Athersys Inc (ATHX) 2017 Q4 法說會逐字稿

My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Athersys Fourth Quarter Earnings Call. (Operator Instructions)

Ms. Laura Campbell, you may begin your conference.

Thank you, and good afternoon, everyone. I'm Laura Campbell, Senior Vice President of Finance for Athersys. Thank you for joining today's call. If you do not have a copy of the press release issued at close of market, it's available on the Athersys website at athersys.com, or you may call Matt Celesnik, at (216) 431-9900 to receive it via e-mail.

Dr. Gil Van Bokkelen, Chairman and Chief Executive Officer; and I, will host today's call. B.J. Lehman, our President and Chief Operating Officer, will also be available for the question-and-answer session that will follow our corporate update. The call is expected to last approximately 30 to 45 minutes and may also be accessed at athersys.com. A replay will be available 2 hours after the call's conclusion, and access information for the replay is in today's press release.

Any remarks that we may make about future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors, including those disclosed in our Forms 10-Q, 10-K and other public SEC filings.

We anticipate that subsequent events and developments may cause our outlook to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. For the benefit of those who may be listening to the replay, this call was held and recorded on March 13, 2018. Since then, we may have made announcements related to the topics discussed, so please reference our most recent press releases and SEC filings.

Now I'll briefly review our fourth quarter and annual 2017 financial results and then turn the call over to Gil for corporate update followed by the question-and-answer period.

For the fourth quarter of 2017, our contract revenues were $955,000 compared to $828,000 compared for the same period of 2016. We expect our future contract revenues to be comprised primarily of revenues associated with our collaboration with Healios, royalty payments [of] potential commercial milestone payments from RTI Surgical and potential proceeds from any new collaboration.

Our grant revenue increased to $215,000 in the fourth quarter of 2017 from $155,000 in the prior year's fourth quarter. Grant revenues fluctuate from period-to-period with a timing of grant-related activities and with the award and expiration of grants.

Research and development expenses increased to $12.1 million in the fourth quarter of 2017 compared to $7.1 million in the fourth quarter of 2016. It's important to note that in the fourth quarter of 2017, we have spent $4.7 million as a nonrecurring charge related to a settlement and license agreement with Garnet BioTherapeutics to resolve a long-standing intellectual property dispute. Furthermore, of this $4.7 million amount, $3.2 million was noncash expense for the issuance of Athersys stock as part of the settlement and license agreement.

After factoring in this onetime charge, the remaining difference of $300,000 from period to period was primarily due to increased clinical and preclinical development cost, which vary based on trials underway, clinical manufacturing and process development activities.

General and administrative expenses were relatively consistent at $2.1 million and $2.0 million in the fourth quarter of 2017 and '16, respectively. We had a net loss for the 3 months ended December 31, 2017, of $13.1 million compared to a net loss of $7.1 million in the same period last year. As stated previously, $4.7 million of this increase was due to the onetime license fee expense related to the agreement with Garnet. We also had a $1.1 million noncash gain in the fourth quarter of 2016 from the change in the fair value of our warrant liabilities. We had no corresponding warrant activity in the 2017 fourth quarter since the warrants were either exercised or expired early in 2017.

Turning to the results of full year. Our contract revenues were $2.8 million in 2017 and $16.2 million in 2016. This variance relates primarily to the $15 million payments from Healios in January 2016 for our stroke collaboration in Japan, partially offset by a $1 million milestone payment in 2017 from our collaboration with RTI Surgical and manufacturing and service proceeds from Healios.

Grant revenues are relatively consistent at $865,000 and $1.1 million in 2017 and '16, respectively. Research and development expenses increased to $27.8 million for the year ended December 31, 2017, from $24.8 million for the year ended December 31, 2016. After factoring in the onetime charge of $4.7 million for the agreement with Garnet referred to earlier, the decrease in research and development expenses year-over-year of $1.7 million related primarily to reduced spending and research supplies of approximately $900,000 and on sponsor research of $500,000.

General and administrative expenses increased to $8.5 million in 2017 from $7.8 million in 2016. The $700,000 increase was due primarily to increased personnel costs and legal and professional services.

Net loss was $32.2 million in 2017 compared to $15.3 million in 2016. To recap, the sizable difference of $16.9 million reflects the following: the $4.7 million nonrecurring Garnet license fee expense in 2017, of which, $3.2 million was noncash; the $15 million Healios revenue in 2016 for the stroke collaboration in Japan; a $1.3 million increase gain in 2017 in the fair value of warrant liabilities whereby these warrants were either exercised or expired early in 2017; $700,000 of insurance proceeds in 2016 related to damage from a flood and other operational variances described previously.

Cash used in operating activities was $24 million and $10.9 million for the full year 2017 and the full year 2016, respectively, which takes into account the $15 million license fee from Healios in 2016 and the other variances discussed.

As of December 31, 2017, we had $29.3 million in cash and cash equivalents compared to $14.8 million at December 31, 2016. As Gil will describe next, we also announced this morning an expense -- expansion to our Healios collaboration, which will provide additional capital to our balance sheet.

With that, I'd like to turn the call over to Gil for our corporate update. Gil?

Thanks, Laura. Good afternoon, everyone. Thanks for joining the call today. During the fourth quarter and more recently, as we announced earlier today, we've made some significant progress towards the achievement of our key goals. As we said in the last earnings call, our recent priorities had been evaluating and successfully establishing new partnerships and collaborations to strengthen our financial position and advance our portfolio of programs; supporting Healios in the conduct of the TREASURE trial in Japan, which is evaluating the administration of MultiStem therapy to patients in Japan that have suffered an ischemic stroke; preparing for the initiation of the MASTERS-2 clinical trial, our pivotal Phase III study that will evaluate the administration of MultiStem cells to ischemic stroke patients in North America and Europe; maintaining a solid balance sheet and financial position; building awareness through our Media Relations, Corporate Communications and Investor Relations activities; and strengthening and expanding our capabilities.

These objectives are critical to achieving our overarching goal to establish Athersys as a leading biopharma company by developing innovative therapies with the potential to address areas of substantial unmet clinical need.

As I mentioned on our last earnings call in November, our recent focus has been heavily concentrated on evaluating potential collaborative and partnering activities. Earlier today, we were pleased to announce that we have entered into a binding letter of intent to significantly expand our existing development and commercialization collaboration with Healios.

Our initial collaboration with Healios began in 2016 with a license to develop MultiStem for the treatment of ischemic stroke in Japan. And since that time, we in Healios have worked closely on the design and launch of their ongoing registrational trial in Japan referred to as the TREASURE study.

In connection with the envisioned expansion, Healios is making a $21.1 million equity investment at a price of $1.76 per share via the purchase of 12 million shares of our common stock, reflecting a 13% premium to yesterday's closing price. In addition, Healios will deposit $10 million into an escrow account that represents a guaranteed license fee payment to us while we work to finalize the agreements related to a broad collaboration expansion over the next several weeks.

Under the terms of the collaboration expansion agreement that we are actively working on and intend to complete by April 30, Healios would obtain an expanded and exclusive license to develop MultiStem for additional indications in Japan, including for the treatment of acute respiratory distress syndrome, or ARDS, and trauma as well as the use of MultiStem in their organ bud technology for organ-specific disease and a license to develop MultiStem for certain ophthalmological indications on a global basis, among other rights.

Importantly, Healios would also obtain an exclusive option for a license to develop and commercialize MultiStem for the treatment of ischemic stroke, ARDS and trauma or any combination thereof in China. If we enter into the broader collaboration expansion and Healios elects to exercise its option for a license in China following the result of the TREASURE trial, Healios would pay Athersys license fees, milestone payments and escalating royalties or profit share for each indication in China.

In exchange for the broader collaboration rights, including the licenses and the option for a license in China, upon execution of the broader collaboration expansion agreement and associated documents, Athersys would receive $35 million in guaranteed payments, reflecting payment of license and options fees. These payments include the initial $10 million payment from the escrow account, which is required to occur by April 30, 2018, and an additional $25 million in license and option fees, which is required to be paid in installments on a quarterly basis.

Once the collaboration expansion agreement becomes effective by May 1, the $25 million payment obligation may not be terminated or otherwise abrogated over time. And although the payments are nonrefundable, the funding from these quarterly payments could be used by Healios as a credit against certain milestone payments due under the MultiStem license for stroke, ARDS or trauma in Japan.

As I noted a moment ago, in conjunction with the execution of the LOI and in addition to the equity investment, under the binding portion of the LOI, Healios is required to fund $10 million into escrow. That amount will be released to Athersys as either the initial portion of the $35 million in payments associated with the execution of the broad collaboration expansion agreement described a moment ago. Or if such agreement is not executed on or before April 30, 2018, as payment for expanding the scope of the current Japan license to include ARDS, certain ophthalmological indications and the use of MultiStem for organ buds for organ diseases.

In addition to its purchase of 12 million shares of common stock as the initial equity investment, Healios will also receive a warrant that will give it the right, but not the obligation to purchase additional sales of Athersys common stock until September 1, 2020, subject to certain conditions and limitations, including a fixed exercise price with respect to certain of the warrant shares and a floating exercise price with respect to other warrant shares that will be based on the greater of a minimum floor price that escalates over time and the then current market price.

Furthermore, there's a cap on the total number of shares that Healios may acquire during the terms of the warrant of 19.9% of Athersys' outstanding common stock. The warrant becomes exercisable only if the collaboration expansion becomes effective in April, but not if the narrower license for ARDS and the other conditions I mentioned in Japan is implemented under our 2016 license and we fail to execute the broader collaboration agreement.

A key goal of this transaction is to expand and accelerate our development programs with Healios in Japan under the recently implemented Regenerative Medicine framework. It puts Healios in a potential position to develop MultiStem for multiple indications in a rapid, efficient and cost-effective manner, and also provides global development opportunities where they have established expertise and a strong competitive position.

From an Athersys' perspective, this transaction provides us with access to meaningful capital that is sufficient to see us through TREASURE and other important initiatives, including the ability to conduct our MASTERS-2 trial. Perhaps just as importantly, it is a clear signal of strong mutual commitment, respect and alignment.

We are pleased to announce that as part of Healios equity investment, if the collaboration expansion agreement is entered into in April, Dr. Hardy Kagimoto, CEO of Healios, will be nominated for election to the Athersys Board of Directors at the next scheduled Annual Stockholders Meeting in June of 2018. Having had the opportunity to work with Hardy over the past several years, I'm especially pleased that, subject to election by our shareholders, he will be joining our Board of Directors as I regard him to be a visionary CEO and a highly effective leader with an outstanding track record of accomplishments. As I mentioned, I believe our visions are strongly aligned, both at the leadership level and throughout Healios and Athersys organizationally.

In summary, with regards to the announcement earlier today, this expansion of our collaboration with Healios will provide meaningful capital resources with a commitment of $56.1 million to Athersys through the enactment of the broader collaboration expansion, of which, $31.1 million is guaranteed now with the potential for additional substantial equity investments and meaningful payments over time and establishes even stronger organizational alignment between the companies.

From an Athersys shareholder perspective, it enables us to move forward with confidence and in a strong financial position. We'll provide additional information to our shareholders in the coming weeks as we move forward and complete these activities with Healios.

In addition to our progress of Healios regarding an expansion of our collaboration, there has been further progress in the TREASURE trial with the enrollment of additional patients and the addition of clinical sites. As Healios and we have conveyed previously, there's a strong commitment to completing the enrollment of the trial as soon as possible. As some of our shareholders already know, during their February earnings call, Healios adjusted the time table for the completion of the TREASURE trial to reflect the impact of the manufacturing issues we experienced with Lonza, our contract manufacturer, last year and the temporary suspension of the trial last fall due to the incorrect formulation of placebo.

To be clear, they intend to complete enrollment of the trial sometime in 2019, and the top line data will be available several months after the last patient enrolled has been assessed at their 90-day visit. After the top line data is subsequently collected, organized, verified and analyzed, the top line results will then be announced. If the results are as we in Healios hope and anticipate, they will provide the basis for a submission for approval to the PMDA.

Some of our shareholders have been a bit confused by the fact that patients will be evaluated for a full year in the trial and what that 1-year evaluation might have on the impact of the timing of the announcement of results or a potential submission for approval. So to clarify, while patients will be evaluated in a double-blind manner for a full year following enrollment and neither the patients nor their physicians will know whether they received MultiStem or placebo during that time, as was the case in the MASTERS-1 trial previously, the 90-day data will provide the basis for the primary clinical assessment or primary endpoint of the study. These results will provide the basis for a submission to PMDA for either conditional or full approval if the trial is successful.

While the study will continue for approximately 1 year beyond the enrollment of the last patient in the trial and Healios is projected that this 1-year evaluation process is expected to continue until the latter part of 2020, the primary results from the TREASURE trial will be available approximately 8 months earlier following the final 3-month visit and then several more weeks for the collection, verification and analysis of the data.

While this adjustment was necessary as a result of the issues and obstacles we experienced last year, it also serves to underscore an important point. Throughout these challenges, we in Healios work in a productive and coordinated manner to address issues as we needed to, and we remain and are fully aligned. That strong alignment is one of the keys that led to the mutual decision to expand our partnership.

Over the past few weeks, we have also worked with Healios team to engage in additional interactions with PMDA regarding other indications of common interest, such as ARDS, which is another area of considerable unmet clinical need in Japan. As we approach the completion of our ongoing trial here in the U.S. and U.K., we and Healios believe that we are well positioned to effectively apply the knowledge gained from the results of the ongoing trial in a subsequent ARDS study that will be conducted in Japan. Healios has already engaged key clinical experts and is actively preparing for such a trial by engaging with the PMDA, and we're assisting them in that process.

Another area of common interest is in trauma. Over the past few years, working with several leading independent research groups, we have published multiple studies that illustrate how MultiStem could be beneficial in a range of models, reflecting damage from trauma, specifically in the neurological area. Some of our collaborators and others that follow the company closely notice that this could indicate potential relevance more broadly in the treatment of trauma.

According to the Centers for Disease Control, or CDC, trauma is the leading cause of death for individuals under the age of 45 and the third leading cause of debt in the U.S. as well as a leading cause of serious disability, and it accounts for approximately 180,000 fatalities each year.

Among its -- being a cause of serious disability, it's especially significant among young people that suffer trauma and members of the military. The CDC reports that in the most recent year evaluated, which is 2013, there were more than 2.5 million emergency department visits for traumatic brain injury, or TBI, and more than 282,000 hospitalizations. Of 5 million people in the U.S. that are living -- over 5 million people in the U.S. are living with a TBI-related disability, and an estimated 80,000 to 90,000 suffers serious disability from TBI each year in the U.S. at an estimated cost of $37.8 billion annually.

75% of trauma-related deaths occur in the first 3 days after injury and are primarily due to uncontrolled bleeding and TBI. After 3 days, the remaining 25% of deaths occur at a low, but steady rate, and result from inflammation or immune complications, blood vessel damage and poor clotting associated with the initial injury, shock and resuscitation.

These inflammatory-related complications include systemic inflammatory response syndrome, acute kidney injury, acute respiratory distress syndrome or ARDS, venus thromboembolic disease, multiple organ failure, neurological swelling and tissue death after TBI as well as secondary infections.

Our preclinical data consistently indicate that administration of MultiStem following traumatic injury mitigates the inflammatory cascade that occurs and it causes considerable damage to end organs, such as the lungs and kidneys. We and leading independent experts in the field believe MultiStem has the potential to respond to signals of inflammation and tissue damage in various ways, including protection of [injured] cells, stimulation of new blood vessels and the recruitment of other cell types to promote tissue repair and healing as well as the reduction of complications following the initial injury.

Accordingly, we will soon announce plans for the conduct of a Phase II clinical trial, evaluating Athersys MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury, working with one of the leading Level 1 trauma centers in the U.S., with funding and support provided from both the consortium that collaborates with multiple government agencies and the participating trauma center.

As I described earlier, trauma is one of the indications that would be included as part of the collaboration expansion with Healios who has followed our work in the area closely. This serves as another illustration of our ability to work successfully with various institutions as partners and collaborators and to secure funding to support focused preclinical and clinical development initiatives.

As mentioned earlier, another key objective has been to maintain a solid balance sheet, and as Laura described a few minutes ago, we've done just that. This leads me to some of the questions that we've received from some of our shareholders in recent weeks. Although on the last call I associated names with each question, we have received so many questions from people this time around, I'm simply going to present representative questions and the corresponding answers.

Several shareholders have asked about the intent and the significance of the recently announced Aspire vehicle and whether we have used that vehicle yet. The significance of the Aspire vehicle is that it provides a backstop form of financing that we could utilize to maintain a healthy balance sheet. We can use it whenever we want or whenever we feel the need to, but we're under no obligation to sell additional shares to Aspire if we choose not to. In effect, the facility is a form of an insurance policy.

Over the past several quarters, we've used the prior facility to maintain a stable balance sheet and avoid the risk of doing an excessively dilutive financing. Some of our shareholders recognize and appreciate the importance of that and have thanked us for taking proactive steps to protect their interest and our own, and we appreciate that.

Other shareholders have asked whether we have used the new Aspire vehicle yet. Other than the -- Aspire's $1 million upfront investment, which was made at $2 per share, the answer is no, we have not used it. Our board always retains the rights or the option to do whatever we feel is appropriate, given the circumstances, but we have no immediate plans or no immediate intention to use the vehicle.

Other shareholders have asked whether we are currently planning an institutional financing or whether we've been engaged an investment banker to conduct such a financing. The answer is no. We have no immediate term plans to conduct such a financing, but as always, the board reserves the right to do whatever it feels is prudent and appropriate to serve the interest of our shareholders.

Another shareholder asked whether there's been any progress with regards to the TREASURE trial in Japan, has Healios enrolled additional patients. I addressed this in my earlier comments, but just to reaffirm, yes, they have enrolled multiple patients, and we are both pleased with the recent progress in the trial.

Another shareholder asked when we intend to initiate the MASTERS-2 trial. We're on track to initiate the study in the second quarter and are excited about doing so. Another shareholder asked about the recent developments coming out of China in regards to accepting outside clinical trial results and whether it is likely that Athersys can get MultiStem approval in China based off of the TREASURE trial results. This is a good question, and we don't have the answer for that yet, but it could be a possibility. My conservative expectation is that we would have to conduct one or more trials in China, but that is something that we in Healios will explore together.

A final question that has been posed earlier today is in regards to whether we are still engaged in the evaluation of potential partnering opportunities. The short answer is yes, we continue to evaluate such opportunities.

Those are some of the major questions that have been submitted by our shareholders, although we received quite a few about when we might announce a new partnership. I think we may, but we have effectively addressed that one for the time being.

So with that, I'd like to open it up for a few questions from people calling in.

(Operator Instructions) Your first question comes from Steve Brozak with WBB.

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

Sure. Thanks, Steve, for joining in and I appreciate the question. I mean, the biggest difference, I think, is that the regulatory environment in Japan includes this entire framework that we set up specifically to accommodate regenerative medicine products or cell therapy products. Certainly, the FDA has done things recently over the course of the past 18 months or so under 21st Century Cures and other initiatives that they've implemented that I think is really designed to specifically expedite the development of regenerative medicine and cell therapy or other advanced therapy products, but I think Japan was a bit ahead of the curve. So when they implemented the regenerative medicine framework that we've talked about in many prior calls, they really did it with an eye towards making it possible to expedite development and create 2 paths. One involving conditional approval, which would essentially be an approval that would last for 7 years, but would also include full reimbursement under the Japanese health care system. So another key difference is that the Japanese health care system is truly a national health care system whereas here in the United States, we don't have that, right? So we have kind of different challenges and complications or obstacles, if you will. From Healios' perspective, I think they understand this new system exceedingly well, and we've worked with them and had many, many meetings with the PMDA and others that are important to the utilization of the system. And I think we are both convinced that we are extremely well positioned to take advantage of this to use this new system, I should say, in a manner that would allow us to accelerate development of MultiStem for multiple indications. And that's really what is driving this. If you think about it, it's kind of unprecedented to be able to enter into a partnership like this where you might only have to run one meaningful clinical trial in each of the clinical indications you're going after and be able to get multiple -- get approval for multiple indications on the market. I mean, that's pretty unheard of. And the reason why we're in that position is number one, we have substantial safety data that we can rely on for multiple indications that we've looked at; and number two, because we've done this in a very thoughtful way, both before we were partnered with Healios and ever since we've been partnered with Healios in terms of our interactions with the PMDA. So I think recognizing that, the party and the leadership team at Healios saw that they wanted to make sure that we were working together as closely as possible to leverage that in all the different ways that we can envision doing it, and that's exactly what this new partnership is set up to do.

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

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

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

Yes, that's a great point. And Steve, I'm sorry, I neglected to answer the second part of your question, but B.J., thank you for that.

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

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

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

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

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

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

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

Understand. I was asking about their organ bud technology.

Yes, organ bud. So that was actually something that was included in the original in a limited way, it was included in original license that we entered into. So briefly, what organ bud means and actually Hardy talked about this at the Investor Day that we did back in 2016. I think it was several months after we announced our initial deal with them or a few weeks after we announced that initial deal. So it's been shown in the research that by various groups that if you essentially combine certain types of progenitor cells and kind of a mixture of a couple of different cell types, they will self-assemble into organoid or organ-bud-like structures, which essentially I think the right analogy is best I can describe is, you can utilize these essentially as seeds to help repair or regenerate damaged or injured organ tissue in a variety of different areas. And actually, very early on in our discussions with Healios going way back, he showed me a video of some of the stuff that they've done that shows cellular self-assembly and organization into these organoid-type structures. If you just do a lit search on organ bud technology, you'll find some good reviews that actually talk about the work that's been done, some of the exciting work that's been done. And I think it's one of those things that is, to a certain degree, has enabled by iPSC technology, but I think it's also -- it has very powerful clinical potential in a variety of different solid organ transplantation type indications, and I think based on enough work with our technology, to believe that our technology could be a beneficial component to that. And we're glad for that because, again, I think that as they envision or as they explore additional opportunities where our technology may be relevant, particularly -- there's obviously some indications where IV administration or local administration of our products make sense and can be very beneficial, but there's also other things that are a little bit closer to home to them maybe areas that we haven't done a lot of activity or in some cases, haven't done any activity on previously. And the organ bud and the ophthalmological areas I think are 2 areas that reflected their deepest domain expertise where it just provides another pathway of opportunity for our technology, and they're a very good partner to be working with on that.

Your next question comes from Jason Kolbert from Maxim Group.

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

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

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

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

This does conclude today's conference call. You may now disconnect.