Athersys Inc (ATHX) 2014 Q2 法說會逐字稿

Good afternoon. My name is Jack and I'll be your conference operator today. At this time, I would like to welcome everyone to the Athersys second-quarter 2014 earnings call.

(Operator Instructions)

Lisa Wilson, Investor Relations for Athersys, you may begin your comments.

Thank you. Good afternoon, everyone. I'm Lisa Wilson, of Insight Communications, Invest Relations for Athersys. Thank you for joining today's call.

If you do not have a copy of the press release issued at the close of market is available on the Athersys website at Athersys.com. Dr. Gil Van Bokkelen, Chairman and Chief Executive Officer, and BJ Lehmann, President and Chief Operative Officer, will host today's call.

The call is expected to last approximately 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 Athersys may make about future expectations, plans, and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors including those discussed in the Company's Form 10-Q, 10-K, and other public SEC filings. Athersys anticipates that subsequent events and developments may cause its outlook to change. While the Company may elect to update these forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so.

For the benefit of those who may be listening to the replay, this call was held and recorded on August 11, 2014. Since then, Athersys may have made announcements related to the topics discussed, so please reference the Company's most recent SEC filings and press releases.

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

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

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

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

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

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

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

Net income per share was $0.01 for the quarter ended June 30, 2014, which reflects the benefit of $0.09 per share from $7.3 million of non-cash impact from the change in warrant liability that we just noted less stock compensation expense. During the second quarter of 2014 we used $6.1 million of cash in operating activities compared to $6.4 million in the second quarter of 2013. We closed the second quarter of 2014 with $38.8 million on our balance sheet and remain well positioned to achieve important clinical development and business milestones.

With that I would like to turn the call over to Gil for a corporate update. Gil?

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

Our portfolio of regenerative medicine programs are focused on developing MultiStem as an off-the-shelf therapy for the treatment of inflammatory and immune disorders, neurological conditions, cardiovascular disease, and other areas where standard of care is limited and significant medical need exists. We are evaluating our MultiStem product in multiple clinical stage programs as well as in a range of pre-clinical programs.

Our clinical programs based on years of work conducted both internally and in collaboration with leading independent labs. These pre-clinical studies are designed to evaluate and explore MultiStem's potential relevance in various models of human disease and injury.

In April we reported the interim results from a double-blind placebo-controlled international Phase 2 clinical study of MultiStem cell therapy to treat refractory ulcerative colitis or UC, which was specifically focused on patients that have failed or develop resistance to other forms of treatment. Since I've already discussed these results in the last call, I'm not going to rehash them here but will quickly review the salient points.

This exploratory trial was designed to assess whether a single dose of MultiStem could produce a robust therapeutic effect when administered to patients with long-standing active disease who had previously failed, become resistant or shown intolerance to other forms of treatment. In other words, this method to patient population in this study would be particularly challenging.

Compounding the challenge, 67% of patients treated with MultiStem had prior exposure to anti-TNF therapies. As we've already described, the treatment protocol used in this study did not yield the desired clinical results.

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

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

While there was a statistically significant difference at four weeks in the proportion of responders in MultiStem treated patients compared to placebo as measured by a greater than 1 point improvement in the Mayo rectal bleeding score, by eight weeks this difference was reduced and no longer significant. The trial failed to meet other secondary endpoints.

This was a disappointing miss. But one from which we've already learned great deal and expect to learn more. The results of the trial tell us a single administration of MultiStem in this challenging patient population, while safe, was not sufficient to have a substantial therapeutic effect.

A key takeaway from the Pfizer study is that it's tough to tackle long-standing chronic disease like UC with a single dose and expect a significant, durable change, reversing a decade of more of damage in chronic inflammatory bowel disease. We and Pfizer realized from the outset that this was a difficult challenge clinically, which is why it is an area of unmet medical need.

Keep in mind, however, that the study did not evaluate whether a more aggressive dosing regimen might have made a difference in these types of patients. It is possible that a different dosing strategy might produce a meaningful effect over time.

The study continues to gather additional data from biomarker analysis. This, plus other information from the 16-week clinical assessment, could provide additional insight into the factors at work and the potential relevance for MultiStem in this area. Once all the relevant data has been analyzed, it will add to our body of knowledge about the application of MultiStem in chronic inflammatory bowel disease, and we will coordinate with our colleagues at Pfizer to convey the results as appropriate.

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

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

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

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

Even more noteworthy is that neurological injury as a result of a stroke represents one of the leading causes of death and is typically the leading cause of serious disability in the United States, Japan, Europe, and other regions of the world. Current standard of care calls for the administration of a thrombolytic, or clot dissolving, agent within 3 to 4 hours after a stroke has occurred, a narrow window that results in only a small percentage of patients receiving such treatment.

If MultiStem is shown to be a safe and effective therapy that can be administered in a clinically practical timeframe, and we believe that 1 to 2 days after a stroke represents both a clinically important window for intervention and a clinically practical timeframe for the vast majority of patients, we believe it could change stroke medicine as we know it. We also believe that the potential market for a new therapy to treat stroke represent a $15 billion to $20 billion annual market opportunity or more. This is an indication that represents perhaps the greatest area of unmet medical need in medicine today and it is a priority for healthcare systems around the world.

Stroke is one of several areas that may benefit from recent international developments on the regulatory front. As we've reported previously, last November, Japan's Parliament passed new legislation designed to promote the safe and accelerated development of regenerative medicine treatments using a novel conditional approval system. The legislation creates a new, faster pathway for cell therapy product approval providing the potential for rapid clinical and commercial development and entry into the Japanese market.

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

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

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

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

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

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

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

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

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

We continue to make progress in our stroke trial enrollment, which is nearing completion, and continue to receive positive feedback from the sites involved in the trial. We've 33 active sites participating in this study, including 27 sites across the United States and 6 sites in the United Kingdom. Enrollment through the first half of the year was very steady and consistent, putting us on track to complete enrollment around the end of the summer, as previously projected.

In July and early August, enrollment slowed somewhat due in part to summer vacations of key clinical personnel as well as the annual early summer turnover in neurological residents who have played an important role at certain sites. Assuming enrollment rates return to their previous pace soon, we anticipate the early summer slowdown will result in completion of enrollment sometime around late October or November, which is just one to two months behind our target of end of summer, and puts on track to have interim results around mid first quarter of 2015.

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

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

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

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

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

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

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

We are also engaged in parallel discussions and preparations with the EMA and are finalizing the design of the trial such that it will meet our objectives and rigorous standards. Once that is done, we look forward to initiation of the trial upon achieving certain business development and financial objectives that will provide the necessary support. Recall that our GVHD program has been assigned orphan drug designation from both EMA and the FDA, which among other benefit assures us seven years of market exclusivity upon approval.

Our solid financial position enables us to execute on a number of development programs with our current resources. It enables us to further progress our clinical development programs, advance our process development activities, and expand our later-stage development capabilities. It also strengthens our position in business development discussions relating to certain regenerative medicine programs and to our novel 5HT2C receptor agonist program to treat obesity and neurological conditions such as schizophrenia.

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

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

With that, we would be happy to take any questions.

(Operator Instructions)

Jason Kolbert, Maxim.

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

That's a great question. We've done a lot of work and we've actually presented a substantial amount of some of the work that we've done at various neurological conferences and stroke conferences. It illustrates the depth of the knowledge that we've gleaned over the past few years as we've conducted studies here at the Company as well as working with outside, independent collaborative labs. One of the key differences -- stroke is generally recognized as being a very difficult area. A lot of pharmaceutical companies have tried to develop drugs to treat stroke, as you know, and even a few biotech companies.

One of the things that all of these therapies have in common is, they tend to be therapeutics that are designed, or pharmaceuticals or biologics that are designed to target a single specific receptor. One of the things we know about stroke, and there has been really a tremendous amount of literature that over the past several years really illustrates this and the change of understanding about stroke. Is that following a stroke, there is a series of cascades that occur in the days and several weeks after the original stroke has occurred. One of the things that happens in the first few days after the stroke is this massive hyper-inflammatory cascade that actually occurs that is now recognized to be directly responsible for causing a lot of the long-term or even permanent brain damage that many stroke victims experience.

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

Again, we can say with great clarity how cells regulate these key factors in these key pathways to specific factors within the cascade that they are regulating. These are down-regulating pro-inflammatory things as well as up-regulating key factors that stimulate or drive the healing and the repair process. So, it really is an umbrella effect, if you will, that cuts across multiple different cascades, multiple different pathways and affects all the key factors in each of these pathways. We have quantitative data that actually illustrates these effects.

In addition to that, we know that the cells are stimulating the repair and the restoration of the blood brain barrier, which is compromised in stroke patients as well as in traumatic brain injury patients. It's really the difference between doing one thing, which is why the pharmaceutical programs really have not faired all that well, and the ability to do multiple things in parallel in a dynamic really regulated way. We have a lot of evidence that shows that, that's exactly what MultiStem does, which is why we think it's a true game changer in terms stroke treatment.

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

Another great question. You're right. That is a well-known clinical observation, a well-known phenomenon. Sometimes patients will experience what's referred to as a TIA, or transient ischemic attack, and then they will, within hours after having the stroke, begin to show evidence of some spontaneous recovery. In fact, this is one of the big challenges that a number of pharmaceutical companies and others have run into because typically if they are trying to administer a pharmaceutical-type drug, whether it's a neuroprotectant or something that modulates activity, even ion channel for example, they have to give that drug within the first several hours after the stroke, just like tPA.

The problem with that is, is that you don't really know within the first several hours which patients may have experienced a TIA or may actually be experiencing spontaneous recovery because the body is able to increase collateral blood flow in the region around stroke that is really helping to minimize damage and helping the patient get back to where they want to be. In our case, we designed our trial recognizing that we had already published data and had an extensive amount of mechanistic understanding that tells us that we appear to have a window that extends for a few days after the stroke, at least, where we can administer MultiStem intravenously and see substantial recovery. In fact, as we published from the animal studies that we've done, even when we were treating animals a few days or even a week after a stroke, we were seeing virtually complete recovery.

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

Now, the benefit of that is that it has the potential to eliminate a lot of the background noise, if you will, among patients that might have received placebo but would then go on to spontaneously recover on their own. In effect, it's creating a more informative study for us. It also allows us to focus our efforts on precisely the types of patients that we are most interested in helping. These are the patients that are at the more severe end of the stroke spectrum, if you will, that we believe we're going to have greatest impact in. If we're right about that, as I said in my earlier comments, we think it could literally change stroke medicine as we know it. That is also the area where, frankly, the greatest amount of unmet medical need exists is in those patients that are at the more severe end of the spectrum.

Getting back your earlier question about what's the difference between acute and chronic, and how do we compare this versus something like IBD where we have patients that have been -- the average duration of the disease, actually, among the patients that were enrolled in our trial with Pfizer was 10 years. These are patients that had already failed multiple other forms of treatment. These patients have a substantial amount of damage that has built up and scar tissue that is built up over literally years of disease progression. To use an analogy just focused on stroke, what we are doing with MultiStem is we are intervening early, before a lot of that damage actually has the chance to accrue and buildup, and we're cutting it off at the pass.

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

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

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

Great question. Our current thought was looking at the concept of potentially expanding the current study, the current international study that we have to possibly include sites in Japan and investigators in Japan and just try and fold that into the current study. Because the current study has actually progressed pretty consistently and we're approaching the finish line for enrollment here. We think that the better strategy is actually to take the information from the current study and use that to design an informative -- I refer to as a confirmatory study, that again looks at safety but also looks to see consistency in terms of disease responsiveness among patients that we would treat in Japan.

That concept is really what we've been discussing with the PMDA. I guess it's fair to say that the PMDA historically has had a bit of a reputation among companies outside of Japan for being somewhat inflexible. I can tell you that our interactions at the PMDA over the past few months have been nothing but supportive and open and very candid. I think that there is a lot of people in Japan, both at the PMDA and in the Ministry of Health, Labor and Welfare and across the nation, that really want this new framework to be successful.

Given that we're focused on one of the areas that represents perhaps the greatest healthcare challenge in Japan, we're getting a lot of good guidance and support and I think that, that bodes well for us. I think that the study that we're likely to run in Japan would be something that we're using the next few months to do all the preparatory work for, such that, as soon as we have the results from this current study that we can move forward into that trial in a very, very seamless and efficient manner. Then, use that as a basis for moving forward under the new framework.

By doing all the groundwork now, so our discussions with the PMDA in Japan have focused on things like our manufacturing approach, which they have expressed a tremendous comfort with. We've answered their questions and addressed the other points that they had around that, as well as looking at things like the safety package and other issues. Again, the interactions have been very cordial, very supportive. They ask good questions. We have good answers for their questions. We continue to make good progress towards preparing the way for being in a position to run a study in Japan in a very efficient manner.

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

Gil, thanks very much for the comprehensive update. I think we're all really excited to see, and understand how transformative stroke could be for Athersys and for patients. Really appreciate it.

Thanks, Jason. Appreciate it.

Ted Tenthoff, Piper Jaffray

Thank you very much, and I agree. Good questions and good detail on the whole stroke program, really interesting. Picking up where Jason left off, it's the partnering opportunity in Japan. Again, I know you've been focused on spending a lot of time over there and the environment seems right. What are the kind of deals that the Japanese pharmaceuticals companies are looking for? Are they waiting for a crucial piece of data? Are they looking for global rights? Are they looking at specific indications? How are those talks going? Give us a sense of what the potential opportunity is, either in Japan or even do a global deal maybe with one of the larger Japanese pharmaceutical companies?

Really good question. First off, either one of those other, either a regional deal that's focused on Japan or maybe includes potential territories in Asia or a more comprehensive global deal, either one of those are possibilities. It depends on which program we're talking about and which of the companies that we're engaged in discussions with. Some of the companies, as you know, a number of the big Japanese companies are multinational. They have a global presence, or at least a far-ranging presence across key geographies that we really care about. Some of them are clearly thinking in larger scope in terms, if you will.

The other companies are focused, primarily, on utilizing the new framework and what it might mean for Japan, and really driving and accelerating development and a clinical development in commercialization efforts there as well. Each of the companies that we're in discussions with is thinking about it slightly differently. They all have different strengths and weaknesses or areas that they might be concentrating on. Stroke, in particular, is something that resonates with most of the companies that we've met with and been having discussions with in Japan, and for obvious reason. They all recognize that it could be a true block-buster opportunity that even if we're only talking about Japan could carry an enormous amount of value associated with it.

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

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

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

It's interesting, if we go back three or four years ago, we were having a difficult time really getting meaningful traction with some of the companies in Japan that we had started to reach out to. The game-changing event was really the discussion around this new regulatory framework, but things really began to take off in earnest, I would say, when the new framework was passed last November. That clearly had an accelerating effect because people saw that it was real. There was a lot of speculation that -- hey, maybe it wasn't going to happen. Maybe, politically, it wasn't viable. Or there was too many things standing in the way.

It's become quite clear to everybody over there, particularly since it passed in November, that this is something that has a tremendous amount of support from a lot of different vantage points and a lot of different angles in Japan. That makes it particularly interesting to Japanese companies and also to companies like us.

Steve Schwartz, First Analysis.

Good afternoon, everyone.

Hey, Steve. How you doing?

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

Well, in fact, we already have. The reality of it is that we weren't really looking at Japan as a near-term clinical opportunity until about a year ago when we first became exposed to the concept of this regulatory framework. Then began to do our homework and started meeting towards the end of last summer with the senior leadership of PMDA and Ministry of Health, Labor and Welfare and started building our advisory and clinical team over there. Then, we went back earlier this year, met with roughly a dozen the top stroke specialist across the entire country in Japan, that really just cemented it in our minds. The degree of interest and enthusiasm that we were seeing about how we should think about this. Again, we started off by thinking, what if we just expand the current clinical study to incorporate sites in Japan and then wrap it in or maybe even increase the size of the study and approach it from that perspective.

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

I do think that there is some truth to the concept that perhaps we're enjoying a first-mover advantage here. I think maybe a bigger impact might be that we have established a reputation for really being very systematic and methodical about how we do things and also the fact that we're focused on stroke. I think we're very highly regarded by regulatory agencies around the world, because we do our homework and we're very prepared when we go in and have conversations with them or have discussions. They see that we're not trying to shortcut anything related to safety or any of the other things that sometimes people have a tendency to try to navigate around as quickly as possible. Our mentality is, is we want to make sure we do it right. We convey that to the regulatory agencies and experts that we deal with and they recognize that.

In answer to your question about changing our strategy, I'd say that it has changed and evolved, pretty meaningfully, since a year ago because we see this is a pathway where we can achieve accelerated development and entry into the market and help a lot of patients. I think it's recognized both here and Japan that the commercial value associated with being able to do something like that is absolutely enormous. Not only can we help a lot of patients, our philosophy has always been think about the patient first. That we help patients and we can deliver a safe and effective therapy, then that puts us in a good position to benefit from that from a commercial standpoint.

I think that the response we're getting in Japan is largely driven from the recognition that this is a major area of need and we're approaching it the right way. So, if our clinical data delivers what we want, I think it's going to be really exciting for everybody involved.

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

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

In setting the current timeline, you just have gone back to the pattern that you are familiar with?

Right. So if you look at the enrollment rates that we experienced for months, it was very steady, very consistent. It was only when we got to early July that we really saw a meaningful drop off. It didn't go to zero, obviously, but it dropped off pretty meaningfully. We didn't just sit there and not do anything about it. We actually started reaching out to all the clinical sites and all the investigators. The pattern that emerged from all those conversations with the various site coordinators and the clinicians and the KOLs at each one of the sites is -- hey, this what's going on.

It was really the combination of the two factors that I mentioned, the seasonal turnover in the neurological residents at a few sites had an impact. Some of these guys were tremendously excited about the trial. They were really on the front line to devoting a lot of time, effort and energy to it. The senior clinical specialists, obviously, are still going to continue to do that, but they have to deal with the changeover of having some new residents come onboard, at least in a few instances. Then, just some of the vacation schedule that happens for some of the key nursing staff and clinical site staff, actually, at a few of the sites. I think we're pretty much beyond that, now. I expect that in the latter part of August and as we move forward from there that things will get back up to where they were or maybe even, hopefully, a little bit better than that.

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

Okay. If we have time for just one more, nuts and bolts question?

Sure.

Just about your sense of spending in the second half relative to the first half, the third quarter or fourth quarter?

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

Okay that sounds good. Thank you taking the questions.

Steve Brozak, WBB.

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

What is it bringing back to you thought, let's say in the United States? What I mean by that is with potential clinicians that are interested in working with MultiStem, with potential partners in addition to Pfizer that might be interested in approaching MultiStem? Lastly, I don't want you to have any kind of index where your measuring patient interest or people who that have disabilities with their interest. What can you tell us about that? I'll have one follow-up question after that. Thanks.

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

There's a lot to be said for actually going to Japan and sitting down with the experts in their home environment and walking them through, in a much more detailed way, the data that we generated over the past few years that really talks about how MultiStem can deliver an impact and provide a benefit in indications like ischemic stroke. That's what we made the decision to do early this year. We made a special trip to Japan, actually, where we literally spent an entire week meeting with leading investigators all across the country, including at the National Stroke Center in Japan and the Cerebral Vascular Center. We had a tremendous amount of enthusiasm and interest from that.

The good news is that when some of those people want to talk to -- and in fact, two of the leading stroke experts from here in the US that our senior investigators as part of the current study, made that trip with us, so that they could talk to their colleagues in Japan professional to professional, if you will. It's one thing, obviously, if the company is there conveying the message, but we actually -- the head of our neuroscience team. I actually made the trip myself. Then, the two senior investigators from the current stroke trial all made the trip together, so that we could sit down with these colleagues. Then, obviously, some of our key strategic advisors in Japan were there as well.

I think that together that sent a very strong message that we are very committed to this and really helped us educate a lot of people on what the possibilities might be. The interesting thing is that we had already started to get, just in recent months, a little bit of media exposure in Japan because a Japanese TV crew had actually come over to interview one of the senior investigators and one of the patients, actually, from the stroke clinical trial. That aired just several months ago, actually, in prime time in Japan. A lot of people got a chance to see that.

Just among people that we haven't had a chance to meet with or talk to, they were exposed to what's going in stroke medicine and how MultiStem may actually have an impact for something like this. The awareness has been growing pretty consistently and pretty steadily. We've been doing some other things, just from our communications standpoints, trying to build awareness and let people know what's going on. The interactions have been very good. In terms of what that brings back is, it's really a reaffirmation, if you will, or reinforcement.

From a partnering perspective, to get your second question, I think it also does a lot, because people see that we're aligning ourselves with experts internationally. The ability to use the accelerated regulatory framework as a way to expedite development and validation, if you will, and actually get product onto the market in what is unquestionably a very substantial market opportunity, is something that is of interest, not just to Japanese companies, but to other companies internationally as well. We're not just talking to companies in Japan. We're talking to companies outside of Japan, but I would characterize the interest level in Japan as being particularly high because people really see that and recognize it for what it is and for what it's intended to do. The fact that we're also building a great leadership team around us in Japan, I think is noteworthy as well.

Okay. The last part of my follow up is, given the fact that with everything going on, with potentially clinical studies in Japan, how are you preparing it? Are you packaging it so that you can use the same data sets to come back into the United States and present to FDA? I will hop back in the queue.

The bigger the data set that we build, then obviously the more convincing and persuasive it becomes. One of the things that were very keen to discuss with the FDA, once we have the data from the current trial is, how do they view our options going forward in light of some of the recent regulatory changes here in United States? The broadening application of the accelerated approval pathway, the potential ability to use breakthrough therapies? Imagine if we're really the first company that delivers in a -- well it wouldn't be fair to say first because Genentech truly was first tPA a few years ago.

Imagine if we're a company that develops a therapy that demonstrates good consistent safety and a meaningful and robust therapeutic effect in patients that are largely viewed as being no option patients or patients that you really can't do much for them except hope, pray and hopefully advance them in a rehabilitative therapy or other forms where they may begin to regain some of the lost function that they had. I personally believe that this sets up very nicely to be able to apply some of the new regulatory frameworks here in the US, like breakthrough therapies or like accelerated development, but we have to have the data first to be able to make that case. I'm excited about completing the study because I think the study is going to give us that data.

Similarly, I think in Europe where they -- it was actually a bit surprising to me that they adopted a conditional approval pathway as quickly as they did. They've been talking about it for quite some time, but then they actually pulled the trigger on it. Now, to be fair, they characterized it as a pilot program, if you will. But there seems to be good regulatory consistency and buy in both with the FDA and EMA and obviously in Japan, where they've already implemented it. This notion of changing the regulatory system in a manner that doesn't compromise anything on safety, and of course that's something that we believe is an absolute strong suit for MultiStem is the consist safety profile of the product.

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

Great. Good luck with the announcements and thank you for the comprehensive conference all.

Thanks.

(Operator Instructions)

Christian Glennie, Edison.

Hi, good afternoon, Gil and BJ. The stroke and the Japan aspects of this story have been well covered. It might be worth just an update on the AMI study? Obviously, that is approaching that study getting underway. Just a bit in terms of the size and scope of the study, number of the patients, treatment duration and the way you might see some headline data from that study?

I can give you the highlights. The plan would be to provide a little bit more information [to market], which as Gil mentioned will be later in the year. This is going to be a Phase 2 study, as we mentioned. It's going to be in the acute-MI area. We have a design, where we're going to have approximately 80 to 100 patients. We'll be more specific about that a little bit later on, looking at safety and efficacy in the patient population focused in the United States. I think the objective is to have top-line data in 2016, so we'll launch at the end of the year. There will be a relatively short enrollment time.

We have some experience from our Phase 1 study with this area, so we have a pretty good understanding of what's going to be required. The top-line follow ups will probably be built around four-month type of end points, three- or four-month endpoints. We'll be in a position by 2016, I think, to have top-line data. At least that's the expectation now, but we'll provide more information and set some better expectations towards the end of the year as we're initiating the study.

Just to a little bit of color that. It's possible that we might change the study size or design slightly. That's something that we're currently evaluating right now. Remember that in the study that we ran previously, it wasn't a very large study. It only involved about 26 patients in the total study. Even with that -- so we looked at three different dose groups and then we looked at a registry control group. Even with that, we actually saw statistically significant and very robust improvement in one of the groups that were part of -- it was a consistent pattern of improvement across the patients that appeared to correlate with dose as well.

In particular, it was noteworthy that we actually saw statistically significant response and double-digit improvement in things like ejection fraction and some of the other parameters that we looked at. So, we don't necessarily need to run a very large study here in order to be able to generate a lot of information and some thing that is compelling from a clinical effectiveness standpoint. Just one other point, we thought long and hard about the delivery strategy that we wanted to utilize for the MI clinical development program. It potentially has relevance in certain other clinical programs. We work with a catheter system that was recommended to us by leading cardiologists at the Cleveland Clinic and other places like New York Presbyterian in New York, for example, that had evaluated a number of different delivery strategies and technologies.

They ultimately proposed that we use this particular delivery technology because it is fast. It's easy to use. It minimizes the amount of time that the patient has to spend in the cath lab. So, in contrast to some of the other technology that people have utilized, where you have to map the electrical activity in the heart, and then you've got to keep the patient in the cath lab for what could be an extended period of time, those can be challenging and problematic.

With this approach, in fact I've shown this slide many times. The first patient that was treated at the Cleveland Clinic, the entire procedure once the catheter was in place, which didn't take very long, it only took about a minute. The cells were delivered precisely in the area that we needed them to go. That showed how efficient this delivery strategy is. It has also exhibit a very consistent safety profile.

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

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

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

That's good. Thank you. Just to be clear on the financing opportunity. You have grant money that helps it but, as I understand it, you will be funding the study, which is in slight contrast to the plan or program in GvHD where you've mentioned now and previously as well a few times. Obviously, see that's such dependent on other financing or business development activities. Is that correct?

The GvHD study is as you represented it. That's to be dependent on either additional financing or business development activities or additional grant opportunities. We'll see how that plays out. We're going to be ready to go around the end of the year, and then we'll play these other things out. I think with respect to AMI, we're going to move forward. We have grant funding. There'll be some incremental cash that Athersys puts into the program to move it forward, but the good news for us is that the grant funding supports the lion's share of the costs associated with the program. We're going to go ahead and move that forward.

Great. Finally, I believe you mentioned earlier, but just to confirm the R&D spend in the second half of the year, obviously, because the strength is on going a bit more than expected. Will it start to wind down? Then, obviously, you've got the AMI starting, just to confirm there's a little bit expected burn in the second half?

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

Okay that's great. Thank you much.

Thanks, Christian.

Tracy Marshbanks, First Analysis.

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

We spend a lot of time, actually, exploring the various safety parameters of MultiStem, and we some characteristics with the cells that I think are advantaged. These cells are fairly small cells. They are not sticky the way some other cell types are, so they don't have tendency to clump the way people have observed with certain other cell types and the like.

Whether they are being administered either through a catheter-based delivery system that has a very small needle -- for example, the catheter-based system that we're utilizing, which was developed by a biotech company out on the West Coast, it's got a very, very small needle. I think it's like a 34-gauge needle, which for anybody that's familiar with how they gauge the needles sizes. It's literally about the size of the human hair. It's tiny. You can barely see it. Yet even with that, it's very easy and very efficient for the cardiologist to just turn a dial and deliver the cells right where they want to in the heart when the patient is receiving treatment.

In terms of overall safety profile, one of the things that we did that I think is a little bit different from the way some other companies have developed it is, we spent a lot of time, literally a couple of years, actually, interacting with the FDA to map out a comprehensive set of studies that we ask them for their unfettered, candid guidance and input on. A lot of companies when they approach the FDA or other regulatory agencies, their first objective is tell me the least amount that I have to do so that I can get into clinical development in the shortest possible timeframe.

That was not our mindset when we sat down with the FDA. In fact, in contrast to that, we said, look, here's what we want to do. We want to have a series of meetings and discussions with you, and we understand that this is going to take a little bit of time. We want to have a series of discussions with so that you can give us your feedback on all of the things you would like to see us do before we ask for permission to advance into that first clinical trial. And that's exactly what we did.

We conducted the studies. The FDA said, hey, we'd like you to run the following types of studies, or we have thoughts on how you can run some of the studies that you proposed. We took their guidance and their input very seriously, and I think that builds up a lot of credibility in terms of how we approach things. Such that, after we have had a handful of formal meetings with the team at the FDA, we were ready to start submitting our first IND. Then, as we submitted our second IND and our third after that, each time we were able to incorporate by reference a lot of the prior work that we'd done and the prior interactions that we had with the FDA.

An important aspect of strategy is, we weren't trying to rush. We were trying to make sure that we were doing it exactly the way that it needed to be done, because ultimately that is what allows you to make the most persuasive case about the safety profile or other key aspects of any product that you want to take into clinical development. We have developed that kind of repetition, and that's something that we safeguard and we're very proud of. I'm not going to go into detail in terms of some of the other -- I know what study you're referring to, and I don't really want to go into detail on commenting on their program, because honestly, I don't know a lot about the specifics of that.

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

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

I appreciate taking the question. Since the stroke trial is well into it and still progressing, I assume safety will remain mundane. So thanks.

Just for the record, I would never characterize safety as being mundane. (laughter) I think it's a crucial and important part of what we do. But, to your point, I think the sentiment behind it is, as long as it doesn't appear to be an issue, then everybody should be happy about that.

That's right.

We have enjoyed a consistent safety profile and it's something that we're quite proud of and certainly hope to maintain.

Agreed. Thanks.

Jason Kolbert, Maxim

Hi, Gil. I just thought I would ask a follow up. Just two areas that I'd love to understand exactly where we're at. On 5HT2C, any progress on the partnering front, finalizing a molecule and putting that assessment together? Also, we didn't have a chance to talk that much about solid organ transplant and the ability to essentially tolerize patients, which by the way is a very significant market. I wondered if you could just touch with us on that topic, and what the next steps might be to keep that program moving forward as well? Thanks.

On the first question, 5HT2C, our near-term priority is actually to select a clinical candidate for that program while we continue to explore partnering opportunities and see where that takes us. Obviously, once you've got something that is ready to go into clinical development, that has a different value associated with it. We've done a lot of work on some very interesting compounds that have relevance in obesity and other compounds that we've developed that we think are distinct that have relevance in areas like schizophrenia and some related neurological indications.

We remain committed to this program. We're just doing it in a very measured, cost effective, methodical manner while we continue to explore options and opportunities in a variety of different ways. We don't feel like we need to rush to completion on something, particularly if -- we want to make that we get fair and appropriate value for any of the programs that we're focused on exploring partnerships around. There is other that I haven't even talked about today. I think we're really trying to be systematic in terms of how we approach that and do it right as opposed to just do it fast. On the second question, I'm trying to remember you asked about --

Solid organ transplant, that study, tolerizing and what's the next step there? As I recall, that data was really exciting, right? If I was a transplant patient the ability to have a tolerized organ, that would be huge.

Yes. It actually generate a fair amount of buzz among some of the transplant specialists at institutions both here in the US and in Europe as well. To be honest with you, we've run into problems with respect to the investigator-initiated trial in Germany just because of the way that, that trial was designed. It sets a very, very high bar for patient enrollment in the trial. We're not anticipating results from that trial anytime soon. It's proceeding in a very slow and measured way. It has nothing to do with us, because what we did was we agreed to provide clinical product for the trial and work with the investigator in the leading transplant center there in Germany to actually support the study. However in the meantime, what we started doing is exploring other options, while we also engage in assessing what our partnering opportunities might be in the area.

As you noted, the idea of being able to create and deliver a durable authentic tolerance, which is what we showed we can do in a pre-clinical studies, is something that a lot of people find really interesting. The field of organ transplantation, more generally, I think is undergoing some profound shifts and changes. Some of this is developed by just new techniques and technologies that are emerging. If you think about liver transplantation generally, the impact of some of the new drugs is going to have a profound impact on liver transplantation in the years to come. I know that's something you know a lot about, Jason, because you've written on it extensively and correctly called early on some of the big success stories in some of these new drugs.

We're thinking pretty carefully about the opportunities that we want to go after and how we want to go after them. The good news is that we have a lot of people that are really interested, both in terms of leading clinicians, leading transplant centers in the US and in Europe, and then potential sources today actually may provide funding for these types of programs and opportunities. We remain excited about that, but we have as we tried to state in a very candid and clear way, we don't have the capacity to run as fast as we would like in each and every area that we're going after. We're assessing our options in parallel and really trying to prioritize things while we finish some of the current studies that are ongoing and then explore where that takes us in terms of opening up new avenues and new opportunities we can pursue aggressively.

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

Thanks, Jason. I appreciate it.

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

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

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