Athersys Inc (ATHX) 2011 Q3 法說會逐字稿

Good afternoon. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the Athersys third-quarter 2011 financial results conference 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) Ms. Lisa Wilson, Investor Relations for Athersys, you may begin your call.

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. You should have a copy of the press release issued at the close of market. If you have not received it, the release is available on the Athersys website at athersys.com or you may call Libby [Abell] in my office at (212)759-5665, and it will be sent to you immediately.

Gil Van Bokkelen, Chairman and Chief Executive Officer and BJ Lehmann, President and Chief Operating Officer of Athersys will host today's call. The call is expected to last approximately 45 minutes and may also be accessed through the Company's website at athersys.com. A replay will be available two hours after the call's completion and access information 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 these 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 this outlook to change and while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. For the benefit of those who may be listening to the replay, this call was held and recorded on November 14, 2011. Since then, Athersys may have made announcements related to the topics discussed, so please reference the Company's most recent press release and SEC filings.

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

Thanks, Lisa. Good afternoon and welcome to the Athersys third-quarter 2011 earnings call. I'm BJ Lehmann, President and Chief Operating Officer at Athersys. I will briefly review our financial results for the third quarter ended September 30, 2011, and then I'll turn the call over to Gil for a corporate update.

In the third quarter of 2011, we recorded revenues of approximately $2.4 million as compared to $2 million for the same period in 2010. Our revenues consist of grant proceeds from public and private entities and contract revenues reflecting the amortization of license fees and other payments from our business collaborators and the performance of manufacturing services.

Contract revenue increased by approximately $0.5 million for this period primarily as result of the impact of our arrangement with RTI Biologics Inc to develop a stem cell-based bone allograft product for the orthopedic field. Grant revenue decreased approximately $100,000 in the third quarter of 2011, primarily due to the timing of grant related expenditures.

Our research and development expenses at $4.3 million remained level for the three months ended September 30, 2011, as compared to the same period in 2010. Breaking this down further, our clinical and pre-clinical develop costs decreased in the 2011 period, as a result of lower clinical and manufacturing costs from our MultiStem clinical trials while patent legal fees, personnel costs, and other research expenses increased.

General and administrative expenses for the third quarter of 2011 decreased to $1.1 million, compared to $1.3 million in the third quarter of 2010. This was due to a decrease in legal and professional fees, personnel costs and stock-based compensation expense during this period.

Also in the third quarter of 2011, other income was $800,000, which related to a decrease in the warrant liability related to our February 2011 registered direct offering. As a result, our net loss was $2.3 million or $0.10 per share for the three months ended September 30, 2011, as compared with a net loss of $3.7 million or $0.19 per share for the third quarter of 2010.

For the first nine months of 2011, we used $10 million cash and operating activities and as of September 30, 2011, we had $16.5 million in cash, cash equivalents and available for sale securities.

This morning we announced that we entered into an equity purchase agreement with Aspire Capital. Under the agreement, Aspire has committed to purchase, at our election and under certain conditions, up to $20 million of Athersys' common stock over the next two years at a modest discount to the prevailing market price.

Additionally, at the closing, Aspire purchased $1 million of common stock at $1.50 per share, which adds to its current holdings in the Company acquired through participation in our February 2011 financing.

We intend to use this equity purchase arrangement as a complement to our financing and business development strategy and it's designed to give us the flexibility to sell shares at times favorable to the Company.

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

Thanks, BJ. Good afternoon, everyone, and thank you for joining our call today. Our mission at Athersys is to discover and develop best in class therapeutics that will have a meaningful impact on improving clinical care and deliver substantial, long-term value for our shareholders.

We are currently focused on developing MultiStem, our patented and proprietary stem cell product candidate for the treatment of diseases and conditions that are under served or where there is significant unmet medical need. We are most heavily focused on exploring its therapeutic potential in three primary areas; the treatment of cardiovascular disease, specific neurological conditions, and certain inflammatory and immune disorders, and have done meaningful work in other areas as well both internally and through our international network of collaborative relationships.

In our core focus areas, we have established multiple programs. Several of which are in or at mid-stage clinical development, which represent the key point in the clinical development process. Certain programs are partnered and we are developing others independently, while maintaining broad latitude to enter into additional partnerships that, we believe, are in the best interest of our shareholders.

In the third quarter of 2011, we continue to execute our strategy of advancing key programs through clinical development while evaluating and progressing additional applications both internally and through collaborations.

Our most advanced clinical program involves administration of MultiStem for the treatment of Inflammatory Bowel Disease or IBD. This disease affects approximately 2.4 million individuals in the US, Europe and Japan. While there are multiple therapies currently available to treat IBD, many patients either do not respond to these therapies or they experience only temporary benefits.

We believe this is because most therapies are designed to intervene at one specific point in the disease process, which typically involves a cascade of events that leads to an imbalance in immune system function. The resulting inflammatory cascade destroys healthy tissue, resulting in significant pain and discomfort for the patients and erodes quality of life.

A hallmark feature of MultiStem is that it appears to be capable of reducing disease inducing inflammation and modifying immune system function in several important ways. Such as down regulating key signaling pathways that cause inflammatory damage, reduce the infiltration of hyper-activated immune cells into regions of tissue damage and protecting and preserving healthy tissue. These multimodal effects represent a different profile than conventional anti-inflammatory drugs, and are a key difference between MultiStem and traditional therapies.

Under our global collaboration for IBD, our partner Pfizer is conducting a randomized double-blind, placebo-controlled, multi-center, Phase II clinical study to evaluate the safety and efficacy of MultiStem for the treatment of ulcerative colitis in approximately 126 patients. We continue to enroll patients in the study and, as we've described previously, expect total study enrollment to be completed sometime in late 2012. We and Pfizer look forward to sharing data from the study when it is available.

Given that MultiStem has been shown to reduce inflammation and restore balance to the immune system in multiple ways, we believe it may have broad relevance in treating many different types of inflammatory disease and immune system disorders. And that it may be more effective than currently available approaches, leading to better and more durable responses.

With this in mind, we are conducting an open label, multi-center, Phase 1 clinical study of MultiStem for transplantation and ecology treatment support. The patients who are participating in this study have leukemia or related conditions. They've been treated with radiation or chemotherapy and a donor-derived hematopoietic stem cell transplant. These patients are typically at significant risk for graft-versus-host disease or GVHD. This is one of the major limitations of donor-derived hematopoietic stem cell transplants, and is a significant cause of morbidity and mortality.

GVHD is thought to be triggered by the activation of donor-derived immune cells, such as activated T cells, which attack the transplant recipients host cells as foreign tissue. Acute GVHD is associated with damage to the liver, skin, gastrointestinal tract and other tissues. Moderate to severe GVHD, with Grade 2 being moderate and Grade 3 to 4 GVHD being severe, occurs in approximate 30% to 50% of matched related hematopoietic stem cells transplant recipients and 50% to 70% of matched unrelated donor recipients. Patients that receive a peripheral blood stem cell transplant are at higher risk for GVHD, as compared with bone marrow derived hematopoietic stem cell transplants.

Severe GVHD requires treatment using intense immunosuppression with steroids and additional agents, and patients may develop serious infections as a result of such immunosuppression. Our Phase I study is designed to evaluate the safety and maximum tolerated dose of a single or repeat dose administration of allogeneic MultiStem delivered intravenously following a traditional donor-derived hematopoietic stem cell transplant.

The ultimate clinical objective is to reduce the incidence and severity of GVHD for these types of patients. Patients enrolled in the study receive either a low, medium or high dose of MultiStem for both the single and repeat dose ARM's. The primary endpoint of this study is evaluating the maximum tolerated dose and dose limiting toxicities in patients over 30 days.

The study is also evaluating other safety and clinical parameters over 100 days, including engraftment, incidence in severity of GVHD, infections, and relapse-free survival. The study is being conducted at Bone Marrow Transplant Centers in the United States and Belgium.

We completed patient enrollment for the single dose administration ARM in December of 2010. In this ARM, a single dose of MultiStem was administered intravenously at either a low, medium or high dose level, two days after a peripheral blood or bone marrow transplant. Positive interim results from the single dose ARM, which were announced in May, demonstrated that MultiStem was well tolerated at all dose levels and suggested that the product may reduce the incidence and severity of GVHD, as compared to historical clinical experience.

Over the 100 day observation period, there was a low accumulative of incidence of acute GVHD for all 18 subjects enrolled in the study. For the nine patients receiving the high dose, there was just one case of Grade 2 GVHD and no cases of Grade 3, 4 or more severe GVHD. The single dose administration ARM results suggest that a single dose of MultiStem can have a significant and durable effect on immune system function. The results also add to the growing foundation of safety data for MultiStem.

We are now in the final stages of completing the second ARM of this Phase I study, the repeat dose administration ARM. Patients in this ARM of the study received multiple doses administered in weekly intervals for up to one month following the initial transplant. As with the single dose ARM, there is further assessment of patients up to 100 days. We met our objective of completing patient enrollment in the third quarter, and the remaining patient evaluations will be completed in the fourth quarter.

We expect to complete data analysis for safety parameters and secondary efficacy measures, including GVHD incidents in December and announce the results later this year or in early January, after the holidays.

We believe that MultiStem could have broad relevance for providing support in a clinical transplant setting. Approximately 25,000 patients annually undergo hematopoietic transplant procedures that put them at risk for life-threatening GVHD. With an understanding of the safety and dose profile of MultiStem in these patients, will be able to conduct clinical evaluation of the efficacy of immunomodulatory and other properties of MultiStem in subsequent studies. The therapy that could meaningfully reduce the incidence and/or severity of GVHD without increasing relapse or infectious risk in hematopoietic stem cell transplant patients, would provide substantial clinical benefits.

Turning to our neurological programs, we recently initiated a Phase II clinical study to evaluate the safety and efficacy of administering MultiStem in patients that have suffered an ischemic stroke. This condition affects approximately 2 million people annually in the US, Europe and Japan, and approximately 15 million worldwide. It is a leading cause of death and disability, globally.

In the US, the annual economic impact of ischemic stroke has been estimated at more than $73 billion a year and is expected to grow substantially in the years ahead, as a result of the aging population. A similar situation exists in other countries around the world. We believe the potential commercial market for this condition exceeds $15 billion annually.

In our view, there are several keys to the development of an effective therapy for treating damage from a stroke. First, the therapy must be able to deal with the multiple forms of damage that occur following a stroke, including both the ischemic damage and the inflammation that occurs after the initial event. Our published data demonstrates that MultiStem is capable of providing therapeutic benefits through several distinct mechanisms and can act in ways that traditional approaches appear unable to achieve.

Second, the therapy must have a reasonable window in which it can be administered to stroke patients, in contrast to currently available therapies, which must be administered within several hours following the occurrence of a stroke. As a result of this narrow window, the vast majority of stroke victims do not receive treatment with these therapies and many patients are left with substantial and, in many cases, permanent disability.

Our published data shows that administration of MultiStem, even several days after a stroke, can have a profound effect. And our current clinical trial involves administration of MultiStem one to two days after a stroke, which we believe is a clinically realistic timeframe.

Third, we believe the therapy should utilize a consistent, well characterized and well validated product, which can be produced at scale, and easily stored at clinical sites. We believe these are hallmark characteristics of MultiStem. Finally, we believe the product should be easy to administer at the clinical point of care. MultiStem can be administered through a simple IV administration, which again we believe is clinically practical.

Our study is a double-blind, placebo-controlled, multi-center, Phase 2 clinical trial and is designed to evaluate safety and therapeutic effectiveness of MultiStem in approximately 140 patients that have recently suffered an ischemic stroke. As I mentioned, the product is administered intravenously, one to two days after the stroke has occurred, and the study is being conducted at leading Stroke Centers across the United States. We recently began screening patients to enroll in the study and are excited about having the study under way. We look forward to completing the trial and reporting the results when they are available.

We aim to develop a safe and effective therapy that can meaningfully improve clinical outcome for patients that have suffered the debilitating effects of a stroke. Execution of this well-designed, rigorously conducted Phase II study will be an important step forward, both in terms of establishing initial clinical proof of concept, and towards achieving commercial validation for an opportunity that could result in substantial value creation for our shareholders.

We've also continued to make progress in our other neurological programs. In October, we entered into a sponsored research agreement with Fast Forward, a part of the Multiple Sclerosis Society. Fast Forward will be funding the development of MultiStem for the treatment of Multiple Sclerosis, or MS, including treatment of chronic progressive forms of the disease to clinical development stage. The goal of our alliance is to accelerate the clinical application of MultiStem for patients diagnosed with MS.

We were excited to commence this project, building off our prior results in this area, which are being presented at the Annual Society for Neuroscience meeting being held today in Washington, DC. Under the terms of the collaboration, Fast Forward will provide up to $640,000 to complete pre-clinical testing of MultiStem in pre-clinical models of MS to support submission of an investigational new drug application, or IND, to secure FDA authorization to conduct a clinical trial using MultiStem to treat patients diagnosed with chronic progressive MS. We look forward to advancing this program and evaluating the utility of MultiStem in this important indication.

In the event of successful development, we will pay modest milestone payments to Fast Forward upon achievement of certain predetermined development milestones. These include successful completion of clinical development and commercialization of the product in this indication.

This collaboration not only underscores the promise and potential of MultiStem for treating Multiple Sclerosis, but provides yet another example of how MultiStem could be utilized to treat diseases and conditions involving immune system dysfunction. It also provides an additional example of how our work in this and other areas can help accelerate our ongoing efforts to develop novel, safe, and effective treatments for patients with neurological conditions, especially those that involve chronic inflammation in the brain. We look forward to continuing to work with our development partners and to foraging research relationships with visionary organizations like Fast Forward for MS research to help us reach this goal.

Moving onto the cardiovascular area, as we announced early this morning, we have successfully negotiated the early termination of our co-development collaboration with our partner Angiotech. While Angiotech has been a truly committed and outstanding partner, its new Board has elected to focus in the immediate term on certain core medical devices business efforts, after its recapitalization and balance sheet restructuring.

As a result of our mutual decision to terminate the alliance, we now own the unencumbered rights to all applications of MultiStem in the cardiovascular field, including acute myocardial infarction, congestive heart failure, chronic ischemia and peripheral vascular disease, and have the freedom to pursue alternative cardiovascular development and commercialization opportunities or broader platform-based partnerships that include the cardiovascular area.

While Angiotech will be entitled to a future payment equal to a percentage of cash license fee payments we receive from a third-party AMI collaboration, this payment will be limited. Angiotech is not entitled to royalties or any profit sharing or other down stream payments. We remain excited about advancing MultiStem in the cardiovascular area, and in light of these recent events, we are reevaluating our Phase 2 trial design to make sure that we are conducting the best study to achieve our goals.

We aim to build on the strong positive results from the Phase I clinical study that demonstrated the delivery of MultiStem was safe and well tolerated in patients who had recently suffered an AMI. The data also suggests meaningful improvements in cardiovascular performance, particularly among patients with severely compromised heart function, and the results from the study were recently published in the highly regarded peer-reviewed journal Circulation Research.

This open label, multi-center, dose escalation Phase 1 clinical trial was conducted at seven centers in the United States, including the Cleveland Clinic, New York Presbyterian Hospital and Henry Ford Medical Center. The objective of the trial was to evaluate the safety of MultiStem administered by catheter delivery into the heart of patients that had recent suffered an AMI, resulting in severely compromised heart function.

Our study included 25 patients in three MultiStem treatment cohorts, as well as a registry group, where six patients received only standard of care, or PCI, which consists of balloon angioplasty and stenting. 19 treated patients received MultiStem, delivered via catheter, near the region of injury, two to five days following PCI.

Study data demonstrates the delivery of MultiStem appeared safe and did not result in any clinically significant changes in vital signs, allergic reactions or infusion related toxicity. In addition, there were no cellular or hemo immune responses observed up to four months after MultiStem administration.

Following treatment, patients who exhibited significant myocardial damage and receivable 50 million cells or a higher dose, demonstrated strong transfer improvement in both ejection fraction and left ventricular stroke volume during the follow-up period. Based on historical results, these measures are believed to correlate with improved clinical outcomes.

Acute myocardial infarction is a leading cause of morbidity and mortality worldwide. A myocardial infarction occurs when the blood supply to the heart is interrupted or diminished, leading to ischemic myocardial tissue. Myocardial infarction is the leading cause of death in United States, with more than 1.25 million heart attacks occurring each year.

According to study investigators, this is the first clinical study utilizing a cell therapy that replicates the significant improvements in heart function observed in animal models of AMI. These results provide an important basis for understanding the properties of MultiStem in AMI and we look forward to completing our evaluation of the trial design and initiating a Phase II clinical trial to substantiate these results.

MultiStem has shown promise in treating multiple disease indications in the neurological, cardiovascular and inflammatory and immune disease areas, as well as other potential applications. Athersys has successfully advanced four MultiStem programs to clinical stage in a highly cost-effective manner. And we believe that our approach puts us at an outstanding position to evaluate its potential utility for the treatment of multiple high impact disease areas.

We believe the success in any of these areas will result in significant value creation for our shareholders. And success in multiple areas could make us a leader in the industry. We also believe that there is growing interest among companies that recognize the potential of the stem cell and regenerative medicine field and our leadership in the area. We are exploring potential partnering opportunities in several key areas and are committed to building strategic relationships that will provide meaningful capital, add to our capabilities and broaden our clinical and commercial reach.

And as noted, the recovery of our cardiovascular rights from the Angiotech collaboration will provide us the opportunity to pursue new cardiovascular partnerships on the basis of our exciting clinical and pre-clinical data, and explore broader deals that could include the cardiovascular program.

We realize that as shareholders, the past few months have not been easy. We appreciate your continued support, especially in light of the continuing chaos in the capital markets. However, just as we did in 2008 and 2009, we are committed to progressing beyond the current environment of uncertainty by taking careful, prudent steps to ensure that we are in the best possible position to advance the Company and our key programs, building significant value in the process.

One example of that is the agreement we announced this morning with Aspire that provides us with up to $20 million in additional funding over the next two years, through a structured equity purchase agreement. This complements the other tools we have at our disposal and enables us to maintain a healthy balance sheet while we continue to advance our key programs, minimizing dilution in the process.

The key value drivers in the months ahead will be progress in our clinical development programs and in the business development area. We look forward to making important advancements in both areas, and to updating you on our progress.

With that, we welcome your questions.

(Operator Instructions) Steve Brozak, WBB Securities.

Thanks for taking the question, and I really have one, because obviously, we're watching as you set up problematic capital markets, but we're seeing a bifurcated capital markets here, where a lot of folks have interest in the science that you are putting forward whereas a lot of other programs are being shuttered and especially programs that aren't as advanced as yours are.

Can you give us -- and I hate this word, but I will use it -- as much granularity as possible in terms of what potential partnering arrangements you're looking into, into the future? And as much detail as you can provide would be greatly appreciated. And I've got a follow-up after that.

Yes, thanks Steve. Well, first off, I would characterize the interest level on the business development side of things as being pretty robust. And it's broader than just what's going on here in North America, it is actually international in scope. I think that more and more people are realizing -- businesses really around the globe, are realizing what a transformational area of opportunity regenerative medicine represents. And we are seeing tangible signs of that again from many different entry points or pathways, if you will, from institutions and potential partnerships really around the world.

I think that's a really positive sign. I think that earlier this year we saw some meaningful transactional activity with the Mesoblast/Cephalon deal which actually was late last year, but then was followed up earlier this year by the Shire acquisition of Advanced BioHealing. I think that the -- those are just two indicators, but I think that there's a lot more out there that really revolves around the progress that's being evidenced in the field.

As we and others continue to advance our clinical programs and really show exciting data and results along a range of different pathways, it's really driving the interest level among both bigger players and then other companies that really are looking for key opportunities in areas that are critically important to them as they're looking to grow their business.

So I guess I would characterize -- I mean, it's tough to get a little bit too granular other than to say that we're talking to multiple different companies. It cuts across each of the therapeutic areas that we're actively engaged in, as well as some other areas that we really haven't talked about publicly. I would characterize the interest as being robust.

And I think that it creates for us the opportunity to do multiple things, that can really help us drive value, add to our balance sheet, and really extend and expand our reach so that it becomes more global in nature. And I think that's a pretty exciting place to be.

I can honestly say that I think the interest level in the area of regenerative medicine has probably never been higher. And that's being driven first and foremost by data and progress in the field, but I think increasingly people have recognized our leadership in the field and that puts us in a pretty good position.

Okay and along that line, basically, given your differentiation in terms of your clinical head start or your clinical supremacy, how does that put you vis a vis, let's say for instance -- and I don't want you to pick on any specific company -- but how much of an advantage does that give you when you do go into these collaborative relationships?

I think it is actually a big advantage because one of the things that we've done is we've advanced core programs across each of the three major therapeutic areas that we are focused on, cardiovascular, neurological and inflammatory and immune. And by picking lead indications in these areas, but then also cultivating a portfolio of additional opportunities behind that, we've actually placed ourselves in a position of being able to do a partnership, not just around, say, a single indication in a particular area, but around an entire portfolio of opportunities in a given area, or across the broader portfolio of opportunities that we are actively developing.

So, just to point out a couple of specifics. One of the things that we've done is we were able to leverage the earlier clinical safety data that we had generated in a couple of programs to accelerate the work that we've been doing clinically in IBD and also in stroke. And I think this points out something that we've been communicating to people for quite some time is, the efficiencies that we are able to enjoy by implementing the development approach that we've laid out and have enacted successfully over the past several years.

So if you think about being in a position where you don't have to keep running Phase 1 studies over and over, and over again. You can move multiple programs directly into proof of concept clinical studies. That allows you to save time, save money. And from a partnering perspective, it creates a much more compelling set of opportunities when people see that, hey this isn't just one discrete opportunity, it is an entire bundle of opportunities in a pretty important area. So we think that's really good place to be and the companies that we're talking to, I think, are really cognizant of the opportunities that that creates.

Yes, I think Steve, our product profile is actually an advantage vis a vis most of the other competitors. Not only can we provide a product that can be used off the shelf, so very similar to what you would see with a more traditional biologic product. We can provide a product, it can be manufactured at scale and that gives us significant advantages with respect to product characterization, supply chain management and the like. The larger companies out there recognize the importance of that. There are not many players if any that have the combination of characteristics I just described.

Okay, and I don't know since you've just got on the call obviously there's been some breaking news with -- on the embryonic stem cells side, but you are clearly and exclusively focused on adult stem cells, that is a clear differentiator between you and your competition.

That's right. And we did notice, we did notice -- we did actually just saw actually a couple minutes before we got on the call, that Geron had announced that they're actually terminating development of their embryonic stem cell programs. That's not our focus.

I think that as companies in various groups are continuing to advance in the field, the pressure is going to continue to build as well to make sure that you're delivering results and have the ability to deliver a scalable, commercially valuable, commercially applicable technology platform. And that, as BJ was mentioning, that's really something that we believe we can do.

Great. Well, I look forward to obviously the positive results and how you differentiate yourself from candidly, the industry and specifically, in the clinical side. So again, I look forward to the positive continued results. Thank you, gentlemen.

David Musket, ProMed.

A couple of quick ones here. So on the Angiotech situation, congratulations on getting your cardiovascular line back. Were you prevented from having any discussions, partnering discussions with anybody else until that deal was terminated? Or have you been able to actually have some preliminary discussions until -- before today?

Yes, we weren't prevented from having those conversations, and in fact, we have been talking to various groups. But I will say that it was a complicating factor in terms of trying to get something done. If you think -- let me just reiterate one point that I made earlier.

Angiotech has been a great partner. Obviously, they've been through some very difficult times the past few quarters. But I'd just like to publicly thank the leadership team at Angiotech for all the work that they've done over the past several years to support us, to support this program.

They were really, really committed to this and it was something they very much believed in. But obviously it's a matter of public record now that they had a change in leadership, there's a new Board, they've undergone a very difficult financial restructuring period and, of course, their circumstances have changed. But they've been nothing but supportive throughout this entire process.

And I know that at least for some people in that organization, it pains them greatly to not be in a position to advance this program in the way that we all wanted to and were committed to. But that being said, now that we've achieved clarity around this, I think it really strengthens our position in terms of the discussions with potential partners both around the cardiovascular program but also in the context of doing a broader-based partnerships. It simplifies the landscape immensely and I think that's a good thing for us and for our shareholders.

So you were able to have conversations, but they must not have been able to be advanced very far. I mean it was -- would you say they were preliminary and now you will get to a more active phase?

I would say that the additional degree of freedom that this provides will be helpful in terms of continuing to progress the conversations that we've been having with people. I will say that there is growing recognition of -- and has been for quite some time, I think over the past year or so, of the potential benefits and the impact of a therapy like MultiStem in the cardiovascular area, as well as some of the other areas that we are focused on.

So, I guess what I'm asking is, will you need a partner before you advance the cardiovascular program to a Phase II or any additional trials?

Not necessarily, no.

Well, is that part of the use of proceeds for the $20 million or any other money that you are bringing in right now? Will you be advancing the cardiovascular program?

Yes, certainly we would have the ability if we wanted to use the equity purchase line as a way to help fund activities, but the one thing that I want to make sure people understand is we're exploring business development partnering opportunities in areas outside of cardiovascular in addition to what we are talking about doing in cardiovascular. So we are engaged in multiple conversations, and it really does cut across a broad range of different therapeutic areas.

So it is not -- the way that we think about the partnering process is, it is better to have multiple different opportunities in multiple different companies that are interested in working with you in several different areas because it makes you less limited in terms of what you can do and how you can structure things. And so we really want to select our partnerships very carefully. We want to think about the impact of those partnerships and what it will mean across the entire portfolio in a very thoughtful measured way. So whatever we do next is going to be very carefully considered.

Yes, I appreciate -- it's an interesting situation, you have an embarrassment of riches. So what I was really trying to hear you say is, does getting the cardiovascular back put it into a higher priority position for you than some of your other programs? I mean if you had to pick you might want to keep, I would think, at least one of these programs yourself? Maybe you can help us understand that little bit better?

No, I think that's exactly right. Obviously, there's lots of different potential outcomes. But we do absolutely want to hang onto rights in certain areas that we think could be extreme value creating opportunities for the Company. But the nice thing about our situation is, is that frankly we see a lot of value creation potential in stroke or neurological or in certain inflammatory and immune as well as in the cardiovascular, some things might be a little bit more complicated to run late stage clinical trials than others. It might require greater resources in terms of how you approach that.

So I think naturally, those are the types of opportunities that we would probably think about partnering around. But the good news is, is that we have multiple different options in multiple different directions we can go in. For some of the more orphan indications or markets that we think we could pursue in a strategically rational way, given the capabilities that we have now and the capabilities that we would expect to build over the next several years, those are the types of things that we might want to hang onto and really push further down development.

But anything we partner around, I can say we expect to be an active partner and a key part of what is done. I think that's an important part of our game plan, just as it is with our partnership with Pfizer. We're responsible for dealing with manufacturing. We are actively supporting on the regulatory side. We are doing lots of different things and making substantial contributions obviously on the research and development side just as Pfizer is making contribution to multiple different areas.

So it would be mistake for people to think that we're going to enter into a partnership that's basically just going to be along the lines of a traditional licensing agreement where we toss it over the fence and let somebody else take it and run with it. Our partnerships will be true partnerships, and things that we intend to be actively involved in for the duration. And I think that's one of the ways in which we expect to maximize value for our shareholders. Does that help?

Yes, I'm sure we would love to expand upon that further but thank you. I have a follow-up on the Aspire transaction. So the details aren't really provided here maybe they will be in a K or a Q, but they were supposed be able to buy at a discount but yet they announced a transaction today -- it was at a premium, it would appear.

That's right.

And how did that come about and were there warrants or something and was that $1 million, does that count against the $20 million?

Yes, it does. That was a negotiated price. I think every future transaction will be at a modest discount to the prevailing market price. The terms of the deal are described, I think, in the 8-K and in our 10-Q.

But in principle, the way that the deal works, it's a $20 million facility. We ultimately get to notify them to make purchases at certain times. They made an initial investment. We negotiated that particular price, the rest is going to be driven around a specific structure that we negotiated into the contract, so the pricing mechanism. And they did get a commitment fee in the form of shares, 2% of the overall commitment, $20 million in the form of shares. That's the only additional consideration they've gotten in this deal.

So it is a very attractive deal for us. It is a tool that we think can complement our business development strategy nicely, and any other financing strategy we pursue. So it is a nice add-on to the toolkit on the financial side.

Thank you. Are those registered shares and if so, are there any restrictions on sale for any period of time?

They will be registered shares so we entered into a registration rights agreement as well, and we'll be filing a registration statement to cover both the initial purchase of shares plus any subsequent shares that are sold to Aspire under the agreement.

There are limited restrictions on what they can do with the shares once they've purchased the shares. But I will note, we anticipate they are going to be a long-term investor in the stock and be good stewards of the stock that they purchased from us. As we noted, and I think as we described in the Q, they're a current investor in the Company and held shares since purchasing shares in our registered direct last February.

Yes, So they purchased a meaningful amount of shares actually in the transaction in February and they've held every one. I mean, they believe that we are significantly undervalued. This is a group that also knows the stem cell and regenerative medicine space, I would say, inside and out.

They spend a lot of time following the companies in the field, they've actually been knocking on our door for a long time. As I said, they were happy to participate in the financing that we did back in February, and we felt that this was a good time to be putting this in place just as one more tool, if you will, that we could utilize as we think about various ways to get access to capital over time.

Yes, don't get me wrong, I totally agree. I was just wondering why you didn't take more at $1.50?

Well, I think we think we are totally undervalued right now. That's the bottom line. The stock price is not as we would like it to be.

Yes.

(Operator Instructions) Ray [Xeri].

Thank you very much, but my question has been answered.

There are no further questions at this time. I will turn the call back over to Dr Van Bokkelen.

Thanks Rob. Well, again we'd like to thank everybody for listening in and participating in the call today.

Again, we are excited by the progress that we've been making, and we are committed to continuing to enact the plan as we've laid it out. I think we feel like the next months and the next few quarters are going to be a pretty exciting time for all of us.

Again, the world out there is pretty chaotic, particularly as it relates to the capital markets, but we're navigating through that and we're doing what we need to do to make sure that we are in the best possible position to create significant value.

So thanks again for your time and attention and with that, we will close.

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