Athersys Inc (ATHX) 2011 Q4 法說會逐字稿

Good afternoon. My name is Sean and I will be your conference operator today. At this time, I would like to welcome everyone to the Athersys fourth 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, please go ahead.

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 today. If you have not received it, the release is available on the Athersys website at Athersys.com, or you may call Libby Abelt 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 at 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 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 its outlook to change and while the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so. For the benefit of those who may be listening to the replay, this call was held and recorded on March 27, 2012. 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.

Thanks, Lisa. Good afternoon and welcome to the Athersys fourth quarter and year-end 2011 earnings call. I'm BJ Lehmann, President and Chief Operating Officer at Athersys. I'll briefly review our financial results for the periods ended December 31, 2011 and then I'll turn the call over to Gil Van Bokkelen for a corporate update.

In the fourth quarter of 2011, we recorded revenues of $2.6 million, as compared to $3.3 million for the same period in 2010. The decrease is primarily related to a one-time government therapeutic discovery grant of $700,000 that was received in the fourth quarter of 2010. Research and development expenses increased to $5.6 million in the fourth quarter from $4.2 million in the prior-year period, due to an increase in clinical development costs for MultiStem clinical trials. We currently have two ongoing Phase 2 trials, one in collaboration with our partner Pfizer where MultiStem is administered to treat Ulcerative Colitis, and the second in which MultiStem is used to treat patients who have suffered a stroke. We have also been completing patient follow for our Phase 1 clinical trials in MultiStem for acute myocardial infarction, for patients undergoing hematopoietic stem cell transplants and at risk for GvHD and other side effects.

General and administrative expenses grew $1.2 million for the three months ended December 31, 2011, compared to $1.1 million in the fourth quarter 2010. As a result, our net loss was $4.3 million, or $0.18 per share for the three months ended December 31, 2011, as compared with a net loss of $2.1 million, or $0.11 per share for the fourth quarter of 2010. Turning to the full-year results for the year ended December 31, 2011, revenues were approximately $10.3 million, compared to $8.9 million in 2010. Our contract revenues reflect the amortization of the estimated performance period of payments from Pfizer including the up front license fee, R&D funding, payments from manufacturing services, as well as the license fee from RTI Biologics. Contract revenues also include license fees and milestone payments from BMS. Contract revenues increased by more than $2.3 million in 2011 compared to 2010, primarily as a result of the Pfizer and RTI arrangements.

As our research and support commitments under the Pfizer and RTI collaborations are being completed, we expect our contract revenues to decline in the second half of 2012 absent any new collaborations, and will be comprised primarily of manufacturing services revenue under the Pfizer arrangement and potential RTI milestone payments. Grant revenue decreased $900,000 in the fourth quarter 2011, primarily due to the one-time government therapeutic discovery grant of approximately $700,000 that was received in 2010. Our research and development expenses increased to $18.9 million in 2011, from $14.8 million in 2010, primarily due to an increase in clinical and pre-clinical development costs of $3.1 million, as well as increases in personnel costs, $570,000, sponsored research of $259,000, patent legal fees of $226,000, other costs of $216,000 and research and supply and facility cost of $172,000. These increased costs were partially offset by a $340,000 decrease in stock-based compensation in 2011, which resulted from the final vesting in 2010 of a significant number of options. We expect our research and development expenses to remain relatively consistent in 2012, but would expect these costs to increase if we receive proceeds from additional financings or business development activities.

General and administrative expenses decreased to $4.9 million in 2011 from $5.4 million in 2010, primarily as a result of a $573,000 decrease of stock based compensation expense associated with the final vesting of options. We expect our general and administrative expenses to continue at similar levels in 2012. Our net loss increased to $13.7 million, or $0.59 per basic and diluted share for 2011, compared to $11.4 million, or $0.60 per basic and diluted share for 2010. Our cash, cash equivalents, and available for sale securities were $12.8 million at December 31, 2011, compared to $15.2 million December 31, 2010. In March 2012, we raised $9 million from the issuance of approximately 4.3 million shares of common stock, and warrants to purchase up to 4.3 million shares of our common stock at $2.07 per share in a private placement transaction. In addition, in November 2011, we put in place a $20 million equity facility that enables us access to additional equity capital to support our operations and business development activities.

For the year ended December 31, 2011, our net cash used in operating activities was $14.5 million. Taking into account the March 2012 financing, based on our current business and operational plans, we expect to have available cash and fund our operations into the first quarter of 2013, even if we assume no new financings or collaborations. With that I like to turn the call over to Gil.

Thanks, BJ. Good afternoon, everyone, and thank you for joining us today. 2011 was a very busy year at Athersys as evidenced by the notable advances in the development of MultiStem, our patented and proprietary stem cell product candidate. We now have five clinical stage programs to evaluate this promising therapeutic for the treatment of diseases and conditions that are under served, or where there is significant unmet medical need. We are primarily focused on three important therapeutic areas, the treatment of certain inflammatory and immune disorders, specific neurological conditions and cardiovascular disease. Targeted indications we are exploring include hematopoietic stem cell transplant support, Ulcerative Colitis, ischemic stroke, and acute myocardial infarction, and through a physician sponsored trial providing support for solid organ transplant patients.

MultiStem has been shown to reduce inflammation and restore balance to the immune system in multiple ways. As a result, we believe it may have broad relevance in treating many different types of inflammatory disease and immune system disorders, and it may be more effective than currently available approaches, leading to more better and more durable responses. While helpful to many patients, currently available immunosuppressive therapies can suffer from two fundamental limitations. First, many actives suppress overall immune system function, which can leave patients susceptible to infection or other competitions. Second, many patients experience only temporary benefits from available therapies, while some did not respond at all. A reflection of the fact that some therapies focus on blocking a specific point in the inflammatory cascade, which the immune system is eventually able to overcome. The consequence of these limitations, we believe a therapy like MultiStem that acts through multiple modes of action and can calm the immune system without shutting it off entirely, could be a more effective therapeutic approach and help many patients.

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. Under our global collaboration for IBD, our partner Pfizer is conducting a randomized double-blind placebo-controlled multi-center, Phase 2 clinical study to evaluate the safety and efficacy of MultiStem for the treatment of Ulcerative Colitis in 126 patients. Enrollment for this trial is ongoing and is expected to be completed toward the end of this year. We anticipate initial results for the study will be reported in early 2013.

Also in the inflammatory disease and immune disorder category, we are evaluating MultiStem for treatment in conjunction with allogeneic hematopoietic stem cell transplant, or HSCT, for the treatment of leukemia and related conditions. We recently announced positive outcomes of an open label multi-center Phase 1 clinical study, a MultiStem administered to individuals undergoing allogeneic hematopoietic stem cell transplant that are at significant risk for graft-versus-host disease, or GvHD. The study demonstrated that MultiStem therapy was well tolerated in both a single infusion and repeat infusion arms. The study also suggested that MultiStem may provide benefit to recipients of allogeneic hematopoietic stem cell transplants, such as reducing the incidence and severity of GvHD as compared to historical clinical experience.

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 track, and other tissues. Moderate to severe GvHD, grade two and grade three to four respectively, occurs in approximately 30% to 50% of mass related HSCT recipients, and 50% to 70% of matched unrelated donor recipients. Previously published clinical studies show that patients receiving a peripheral blood stem cell transplant are at higher risk for GvHD, as compared with bone marrow derived hematopoietic stem cell transplant. Severe GvHD requires intense immunosuppression with steroids and additional agents, and patients may develop serious infections as a result of immunosuppression. Understandably, GvHD is one of the major limitations of donor derived hematopoietic stem cell transplant and is a significant cause of morbidity and mortality. Approximately 25,000 patients annually undergo hematopoietic transplant procedures that put them at risk for life threatening GvHD. A meaningful number of additional patients could benefit from such transplants if complications such as GvHD could be effectively addressed.

Our recently completed Phase 1 study with an open label multi center clinical trial evaluating the safety and maximum tolerated dose of single or repeated dose administration of MultiStem following an allogeneic HSCT in patients being treated for leukemia, or related cancers of the blood or immune system. A single dose arm evaluated the infusion of a single dose of MultiStem administered intravenously two days following a peripheral blood or bone marrow HSCT, and included patients in three dose groups, based on cells per kilogram body rate. Repeat dose arm also evaluated patients in three dose groups, based on cells per kilogram body weight. In the to lower groups, MultiStem was administered on days 2, 9, and 16, both HSCT and for the highest group, MultiStem was administered on days 2, 9, 16, 23, and 30. 20 male and 16 female subjects enrolled in the study, ranging in age from 20 to 62 years old. 19 of the 36 patients received HSCT for matched unrelated donor's, including two with a slight degree of miss match.

With respect to a HSCT source, 34 grafts were from peripheral blood and two were from bone marrow, with 16 of 18 patients receiving peripheral blood stem cell, or PBSC transplants, in a single dose arm of the study and all 18 patients of the multiple dose arm of the study receiving PBSC transplants. Transplants from unrelated donors in PBSC transplants were both associated with a higher risk of GvHD. In addition, several patients in the multiple dose treatment arm in the higher dosing cohort received a treatment regimen that is known to be associated with a higher risk of GvHD. All patients received MultiStem therapy from the same product bank, reflecting MultiStem's manufacturing scalability and shelf life stability and advantage over other cell therapies and an important potential commercial advantage.

During the 48 hours following MultiStem administration, patients were assessed from infusion related toxicity and another acute adverse events. The primary endpoint for the study was the determination of the maximum tolerated dose as determined by continual reassessment methodology. Regimen related toxicities and infusion related allergic toxicities were monitored through 30 days following MultiStem administration. Additionally, patients were evaluated for adverse events and infection through 100 days following the HSCT. Administration of MultiStem was found to be well tolerated for all dosing groups in both the single and repeat dosing administration arms.

Immediately following dosing, there were no clinically significant changes to vital signs or evidence of allergic reaction associated with MultiStem administration. Over the 30 day observation period, no infusion of toxicity or clinically significant adverse events definitively related to MultiStem occurred. MultiStem had a favorable safety profile over the 100 day period following the HSCT. There were no graft failures, which compares favorably with historical graft failure rates of 5% to 15% for these types of patients. Of the 36 patients in the study, 30 patients completed 100 day follow-up and there were 6 withdrawals, including 2 relapses and 3 deaths unrelated to treatment. Other serious adverse events in the first 100 days were consistent with expectations for this patient population.

While the primary objective of this Phase 1 clinical trial was to evaluate the safety of MultiStem administered to HSCT recipients, additional data regarding secondary endpoint, GvHD incidents, infection and survival, have been collected and are being evaluated for safety and evidence of efficacy signals to facilitate planning for subsequent clinical studies. Specifically, following MultiStem administration, patients were assessed weekly by the attending physician for GvHD and regimen related toxicity. Information regarding infections and adverse events was collected as they occurred through day 100.

Overall, MultiStem treatment was associated with a positive impact on blood and immune system recovery as compared to expectations for this patient population based on historical experience and scientific literature. All patients experienced successful neutrophil engraftment and 86% experienced successful platelet engraftment, including 94% of the patients in the multiple dose arm of the study which compares quite favorably with historical clinical experience for these types of patients. The median time to engraftment was 15 days for neutrophils and 16 days for platelets. This demonstrates a positive impact on blood and immune system recovery.

The cumulative incidence of acute GvHD for all subjects enrolled in the study, irrespective of administered dose, was generally in line with or better than expectations for this patient population based on historical experience and scientific literature using Kaplan-Meier estimates censored for study withdrawal due to relapse and death. However, in the highest single dose group, patients treated with 10 million cells per kilogram body weight infused on day two following HSCT, the 100 day cumulative incidence of moderate to severe acute GvHD was just 11%, this compares favorably with historical experience for this patient population in which generally is 50% to 60% will typically develop grade two to four GvHD. Furthermore, among the patients in this group, no patient developed severe GvHD. Additionally, at the 5 million cells per kilogram body weight dose level, once weekly dosing of the intermediate does through the first 30 days provided a parent additional benefit over single or weekly dosing over the first two weeks post transplant. Importantly, the incidence in infections and mortality over the observation period it appeared to be in line with or better than what would be expected for this high risk patient population. Consistent with the positive impact on hematopoietic recovery, MultiStem was associated with a relatively low level of late stage infection and only one case of infection related mortality occurred through 100 days, which compares favorably with historical experience with this patient population.

Overall, the Kaplan-Meier estimate of relapse survival at 100 days was 81%, compared to an expectation of around 65% to 70% based on results from previously published critical studies using comparable treatment approaches and patient groups. These clinical results provide the foundation for further accelerated development of MultiStem to prevent and reduce the incidence of GvHD. We are scheduled to meet with the FDA to discuss plans for the next stage of clinical development which could include a registrational study or blinded, controlled Phase 2/3 study of MultiStem for GvHD prophylaxis and HSCT support. This study would be intended to help lay the ground work for regulatory approval in this indication. And would also help continue to establish the scientific foundation for MultiStem in related areas including GvHD treatment, Ulcerative Colitis, solid organ transplant, and other areas of immune system dysfunction. Furthermore, we believe the GvHD area is attractive for potential partnering opportunities.

We also believe that the work we have conducted in hematopoietic transplant support helped provide the foundation for a broader opportunity in clinical transplant support. As an example, I'm pleased to announce that working in collaboration with a leading transplant group in Europe, we recently received German regulatory clearance for a physician sponsored trial to evaluate MultiStem for solid organ transplant to help reduce the incidence of transplant rejection and the need for long-term immune suppression. This study, which is being conducted by a group of leading transplant specialists, will involve up to approximately 24 patients receiving liver transplants and is expected to initiate in the second half of the year. We will provide modest and limited support for this trial, including providing the clinical great product for the study.

Turning to the neurological area, our lead program is MultiStem to treat ischemic stroke. Each year about 2 million people suffer an ischemic stroke in the US, Europe, and Japan. Approximately 15 million people experience a stroke worldwide annually. It is a leading cause of death and disability globally. The annual economic impact of ischemic stroke has estimated at more than $73 billion a year in the US alone, and with an aging population, that number is expected to grow significantly. With a similar situation in other countries around the world, we believe the potential global market for this condition exceeds $15 billion annually. Our goal is to develop a safe and effective therapy that could meaningfully improve clinical outcomes for patients that have suffered the debilitating effects of a stroke.

In December 2011 we initiated enrollment for our ongoing Phase 2 clinical trial to evaluate the safety and efficacy of administering MultiStem to treat patients that have suffered an ischemic stroke. This double blind placebo-controlled multi center Phase 2 clinical trial is designed to enroll approximately 140 patients at leading stroke centers across the United States. The first of three cohorts was recently successfully enrolled. Currently available therapy for stroke must be administered within three to four hours after the stroke has occurred, which limits administration to less than 10% of stroke victims. However, in the current clinical trial, MultiStem is administered intravenously one to two days after the stroke has occurred. Patients are then evaluated at designated time points up to one year post stroke, with a primary efficacy of evaluation occurring at three months. In addition to examining functional improvement in these patients, we are also evaluating safety in a number of secondary efficacy endpoints, including using advanced imaging technologies and bio marker analysis. We look forward to completing enrollment of the trial in 2013 and reporting the results in the second half of next year.

This study was founded on a growing body of data that shows that MultiStem can reduce tissue damage and promote healing and repair in multiple ways following a stroke or other types of neurological injury. Last month, new pre-clinical research results illustrating the potential benefits of MultiStem therapy for treating stroke were presented at the American Heart Association international stroke conference. Researchers from the University of Texas Health Science Center at Houston medical school observed the intravenous administration of MultiStem one day after a stroke resulted in a substantial reduction in brain tissue loss 28 days post-stroke. These data also illustrate and reinforce the importance of the immune system following a stroke.

The spleen is believed to play a significant role in the body's immune system response to the stroke that can result in additional damage following the primary ischemic event. After administration, MultiStem limits the inflammatory cascade that results from the initial stroke, thereby reducing the secondary damage that occurs. In the pre-clinical models stroke used in the study, animals that received treatment with MultiStem versus placebo showed statistically significant increases in the percentage of T-regulatory, or T-reg cells, which may play an important role in the human process. Treated animals also showed decreases in inflammatory T-cells, which are believed to exacerbate damage in the brain following a stroke. In addition, a statistically significant reduction in levels of the pro inflammatory cytokines, IO1 beta and TNF-alpha, in a statistically significant increase in levels of the anti-inflammatory cytokine IO10, also known as human cytokine synthesis inhibitory factor, where observed. At four days after stroke, animals treated with MultiStem had reduced levels of the serum cytokine IL-6, compared with placebo.

These outcomes support prior research at UT Health in which researches found that animals treated with MultiStem showed normal spleen size at increased levels of anti-inflammatory cytokines in the blood. Where as, animals treated with placebo showed a reduction in spleen size and an increase in inflammatory cytokines in the blood. In addition to confirming prior study findings, if MultiStem can reduce tissue damage and promote healing repair in multiple ways following a stroke, as well as in other acute neurological injuries, the study extends our understanding of how MultiStem can work through several distinct and important mechanisms.

We also continue to make progress in our other neurological programs. We were pleased to announce last fall our collaboration with Fast Forward, part of the multiple sclerosis society. Fast Forward will be funding the pre-clinical development of MultiStem for the treatment of multiple sclerosis, or MS, including treatment of chronic progressive forms of the disease. This work will be important for supporting the future advancement of MultiStem into a clinical study in this area. We believe our work in MS can help accelerate our ongoing efforts to develop novel, safe and effective treatments for patients with acute or certain chronic neurological conditions, especially those that involve inflammation in the brain.

We've also made progress in other areas. In February we announced that Athersys was awarded an SPIR fast-track grant of up to $1.9 million from the National Institute of Neurological Disorders and Stroke to develop MultiStem for the treatment of traumatic brain injury, or TBI. We are collaborating with leading researchers at the University of Texas Health Science Center at Houston medical school on this program, which will include pre-clinical safety and efficacy studies required to support an IND application, followed by clinical study of MultiStem for the treatment of TBI. TBI is a serious clinical problem that affects predominately young people and members of the armed services, as well as other adults. According to the Centers for Disease Control, TBI results in nearly 1.4 million emergency room visits each year, leading to 275,000 hospitalizations and 52,000 deaths annually. We are grateful to have secured funding to evaluate the potential of MultiStem to treat this neurological condition and potentially benefit victims of TBI.

Moving onto the cardiovascular area, as I discussed on the last earnings call, we successfully negotiated the early termination of our co-development collaboration with Angiotech Pharmaceuticals. We regained the rights to all applications of MultiStem in the cardiovascular field, including acute myocardial infarction, congestive heart failure, chronic ischemia, and peripheral vascular disease. In early 2012 we were granted a US patent covering the use of non-embryonic multi potent stem cells for the treatment of numerous cardiovascular conditions, including myocardial infarction, or heart attack, congestive heart failure, myocardial ischemia and other heart conditions. This patent provides additional protection in this high-value area, thereby strengthening our position in strategic discussions regarding cardiovascular development and commercialization opportunity, as well as broader platform-based partnerships that may include the cardiovascular area.

In addition to the patent, over 25 additional patents were issued to us in 2011 in the US and other countries covering non-embryonic multi potent stem cells, their production, and usage. Athersys' broad IP portfolio now includes more than 50 granted patents and over 150 global patent applications around our stem cell technology and MultiStem product platform. The current IP estate, which incorporates additional filings and may broaden over time, could provide coverage for Athersys product candidates, manufacturing processes and methods of use through as late as 2030.

We continue to be successful in attracting grant funding to advance programs in other areas. We recently were awarded funding to evaluate MultiStem to treat chronic cardiovascular disease and intend to initiate certain pre-clinical studies in large animals later this year. In addition to our published clinical work in treating damage from acute cardiovascular damage, we believe that chronic ischemic injuries represent an important opportunity and this grant funding provides additional resources to continue our efforts in this area. Additionally, we were recently awarded a EUR900,000 grant, which is about $1.2 million, from the Belgian agency for Innovation by Science and Technology, or IWT, to further develop cell therapy formulations and manufacturing capabilities. The IWT grant will fund further product and process development work in Belgium by our affiliate, ReGenesys. A principles focus of these efforts will be to continue development of serum three formulations for the manufacture of MultiStem and related cell therapy products. We expect this grant funded work will have a substantial impact on product manufacturing and clinical development in Europe and globally.

In summary, we continue to make good progress on our ongoing clinical and pre-clinical programs and are actively exploring potential partnering opportunities in several areas. Choosing the right partners and establishing the right partnership structure requires creativity and patience, but as we continue to advance and mature our portfolio of opportunities, we believe our position will continue to strengthen over time. As appropriate, and as a compliment to our business development activities, we will access the capital markets when we believe it will enable us to achieve key milestones and create significant value for our shareholders. With our recently strengthened balance sheet, we are positioned to continue executing our business model, advancing our core programs and pursuing attractive partnering opportunities, building significant value in the process. We look forward to continued progress in both areas and to keeping you updated as we advance. With that, we are happy to take a few questions.

(Operator Instructions). Stephen Brozak, WBB Securities.

Congratulations, gentlemen. On the GvHD side, it is a terribly, terribly debilitating indication,. Can you give us some clarity in terms of the differential between what you've got, and I normally would say standard of care but the your care is so poor and frankly the problems are so poor that I can't really describe it that way. Could you highlight what some of the succinct points of difference are? And I've got one follow-up question related to that afterwards and then I'll hop back into the queue.

Sure, the current approach to dealing with graft-versus-host disease is to wait for the disease to actually occur and then try to control it once it is started to blaze. The analogy that we use for people is trying to treat the graft-versus-host disease is like trying to put out a forest fire. Whereas our approach is intervening much earlier in the process, before things have gotten out of control. To extend the analogy a little bit further, what we are doing is we're putting the fire out at the campfire stage, whereas what other people are doing is trying to treat the full blaze, if you will, of graft-versus-host disease once it is raging.

The data that we have generated, some of which is published and other pieces which have been presented at various scientific conferences, demonstrates that if we intervene very early in the process we believe we can have a profound effect on regulating the immune system. The clinical data from the recent study shows that this could be an incredibly powerful way to head off the graft-versus-host disease from ever occurring, either reducing or eliminating the incidence and severity of graft-versus-host disease which would be a huge step forward.

If you talk to clinical experts from some of the leading transplant centers here in the United States and others around the world, they will tell you that if you could develop a therapy that could reduce the incidence of graft-versus-host disease by even 5% or 10% would be huge for these patients. What we saw from our Phase 1 study was evidence of a much more significant reduction of graft-versus-host disease and again, I think this illustrates the different types of biological effects, or immunomodulatory effects, that we see with our cells, which are able to address multiple points in the inflammatory cascade which current standard of care is simply not capable of doing. That is why the current approach has not been effective at adequately addressing graft-versus-host disease once it occurs in these patients.

You just hit into the next question and I'll jump off the queue. You mentioned that you've got a lot of people that are curious, or more than curious, they are desperate for an answer. Can you give us some color as to the potential collaborators that you are starting to see because obviously they don't have satisfactory answers? What has been your approach in that case and again I'll jump out after you've answered that.

It is interesting. What we have done is we've spent a lot of time interacting with the key opinion leaders at clinical centers, both here in the United States as well as at leading transplant centers in Europe. We've already gotten commitments from these clinical centers to participate in the next phase of clinical development. We are scheduled to meet with the FDA at the end of April to lay out our envisioned plan for what the next phase of clinical development could look like; get their feedback and their guidance in terms of what they would like to see in the next phase of clinical development. We think there is a pretty compelling argument for an accelerated path in terms of clinical development. I think that the response and the interest that we've been getting from key opinion leaders and clinicians from leading transplant centers here in the US at some of the institutions that I've mentioned, places like MD Anderson and others, is very exciting and I think that we are optimistic about where we could be going next with this program. Also the broader impact that it could have for other opportunities in hematopoietic and solid organ transplant support.

Congratulations and I look forward to the next announcement.

Ted Tenthoff, Piper Jaffray.

Switching gears maybe a little bit to the stroke opportunity. I think you guys have done a fantastic job laying out the rationale for that. Gil, go into a little bit more detail if you can about how MultiStem could impact stroke victims. You went into a little bit of detail about how there is a multimodal approach here. How does that compare to some of the past drugs that have failed because it has been difficult therapy to carry out. But also if you can, put it in perspective in terms of this massive market opportunity and what percentage of that would actually be relevant for the MultiStem approach?

Yes, great question. To compare and contrast what we're doing and why we think it is different from some of the other approaches that have been taken historically and that haven't worked so well in the past few years. I would categorize approaches that people have focused on over the past few years as following into a couple of different categories. There are clot dissolving agents, like TPA, which is the only therapeutic option that is currently available to patients that have suffered an ischemic stroke. In technical terms, people refer to these as thrombolytics. The second category are the neuroprotectant agents and these are traditionally pharmaceutical agents that are administered. The limitation with and the objective of the neuroprotectants is basically to try and preserve tissue by blocking specific things from happening that are actually driving tissue loss in the very early timeframe after a stroke occurs.

The problem with both of these approaches is you've got a very small window to intervene and treat the patient. With thrombolytics, TPA being the relevant example, your window is only about three to four hours. With neuroprotectant agents, you've got a comparable timeframe. To be honest, with all the work that's been done, I think both of these approaches have shown that just trying to intervene in one specific series of events that are occurring after a stroke has occurred are really inadequate. You are really not doing that much, particularly in the case of the neuroprotectants, to improve outcomes in patients. Now TPA does work and can benefit patients provided you can get to those patients, but the problem is that you've only got about that three to four hour window and what that means is more than 90% of the patients that suffer an ischemic stroke aren't treated with TPA simply because they don't get to the doctor in time or they're not diagnosed in time. The risk is that you really can't administer TPA to those patients after that three to four hour window because you could cause bleeding into the brain, which could actually make things worse or could even result in the death of the patient.

I would characterize what we're doing as being fundamentally different in a couple of specific ways. The first is that our window of intervention appears to be much more substantial and as I mentioned in my comments, we are actually intervening in the current clinical trial treating patients one to two days post stroke and our published pre-clinical data suggests that we could go out even beyond that. In fact, our published work shows that, in the pre-clinical models that we did work in, that we could intervene up to seven days post stroke and see profound, and in many instances, virtually complete recovery. That data also tells us that the earlier we intervene, the better the results we see. Getting to the patient within the first couple of days, we think is really kind of key.

The other thing that is really central to what we are doing here is, over the past few years, we've compiled and an enormous amount of data and evidence that shows that MultiStem, unlike thrombolytics like TPA or the neuroprotectant agents, which are only designed to do one very specific thing, MultiStem is capable of acting through several distinct pathways. We know that these those cells will express multiple factors that protect and preserve tissue, they will have a profound impact on reducing the inflammatory damage that occurs after a stroke or other types of neurological injury and that builds, frankly, in the days following the stroke. We also know that the cells can promote formation of new blood vessels in regions of ischemic damage and injury. They are capable of conveying therapeutic effects in multiple different mechanisms and that and the fact that it appears we can administer the cells in a clinically practical timeframe, I think are the two biggest differentiators relative to what other people have tried previously in stroke.

Obviously it is a little bit too complicated to go into great depth here, but we have presented and our collaborators have presented at leading scientific conferences, it really shows a tremendous depth of understanding about how these cells can convey multiple different types of biological effects and I think that leads to the second question you asked which is related to the scope of the opportunity. These statistics are tracked pretty carefully. People in the industry and again, we know that there are about 2 million people just in Europe, Japan, and the United States that suffer an ischemic stroke every year and over 90% of those patients are basically just getting what we refer to as palliative care, or the clinical equivalent of hand holding. There really isn't a whole lot that can be done for these patients.

I would characterize the prime market opportunity, or clinical opportunity if you will, as being the segment of patients that have the most significant deficits following a stroke. If you say, we're only focused here on trying to treat the bottom 50%, if you will, of patients that have suffered a stroke, you're still talking about 1 million patients a year. Even if you make some pretty modest assumptions about what the therapy would be priced at, then that leads you pretty quickly to a picture or a scenario where you could see that this market opportunity could be $15 billion to $20 billion a year easily and that is just addressing a portion of the patients that have a stroke. It is quite conceivable that we could actually provide a meaningful benefit for pretty much anybody that has suffered an ischemic stroke.

That will have to be determined through careful clinical study and I think that if we could even help a modest percentage of patients that have suffered an ischemic stroke, it could be absolute game changer, both for those patients as well as for clinical standard of care. I think that from a commercial development opportunity, it could easily be one of the biggest blockbusters that the industry has ever seen. That's why we are so excited about it.

(Operator Instructions). There no further questions at this time, I turn the call back over to the presenters.

Thanks, Sean. Once again, we would like to thank everybody for listening in and participating on the call today. We look forward to speaking with you again on the Q1 2012 call which will be coming up in May.

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