Vericel Corp (VCEL) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Aastrom's second-quarter 2011 investor conference call. (Operator Instructions). I would also like to remind you that this call is being recorded for replay. I will now turn the conference over to Aastrom's Chief Financial Officer, Scott Durbin.

Thank you, Saed. Good afternoon, everyone. Welcome to our second-quarter 2011 conference call to discuss our most recent financial results and, most importantly, our development progress.

Before we begin, let me remind you that on today's call we will be making forward-looking statements covered under the Private Securities Litigation Reform Act of 1995, and all of our projections and forward-looking statements represent our judgment as of today.

These statements may involve risks and uncertainties that are described more fully in our filings with the SEC, which are also available on our website. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Joining me on the call today is Aastrom's President and Chief Executive Officer, Tim Mayleben. Following our prepared remarks, we will open the call to your questions.

At the end of June, Aastrom had $18.5 million in cash and cash equivalents, versus $31.2 million at the end of December 2010, and had 38.6 million shares of common stock outstanding.

Our cash expense during the second quarter was $6.1 million, on the low end of the $6 million to $7 million range we forecast on our last quarterly conference call.

Research and development expenses for the quarter were $5.3 million versus $3.6 million for the same period a year ago. The increase in R&D expenses was primarily attributable to the preparations for the Phase III clinical program for ixmyelocel-T, which we plan to start in the next quarter of this year, as well as an increase in non-cash stock-based compensation expense.

General and administrative expenses for the quarter were $2.1 million, compared to $1.5 million for the same period a year ago. The increase in G&A expense is primarily due to an increase in regulatory, legal, and employee related expenses.

We had a quarterly loss from operations of $7.5 million, compared to $5.1 million a year ago, and a net loss for the quarter of $10 million, or $0.26 per share, compared to a net loss of $3.8 million, or $0.13 per share, for the same period a year ago. However, our current net loss reflects $2.5 million in other expense versus $1.4 million in other income during the same period a year ago, due to the non-cash increase in the fair value of our common stock warrants.

Finally, now I'd like to give some guidance on our expected cash expenses for the remainder of the year. For the third and fourth quarters, we plan to spend approximately $7 million per quarter, which we expect to support the ramp-up and initiation of the Phase III trial in the next quarter.

That completes my financial review, and I will now turn the call over to Tim.

Thank you, Scott. Good afternoon, everyone.

As we announced late last month, Aastrom and the FDA have agreed to terms for the special protocol assessment for the pivotal Phase III REVIVE-CLI study of ixmyelocel-T in critical limb ischemia patients with no other treatment options. We are planning to launch this pivotal Phase III study next quarter.

Along with completion of the RESTORE-CLI Phase IIB clinical study last quarter, which established clinical proof of concept in the no-option CLI patient population, the release of the topline data in early June, and the submission of the abstract with the full results to the AHA, the SPA agreement was an important step for the advancement of the CLI program.

As you can imagine, we are very pleased that the process has been completed successfully and that we are now able to move forward with final preparations for the pivotal Phase III no-option CLI clinical trial.

I want to highlight that the protocol for this study was developed in consultation with the world's leading vascular surgeons and authorities in treating no-option CLI patients. With clinical proof-of-concept results from the RESTORE-CLI Phase IIB study, and our SPA agreement with the FDA in place, we feel confident that the results from this Phase III no-option CLI study can serve as the basis for a biologics license application submission.

The final RESTORE-CLI data and the SPA agreement provide us and our investigators a greater degree of confidence about the prospects for the approval of ixmyelocel-T if the Phase III results are positive.

Our plan is to begin the trial next quarter, once we have a significant number of the 80 U.S. clinical sites ready to begin patient enrollment.

We're particularly excited to be working with many of the leading physicians and vascular surgeons who have been involved in previous CLI studies, and have asked to participate in our Phase III program. I believe their involvement shows the level of enthusiasm for evaluating ixmyelocel-T in this patient population, and it also confirms that there is a high level of unmet medical need among no-option CLI patients and significant and growing interest in using our very promising cell therapy to treat them.

Let me take a moment to comment on the size of the Phase III pivotal study. While we originally planned to enroll 525 patients in this study, as you know we have increased the size of the study by about 15% to 594 patients, and this is to support the 90% power assumption and treatment affect calculations in the clinical and statistical protocols.

We've said before we set a high bar for success and want to be certain that our findings will support registration at the end of this pivotal study. This increase will allow us to enroll a sufficient number of patients to show the desired effect and be confident that the results from this pivotal trial, if positive, will be clinically meaningful and not due to chance.

Now, Aastrom will also present final results from our Phase IIB study, which were recently accepted for presentation at the scientific sessions of the American Heart Association in Orlando on November 14. We are especially pleased that Dr. William Marston will be presenting the data on behalf of Dr. Richard Powell and the other principal investigators in the study at this preeminent medical meeting. Dr. Marston will present the complete and final 12-month results on all patients from what is the largest Phase IIB cellular therapy study ever conducted in no-option CLI patients.

Last quarter, I also mentioned our goal to report and present the final 12-month results from the Phase IIB dilated cardiomyopathy surgical study, which have now been accepted for presentation next month at the Heart Failure Society of America annual meeting in Boston. And we'll announce the details of that presentation shortly.

Shifting back to CLI, as we gear up for the Phase III CLI program, I want to publicly express my thanks to our clinical, regulatory, and other development teams here at Aastrom for their effort and accomplishments, especially over the past 16 months. I have tremendous confidence in their ability to continue this progress, especially our goal of quickly enrolling and completing the pivotal Phase III REVIVE-CLI clinical trial.

We recognize that we have a great opportunity to expand the treatment options for patients with CLI and advance the field of regenerative medicine if our novel cellular therapy product, ixmyelocel-T, is approved.

I am grateful to my Aastrom colleagues, our collaborators, and the patients for their support of this endeavor.

That concludes our prepared remarks, and now we'd like to have the operator open the call to your questions. Operator?

(Operator Instructions). [Mark Brenau], Needham.

Good afternoon, and thank you for your comprehensive review of the past events, and we'll look forward to the future events, too.

It's raining in New York City, kind of cloudy. Hard to look much into the distance, which gets to my first question around the pivotal trial that's starting now. Is there an opportunity to perform interim looks in the trial? And given your increase in the numbers of patients, which seems to be conservative, is there a way to potentially speed up the trial, where results allow you or the Data Safety Monitoring Board to see a trend there?

Mark, this is Tim. Thank you for the good questions, the insightful questions.

To answer your first question, we do not have the ability to do a -- I guess what I'd call an unblinded interim analysis with this study. As you may know, the -- at least our -- the comments that we're getting from experts in the field is that FDA is shying away from interim analyses. And our study seems to reflect that trend.

Having said that, though, as you know we are under an SPA agreement and we have a formal agreement now with the agency, and as you noted, we do have a DSMB as well that will be looking at the results as they come along. So, I think certainly there is an opportunity to -- if we see or if they see, rather, very compelling results, for this trial to be smaller. But that would have to be worked out through the SPA process and obviously at the recommendation of the DSMB.

Very helpful. Thank you. And then, in follow-up to that question, there is -- I believe you had talked about another Phase III trial in poor-option patients, not with no option. Did this discussion that you've had around the no-option patient help facilitate the other discussions going forward? And maybe you could update us on the status (multiple speakers)

That's, again, a very good question. So, I'm glad that you asked that.

So I think, just to go back on one of the comments that I made in our prepared remarks, which is that with the increased size of the no-option CLI trial and with the other elements around that, the clinical protocol and the statistical protocol, we do believe that there is an opportunity for the no-option CLI trial to form the basis for a BLA submission.

And of course, the key to that statement or the confidence there is that we see very good results in the Phase III program, that is the data is supportive. But the trial is certainly large enough and powered -- well powered enough to be able to do that.

Having said that, there -- as you noted, we have also talked previously about the poor-option patient population which -- two things to note about the poor-option patient population. It is larger than -- we estimate and others estimate that the population is larger. And it is also a patient population that hasn't been studied as much.

So, we see an opportunity for pursuing a second pivotal trial in that poor-option patient population that could be supportive of a BLA submission if we choose to go down that path, one, and two, also provide an opportunity for label expansion as we're thinking about lifecycle management for this product in the broader CLI patient population.

Thanks for the added information. I'll go back into the queue.

Joe Pantginis, ROTH Capital Partners.

Maybe a couple of quick questions on the SPA and the Phase III, and congratulations for finally getting that. It's a nice feather in your cap.

With regard to the preparations you allude to, just what kind of things are going on in the background right now with regard to bringing on the significant number of those 80 patient sites, and then I have a follow-up. Thanks.

Sure. So, as you might expect, our clinical operations team is incredibly busy for what is otherwise, I think, a slow time in the financial markets, obviously.

But those folks here at Aastrom are incredibly busy working, obviously -- and again, for those of you that don't know, there is a very rigorous process for bringing sites up, including receiving IRB approvals from the various clinical sites, and again, a -- the IRB approval process is a very rigorous process.

In addition to that, there is a lot of training that goes on. So, our team is out laying the plans to begin training all of the sites.

And then, again, the last and perhaps one of the most important elements is making sure everybody understands the inclusion/exclusion criteria and are moving through that process so that we can begin to identify patients that will be qualified to enroll in this study.

So, those activities are ongoing, and again it's a very busy time for our clinical operations team, but also a very exciting time because, as you know, the SPA process was a great accomplishment for our team.

Great, thank you. That's helpful. Then just a quick follow-up on the SPA. You did mention some of the details. I was just wondering if you can provide maybe a little more.

Assuming the primary endpoint is amputation-free survival, you did allude to a 90% power. I was just wondering if you have the ability to disclose today 90% power to detect what difference in event rate. And also potentially what kind of assumptions you might have with regard to enrolling this study, time-wise.

I'll cover all of those, Joe, and I appreciate the good question.

So, just to recap for everybody, the Phase III CLI no-option protocol calls for enrolling 594 no-option patients with existing tissue loss, and you have probably heard us refer to these patients as Rutherford 5 patients, and Rutherford is a scale used to evaluate these CLI patients. So, again, 594 no-option patients with existing tissue loss at the time of enrollment.

The trial provides for one-to-one randomization, and all patients will be aspirated and, again, this is important so that we can be sure to maintain the blind.

As you noted, the primary endpoint, the primary efficacy endpoint, is going to be amputation-free survival at 12 months. And again, just as a reminder to everybody, amputation-free survival is a composite endpoint that includes both major amputation, which is amputation at the ankle or above, and all cause mortality, so it's a composite endpoint of major amputation and all cause mortality.

We will look at these patients for up to 18 months post-treatment, so the safety look will be at 18 months, whereas the efficacy look will be at 12 months. But we have agreed that we can submit based on the efficacy data starting at 12 months.

The secondary endpoint, probably the most important secondary endpoint, and I won't go through all of them today but the -- probably the highest profile secondary endpoint is going to be wound healing, which again I think you've heard us talk about before. This is important not only to patients and physicians. I think you heard Dr. Hyatt comment on our last quarterly call that if you can manage the wounds, then you can manage the no-option CLI patients.

The wound is an exogenous or external sign of what's going on within the vascular in these ischemic limbs. So if we're able to manage the wounds and we're getting good profusion to the wounds, then we're doing a good job of managing these patients. So wound healing is going to be an important secondary endpoint.

And then, lastly, again this is important as we start thinking about reimbursement, which we're doing even now as we prepare to launch this Phase III study. We're going to be looking at pharmacoeconomic and patient-reported outcomes data, which, again, is really essential to CMS and other payers.

Just -- thanks a lot for that. Just about the -- what the event rate difference is you're looking for.

Yes. I'm going to get to those right now. So, the control group event rate that we're -- that have -- the assumption on the control group event rate that has been built in this study is about 34.5%, and the treatment group event rate that we're assuming is 22%, Joe. So it's, again, roughly about a 35% -- 30% to 35% difference in treatment effect.

Ted Tenthoff, Piper Jaffray.

Great. Thank you very much and thank you for that thorough update. Congrats on the SPA. This is a really exciting summer for you guys.

Thank you, Ted.

So a lot of the questions have been asked. I think one of Joe's questions that maybe was missed was when you expect to complete enrollment.

Thanks for the reminder.

Yes, and I appreciate you going through all the detail with respect to the site enrollment because that's really helpful, too.

Thanks again for the question. The going-in assumption that we have about this study -- first of all, I should note that I mentioned that our clinical operations team is very, very busy this time of year. And now that we have the SPA, we're especially busy.

Many of you have met Sharon Watling, who is our VP of Clinical and Regulatory, and I think you've heard me talk about, not just in my comments today in terms of acknowledging just how much this team has accomplished over the last 15 or 16 months, but also my confidence, our confidence, in the team's ability to continue to execute.

And the reason for my confidence is not only the track record that they have built here over the last 15 or 16 months, but also their track records at the prior companies that they've worked for. So, both at small biotech companies, as well as large pharmaceutical companies, which almost everybody on our team, our clinical and regulatory team, has spent more than a decade at getting trained and getting some great experience at the largest -- some of the largest pharmaceutical companies in the world today. So, our team is a very experienced team and one, as I said, that we have a lot of confidence in.

So with that as backdrop, the assumptions that we're making about the Phase III clinical trial enrollment is that we expect this trial to enroll over the next 18 months. I think you probably have heard me say before that our goal when we start this trial in the fourth quarter is to have a substantial fraction of the sites up and running. That is, we are not looking to bring up one site in the fourth quarter and call that -- that is bring up the site and have them screening and enrolling, but rather have many, many sites up and enrolling so that we can move aggressively through this enrollment.

So, again just to recap, we're expecting the trial to enroll in 18 months from the time that we initiate enrollment. And I think we're committed to being transparent as we have been in the past. We'll continue to be transparent with folks outside of Aastrom about our progress on that enrollment because we're certainly measuring ourselves against that target and we expect that you guys will be measuring us against that as well.

Fair enough. Maybe you can touch base with me, too, a little bit on the success rates that you guys have seen with respect to aspiration going to self-delivered, and how does that factor into the powering or the assumptions that you're making for the trial?

That's an interesting question. The -- and again, for those that aren't as familiar with our process, our patient treatment process starts with a small bone marrow aspiration from a patient.

It's done in a physician's office, typically, and it's about a 15-minute outpatient procedure usually done under local anesthesia. So, as Ted was referencing, the patient's bone marrow becomes the basis for developing our product which is ixmyelocel-T, the product that you've heard us refer to.

But it starts -- the basic or raw material for our product is the patient's own bone marrow. So, that bone marrow aspirate becomes an important process.

So, historically, our success rate has been very high, Ted, on the order of the high 90% rate in terms of a successful bone marrow aspiration, and I think you may recall we had, I think, 18 sites actually enroll and aspirate patients in our Phase II study, and we are going from 18 now to 80.

But I mentioned in my earlier comments that a lot of our focus now over the next couple of months as we're looking to bring up and working to bring up sites is actually for the sites that we have not worked with before, it's rigorous training for the bone marrow aspiration procedure because with our patient-specific or personalized medicine, or therapy rather that we're developing which is based on the patient's own bone marrow, it's critically important that we have a good bone marrow aspirate at each of the sites and with each of the patients.

So, our historical success rate is good. We have a team of folks here that have good experience with bone marrow aspiration procedures and actually training folks in bone marrow aspiration procedures, so we feel very confident. Again, I think if -- I don't want to overuse that word, but we feel confident about it.

Jason Napodano, Zacks Investment Research.

This is interesting news. I think in the past, the market's kind of expected that you would need to conduct two Phase III trials, one in the no-option, one in the poor-option, before filing. Is this kind of new information that you have today -- that you're releasing today? Did that come about from your discussions with the FDA?

Yes, so it has. As part of the SPA process, there is a back and forth. There was a long negotiation, as you know -- I guess as you've heard us talk about. It -- again, taking everybody back, we started with the original SPA filing back in mid-October of 2010 and had several iterations for the no-option SPA over the intervening time leading up to the approval in late July.

So yes, so I think this is -- as I think you heard me say earlier, we've -- in agreement with the FDA, we've increased the size of this Phase III no-option CLI trial, and I think that was -- that turned out to actually be okay news because now this trial is large enough to stand alone as a basis for BLA approval. And again, I say that, and then my next breath I always caution the trial has to produce the data, and we're certainly cognizant of that, but based on our Phase II data, which we are going to be presenting at AHA, as we know, we feel confident.

And I think as everybody else sees that data, I think they'll understand the basis for the confidence.

How many patients do you think you'll need to screen to get to that target 594 number?

That's a great question, Jason. I don't think I know the answer. If you were to ask me that after our first-quarter conference call, I think I could probably give you a good solid answer based on our experience.

But I think because we have this eligibility review committee in place, the centralized eligibility review committee, I think we're going to do pretty well with that. That is, we're doing a lot of education of the sites on the inclusion/exclusion criteria, and the eligibility review committee is staffed by a group of prominent physicians that have worked with many of these sites before. And I think as we had mentioned previously, many of the sites that we're working with have done no-option CLI trials before, so we're fortunate to be working with a very experienced site.

I'm not trying to avoid your question in terms of responding to it, but I think I can only respond qualitatively and not quantitatively at this point.

That's understandable. If a patient comes in and they're not quite up to the no-option level, will they be referred for a later date for the poor-option trial?

You know, so it -- that's certainly possible and that's -- as we had been thinking about and strategizing about the poor option and no-option trial, trials rather, we had certainly looked at the efficiencies that will come from having both trials running at the same time, and that, as you noted, if a patient is not quite a Rutherford 5 no-option, that it could be that they will qualify for the poor option.

So, that's a key point of one of the efficiency considerations that once we have the 80 sites up and running, and all of them screening and enrolling patients, that we could get some nice efficiencies by being able to run the two trials in parallel. But again, the other consideration is with the final SPA approval, we don't have to run that poor-option study, which is in a nice place to be.

Because do you think that you'll have overlapping sites between the --

Oh, we'll use the same sites. So, for the poor-option study, if we decide to go forward with that or when we decide to go forward with that -- I don't think it's an if, but when we decide to go forward with that, we will definitely be using the same sites and the same clinical infrastructure.

Okay, so I guess that kind of leads to the question of the balance between when you start that poor-option trial. Obviously, you'd like to file for approval on just this no-option trial if the data looks good. But pushing off the poor-option trial, you're potentially missing out on some of those patients and some of those synergies that you've mentioned, so (multiple speakers)

Yes, you -- I think you're getting at the core, Jason, of some of the strategic discussions that we're having. I think they're exactly the right business questions that we're wrestling with, and -- because they have short-term and long-term implications, and, you know, we're -- as I think last week showed, we're living in uncertain economic times.

So we're trying to balance all of those considerations, but I don't think we've concluded on them, but I definitely -- as you're talking, they are resonating with me because they are exactly the questions that we are tossing around internally.

Jason Kantor, RBC Capital Markets.

I was wondering -- a lot of the questions have been answered, but what is your expected cost for running this trial? I guess the direct cost of the trial, and then I suppose also your expected burn between now and when you would get data.

Scott, do you want to tackle that one?

Sure. You know, we're expecting that the no-option trial will cost between $20 million and $25 million, and we don't expect our base burn to increase substantially, which, based on sort of the previous quarter $6 million to $7 million in cash spend, about $3 million of that, $3 million to $3.5 million or so, is core burn rate.

You answered all the questions about the study design, but I guess I'm just wondering, was there anything in this SPA process that was contentious with the FDA in terms of things they wanted to see or things that you didn't want to include in the trial that you had to because FDA pushed you on it? It took you a while to go back and forth with them, so I'm just wondering if there was something you could point to that might've been contentious.

Jason, you are -- I'm smiling a little bit because you asked the tough question here.

I think that -- you know, our expectation, and maybe I've shared this with some of you before, our expectation going in was that the SPA process would take us six, maybe seven months. And so, I think if there was anything we wished would have -- if we could've written the script differently, it would've been that we would've been able to get this done in the six to seven months as opposed to the nine months -- a little over nine months that it took to get completed.

So, I think timing-wise, we were a little bit disappointed that it took as long as it did. But I think we're happy with the final product, and my feeling is that, based on our interactions with our colleagues at FDA, they are pleased with the final outcome of it as well.

The SPA -- you know, I can't emphasize enough, the clinical protocol itself, I've said to folks, I think this is arguably the best clinical protocol ever developed for the no-option CLI patient population, and while that may sound bold, keep in mind that we've -- we're fortunate to be standing here in 2011 having a number of CLI trials having been done before, and we've been able to go to school on those and learn a lot from the protocols that have been put forth before. In addition to that, we're working now with the very best, the very most experienced clinicians in this space.

And so, we have all of the benefits of their contributions and learnings over the years. So, we've got a great protocol. We've got a very robust statistical protocol as well. So, there wasn't -- I wouldn't say that there was anything contentious. There was just a tremendous amount of detail associated with this that we wanted to get just right.

I think you've heard me say before that we have a lot invested in this. From a business standpoint, I've said we're not going to spend, as you heard Scott say, we're not going to spend $20 million to $25 million if we aren't really confident in the protocol and the robustness of the statistical analysis plan, because that's just not a good business decision.

And again, it took us a little bit longer to get there, to iron out all the details. But I'm happy and I know our team is happy with the final outcome, and in particular, that -- not so much contentious, we actually feel like we came out of this with a very healthy relationship with the agency, a closer relationship, because they got to know our team and the competence of our team better than certainly when we started this process last year.

George Zavoico, MLV.

Congratulations on the progress you've made. I know you're really looking forward to the start of the Phase III trial, as obviously everybody else on the call is as well.

I was a little -- when you said to, I think, Jason's earlier question about if and when you'll decide to go forward with the poor-option patient trial, the Phase III patient trial, it looked like when we talked several months ago that was a -- that seemed to be a very logical and key and efficient way of pairing the two trials, that you start the first, you move onto the second one, and then you can use the same eligibility committee and the same sites. Could you tell -- describe a little bit more exactly what you meant by if and when (multiple speakers)

Sorry. I think I started to say if, George, and then I said it's -- or if I didn't say it, I meant to say it. I guess I'll go have to go back and look at the script afterwards.

But what I meant to say was that when we decide to start that trial -- and keep in mind we have a SPA process started on that trial, and so we want to finish the SPA process with the agency on the poor-option study, and so it was more reflective of the fact that there is still some work to do there. But again, also a matter of emphasis to say that we could, we can, we have the ability to have the no-option CLI trial at its current size and within its current design to stand alone as a basis for approval for the biologics license application.

So, I agree with you. I think there's a nice -- a very nice label expansion opportunity there. It's, as we noted, a larger population than the poor or the no option -- it's a larger population than the no-option patient population. And again, from a lifecycle management standpoint, it's very nice as well.

And I think one of the things that you're getting at as well is, from a clinical development standpoint and from a regulatory strategy standpoint, it's a nice risk-mitigation strategy as well. So, there's multiple reasons -- as we've talked about before, there's multiple reasons to do it, but there are -- it's possible not to have to do it, and that was the only point I was trying to make.

That was well understood about the fact that the no option is a standalone, and that's absolutely terrific as well. Thanks for that clarification.

And actually you answered the follow-up question as well, the SPA process has actually begun on that, and yes, you said it did. Do you have an expectation of when that SPA process might be [finish] and or -- so involved in the start of the no-option trial to sort of put that on the back burner right now?

My record on predicting when the SPAs will be completed is not so great right now. But -- you know, because the last SPA process took longer than we expected.

But I think -- what we can say is that, as you know, the process has started. We are fortunate that we and FDA have been through this now very recently. So, we have an even better and more clear understanding of what their expectations are and what the open issues are. And I think you've heard us say that the primary issue that we're going to be discussing with the agency is just around the primary endpoint for that poor-option patient population study.

So, I -- again, I would hesitate to predict. We're hopeful that it's measured in a few months, not as long as this first one took. But we're only -- as with any negotiation or discussion, we can only control one side of the discussion. So we're just cautious about predicting.

Okay. Now you're going to be doing 594 patients in this trial. Can you speak a little bit to your capacity at Ann Arbor? And also whether -- by how much of a multiplier is this with regard to the number of cell development or cell processing that you've already done? Is this multiplied by a lot, in your experience?

So, again, that's a very good question. So the answer is that -- so we have more than enough capacity here at our centralized GMP manufacturing facility in Ann Arbor to meet the needs of not only this clinical trial, but if we so desired several clinical trials. So, capacity is not something that is a concern for us.

In terms of experience in manufacturing or processing tens of samples or products per month, we do have that experience. So, we're certainly well within our range of experience there as well. So, and again this is stuff we've been practicing for, George, just to -- I guess I think that's the best way to put it. We have anticipated it. We've been practicing. We've been working out the wrinkles of -- and so we're feeling pretty good about the experience that we've had and are having with being able to ramp that up.

Does the capacity include the number of technicians, or once the trial gets going you're going to need to hire a few FTEs?

So I would just highlight that we've -- something that we've said before, not on this call, but something we've said before, which is that we are very fortunate that, as a Company, our early years were spent developing what is now a highly-automated, fully-closed cell manufacturing system, what we call our Aastrom-Replicell system.

And if you recall last year in the fourth quarter, we announced an agreement with ATEK, a partnership with ATEK, to produce the disposable cassettes. So we're in really good shape on the manufacturing side. It's -- we are -- again, because our system is highly automated, it's not a staffing issue. We're actually in very good shape there.

We've added a few people, a few technicians over the last several months, but we're not going to have to be adding tens of technicians. We are -- again, because of the highly automated nature of our system.

Now, you said you're -- CLI is obviously not the only thing you're working on. HFSA is coming up in just a few weeks. If you don't know the results already, you probably will very soon, of the trial. Could you provide some guidance as to what the next step in the DCM program will be and when we might expect an announcement of perhaps a Phase III trial there?

Yes. So again, to take everybody back and give you context, what George is referring to is that we -- our second program is in dilated cardiomyopathy, and as I had mentioned in my prepared remarks, we are going to be presenting the Phase II data, Phase II surgical data, 12-month data at the Heart Failure Society of America meeting.

Our next step, George, the answer to your question, in that program is we're planning to file a briefing book with the agency to discuss exactly the questions that I think you're asking, George, which is, what's next? And the critical questions that we need to answer are really around what does the rest of development look like?

We have an orphan designation for that program, which we think will confer some benefits to us from an advanced -- or rapid development that we can proceed pretty rapidly in development. But you know, we need the confirmation of that from the agency.

And again, as with the poor-option SPA, we want to get an understanding with the agency now of what a likely Phase III endpoint is going to be before we invest more money or more time into that program. So getting clarity is what we're going to be seeking over the next few months, and we expect that in the fourth quarter, we'll be in a position, or next quarter we'll be in a position to talk about what we've learned from our interaction with the agency.

So, can't answer it now. I guess a long way of saying, George, that we can't answer it now, but we're going to have a number of interactions with the agency over the next several months and expect to get that clarity and be out telling you and others exactly what that looks like.

It's nice to know that you'll be able to tell us within just a couple of short months. That's great.

And final question, could you comment a little bit about any partnering discussions that you may be involved in, and how that might -- if any [in the end] how that might accelerate any of the programs?

Scott, do you want to tackle that?

Sure. George, we had mentioned on the previous call, had given a status update on our discussions. I think it's fair to simply say today that given the positive data out of the Phase IIB RESTORE-CLI study, as well as the SPA, I think we're generating a lot of interest, external interest, in the Phase III program. And we are continuing a dialogue with a number of external potential partners, and we expect that to continue over -- for the near term here.

That's great. I know you can't give us any details on that. Thank you for confirming that a lot of discussions are ongoing. Thank you very much, and I look forward to the start of the trial and the results in -- at HFSA and AHA. Thank you very much.

Stephen Willey, Stifel Nicolaus.

I think, Tim, in response to Ted's previous question regarding the safe cards that you've built into your statistics around, I guess, those patients that don't have a successful aspiration, could you maybe just repeat what those are? And I guess in bringing up the additional trial sites, you talked about training and whatnot, are there specific performance criteria that needs to be met on the aspiration front before you bring a trial site online?

So, that's an interesting question. So the answer is that we've done a lot of prequalification of each of these sites, including an assessment of their aspiration capabilities, either directly or from prior experience.

So we feel going into this that -- we've gone through a lot of sites. And again, there's been -- we've been happy with the number of folks that have been interested in -- physicians that have been interested in participating in this, and so I think we've had the good fortune of being able to be selective and qualify only those sites that really do meet, again, what is a very rigorous prequalification process.

So, again, as you noted when I was responding to Ted's question, the aspiration is the raw material for our product, and so we're doing a lot to ensure that it is right and also, already, putting plans in place that if we do see a failed aspiration procedure, we have a slot team that is already geared up and ready to visit the site and make sure that it doesn't happen again. So, that's in progress and in place.

With respect to the screening of patients and evaluating patients, we do have a centralized eligibility review committee that is going to be evaluating every patient that is suggested for enrollment in the trial. Again, the philosophy behind that is that there are going to be -- this is a group of four or five physicians that are rigorously trained by us and our steering committee to make sure that they understand the inclusion/exclusion criteria very well.

I mentioned earlier that we've got 80 -- eight zero -- sites that we're going to be bringing up for this Phase III study, and we don't want 80 different opinions at -- from the different site investigators about what -- whether a patient meets or doesn't meet the inclusion/exclusion criteria. So, our goal is to have a very homogenous patient population enrolled in this study that is very carefully reviewed by our centralized eligibility review committee.

Okay. Yes because I think in going back, I think the frequency of failed aspirations in the [two p] was pretty low.

Yes, it was. I think the number -- I can't remember the exact number, but it was in the high 90% range in terms of the aspirational success rate.

Okay. And this is just a procedural question, but I guess taking into account that everyone is going to be aspirated to maintain the blind, would you actually exclude a control patient on the basis of getting an insufficient amount of aspirate?

Boy, that -- Steve, I have not thought about that. And I'm sure the team has discussed it, but I don't know it. I'll have to get back to you on that.

And then just quickly on the DCM front, I know you're talking about the 12-month surgical data, but I guess where are we on the six-month catheter data?

I'm sorry. Yes, I'm glad you mentioned that. So, in addition to the 12-month data that is going to be presented at the Heart Failure Society of America meeting, we are going to present the six-month catheter data at that same time. So, they'll both be available then.

Great. And then, Scott, just lastly, I guess, how should we be thinking about stock comp into the back half of the year?

I think the vast majority of stock comp has already happened this year. I think it will be more for a subject of discussion for projections and forecasts for next year.

Thanks for the color and congrats on the progress.

Brian Lian, GH Securities.

I had a quick question on TAMARIS. Can you just remind us how long the TAMARIS trial took to enroll, if you know? And then, how that may or may not reflect on your expected timelines for REVIVE? I guess a similar question also is, how similar are those two populations?

So, that's a very interesting question because the -- as you noted, the TAMARIS study -- again, for everybody who's not familiar with that, this was a Phase III CLI study of a gene therapy that was being developed by Sanofi, and it read out in -- I think it was September of last year, and it was about the same size. It was about 525 patients.

So, it's about the same size. It is also -- it was also in the no-option CLI patient population, the Rutherford 5 patient population, but I think there's a lot of dissimilarities as well. They ran a trial in 30 countries at 170 sites around the world on five continents.

I think one of the things that we've learned and had -- even before we saw the TAMARIS study results, gotten very strong advice on is that there was and is a lot of geographic variability in the way that these CLI patients are treated and identified. So, one of the things that we've insisted upon and highlighted for our no-option CLI study is, first of all, right from the start, we're using an eligibility review committee here in the U.S. to make sure that we have a homogenous patient population and we're restricting sites to only the U.S., again to help manage the diversity or potential for diversity in the patient population.

And even though we're going to be using 80 sites, having all of those 80 sites come from the U.S. and be working with this centralized eligibility review committee, I think, helps manage that risk nicely. So, that's critically important, we think, to the success of this Phase III program.

In terms of how long it took them to enroll, Brian, I think the number was 2.5 years, or the time was 2.5 years, but I will confess that I don't know that for sure. I don't know that for sure.

Thank you. I'm showing no further questions on the phone. I'd like to turn the conference back over to Mr. Mayleben.

Thank you, Saed. Thank all of you for listening to the call today and especially those who asked us questions. We appreciate the continued interest and the challenges sometimes that the questions provide.

As you know or are coming to know, Aastrom is the leader in developing patient-specific or personalized multi-cellular therapies for the treatment of severe chronic diseases such as CLI. We're very much looking forward to presenting the Phase II impact DCM results at the Heart Failure Society of America meeting in Boston next month. And then, of course, next quarter we plan to start our pivotal Phase III REVIVE study and present the final Phase IIB RESTORE-CLI results at the American Heart Association meeting.

So, thank you again, and we look forward to updating you on our next call. All the best.

Ladies and gentlemen, thank you for your participation in today's conference. A replay of this call will be available 730 PM Eastern Time on August 15, 2011, until 1159 PM Eastern Time on August 19, 2011, by calling 855-859-2056, or from outside the U.S., at 404-537-3406. The pass code for the replay is 85063940. You may all disconnect and have a wonderful day.