Athersys Executive Insights: FDA Feedback, Competition

On Monday, Athersys, Inc. (NASDAQ:ATHX) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared with analysts and investors.

FDA Feedback

Edward Tenthoff – Piper Jaffray: My first question really has to do with the meeting with the FDA. It sounded like that was a very encouraging discussion, now granted again with the FDA they always want to make sure that everything is in line, but how quickly do you think this would be something like it could move into a pivotal study and how large do you think that might have to be?

Gil Van Bokkelen Ph.D. – Chairman and CEO: Well, I think, it’s still a little bit too early to speculate on just how quickly we could initiate that next study. I think, we really believe in dotting all the Is, and crossing the Ts, and I think, the feedback that we got from the meeting again was very, very positive. There was good input on a number of the questions that we asked the agency. There was a couple of questions, which they actually deferred on until they actually saw the detailed clinical trial plan and the statistical analysis that goes with that. So, we’re hard at work actually preparing that material, so we can submit it to the agency for their review, and then actually really nail things down from there. Our goal obviously is to get this clinical trial defined, designed and defined and set up and initiated as quickly as we possibly can, and I think, the exciting thing is that we believe that if we do this right, we can actually this on an accelerated basis. In terms of the overall size of the study, just kind of back of the envelope, we think that this could be a study that could involve something in the neighborhood of 300 to 350 patients, but again that’s not written in stone. There is a number of things that we really want to make sure we have clarity on, and defined with the FDA, and so we want to take it one step at a time before we get people kind of mentally committed to what that trial is going to look like.

Edward Tenthoff – Piper Jaffray: Based on the positive panels of last week, would this be, would these preclinical obesity assets be something that you would choose to partner and have you begun discussions along those lines at all?

Gil Van Bokkelen Ph.D. – Chairman and CEO: Yeah. We actually have had discussions with people that are very interested in our obesity program, and I think that one of the things that I think has held things back a little bit historically is the real uncertainty around whether or not it was really and truly and possible to get a program past the FDA, and I think that – the recent indicators are that there has been a lot of additional work done to analyze safety and kind of evaluate the risk benefit ratio and I think certainly the arrows seem to be pointed in the right direction in terms of being able to get one or potentially both of these therapies approved and under the market. I think the reason why that’s important from a partnering perspective is, is that gives people a little bit more comfort that it’s possible to go down this path, do all the things that are necessary in order to demonstrate safety and efficacy in a reasonable way. I mean there has been speculation over the past several years that the size of the studies or the length of the time that might be required in order to demonstrate safety and efficacy may just make it impractical for developing an obesity drug, and I think the current signs really indicate that that’s not the case. We know that there are a number of companies out there that are really, really interested in the obesity area, and we feel like we are in a very strong position. I mean we’ll continue to advance this program very quietly in the background, not focusing a lot of attention on it, and that’s been the prudent thing to do, but it’s something that are tremendously excited about, because we do believe that with the data that is illustrated on our website and are forcing an enormous amount of additional information behind that that we have a very compelling case for having a best-in-class program here.

Competition

Stephen Brozak – WBB Securities: Actually, I’d like to follow up on your last statement and then I’ve got a follow-up after that in terms of MultiStem. But let me understand this and make sure that it is crystal clear. What you’re looking at is the situation where you believe that the Vivus and Arena potential approvals will be accretive for your progress and for your franchise is a fast follower. Is that pretty much accurate and how would you say – obviously, we’ve had a chance to very quickly clean over the material that you published to your website. But how would you say your program would be accretive in terms of let’s say just going over safety and efficacy.

Gil Van Bokkelen Ph.D. – Chairman and CEO: Those are great questions. I am actually going to let John address some of those points Stephen and then I’ll add some colors to it actually.

John Harrington Ph.D. – EVP and Chief Scientific Officer: Right. So, as Gil mentioned, we view this program as having best-in-class potential and that really centers around the selectivity profile of the compound, the compounds that we’re developing and again, we’re not talking about a single compound or single compound series; we’re talking about a lot of breadth here across multiple chemical classes when we’ve been able to achieve this selectivity profile, particularly at two receptors the 5HT2a and the 5HT2b receptors which have been associated with the safety concern around (indiscernible). Obviously related to 5HT2b action but importantly 2a has not been – it has not received the same attention on the safety side, and it’s clear to us that it’s important to have a wide safety selectivity window at 2a. And just to put that in context, if you look at the efficacy profile of lorcaserin in the early clinical studies, Phase IIa, Phase IIb studies, lorcaserin which has very modest selectivity at 5HT2a was able to achieve a dose proportionate increase in efficacy all the way up to the maximum tolerated dose without any evidence of the efficacy reaching its maximum, and so what that says is if one could go to a higher maximum tolerated dose by having a selectivity profile, it’s quite possible and maybe likely that one would be able to achieve better efficacy as well. So, we – as we look at our program, we see an opportunity to improve not only the efficacy profile of lorcaserin but also improve upon the safety around both adverse events, psychiatric events which were observed at some frequency with lorcaserin, but also reduce any risk that might be associated with valvulopathy. So we see these assets as being valuable to the company, and as Gil mentioned, we’ll be – we’ll continue in our discussions with potential partners around monetizing this asset.

Gil Van Bokkelen Ph.D. – Chairman and CEO: Yeah. And just to add a little bit of color there. The first thing is that we applaud both Vivus and Arena for their tenacity and their diligence in advancing their respective programs. We are unabashedly rooting for them both to be successful. We think it would be great for the field. We think that it will help many, many patients that need help and will provide clinicians with important options in terms of being able to treat patients that have obesity or diabetes and really need help. So, in some ways we are kind of benefiting from their experiences and all the hard work that they put in. Obviously, we are a little ways behind them in terms of advancing our program, which is sold at the preclinical stage. But I think we are taking a longer term view here, which is what’s possible down the road. As John was saying, we believe that we’ve – we’ll we put in an enormous amount of time, effort and energy to characterize the similarities and the differences in terms of the tight compound that we have been developing versus the other things that are out there. But I just want people to understand that we are rooting for both those companies and really applaud them for what they’ve been able to do.

Stephen Brozak – WBB Securities: That’s an overarching answer and I really appreciate that in the positive. Obviously, getting back to MultiStem, there’s one question because you talked about – you briefly hinted about the submission and everything else as far as your next steps. I’d like you to just give me – or give a quick answer in terms of, there’s obviously some PDUFA changes on the – in the all thing. How would you feel a product like MultiStem given it’s different applications might benefit from different changes and what do you think – and I am not going to ask you to speak for the agency, but what do you think some of the strengths that you’ve got are going forward. With that, I’ll jump back into the queue.

Gil Van Bokkelen Ph.D. – Chairman and CEO: What’s interesting is part of the one of the other halves that I wear which is part of the biotechnology industry organization. We’ve been actively involved in monitoring what’s going on in terms of the PDUFA renegotiations which are expected to be implemented sometime this summer. One of the very interest aspects of some of the legislative language that’s been introduced in the PDUFA is a broadening of the framework for accelerated approval for therapies that are designed to treat serious or significant unmet medical needs. I think if you look at our overall development portfolio, many of the indications that we’re focused represent very serious truly unmet significant medical needs and I think that what that opens up the possibility for is that we might be able to utilize this broadening accelerated approval pathway in multiple different ways over time. The other thing that I think is very relevant is that as we’ve been building a broader and broader foundation of safety data from the clinical trials that we’ve been engaged in MultiStem and as we continue to expand that from the trials that are now ongoing, we believe that’s actually going make it easier to advance other programs in other indications that are not yet at the clinical stage. So, this is really part of a broad-based strategy that we are implementing that we think will allow us with a little bit of success from these early indications that will really open the door for some exciting opportunities where we can get new therapies that are really needed by patients that are really need help develop in a very rapid and efficient manner. But we’re going to do it prudently and we’re going to do it in a very collaborative manner with the FDA. We’re not going to cut corners and we’re going to make sure that we’re really committed to doing it property.