Vericel Corp (VCEL) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Aastrom Biosciences, Inc. fourth quarter 2011 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the conference over to Brian Gibson, Aastrom's Vice President of Finance. You may begin.

Thank you, LaToya. Good afternoon, everyone. Welcome to our fourth quarter 2011 conference call to discuss our most recent financial results and the progress of our development programs.

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. Let me start with the review of our financial results. For the fourth quarter and year ended December 31, 2011, Aastrom had a net loss of $2.8 million, or $0.07 per share, and $19.7 million, or $0.51 per share respectively. For the same periods in 2010, our net loss was $13.2 million, or $0.44 per share, and $25.5 million, or $0.90 per share. The lower net loss in 2011 reflects the non-cash change in the fair value of our outstanding warrants.

Our operating loss for the fourth quarter of 2011, which excludes the impact of the warrants, was $7.8 million, or $0.20 per share compared to $5.8 million, or $0.19 per share a year ago. Our full year operating loss for 2011 was $29 million, or $0.75 per share compared to $21 million, or $0.74 per share in 2010. Research and development expenses for the quarter and year ended December 31, 2011 were $5.9 million, and $21.3 million respectively, versus $4.4 million and $15.1 million for the same period a year ago. The increase in R&D expenses for both periods was primarily attributable to launch preparations for the Phase 3 REVIVE clinical program for ixmyelocel-T, as well as an increase in non-cash stock-based compensation expense. General and administrative expenses for the quarter and year ended December 31, 2011 were $1.9 million, and $7.7 million respectively versus $1.6 million and $6.2 million for the same period in 2010. The increase in G&A expenses for both periods is primarily due to an increase in non-cash stock-based compensation expense.

At the end of the year, Aastrom had $5.5 million in cash and cash equivalents. Our cash use of $6.4 million during the fourth quarter was in line with our previous forecast of $6 million to $7 million, and we expect our cash spend for the first quarter of 2012 to again be in the range of $6 million to $7 million. I would now like to review the $40 million private placement with Eastern Capital Limited that we announced late last week. To begin, this is a long-term investment in Aastrom, as evidenced by the fact that the convertible preferred stock does not convert for at least five years unless Aastrom is acquired. It is also the largest single investment in the history of Aastrom, and it will not increase our flow because of security as a preferred stock and will not trade. The preferred stock was priced at $3.25 per common share equivalent, a significant premium to the current trading price of our stock, and has an 11.5% dividend.

We think that this is a very fair trade-off for the significant premium that Eastern was willing to pay. Also, this dividend is paid in kind, which means we don't pay the dividend in cash, but rather we pay the dividend in additional shares of our premium priced preferred stock. From a dilution standpoint, I also want to highlight that none of the outstanding warrants will have their strike prices reset, and we did not issue any new warrants to Eastern in this financing. Finally, I want to highlight that Eastern asked for, and we have provided, a right to participate in future financings. If we need to raise additional capital, and I want to highlight that we may not need to, we have an investor with a long-term commitment to Aastrom and the resources to help anchor any future financing. Consistent with our commitment to transparency, I want to assure you that there are no hidden clauses or features of this financing that you should be concerned about. All of the offering documents are available on the SEC's website for your review.

In summary, we are very pleased with this financing from every perspective. It avoids the dilutive discounts and heavy warrant coverage that are common features of biotech financings today. Further, there is no reset to the exercise prices of our outstanding warrants. The price of $3.25 per common share equivalent is at a premium of more than 75% over our stock price just before the financing was announced. The dividend rate of 11.5% is paid in kind, not cash, and the shares may not be converted until March 2017 unless we are acquired. This timing is well beyond the expected completion of the pivotal Phase 3 REVIVE trial. This is a substantial long-term investment by an important investor in our industry, and it provides us with a significant amount of capital to push our clinical programs forward, as we pursue discussions with potential partners. That completes our financial review. And I will now turn the call over to Tim.

Thank you, Brian. And good afternoon, everyone. This has been an extraordinarily productive period for Aastrom. Since our last quarterly call in early November, we have reported the final 12-month results from the Phase 2 RESTORE-CLI clinical trial at the American Heart Association scientific session. We held our investigator meeting and launched the pivotal Phase 3 REVIVE-CLI study of ixmyelocel-T and perhaps most significant of all, we completed the largest financing in our history.

Each of these events was a major milestone for Aastrom. Together, I believe they represent a new level of performance and a new era of opportunity for our company. The Phase IIb RESTORE-CLI study results were the springboard for rapidly advancing our program in critical limb ischemia. That randomized double blind placebo-controlled study generated compelling clinical evidence that ixmyelocel-T, our patient-specific, expanded multicellular therapy, could be a major advance in the treatment of patients with CLI who have no option for revascularization. As Dr. William Marston reported in November at the AHA conference, quote, these results provide substantial additional evidence that treatment with ixmyelocel-T significantly reduces the risk of disease progression for CLI patients with no options for revascularization. Importantly, the efficacy results demonstrate concordance across all of the defined measures of treatment failure in the trial.

Dr. Marston went on to say, quote, the results related to amputation-free survival in the subgroup of patients with tissue loss, similar to those who will be studied in the upcoming pivotal Phase 3 clinical trial, show a strong and clinically relevant positive trend for such a small number of patients. These results are especially encouraging since the primary end point for the planned REVIVE-CLI pivotal Phase 3 clinical trial for ixmyelocel-T in no-option CLI patients will be amputation-free survival, end quote. And as another prominent vascular surgeon said to me at the AHA meeting, these are the best clinical results in CLI ever. We appreciate Dr. Marston's perspective and share the enthusiasm which he and the broader vascular surgery community have expressed about these findings.

On the basis of these compelling Phase IIb results, we have now advanced ixmyelocel-T into pivotal Phase 3 testing. The REVIVE-CLI trial is being conducted at 80 US medical centers under the guidance of an independent steering committee of experts in vascular medicine, led by Dr. William Hyatt, and a special protocol assessment agreement with the FDA. The goal of the REVIVE study is to confirm the benefits of ixmyelocel-T in the treatment of CLI patients who have already experienced tissue loss and have no other good treatment options. The REVIVE trial is well designed and conservatively powered to show the effects of ixmyelocel-T in CLI patients. Enrollment is now proceeding toward our target of approximately 600 patients, and of course, as I said before, we will provide regular updates on this program during our quarterly calls.

Our program in dilated cardiomyopathy is also progressing well and is about to enter the next phase of clinical development. Based upon the positive results to date in our initial Phase I/II clinical studies and recent productive discussions with the FDA, we are preparing to initiate a Phase IIb catheter study of ixmyelocel-T in the treatment of ischemic DCM patients, and we'll do this by the middle of this year. In support of these programs, and our commitment to their transparency, we have also expanded our outreach to the medical and scientific communities in order to better explain the science supporting our technology and present our clinical findings. In recent months, Aastrom executives made important presentations about our clinical programs at the World Stem Cells Congress, the Cell Therapy Summit, and the recent New York Academy of Sciences Symposium on Advances in Adult Stem Cell Therapy, which was sponsored by Aastrom. These events have generated greater interest in our company and been productive forums for strengthening our relationships with key medical opinion leaders.

Looking ahead, we expect to publish the results of our RESTORE-CLI Phase IIb study this spring in the Journal of Molecular Therapy, and to present the results of our ground-breaking preclinical studies with ixmyelocel-T at the upcoming ATVB 2012 conference in Chicago in April. We also expect to present the final 12-month IMPACT-DCM catheter data and the 24-month IMPACT-DCM surgical data at a scientific meeting next quarter. On the strength of these achievements, we have recently completed the largest financing in Aastrom's history through a $40 million private placement with Eastern Capital Limited, a long-term fundamental investor with a history of successful life science investing. I think the key here is that we worked very hard to complete a financing that both addressed the needs of our company, as well as you our shareholders, and I believe that we have accomplished both with this financing. This investment by Eastern Capital significantly improves our financial position and provides the capital to advance our REVIVE-CLI clinical program rapidly. I want to thank Eastern Capital for their confidence in our team, their endorsement of our technology and clinical programs, and their obvious enthusiasm about our prospects for our future success.

In summary, we had a very successful year in 2011, and are off to a very productive start in 2012, with the resources and talent to achieve our clinical goals, advance ixmyelocel-T, and continue to focus on increasing shareholder value. Now, that concludes our prepared remarks. Now, I would like our operator, LaToya, to open the call to your questions.

(Operator Instructions)

Jason Napodano, Zacks.

Thanks for taking the question and congratulations on starting the trial and completing your financing. Talk a little bit about the statistical powering, if you will, with REVIVE. How did you come up with 600 patients as the number? And then second part of the question, with 600 patients, what kind of separation is needed between ixmyelocel and the control to achieve statistical significance? And I apologize for not doing that calculation myself.

No worries. Thanks for your question, Jason. So the, the number that I quoted, 600 patients, is an approximation. The actual number, if you will, is 594 patients, and let me just review the key assumptions driving the [sign] for this trial. First of all, it's one-to-one randomization, so for every patient treated, there will be a control group patient as well. Of course, important for a trial, a Phase 3 pivotal trial like this, we've made sure that it's 90% powered, which is again, the industry standard for the powering assumption, and the significance level here is 0.05. The event rates, which also contribute significantly to the -- obviously to the calculation of the size of the trial were as follows. For the treated group, we're assuming a 22.2% event rate, and for the control group, we're assuming a very conservative 34.5%, and the treatment effect, which is I think something you had asked about, the treatment effect is simply the difference between those two.

Overall, it's -- on a percentage basis, it's a 36% decrease. On a nominal basis, it's about a 12% decrease. And, you know, I just want to come back to the control group event rate, because I said there that it's 34.5% and that's very conservative. If you look at the literature, if you look at the literature, keeping in mind that this is a US-only study, historically, for CLI patients with wounded baseline, we've seen event rates in the 40% to 50% range. If you look globally, you see a lower event rate.

In fact, the most recent example of that was the failed Sanofi trial in 2010, where they saw a global control group event rate of around 34.5%. But if you look at it geographically, and this is something I want to highlight, especially if you look geographically at just the US, their control group event rate in the US was between 45% and 50%. So because our trial is US-only based, you can see that our trial powered with a control group event rate assumption of 34.5% compares very favorably and very conservatively with the 45% to 50% control group event rate that Sanofi saw in the most recent CLI trial that was conducted. Of course, there are other trials that have been done earlier in this past decade and even before 2000. But we think probably the most relevant is the most recent, because obviously the practice of medicine changes over time, and you would like to go with obviously the most recent data that's available.

Is the US just more strict on what is considered no-option? Is that why the failure rates are higher?

You know, Jason, that is a very good question. And I don't think we have a good answer. I know from talking to some of the, some of the investigators and thought leaders in the space, you know, folks have different hypotheses about why the control group event rates tend to be higher here in the US. It may have to do with the patients coming into the healthcare system later and being sicker before they actually see -- before they actually get treatment. It may have to do, you know, just with some of the cultural issues that we have here in the US that is -- especially this is -- a lot of these patients are smokers, they're diabetic. They're -- unfortunately they haven't taken great care of themselves throughout their lives, and they are not regular visitors, if you will, or regular participants in the healthcare system. So by the time they come in, if they have advanced CLI, by the time they come into the healthcare system with open wounds and very advanced cases of CLI, there's not a whole lot that the doctors can do with them, so that's probably one of the things that's contributing most to this, this high event rate in this population.

One last question, then I'll jump out. What kind of interim looks at the data will you guys be getting?

Again, a very good question, and we have had that question a lot, and the answer is -- we will have an interim look, or I should say we will have a blinded interim look at the data, just checking event rates. So looking at a pooled event rate just to make sure that the trial is progressing at the rate that we think it should, from a control -- I'm sorry, a blended control and treatment group event rate. So it's not a real precise look. It will just give us a partial look. The other thing that I'll just mention, though, is that similar to most trials, this trial has both a steering committee, an independent steering committee, and a data safety monitoring board. And the DSMB, as they are called, obviously will be unblinded at times to look at the data, and there is a very small chance, but there is a chance that, obviously if they see the trial data on an unblinded fashion, and in their view, it would be unethical to continue to have a control group of patients not being treated, then there's obviously always the opportunity for them to let us know that and suggest that we stop the trial. But again, I just want to emphasize that's a small chance that that could happen.

Do you have any flexibility to add patients after you get your blinded look? Yes, we do. In fact, that's the reason for the blinded interim look, is just to check event rates, just to make sure that we are seeing the high event rates that we expect.

Got you. Thanks, guys. Appreciate you answering the questions. You bet. Thanks for your questions, Jason.

Thank you. Jason Butler, JMP Securities.

Hi. Thanks for taking the question. Could we, could I just ask about the DCM Phase 2b? Could you give a little bit more details on trial design and also on time lines and budget for that trial?

Yes, I sure can, Jason. So for the Phase 2b study, this is going to be a blinded, placebo-controlled, randomized study. So it will be in character and form very similar to the Phase 2b RESTORE-CLI trial. So again, a very industry standard study that is, as I say, very well controlled.

We expect somewhere between 60 and 80 patients in this study, and I want to emphasize, they will only be the ischemic DCM patients. If you remember in our Phase 1/2, we had both non-ischemics and ischemics. In this trial, we're only going to be enrolling the ischemic DCM patients, and these will be New York Heart Association Class III and IV, o the very sickest of the sick patients in the DCM classification. And because this is an orphan designation, there's not a whole lot of these patients out there. I think by our estimate, it's somewhere between 100,000 and 150,000 patients that are out there.

With respect to administration of the therapy, it will be via a catheter and we used the NOGA catheter in the prior studies, and we will use the NOGA catheter in this trial. And then importantly, the primary end point for the study is going to be a MACE-like end point -- major adverse cardiac event end point-- which we believe, and based on our conversations with the FDA, we believe will be a Phase 3 or registration-type end point as well. And we'll look at these patients, Jason. We'll do an evaluation both at the six-month and at the 12-month follow-up period. So again, you know, we treat these patients just a single time. We take the bone marrow aspirate, we treat the patients within about 12 to 14 days, and then from there on, we follow them.

And as I said, we'll look at them both at six months and at 12 months, both for safety, but then also importantly for this, what we think of as a Phase 3 or registration-quality end point. And then cost wise, we think this is going to cost us somewhere around $4 million, so, again, right around that $50,000 per patient cost that we've seen in our prior studies. And then time line, we're expecting to start this trial in the second quarter. We're getting geared up to do that. It will, again, be just a US-based study. So approximately 15 centers, 15 sites across the US, and then we should take 9 to 12 months or so to enroll. And then of course, as I said, we'll have data in the middle of 2013 and then obviously in early 2014.

Okay, great.

[Those are the] lines that we're operating against right now.

Great, thanks. And then just one housekeeping question. Could you talk about what you still have remaining under your current ATM facility and how much, if any, you've raised through this so far in 2012?

Yes Jason, this is Brian.

Hi, Brian.

I think we've said in the past that we didn't plan to use the ATM until financing had -- larger equity financing had been done. And it wasn't going to be our main mechanism for raising capital. We wanted to use it opportunistically. You know, with all that said, I can say as of today we have not used the ATM. But going forward, we will be using that opportunistically when possible. And I think on a go-forward basis, we'll just report that quarterly either via through SEC filings or on the conference calls to update everybody on the usage of that.

Okay, great. Thanks for taking the questions.

You bet. Thanks, Jason.

Thank you. Boris Peaker, Oppenheimer.

Hello, and congratulations on the financing. I had a little more, a few more questions on the CLI study. Specifically since there is an opportunity for you to increase study size based on a blinded event rate, could you comment how much time and costs that could potentially add if you exercised that option?

Boris, this is Tim. I honestly don't think we'll be exercising that option, and, you know, I think we, we certainly wanted to be -- I think as we talked about before, we are being very conservative in our assumptions, our powering assumptions about this study. Having said that, no way that we want to have to rerun another CLI study. So, we built in -- and again, this was in negotiation with the FDA. We built into this study the ability, if we needed to, if somehow we get surprised by a control group event rate assumption that is lower, that is more global-like than it is US-like, at least based on the literature, then we wanted to make sure we could increase the size of the trial if we absolutely needed to.

But again, honestly and candidly, and again, we're -- I think as you know, we've been very candid about this stuff in the past, and we continue to be, that we honestly don't think we're going to have to turn that card over. So that's one sort of qualitative comment. I think the other thing to maybe comment on in terms of -- okay, so what if, what if a black tail event happens and, or black swan event happens, fat tail event happens and we see a control group event rate that is substantially lower than what we've seen historically, then I think the way we sort of characterize the Phase 3 study is that it's going to cost us between $25 million and $30 million, somewhere between $45,000 and $50,000 per patient. So I think the right way to think about that is if, again, a black swan event were to happen and we saw this very unusual control group event rate, then every patient, every additional patient would cost us, again, another $45,000 or $50,000. Does that help?

Yes, that's very helpful. Now, in terms of the strategy for recruiting patients and having to find patients with baseline wounds, can you comment on how you plan on finding them and enriching for the right patients in your study?

Yes, so first of all, I would comment that based on the data that we have seen, and I think we're probably by now the experts [in the world] on this because we've been working on it for the last almost 15 months now, but there are -- we're pretty confident that there are several hundred thousand of these no-option CLI patients with existing tissue loss. You know, I think the issue, as I mentioned earlier, is that they are not frequent participants in the healthcare system. So there's a lot of referral work that needs to be done and awareness raising that we have done and are continuing to do. So I think we had mentioned before, we're using an outside -- independent of our CRO, we're using -- who is responsible for the conduct of the trial itself, we're using a specialty patient recruitment vendor. This is their entire -- the entire focus of their business is helping to find patients and helping sites to recruit patients faster, Rather than waiting until midway through the trial to realize that our enrollment may not be what -- our enrollment rates may not be as rapid as we had hoped or expected, right from the start, we've enlisted the help of this specialty patient recruitment vendor, and they are employing a number of different strategies. Again, it's community-dependent.

So we're looking at the different types of sites. There are rural, more rural-oriented sites and there are more city center sites. And the same strategy, or the strategies that work in the more urban areas are not the ones that are going to work in the more rural areas. And the networks, the patient referral networks and the physician referral networks are different, just again, just drawing those two simple examples between those two different types of settings. So we're, we're customizing, if you will, our patient recruitment efforts to make sure that they are sensitive to the sites. And again, we've got 80 sites, 8-0 sites across the US. So we're not treating each site the same. We're customizing efforts for different types of sites, and that's the [tactic] that we're taking.

Thanks. And my last question is -- could you define what are the specific definitions of baseline wound? I mean, once can see a spectrum from a very small infection to something that's probably on the verge of amputation. So how do you define it for the physicians specifically?

Yes, that is actually a very interesting question I think, because a lot of the work that we did and that we did with the outside experts that helped us design this trial was about wounds, because wounds are -- they are a tough area. For anybody who's tried to get a therapy approved for wounds, I think they know it especially well. We're not, obviously, but wound, as you indicated, the wounds in our case is simply an entry criteria as opposed to an end point for us, at least a primary end point. So with respect to the wounds, the first thing I would mention is that we have a very specialized wound core lab that is expert in evaluating wounds and classifying wounds. So they have been out to all of the sites and are continuing to -- will continue to go out to all of those sites and train the sites on the identification of wounds and the recording of wounds. That information then is sent to our centralized Eligibility Review Committee, and the centralized Eligibility Review Committee is then responsible for evaluating which wounds qualify as Rutherford 5 category CLI and which don't. I think you noted on the [2-6] side, you have wounds that involve the bone, for example, where the infection has gone deep enough to include the bone, and those are Rutherford 6 patients, and those are not going to be eligible. Again, the important thing from our standpoint is that all of the sites are being trained by this wound core lab, one, and then two, the actual evaluation is not left to the 80 different investigators, but rather is left to our centralized Eligibility Review Committee, which is a group of five physicians that are experts in vascular medicine and in critical ischemia, and those are the guys that are evaluating those patients with wounds to make sure they meet the criteria, but they don't exceed the criteria.

Okay. Thank you very much for that explanation.

Thank you. George Zavoico, MLV & Company.

Hi, Tim and Brian. Congratulations on all of those data presentations and the financings. Congratulations. I have a quick follow-on question to Boris's regarding the steering committee. There are instances where the steering committee and the investigators obviously don't agree with one another, which is why you have the steering committee in the first place, but you just mentioned there are five physicians on the steering committee. Are -- will all five of them review each case, or will each one have sort of go/no-go kind of decision making? How do you correct for perhaps variability within the steering committee?

Yes, no, that's an interesting question and fortunately one that the team has thought its way through, again, with the -- I would just highlight, it's the Eligibility Review Committee. The independent steering committee is separate from the Eligibility Review Committee. We've got the Data Safety Monitoring Board. We've got the wound core lab, we've got the Eligibility Review Committee and then, over everything, we have the steering committee, which is headed by Dr. Hyatt. But the Eligibility Review Committee, which is led by Dr. Mark [Naylor], the protocol is that there have to be two physicians from the Eligibility Review Committee that will review each case, and then they have to agree. If they can't agree, then obviously a third -- there is a protocol for resolution of their differences and similarly, if there are differences between what the site or local PI thinks and what the Eligibility Review Committee thinks, then the Eligibility Review Committee rules, but having said that, it is not the goal of the Eligibility Review Committee to just be argumentative, if you will, with the investigators. This is an important function that they have to make sure that the patients, that we have consistent and homogenous patient population coming into this study. So there is a very well developed protocol for handling and managing differences of opinion.

And that's what you showed in your Phase 2 trial, that you really need to be very selective in narrowing your inclusion criteria. In that regard, so do you expect like a 90% concordance usually or better or worse for all those committees?

No, I think, you know, we don't know for sure what to expect, George, to be honest with you. But I think from some of the qualitative conversations that we've had, yes, our Eligibility Review Committee does not expect that we're going to have huge differences of opinion. I think in some of these things as with a lot of human endeavors, it's getting everybody to think similarly, not the same, but think similarly about things, and as long as we have everybody thinking similarly, then we're going to have that concordance that you suggest.

Okay, and then one question about the DCM trial. You say it's a placebo control, so I presume the patients who are not getting the ixmyelocel-T are also going to be getting the heart catheterization?

Yes, they will have both the aspiration and the catheterization as well. That's right.

But you'll be injecting what, placebo into -- I mean just saline solution into the placebo controls?

We've been calling it electrolyte solution, but, yes, saline solution, right.

Okay. Thank you very much. Look forward to upcoming results and progress for the trial.

You're welcome. Just one other thing. We're obviously not the first ones to use placebo, placebo controls using catheter administration. I don't want anybody to take away that this hasn't been done before. This is the way a lot of these trials are being done now. It's about the only way that you can get these trials done now with a placebo control, which obviously is the strongest way to conduct these Phase 2 and Phase 3 studies.

That's the only way to keep it blinded.

Exactly, and safe for the patient, too, because that's a very important consideration.

And how many injection sites will be in the ventricle?

Historically, we have been about 20, and we expect we're going to be doing something similar in the Phase 2b here.

Okay. Thank you very much, gentlemen.

Thanks, George.

Thank you. John Savin, Edison.

Hello. Yes. Congratulations on the financing. Could I just ask a small question about the [B2] warrants -- or B2 shares? What exactly are they and how would that operate?

Okay. So the B2 are same as the B1, with the exception of those [below]. So we initially issued B1 shares, and once we obtain, we will seek shareholder approval to go above the NASDAQ 19.9% threshold. Once we presumably will have received that, then those B1 shares will transfer into B2, and they will be voting shares. They will vote alongside the common stocks.

Okay. On the B2, is that converted -- [is it] exactly the same whereas the B1 [becomes] discretion?

Yes, for all other purposes, they are the same as the B1 with the exception of the voting rights.

Okay, right. I understand that. Thank you. Yes. Could I ask a second question. Following up on the last one, how do you actually manage to inject 20 sites in the ventricle with a catheter? I could understand in surgical procedure because you have the whole heart available to you, but with a catheter, you presumably only get to the arteries, [coronary] arteries?

So John, this is Tim, the injection themselves, again, just for those of you that are aren't familiar with this, the catheter is inserted in the groin and threaded up through the artery. This is a very, very common procedure that interventional cardiologists practice every single day. The difference, in our case is inside that catheter, where the physician is inserting a needle, and that needle then is loaded with the cells, and then the system itself is the NOGA system which has an imaging system included with it. So with the use of the imaging guidance of the physician, the surgeon can -- interventional cardiologists in most cases can map the heart, can map the left ventricle of the heart and inject up to 20 different -- if you think of a grid, he's injecting in a grid pattern on the left ventricle of the heart, or in the left ventricle. And this is a muscle as you know, John, so the cells go into the muscle, whether in the surgical procedure, they're injected from the outside of the muscle -- in the catheter procedure, they're simply injected from the inside of the heart.

Okay. So you go through the valve into the ventricle.

Exactly, exactly.

Okay. Yes. I understand. Thank you.

Thanks for the question.

(Operator Instructions)

Stephen Willey, Stifel Nicolaus.

Good afternoon. And congrats on the financing. Just a quick question. I was just wondering if you guys have formulated a plan as to how you intend to update the investors in the street with respect to enrollment, because presumably that's going to be the question that you get asked repeatedly between now and the accrual of all those patients.

Yes, absolutely. So, you know, I think leading up to this, Stephen, and I think I had started saying this last quarter, but I am happy to reiterate it again, that we will be providing quarterly enrollment updates, and so no one has to guess, no one has to be wondering or spreading rumors. We'll give the facts. So we'll be providing regular quarterly updates, and again, I think that's just sort of consistent with our, our philosophy here of trying to be transparent with folks. We understand that this is important, an important metric for investors. As you said, leading up to the actual data, the most, or one of the most important things that the investment community will want to know is how we're progressing with our enrollment. So we will be providing quarterly updates from here on out.

And would those updates include just the number of patients in, or will you be providing that in the context of number of patients--

Yes, it's a great question. And we actually have had a number of discussions internally about what will be the best and most informative for investors, and we haven't concluded on those yet. But, you know, next quarter, we'll provide what we think is the most relevant and if folks are -- if we miss the mark, then obviously, we've got the opportunity to adjust how we present that information in the future. But we're open to pursuing different approaches here to make sure folks feel like they are getting the information that is helpful to them.

Okay, and then just one last question on DCM. What's the expected background base event rate in that patient population? And just considering that it is an orphan indication and there's probably not going to be a pivotal trial with a terribly large number of patients, is that something that you can appropriately capture in --

That is actually a very good question, and our folks have been pretty thoughtful about this, and again, not that we're experts in the, not that we're experts yet in this patient population, but we're certainly talking to all the experts in this area. And so far, it looks like where we're leaning, Steve, is to enrich the trial with patients that have recently been hospitalized and -- because, again, it's sort of -- like one of the best ways to tell if a patient is going to have a heart attack is if they recently had a heart attack, and I think similarly with this patient population, one of the best ways to determine if a patient, a DCM patient is going to have an event, a hospitalization of some kind or a surgical intervention or whatever, is that they have recently had one. So we're looking at enriching this patient population with those that have recently had an event and will, you know, as next quarter when we're talking about this, I'll get more specific with you in terms of exactly the kinds of patients and a bit more about the end point as well. So that's well understood. But I think we're sort of 90% of the way there, but not all the way there yet. So I think -- I don't want to get into too much detail yet until we've finalized that.

Okay. Thanks.

Thank you. There are no further questions in the queue. I'll turn the call back over to management for closing remarks.

Thank you, LaToya. And I just want to thank all of our callers for their questions and the continued interest in our company. We certainly look forward to presenting the preclinical and clinical date that I mentioned earlier about our product at upcoming scientific meetings, and let me just highlight those for all of you again. We expect next quarter to publish the final RESTORE-CLI Phase 2b results in the Journal of Molecular Therapy. We're also going to be presenting preclinical results, some very, very interesting preclinical results for ixmyelocel-T at what's called the ATVB 2012 meeting in April, and ATVB is -- this is a scientific meeting associated with the AHA. We're also going to be presenting the final Phase I/2 impact DCM surgical and catheter results at an upcoming scientific meeting, and as soon as we have that meeting, we of course will let you know. And then finally, we will be issuing our annual report shortly prior to our annual meeting in early May, and that meeting is going to be held in our Ann Arbor offices. So thank you again, and I look forward to updating all of you on our next call.

Ladies and gentlemen, this concludes today's program. You may now disconnect. Good day.