and actually Hardy talked about this at the Investor Day that we did back in 2016, I think it was several months after we announced our initial deal with them or a few weeks after we announced that initial deal, so it’s been shown in the research that by various groups that if you essentially combine certain types of progenitor cells and kind of a mixture of a couple of different cell types, they will self-assemble into organoid or organ bud like structures, which essentially I think the right analogy as best I can describe it is, you can utilize these essentially as seeds to help repair or regenerate damaged or injured organ tissue in a variety of different areas and actually very early on in our discussions with Healios, going way back, he showed me video of some of the stuff that they've done that shows cellular self-assembly and organization into these organoid-type structures. If you just do a list search on organ bud technology, you'll find some good reviews that actually talk about the work that’s been done -- some of the exciting work that’s been done and I think it's one of those things that is, to a certain degree, it’s enabled by iPSC technology, but I think it's also -- it has very powerful clinical potential in a variety of different solid organ transplant patient type indications. And I think they've done enough work with our technology to believe that our technology can be a benefit for components of that and we're glad for that because again, I think that as they envision or as they explore additional opportunities where our technology may be relevant, particularly there's obviously some of the indications where IV administration or local administration of our product makes sense and could be very beneficial, but there's also other things that are a little bit closer to home to them, maybe areas that we haven't done a lot of activity or in some cases haven’t done any activity on previously and the organ bud and the ophthalmological areas I think are two areas that reflect their deep domain expertise, where it just provides another pathway of opportunity for our technology and they're a very good partner to be working with on that.

[Chad Messer:]

All right. Well, it sounds like we’ve got many things to stay tuned for.

[Operator:]

Your next question comes from Jason Kolbert from Maxim Group.

[Jason McCarthy:]

It’s Jason McCarthy for Jason Colbert. I think a lot of questions around the expanded partnership with Healios have been answered and by the way congratulations. I think it's very exciting for the company. If I can just broaden the discussion just a little bit, you had mentioned a Phase 2 trial in traumatic injury. Can you tell us as we're waiting for MASTERS to start or waiting for the stroke data next year and into 2020, what the company's plans are with a significant amount of capital now to expand into these other indications? And what I'm really asking is, are there catalysts coming from new trials and new indications from Athersys?

[Gil Van Bokkelen:]

Yeah. Well, on the clinical trial front, we're still busily engaged in conducting our ARDS trial. And I think our expectation is that in the next few months, we should be able to successfully complete enrolment for that study. It's a 30-day endpoint so we should have the data not too long after we've actually completed enrolment for the trial. We've benefited from the surge in influenza cases over the winter and the unfortunate correlation with an increased incidence of things like ARDS or other serious pulmonary complications and we're not just focused on incidents of ARDS that are induced by the flu or by infectious agents, I mean, we’re also including other types of patients that can experience ARDS as a result of other events, including certain types of trauma. So I think that having that data is going to be helpful and I think Healios is very excited about the ARDS area, because they see real potential for that. So I think that will be important. I think providing more visibility, we expect to do here pretty quickly in terms of what we're well positioned to do in trauma and who's supporting it I think is also going to be important, although it'll take a little bit of time for us to get that study up and running because we still have to meet with the FDA and do some things around that. But that’s – we’ll give more visibility and clarity on that here pretty soon. Obviously, we have an ongoing trial in AMI that is still progressing somewhat slowly, but we're focused on trying to advance that study as best we can, including adding new sites, getting rid of sites that haven't been well -- good performing sites and making other changes to try and really enhance the completion of that trial. While we continue to support Healios’ effort in completing the TREASURE trial and getting the MASTERS-2 trial up and running. Obviously, we continue to work on other initiatives that we, including other partner initiatives or potential partnering initiatives and that reflects, in some cases, things that we've been doing in the background and haven't talked a whole lot about. And we'll talk about it when the time is right and when we're in a position to provide greater clarity around that. But I think one of the things that is true of our organization and I think it's true of Healios as well is that we don't always talk about everything that we're doing and that's okay, but I think sometimes people come to the erroneous conclusion that maybe we don't have anything to talk about or there were -- maybe we're not working on partnering and that transactions or we're not doing certain types of things and then we make an announcement like we made earlier today. I think it would be a mistake for people to think that we're not making good progress across multiple different areas and going to have some important and meaningful things to talk about.

[Jason McCarthy:]

Great. Thank you for taking the questions and congratulations again. Very exciting for the company.

[Operator:]

Thank you. That is all the time that we have for questions. Now, I’ll turn the call back over to Dr. Van Bokkelen.

[Gil Van Bokkelen:]

Well, thank you very much Erica and to the rest of you, in closing, I'd just like to say for those of you that have continued to support us and have taken the time to either ask questions or express your support, thank you very much. We appreciate it and we look forward to providing another update soon.

[Operator:]

Thank you. This does conclude today’s conference call. You may now disconnect.