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spk02: Ladies and gentlemen, thank you for standing by, and welcome to the Ethersys third quarter 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Thank you. I'll now turn the conference server to Karen Hannity. You may begin.
spk01: Thank you, and good afternoon, everyone. I'm Karen Kennedy, Director of Corporate Communications and Investor Relations for Athersys. Thank you for joining today's call. If you do not have a copy of the press release issued at the close of market, it is available on the Athersys website at athersys.com. Ivor McLeod, Chief Financial Officer, is here to provide us with the financial updates, and Gil VanBochelen, Chairman and Chief Executive Officer, will be providing our corporate updates. Today's call is expected to last 30 to 45 minutes, and a webcast of the audio will be available three hours after the call's conclusion on our website under the Events section. The access information for the replay is also 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 discussed in our Forms 10-Q, 10-K, and other public FDC 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 November 9th of 2020. Since then, we may have made announcements related to the topics discussed, so please reference our most recent press releases and SEC funding. With that, I'd like to turn the call over to Ivor McLeod. Ivor?
spk03: Thank you, Karen. Good afternoon, everybody, and once again, thank you for joining today's call. I am Ivan McLeod, Chief Financial Officer of AFASIS, and it is my pleasure to give you an overview of the financial results for the third quarter of 2020. For the three months ended September 30th, 2020, we recognized $86,000 in revenues compared to negative revenues of $361,000 for the three months ended September 30th, 2019. primarily related to our collaboration with Helios. During our evaluation of variable consideration in the third quarter of 2019, we determined that the estimated transaction price of certain product supply provided to Helios decreased due to a reduction in the underlying cost of those of the product supply occurring during the quarter. In addition, The number of doses of clinical product requested by Helios was amended, further reducing our revenues during the period. Our collaboration revenues may fluctuate over time as we contract with Helios to perform manufacturing or other services, and as we potentially enter into new collaborations. Research and development expenses were $18.5 million for the third quarter of 2020. compared to $8.9 million for the comparable period in 2019. The $9.6 million increase is primarily associated with increases in clinical trial and manufacturing process development costs of $6.9 million, as well as increases in research supplies, personnel costs, stock compensation costs, and other research and development costs. Our clinical development, clinical manufacturing, and manufacturing process development expenses vary over time based on the timing and stage of clinical trials underway, manufacturing campaigns for clinical trials, and manufacturing process development projects. We expect our annual 2020 research and development expenses to increase compared to 2019. General and administrative expenses were $3.7 million for the three months ended September 30th, 2020. This represents an increase of $700,000 when compared to expenses of $3 million in the comparable period in 2019. This increase was primarily due to increased personnel costs, outside services, professional fees, and stock compensation costs. The net loss for the third quarter of 2020 was $22.5 million compared to a net loss of $12 million in the third quarter of 2019. The difference is primarily a consequence of the previously mentioned variances. During the nine months ended September 30th, 2020, net cash used in operating activities was $44.5 million. compared to $25.2 million in the nine months ended September 30, 2019. Net cash used in operating activities may fluctuate significantly on a quarter-to-quarter basis, as it has over the past several years, primarily due to the timing of receipts of fees from our collaborators and our payments of clinical trial costs, such as clinical manufacturing campaigns, contract research organization costs, and manufacturing process development projects. At September 30th, 2020, we have $61.7 million in cash and cash equivalents, compared to $35 million at December 31st, 2019. With that, I will turn the call over to Gil VanBochelen for the corporate update. Gil?
spk04: Thanks, Ivor. Good afternoon, everyone. Our last earnings call was held on August 10th, just about three months ago. During that time, we have made steady progress on a number of important activities and initiatives, which reflect our focus on and commitment to completing clinical trials, supporting our partner programs, and implementing new high-value alliances, as well as establishing commercial readiness in multiple areas in preparation for becoming a commercial company. On the clinical trial front, we've been actively supporting the efforts of our partner in Japan, Helios. As Helios has indicated previously, they are approaching completion of enrollment in two clinical trials. Their ongoing pivotal study focused on treating patients that have suffered a serious and debilitating ischemic stroke, the 220-patient TREASURE trial, and the smaller OneBridge trial that is focused on the treatment of patients suffering from acute respiratory distress syndrome, or ARDS. Helios has previously indicated that they are focused on trying to complete enrollment for both trials around the end of this year. If they achieve that goal, it should mean that they obtained top-line results for both studies in the first half of 2021. Specifically, the primary clinical assessment for OneBridge is designed to occur 28 days or approximately one month after enrollment, and after all patients have been enrolled for the trial is followed by inspection, verification, and analysis of the clinical data for the study, which typically takes a few weeks. This means that if enrollment of the last patient is completed by the end of the year or sometime in early January, they should be on track to have top-line results for OneBridge before the end of the first quarter. The primary clinical assessment for the TREASURE trial occurs at 90 days after each patient is enrolled. So depending on when the last patient is evaluated, Helios could be on track to have top-line results sometime in the second quarter of 2021. Once again, after enrollment is complete, inspection, verification, and analysis of the clinical data for the trial will likely take a few weeks to finalize. As we previously announced, we completed the production and delivery of the material to Helios to complete both of these trials last year. In recent months, our focus has been on providing regulatory and other assistance to Helios as they prepare for their rolling submission for potential approval in Japan. In the meantime, we've continued to work with Nikon Cell Innovation, as well as other contract service providers and manufacturing organizations. in anticipation of product launch, following successful clinical trials and subsequent approval. In parallel, we've advanced our own clinical programs and negotiations with other potential partners. On the clinical front, despite the chaos created by the COVID-19 pandemic, which has had a significant impact on hospitals and clinical trials around the world, we have forged ahead in the face of all the obstacles and uncertainties. Our most advanced program is our 300-patient Master's II clinical trial, evaluating administration of MultiStem for the treatment of ischemic stroke. This is a randomized, double-blind, placebo-controlled pivotal trial that has received multiple important regulatory designations from the FDA, including both FAST-TRACK and RMAT designations. As we reported previously, beginning in the late spring and throughout the summer, like many other companies, we experienced significant operational issues at a meaningful number of clinical sites. Some of these disruptions included hospitals suspending enrollment activity in clinical trials, and these institutions were offline for a period ranging from weeks to months. In Europe and other international territories, significant travel restrictions were put in place, and many remain in effect. which is the late sites in those geographies from coming online. Accordingly, we've had to adjust our expectations and timetable for the study. Today, however, we're pleased to announce that all of the MasterSoup clinical sites in the U.S. that had previously been taken offline as a result of COVID-19-associated operational restrictions are now back online, and we've been adding new sites at a meaningful pace. We've also qualified a large number of additional sites for inclusion in the study, beyond our initial goal of 50 sites. Importantly, our aggregate enrollment rate at active sites has exceeded our initial expectations and projections for the study, which we believe reflects strong clinical investigator and staff enthusiasm for the trial. We also believe this illustrates investigator confidence that this treatment approach has the potential to substantially improve the standard of care for patients that have suffered a debilitating stroke and who are facing potential extensive disability and complications in the aftermath due to limitations in current standard of care. While we cannot control the course of the pandemic, how effectively it's being dealt with, the impact it might have at hospitals we are working with or intend to work with, international travel restrictions or other obstacles, we continue to forge ahead. As we described in our last earnings call, our goal is to complete enrollment of the Master's II trial by the end of next year. This will, of course, depend on a number of different factors, including the potential for new or recurrent operational disruptions at clinical sites in light of the recent spike in new COVID-19 cases and the corresponding increase in the number of patients that have subsequently become seriously or critically ill. Significant clinical resources have to be devoted to caring for these patients. And this increase in the number of cases means that clinical institutions and hospital staff may be forced to divert their resources or impose restrictions designed to reduce the further spread of the virus, thereby impacting operations and clinical trial activity, even for unrelated areas. Just to illustrate the increased threat level, as of our last earnings call three months ago, there were approximately 2.4 million active cases of COVID-19 here in the U.S., and 5.2 million cumulative confirmed cases had occurred. As of this weekend, however, there are more than 3.5 million active cases, with more than 10.2 million confirmed COVID-19 cases having occurred here in the U.S. Disturbingly, in recent weeks, the seven-day rolling average of new cases occurring here in the U.S. has surged upward, and last week exceeded more than 132,000 new cases per day for the first time. with a seven-day rolling average of more than 100,000 cases, both well above the observed rates and highs from this summer, which at their peak topped out at about 70,000 new cases per day, and at their low were approximately 35,000 cases. It's somewhat tempting to attribute the recent rise in cases to an increased frequency of testing. However, the data suggests that things are not that simple. While the mortality rate has come down appreciably since the early phase of the pandemic, It's important to recognize that this, too, has increased in the fall and recently exceeded 1,200 reported deaths in a single day here in the U.S., with a seven-day rolling average that has risen from a low of about 520 per day in July to the current level of approaching 1,000 patient deaths per day. Globally, the increased incidence of confirmed cases and mortality levels have risen substantially in recent weeks, both to new highs. the mortality rate from fully resolved cases globally is currently approximately 3.4%, whereas the mortality rate from fully resolved cases here in the U.S. is more than 3.6%, even with the U.S. having one of the highest per capita testing rates in the world. So clearly, the increased number of confirmed cases is also correlated with elevated rates of patients that are subsequently becoming seriously or critically ill, many of whom are dying. In total, there have been more than 243,000 COVID-19-associated patient deaths here in the U.S. So the evidence seems clear that despite the best efforts and advice of politicians and public health officials, enhanced public awareness, increased testing, and the imposition of operational restrictions at schools, businesses, and many other establishments, the pandemic hasn't resolved, and things are currently moving in the wrong direction. While we are encouraged by the announcement earlier today regarding one of the candidate vaccines in development, until and unless effective vaccines are developed, demonstrated to be safe and effective through properly designed and executed clinical trials, with data appropriately reviewed by the FDA and other regulators, and appropriately qualified vaccines are subsequently approved and made available on a large scale with people being vaccinated, we may continue to experience additional chaos and uncertainty for some time while the pandemic continues. However, that scenario also provides us with an opportunity to make a difference for patients that are becoming seriously or critically ill as a result of COVID-19 or other pathogens that can arise and have a similar effect. As I believe everyone listening in today is aware, in addition to our ongoing Master's II clinical trial, we are also conducting a clinical trial to evaluate administration of multi-stems to treat patients with ARMS. This program was designed as a pivotal trial and has received both fast-track and more recently the RMAT designation from the FDA, based on the strength of our prior results and clinical data. In response to outreach from BARDA earlier this year, we worked closely with the FDA to design and initiate a clinical trial focused on the treatment of patients with COVID-19-induced ARDS, which remains the leading cause of death in patients that are becoming seriously or critically ill from the virus. Unfortunately, we have now surpassed 1.26 million COVID-19-associated patient deaths globally, and there are now more than 13.7 million active cases. more than double the number from three months ago. This year, we've witnessed a major mobilization of innovative technology and organizations that are focused on the expedited development and delivery of personal protective equipment, diagnostics, vaccines, antivirals, and treatments for patients suffering from COVID-19. There's been tremendous progress on multiple fronts, but there's been one area that has been glaringly underemphasized, funding to expedite development and delivery of treatments for patients that are seriously or critically ill and on a ventilator because they have COVID-19-induced ARDS. A number of innovative approaches have been tried, including antivirals and others, but none of them have provided highly meaningful or effective relief for these patients, as evidenced by the mounting number of patient deaths occurring here in the U.S. and around the world. The focus of our program has always been on treating patients that are becoming seriously or critically ill with ARTS because our data strongly suggests that we can help them. The strength of our results are why we have received both FAST-TRACK and RMAT designation from the FDA for this program. However, while politicians and bureaucrats struggle to find common ground on what approaches to prioritize, whether and how to fund key programs, and what institutions, groups, or individuals should be in charge of such an effort, Our focus and priority objectives have never wavered. In response to the interest from BART leadership, who reached out to us early in the year before the pandemic was even declared a national health emergency by Health and Human Services, we have prioritized the advancement of multi-STEM for the treatment of COVID-19-induced ARDS, and that led to the design and expedited authorization and initiation of our 400-patient Macovia trial. As we stated in the prior earnings call, we are focused on trying to complete enrollment of the trial sometime next year. However, we have watched with mounting frustration as BARDA funding authorized by Congress in February was commandeered and redirected to other initiatives, and key personnel were transferred out of or left the agency. In our view, while the administration has appropriately emphasized efforts and advancement in certain areas, including expediting development of personal protective equipment for healthcare workers and expediting development of diagnostics vaccines and antivirals they have failed to recognize or address other key issues including emphasizing the advancement of treatments that have shown clinical promise for these seriously and critically ill patients despite our best efforts we've been unable to find common ground with barta while the current leadership remains in place However, following the ultimate resolution of the election, it now appears that there may be a change in leadership and at key institutions, creating opportunities for the new administration to focus on things that have been neglected or ignored. Specifically, putting greater emphasis on expedited development and delivery of treatments for patients that are seriously or critically ill and that are at risk of dying. We look forward to seeing how the new leadership team approaches the challenges of the pandemic and to working with them where possible. As recognized by BARDA early on, one of the strengths of our approach is that multi-STEM is not a pathogen-specific treatment. Our mechanistic and clinical data give us confidence that it has the potential to be broadly relevant to the treatment of BARDS, whether the condition is induced from a virulent coronavirus, influenza, bacterial pathogens, or a range of other scenarios. As we noted in our earnings release today, We are in the process of modifying our clinical study to broaden patient eligibility for the trial and to accommodate enrollment of patients with non-COVID-19-induced SARS. Once these proposed modifications are finalized, they must be reviewed and authorized by the FDA and eventually other regulators as we move toward potential inclusion of clinical sites in Europe, which we intend to do in coordination with a partner. Our goal remains to complete enrollment of this trial by the end of next year. Importantly, companies that we have been actively engaged in partnering negotiations with in recent months also recognize the breadth of potential relevance of multi-STEM for treating ARDS. This quarter, we have moved closer towards establishing an alliance that would focus on expediting development and commercialization of multiple programs in our critical care portfolio. With an emphasis initially on development and commercialization in Europe, while enabling us to focus in parallel on development and subsequent commercialization here in the U.S. This also provides us with an opportunity to achieve several important goals. The first goal is to finalize and implement a transformational alliance with a major multinational partner that has the essential capabilities, expertise, resources, and commitment to work with us to efficiently and successfully advance as well as ultimately commercialize our critical care programs in Europe, with the additional potential to work together to expand the reach of the Alliance to deliver safer and more effective therapies into other parts of the world as well. The second objective is to work with the partner to accelerate and successfully complete ongoing and planned development efforts in multiple high-value indication areas where our technology has shown promise. where there is substantial unmet clinical need and where we both believe there is a strong value proposition for our innovative treatments. Third is to provide us with the substantial financial resources to help accelerate our evolution and grow as we work toward completing the transition to becoming a fully commercial company. Throughout this year, we've been working methodically with prospective partners to define and ultimately finalize an alliance that meets our strategic, financial, operational, and commercial objectives, and we have made steady progress in that regard. We are highly focused on achieving this very important near-term goal with a world-class organization, and doing so in a manner where there is genuine alignment and a solid commitment to achieving success together. Once we accomplish this, we believe it will be a transformational moment for the company and our shareholders. While we approach that important event, in parallel, we continue to advance our other clinical programs and our efforts directed towards achieving commercial readiness. As one example, we are pleased to announce that the University of Texas Health Science Center, or UT Health, has finished required institutional reviews and are now commencing patient screening for the Phase 2 clinical trial evaluating administration of multi-stem for trauma-related inflammation and complications, or Matrix 1, in patients at the Memorial Hermann Texas Medical Center, a leading Level 1 trauma center. This study represents another important application of multi-stem for the critical care area. targeting the severe inflammatory responses and other complications associated with poor outcomes following trauma. As we've indicated previously, this trial is being supported by the Department of Defense through NSECH, UT Health, and APHRSIS. In terms of establishing commercial readiness, we remain focused on our process development efforts to establish manufacturing processes and procedures for large-scale manufacturing of the product and commercialization following approval. conducting planning and facility design work for a commercial-scale manufacturing facility, defining requirements and establishing supply chain integrity essential for large-scale commercial operations, and implementing an enterprise resource planning or ERP system suitable to support commercialization, a process that we first initiated in 2018. We've also continued to map out our envisioned commercialization approach here in North America. In addition to these activities, we are focused on many other important objectives, all of which are in direct support of achieving our goals to develop and ultimately deliver innovative and more effective treatments to patients in areas of unmet clinical need and deliver substantial value to our shareholders. Some of those objectives include strengthening the organization through key hires, which we have done throughout the course of this year. It also means taking proactive steps to strengthen and diversify the board, which we were also in the process of doing. All of this is intended to help the company and serve the interests of our shareholders, and we look forward to updating you on these and other activities soon. With that, I'd like to address a few questions submitted by some of our shareholders. One question that many people have asked since the election is what impact do you think the election results will have on our program to treat COVID-19-induced SARS? The answer is this remains to be seen, and it depends a lot on what the new administration's priorities are and how willing Congress is to support that agenda. At this point, it's too soon to say, especially since the election results haven't been certified yet, but we are encouraged by some of the things that we are seeing. I want to emphasize that our priority is to pursue development of multistem for the broader clinical need, including for use against influenza-induced ARDS, as well as from other viral or bacterial pathogens, or other causes, and to find the right partner to help us in that effort. We're confident that we are on a path to do just that. Another question people have asked is whether the development, approval, and delivery of one or more vaccines against COVID-19 will impact our program or interest in the area. The answer is no, because as we've stated numerous times, in a typical year, even without COVID-19, there are more than 200,000 ARDS patients in the U.S. alone and many more around the globe. Many of these are caused by or associated with influenza, despite the fact that every year many people receive the annual flu vaccine. It's estimated by the CDC that typically less than half the population in the U.S. receives the flu vaccine. Usually it's between a quarter to a half of the population, with a much higher rate of vaccinations in children. In contrast to COVID-19 specific vaccines or antivirals, our approach is pathogen independent, and we believe has much broader relevance against a range of things that could cause or contribute to ARDS. In the past 20 years, we have seen repeated instances of the emergence of novel viruses that can induce SARS and cause patients to become seriously or critically ill. It seems pretty likely that that will continue to happen again in the future. Finally, many people ask about the status of our ongoing partnering negotiations and discussions. For obvious reasons, we can't provide detailed comments on this, other than to say that, one, it's a near-term priority and we've made good progress. Two, we're in negotiations and discussions with very high-quality multinational companies that have the types of capabilities we require in a partner. And three, choosing the right partner and negotiating the right field structure are the most important objectives, and people should be patient while we complete the process. And with that, we'd like to open it up to a few additional questions.
spk02: At this time, I would like to remind everyone, in order to ask a question, press star and the number 1 on your telephone keypad. We'll pause for just a moment to . And your first question comes from Greg Harrison with Bank of America.
spk06: Hey, guys. Thanks for taking our questions. Just wondering on the McCovey study, how are you thinking about the hurdle for success or good data when it comes to COVID patients relative to your previous data in patients with ARDS from other causes? Is there any reason to think that the COVID patients could have better or worse outcomes? And how does that kind of impact your strategy for expanding the study to other ARDS patients and then, you know, what it takes ultimately for approval?
spk04: Yeah, that's a really good question. And, you know, one of the difficult things as it relates to evaluating COVID-19 patients with BART, the good news is that there's a lot of data out there that has emerged over the past few months, actually, that give us some insight into how those patients are faring and some of the complications that are observed. Now, it's absolutely true that some of the patients that I would say on average are Patients with COVID-19-induced ARDS tend to be a bit sicker and experience a higher mortality rate than patients with, let's just call it traditional ARDS, whether it be from influenza or other types of pathogens or other events that can cause ARDS in these patients. But we recognized that very early on when we were designing the study, and so we actually designed it very conservatively. So we did not anticipate the same type of response rate that we saw in our prior clinical trial. We were actually much, much more conservative than that. And we also built into it, into the study design, the opportunity to do a resizing analysis partway through the trial. so that the data safety monitoring board or the DSMB could actually look at the data and then come back and say, we recommend, so one scenario is that our data is tracking closer to what we saw from the last study, and they come back and say, you know what, you don't need to run a study as big as you guys thought you were going to. You can actually downsize the number of patients that you include in the trial. Another possibility is that we're close to our somewhat more conservative expectations, and they say, no, 400 patients is about right. We just recommend that you continue with the path and you continue moving on that. Or they could come back with something that's in between those two, which is to say, hey, you don't need to go quite as far as you thought you were going to go. You can do something that's a bit less. Or conversely, they could say, no, we recommend that you increase the size of your study by some amount just based on the emerging data set that we see partway through the trial. So all of those are possibilities. And I think that we've tried to design this approach such that we don't need to make hard and fast decisions. assumptions or predictions is basically designed with some flexibility and also appropriately leveraging the data that we generated from the prior clinical trial. In terms of how we determine success, the primary endpoint of this study, we don't think it's going to change as we go through this exercise. It's really about how large the study might be and then modifying inclusion criteria that we allow for patients in the study. Modifying the inclusion criteria is a reasonably straightforward exercise, but there's still a process that you have to go through with the FDA in order to get them to sign off on that. We don't think there's going to be any problems on that front. For us, it was simply finally reaching the conclusion that, you know what, it's time to basically initiate that process, move forward, and advocate for broadening of the study. But, again, we will take a look at the data in terms of making that. We'll take a look at the COVID-19 patient data. We'll take a look at the other non-COVID-19 induced SARS patient data. And we'll evaluate all the patients in the trial holistically. And that's something that we look forward to discussing with the FDA in the not-too-distant future. So our belief is that if we see a reduction in mortality and we see an improvement in ventilator-free days and the clinical metrics that the FDA has signed off on in terms of the things that are built into the study design, But that is going to remain intact. It's really just about modifying, again, the types of patients that we include in the study and then moving forward on that basis. And it's also fair to say that our potential partners or partner may actually have insight into how they would like to think about the trial as it relates to, for example, clinical sites in Europe.
spk06: Okay, that's helpful. And then I guess just to follow up on that, How are you thinking about your enrollment speed assumptions in light of the increase we've seen in the pace of infection? Is that kind of assumed already in your guidance that you're trying to fully enroll the study by the end of next year, or could that be sooner based on the increase we're seeing lately?
spk04: If we think it's going to happen sooner, then we'll give guidance to that effect once we finalize our strategy for Europe, for example. But the two big things that we're currently focused on right now are, number one, actually broadening up the inclusion for other non-COVID-19 ARDS patients. And then number two, the potential for more countries and more clinical institutions that are seeing a meaningful number of patients. But right now our goal is to try and get it done sometime next year, and we'll provide further updates as we get a little bit further along and are closer to providing some more granular perspective on that.
spk06: Got it. Thanks.
spk04: Thanks very much.
spk02: And your next question comes from David Hillack with SMBC NecoSecurities.
spk07: Hey, guys. Congrats on the progress this quarter. Just had a few questions. So first, just on the regulatory path for Europe, can you just remind us, are you looking to file an MAA, you know, in the same timeframe as the DLA for ischemic strokes? And then have there been any differences in the, you know, in the types of feedback or guidance you've gotten from CMA versus FDA on what, you know, the agencies are looking for in terms of results, outcomes?
spk04: From the stroke trial specifically?
spk07: Yeah.
spk04: Yeah. No, actually the feedback has been pretty consistent and very much aligned between Europe and the FDA here in the U.S., It's been that way from the beginning. There was only a slight difference between the perspective, the feedback that we got from PMDA in Japan when we engaged in our initial discussions with them very early on in the process. But PMDA and the FDA have been pretty aligned in terms of how they do things. Yeah, ultimately, in terms of the filing strategy, in part, that's also going to depend on the preferences and kind of the orientation of our partner in Europe. And my expectation is that that's going to be done in parallel and may even be done kind of around the same time as, you know, both jurisdictions. But some of that actually comes down to things that haven't been decided yet, which I think will, once we're a little further down the road, then we'll be able to make a determination on that.
spk07: Got it. And I guess, you know, on the topic of the EU partnership, I know you're what limited and what you can disclose given the, you know, the conversations remain ongoing. But, you know, in terms of a potential economic deal, is that something, you know, you think can be improved by having, you know, data in hand from ARDS and, you know, and or stroke? And then in terms of sort of the priorities, you know, how do you think about the capabilities of the partner versus, for example, the ability to provide a upfront payment?
spk04: Well, obviously, a meaningful upfront payment is mandatory for us to do a partnership. I think it's fair to say that we're not looking for something incremental. We're looking for something that is very substantial that I think our shareholders would look at that and say, yeah, this represents a transformational type of alliance between the company and the partner. I didn't quite understand the first question that you were asking, so maybe you could just restate that.
spk07: yeah i i was wondering if um you know waiting until sort of post the helios readouts and having that data in hand is something that you feel would help you in terms of negotiations or bringing um you know some additional data points to the table yeah it's you know it's an interesting question um so again we're more focused on this alliance as a near-term priority and uh
spk04: So I guess I don't want to get too granular in terms of how I respond to that, other than to say that this is something that we're actively working on. It's something that we really regard as a near-term objective, and the companies that we're in discussions with know that. As it relates to, I think, the second question related to kind of the portfolio structure or the portfolio nature, we are very much focused on the capabilities of the partners. That is one of the things that we've been actively evaluating. What are the capabilities of the partners in the therapeutic areas that we're going after? That's actually critically important for us, and it's something that we strongly emphasize and have spent a lot of time doing due diligence on the companies that we're in negotiations and discussions with to kind of evaluate what might make them a good partner. Because as you can imagine, obviously the financial elements of this and the overall structure is very, very important. But what you really also want to do is you want to make sure you're aligned with somebody that understands the market, the critical care indications that we're focused on. They have demonstrable capabilities and expertise in those areas. And they've thought a lot strategically and commercially about how to go after it. And so that is something that the team has really been emphasizing in our conversations with prospective partners. And I think that they feel really good about the information, the things that we've learned, Obviously, some entities profile better than others, but I will say that all of the companies that were in discussions with are serious contenders. They're all serious players.
spk07: Okay, great. Thanks for the color on that one. Thank you.
spk02: And your next question comes from Chad Messer with Needham & Company.
spk07: Great. Good evening. Thanks for taking my question. So, you know, it's pretty exciting. The next data we're going to get here is going to be from Helios, and it's going to come pretty quickly in 2021. Treasure, obviously, we've talked about that's a good-sized stroke trial there. I'm a little more interested in your perspective on what we might expect out of OneBridge. It's smaller and it has a small COVID cohort there. Just wondering if you have any perspective on what you think that might be Helios in terms of a label or an ability to sell with PMBA. particularly given their leniency towards regenerative medicine, and then also in consideration of the fact that there is potentially some positive growth data from a larger study coming behind that.
spk04: Yeah. So as it relates to the ARDS trial, it's It's interesting, it's a smaller study, but there's actually several relevant examples, or that we in Helios believe are relevant examples, where companies have received approval under the regulatory framework in Japan that first went into effect just several years ago. And so the two studies that we're talking about here, the 220-patient TREASURE trial, that's a larger, more robustly powered study. Of course, our study is even larger at 300 patients, and it's even more robustly powered. So I think we're going to learn a lot on the stroke landscape from both of those trials. In terms of the smaller studies, in some ways it was reflective of the approach we took in our study, which was about 30 patients and which actually showed pretty substantial data that we were having a positive impact and benefiting a lot of the patients that were enrolled in the trial. Now, of course, the one difference is that ours is a double-blind randomized placebo-controlled trial, and their study is an open-label trial. But nonetheless, there are examples in Japan that, based on open-label or even small or modest data sets, that PMDAs reviewed that data and said, hey, this represents an area substantial on that medical need, and we're willing to provide conditional approval for an investigational therapy or a product on that basis. Approval using a conditional approval pathway in Japan means you're on the market for seven years, and you're eligible for full reimbursement. So you'll get a full reimbursement for your product for a period of up to seven years, but then during that timeframe, you have to run confirmatory studies that the PMDA has to sign off on to demonstrate that your product is, in fact, safe, well-polarated, and shows meaningful therapeutic benefit. But the first hurdle, in terms of conditional approval, which I think is really being emphasized for, or reserved, if you will, for things that are targeted at patients who or indications where there's substantial unmet medical need and there's really limitations, meaningful limitations in standard of care. That's really what that, I think, doorway is best suited for. And Helios decided that they were going to run the study that they're running and that that might provide them with the basis for pursuing that as a potential option and approval. But at the end of the day, they're going to look at the data, see what they've learned, have a conversation, obviously first with us, but have a subsequent conversation with PMDA, and make a determination about how they think they should proceed. And I think that's a very reasonable thing to do. And, of course, they're going to have the opportunity to learn from from our larger trial that we're running when we have data results from that, just like we're going to have the opportunity to learn from their treasured trial on top of OneBridge, and then they're going to have the opportunity to learn from our Masters II trial as well. So we're both learning from each other and benefiting from the investment that we're each making in conducting these clinical trials and building additional information. So I'm not sure if that fully answers the question that you had, but happy to answer a follow-up if you want.
spk07: and they're very excited.
spk04: Yeah, I think that's exactly right. It's going to be very exciting next few months and the first couple of quarters of the year, and I think even out beyond that. So we're looking forward to it. And the team here is pretty fired up about it. I mean, there's obviously a lot of stuff going on around us, but I can honestly say I'm incredibly proud of the team, and I know Ira and Karen are as well, for how the team has navigated through this stuff and dealt with all the operational obstacles or logistical things that people have had to deal with. And they've just never lost focus and they've continued to move ahead. And I think it's a testament to the strength of our team and how excited and committed they are.
spk07: Looking forward to the progress. Thanks, Chad.
spk02: And your next question comes from Jason Kohlberg with Boston Genes.
spk05: Hi, Gil. I want to ask you a question kind of picking up on where the question started, which is when you're pursuing a disease like stroke or a disease like ARDS or even COVID ARDS, there are a lot of variabilities. There's a lot of noise. There's competition. You know, clearly one thing that atherosclerosis understands, given your experiences, is how you zero out that noise and the assumptions that you're making about power that leads you to clinical trial size. So I wonder if you could try to be a little bit specific on what those assumptions are, whether it's the COVID-based ARDS study that you're working on now, and just remind us kind of where we are in terms of power on both the Japan and the global stroke trials. Thank you.
spk07: Okay.
spk04: It's interesting, you know, when you're making assumptions as you move into a clinical trial, we always think that the prudent thing to do is take what you've learned and that you're highly competent in. So in this case, our knowledge about what the historical landscape looks like for patients that suffer from ARDS. And we know historically the mortality rate for patients in the ARDS area has typically been around 40% plus or minus, right? There are some, if you focus on slightly less severe heart cases, the mortality rate can be somewhat lower than that. But basically, we tried to learn from a lot of the data that was out there when we were designing our initial study in terms of the types of patients that we wanted to enroll in the trial and how we wanted to analyze the data. You'll recall that When we set that trial up, we prospectively defined two populations. One, the entire group of populations in the trial, and then more specifically, the more severely ill patients with ARDS. And sure enough, it turns out that the mortality rate for the trial as a whole was about 40%, which is very much in line with historical expectations. And the mortality rate for patients with more severe ARDS was about 50%, which is also more in line with historical expectations, despite the fact that it was a fairly modest data set. But when we analyze the data, those are some of the things, along with the biomarker data that we got, the obvious clinical improvement in things like getting 45% of the patients off the ventilator within seven days or less. In contrast, only 20% of the patients that were being treated under best available standard of care, the ICU-free days, the ventilator-free days, and everything else. But we believe that it wouldn't be the best thing to take your data, even though it's just really, I don't want to say it exceeded our expectations, but it came back as a very strong pattern that we were helping these patients. And particularly in light of the fact that COVID-19 is something that nobody had ever seen or dealt with before, and the early data that was coming out suggested that the mortality rate and the impact on these patients was pretty dramatic and pretty negative. So we made the decision, particularly when we were in discussions with the FDA and going back and forth, that we were going to make a conservative set of assumptions about the clinical effect that we would see that were meaningfully below what we saw in our last study. And so, in a way, that's a philosophy that we try to employ in other things. So, for example, we also did the same type of thing in our master's two trial. We, for example, the study in Japan is 80% or better power to meet the endpoint for that study. Our trial is actually powered well over 90% to achieve statistical robustness, and we designed it that way intentionally. So we were trying to be conservative and, if you will, kind of overbuild it in terms of what people would normally do. Just because we know that when you run a trial, sometimes your patient population might be slightly different than you had in the prior study. And so we really wanted to make sure that we were being conservative about how to design the studies and conduct them so that we maximized our probability of being able to achieve success at the end of the day. In the TREASURE trial, we also did things like we knew that we were going to be able to move our window of treatment earlier than in the last study, which we felt would meaningfully move the odds further in our favor because the last trial told us that the earlier we were treating patients within that 24 to 36-hour window last time around, the better that the patients were doing. So this time, by moving the trial, the treatment window to 18 to 36 hours and emphasizing early treatment in the study, we felt like we might be able to further maximize our chances of success and move it in the right direction. And there's a number of things that we did to really try and leverage what we learned from the last studies that we ran, both in ARDS and also in Master's I or stroke. and apply them in the current large studies that we're currently running, but making conservative assumptions about the mortality rate. So, for example, when we saw a difference in the seriously ill patients, so mortality rates of 25% in the multi-stem treated patients and 50% in the more severely ill patients, we didn't assume that we were going to see that big of an effect in the McCovey study. And same thing when we looked at other parameters. We didn't assume that it was going to line up perfectly. We backed off that with the clinical parameters so that we could design the study in a way that we think was more conservative. But the other thing that we did, as I mentioned, is in the Macrobia study is building in the opportunity for doing a resizing analysis by the DSMB, partly through the study. evaluate that data, reflect on it, and then give us some feedback about, okay, where do we think, what's the appropriate sizing of the study given the company's objectives based on the data set partway through the trial? And we thought that was a reasonable and prudent thing to do, and we still did. So just as we thought it was a reasonable and prudent thing to make conservative assumptions about what we might see in Masters II, to kind of overpower that, if you will. Those things don't care. Sorry, go ahead.
spk05: So how close are we in terms of, you know, and I hate to use the phrase confidence level, but how good do you feel about where you are in terms of the art study now? Or I guess you just have to wait to kind of get feedback from the DSMB.
spk04: Yeah, we just have to wait until we get that feedback. So first off, our policy is that we don't watch the pot while it's boiling. So we're not inspecting the data as it rolls in. I mean, obviously, there's a team of people that are responsible for doing that kind of thing. But, for example, I don't scrutinize the data when it comes in, and nor do other members of the leadership team. We focus on the execution of the trial and getting there as quickly as we can. So it would be, I think, a folly to try and prognosticate blinded data or interpret it and make a determination about what it might mean or what it might not mean. We believe that if we design the trial the right way, if we select the endpoints properly, if we've got full support and buy-in from the FDA and other regulators, and we execute the study properly, and we're working with good sites that understand exactly how they're supposed to evaluate patients, both in terms of enrolling them, but then also during the course of the conduct of the trial, that that's how we optimize that, plus the design elements, obviously, which are critical. That's how we optimize our chances of success. And that's really what we're focused on doing.
spk05: Thank you, Gil. Appreciate the update.
spk02: Yeah, thank you, Jason.
spk04: Well, once again, just in closing, I'd like to thank everybody for listening in on the call today or the webcast, and for your faith and your confidence. We remain fully committed to advancing our programs and achieving our goals, and we look forward to making additional announcements and providing further updates as we move forward.
spk02: Ladies and gentlemen, this concludes today's call. You may now disconnect.
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