Q2 2020 Athersys Inc Earnings Call
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They were saying I walk out there so.
We see 20 results conference call at this time I'm just trying to look the only mode. I didn't speakers presentation to be a question answer session to ask the question. During the session issued a press star one on your telephone if you're quite for their systems. Please press Star Zero I'll now turn the conference over to your Speaker today, Karen How did you director of corporate Communications Investor Relations.
Thank you. Please go ahead.
Thank you Jesse and good afternoon, everyone.
She mentioned actually I, just want any director of corporate communications and Investor Relations for Athersys.
Thank you for joining today's call. If you do not have a part of the press release issued at the close of market. It is available on the Athersys website at <unk> Dot com.
Uh Huh Chief Financial Officer is here with us to provide us with the financial hockey and Gil Van Bokkelen, Our chairman and Chief Executive officer, well be providing our corporate update.
Todays call is expected to last 45 minute and a webcast of the audio will be available three hours. After the call inclusion on our website under the events section.
The access information for the replay is awesome in today's press release.
Any remarks that we may make about future expectations plans and prospects constitute forward looking statement.
For purposes of the Safe Harbor provision under the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from them as indicated by the forward looking statements as a result, various important factors, including those discussed in our form 10-Q, 10-K and other public.
Hi.
We anticipate that subsequent events and developments may cause our out to change.
Well he made a lot 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 maybe listening to the replay. This call is held and recorded on August kind of Twentytwenty.
Since then we may have made announcements related to the topic just got so please reference our most recent press release it under SEC filings.
With that I'd like to turn the call over to Ivor Oh I her.
Thank you Karen.
Good afternoon, everybody once again, thank you for joining todays call.
Hi, I'm I've heard Mcloughlin, Chief financial officer of emphasis on it. It's my pleasure to give you an overview of the financial results for the second quarter of Twentytwenty.
For the three months ended June Thirtyth Twentytwenty, we recognized $84000 in revenues compared to 4.3 million for the three months ended June Thirtyth 29 team.
$4.2 million of the revenues in the prior period, we generated from our collaboration with Healios related to manufacturing services performed.
We expect our collaboration revenues to vary over time, because we contract with he lives to before manufacturing services and that's we potentially into into new collaborations.
Our research and development expenditures with $13.8 million for the second quarter Twentytwenty.
Compared to 11.1 million for the comparable periods in 2019.
The 2.7 billion increase is associated with increases in clinical trial and manufacturing process development costs of 800000.
Internal research supplies of 500000.
Stock compensation costs of 500000.
Personnel costs of 300000 outside services, the 300000, and other research and development costs of 300000.
Our clinical development clinical manufacturing and manufacturing process development expenses vary over time based on the timing and stage of clinical trials underway.
When you count fracturing campaigns for clinical trials and manufacturing process development projects.
We expect our annual Twentytwenty clinical development costs to increase as compared to 29 team.
General and administrative expenses were $4.4 million for the three months ended June Thirtyth Twentytwenty.
This represents an increase of one point fivemillion when compared to 2.9 billion in the comparable period and 29 team.
The 1.5 million dollar increase was primarily due to increased personnel costs outside services professional fees and stock compensation costs.
Net loss for the second quarter, Twentytwenty was $18.4 million compared to a net loss of 9.7 billion in the second quarter of 2019.
The difference is primarily a consequence of the previously mentioned variances.
During the six months ended June Thirtyth Twentytwenty net cash used in operating activities was $24.8 million compared to 17 million in the six months ended June Thirtyth 29 team.
At June 30 of Twentytwenty, we had 18.7 million in cash cash equivalents.
Page at 35 million at December 31st 2019.
The June Thirtyth Twentytwenty balance includes the proceeds from our public offering in April.
The net proceeds of which were approximately $54 million.
It also includes the approximately 7 million dollar proceeds received from the exercise of Healios as Warren as previously disclosed.
Further in accordance with our prior agreement with he lives we will be filing a form S. Three to register shares purchased by his peers. This week.
With that I will turn the cocoa overkill for the corporate update Gill.
Thanks, I worried and good afternoon, everyone.
I'd like to begin by providing an update on the status of our interactions with BARDA and some related issues, including a brief synopsis of the current state of the Cobot 19 pandemic.
Our last earnings call was held on May 7th just over three months ago.
As of that date, there were approximately 1.3 million confirmed cases of cobot 19 today. It occurred here in the U.S. and as of today. There have been approximately 5.2 million confirmed cases, representing an increase of 3.9 million new cases in just three months.
This increase has occurred despite the progression precautions and protective measures that have been implemented.
And then number would surely be much greater if those precautionary steps in protective measures have not been taken.
Well these numbers represent the cumulative cases, it's also important to recognize that there are currently nearly 2.4 million active cases here in the U.S.
As it may seven less than 80000, Kobin 19 related deaths that occurred in the U.S.
Based on the seven day rolling averages at that date patient deaths were occurring at a rate of approximately 1900 per day.
As of today, there have been more than 162000, Kobin 19 related deaths here in the United States.
Thankfully the mortality rate has fallen over the past three months to the current seven day moving average of a little over 1000 patient deaths per day.
Current projections or the total patient deaths here in the U.S. will likely exceed 300000 by the end of the year and may be well above that number.
Many people are concerned about the potential impact of students returning to school and mass and the subsequent impact that may have on increasing the spread of the virus as evidenced by what has transpired and some other countries around the world.
However, we are encouraged that public health officials in school boards are taking the issue seriously.
And our implementing a range of protective measures, including offering online educational options for the fall term and likely beyond.
[noise] globally, the numbers have grown it didnt, even faster rate as it may 7th there were 3.85 million confirmed cumulative cases of cobot 19 around the world and we're now approaching 20 million confirmed cases with more than 6.4 million active cases.
As it may seven there were approximately 272000 deaths globally and as of yesterday, there were more than 734000.
[noise] thankfully in the vast majority of cases patients infected with a virus will be asymptomatic, where mildly symptomatic.
The ultimate resolution of viral infection has three basic outcomes either the patient is determined to be virus free and fully recovers.
The patient is determined to be virus free but experiences some form of disability and or quality of life impairment in the aftermath or the patients has not survive.
Among the fully resolved cases, where the patient has either been determined to be virus free or has unfortunately dot the global mortality rate based on more than 13.6 million fully resolved cases is approximately 5.4%.
Whereas here in the U.S., it's approximately 5.9% based on more than 2.8 million fully resolved cases.
Given the outstanding healthcare generally provided in the U.S. the reasons for this this this difference.
We're not fully understood.
Complications from Kobin 19 are clearly multifaceted, but several things are now very clear first the leading cause of death. Among kobin 19 patients is viral induced acute respiratory distress syndrome or art.
Which is caused by an over reactive hyper inflammatory response induced by the virus.
As I believe everyone listening on this call is well aware the data from our previously completed randomized double blind placebo controlled trial demonstrated that Multistem has clear therapeutic potential in this area, where independent clinical investigators observed evidence of a meaningful reduction in ours related mortality rapid improvement in pulmonary.
Function substantial increase in ventilator free days and I see you free days during the 28 day clinical assessment and dramatic improvement in functional independence and patient quality of life outcomes over the one year follow up.
The fast track designation, we received from the FDA provides further supported this potential.
Second other complications that may occur from cobot 19, such as stroke in renal complications are also areas, where multistem is already shown promise as evidenced by our ongoing phase three trial into scheming stroke and studies with collaborators, including Dr. heavily Todd Thompson in the UK illustrating that but.
Central benefit of Multistem for improving renal function.
Third while there has been a clear emphasis on the expedited development of diagnostics vaccines and anti viral treatments.
We believe that today, there has been insufficient support for innovative technologies that have the potential to treat patients that are becoming seriously or critically ill from cobot 19 and that require ventilator support.
Based on the prior clinical results from our completed study evaluating the safety tolerability and potential benefit of Multistem for treating patients with Bart we were able to move very quickly in March and April with the FDA and collaborating clinical sites to design and initiate a pivotal trial for a value.
Duration of Multistem to patients with cobot 19 induced darts.
In the span of only a few weeks we designed the study submitted it to the FDA for their review responded to their questions comments and request for additional information.
Received FDA authorization for the trial screen initial clinical sites for the study obtain IR beer institutional review board approval.
Successfully launched the trial and enrolled the first patients into the study.
All of this was achieved while a statewide locked down was in effect here in Ohio, and during which many of our employees work remotely.
We announced that FDA authorization of the trial in mid April and less than three weeks later announced the initiation of the study and enrollment of the first patients into them a cobia trial in early Matt.
Well all of this was going on as we announced in the last earnings call. We were working in parallel with the biomedical advanced research and development authority or BARDA.
As we've described previously we were invited to initially engaged with them in late January early February.
Pardon leadership recognized in appreciated several key points, including one that there is no effective treatment for ARX currently available and it is the primary cause a mortality among patients suffering from virus or other pathogen induced severe pulmonary dysfunction and inflammation.
And in the past few years, there have been multiple instances of this although this pandemic is by far and away. The worst example.
To that Multistem acts through mechanisms that are not pathogen or virus specific and therefore, it has the potential to be broadly relevant in situations, where new or recurrent viral pathogen outbreaks occur that caused severe pulmonary inflammation and arts.
And three that in contrast to traditional pharmaceuticals, or biologics that after a single mechanism of action.
Multi stem as a living cell therapy that has the potential to act through multiple dynamically regulated pathways and mechanisms of action.
We believe this is essential as recent clinical studies with treatment targeted only a single inflammatory mechanism of action or ammo way has failed in patients with Kogan 19, and do start that require ventilator support.
Following our presentation to the Corona Watch task force in February which resulted in our technology being designated as highly relevant for the pandemic.
We were invited to submit a formal proposal under the brought agency announcement or be a issued in March describing how we would clinically evaluate and expedite development of Multistem for this and other similar situations that are likely to arise in the future.
We submitted that proposal for BARDA review in late March and were then notified by BARDA in mid April that the proposal had been reviewed and rated as acceptable, enabling subsequent discussions and negotiations to finalize the project.
Following several rounds of additional discussions and correspondents. We were asked to provide further information on certain point, which we fully complied with.
Upon review of this information we were invited by BARDA to submit a revised proposal and the contracting team provided a list of specific requested revisions and questions.
We accommodated 100% of the requested revisions from BARDA and our revised proposal and fully addressed all of the questions provided to us.
To ensure that we had adequately addressed all the points and it's a proposal was properly format. It. In addition to our other advisors. We also engaged an outside expert consulting firm that is highly experienced BARDA proposals and government contracts.
They concur that we had fully address each of the outstanding points and the proposal was properly organized complete and format.
Our revised submission underwent a lengthy and detailed review at BARDA lasted several weeks, where upon we were advised that the technical review had been completed with only two minor remaining questions, which were both promptly and fully addressed.
Our understanding at that point was that the only remaining issue that needed to be resolved with the cost share ratio for the conduct of the pivotal clinical trial and that the next step was to enter into a contract with BARDA.
We previously been informed by BARDA that any expenses incurred by us prior to the execution of the final contract would not be reimbursed.
We acknowledge our understanding of the point, however, given the urgency of the pandemic and our desire to move forward as expeditiously as possible.
We advise the BARDA team that we would proceed with the FDA discussions engagement with our CRL and certain study site investigators and initiation of the study while we worked in parallel with BARDA to complete the contracting process.
Given the strength of our data how quickly the process had advanced to that point the enthusiasm expressed by BARDA and our desire to move as quickly as possible to help patients that are becoming seriously are critically hill. We felt this was reasonable imprudent.
It was somewhat of a surprise therefore, when we saw that in early June that BARDA had publicly announced the discontinuation of the evaluation of Immunomodulatory therapies under section 9.3, and certain other activities under the VA.
Initially however, we do not believe this would were should apply to us given that our proposal had already been evaluated and accepted.
We learned and a subsequent discussion with BARDA that they had been instructed to discontinue all activities related to the development of Immunomodulatory therapies for treating kobin 19 induce pulmonary damage.
It is also important to know that BARDA personnel indicated to us that this was assist decision that they did not agree with.
We later learned that we were the only company that is submitted a proposal under BA section 9.3 that was reviewed and formally accepted addressed all of the questions that were asked fully complied with all BARDA requested proposal revisions and an undergone a complete technical review.
Since our June discussion with them, we have been engaged in additional interactions with BARDA and the department of health and human services or HHS, who have informed us that our proposal remains under consideration and is under a formal review.
However, no timeline has been given per when we should expect a response.
We note that all of the previous funding allocated to BARDA under the supplemental appropriations passed in mid February has been designated.
Therefore, any additional awards from BARDA will likely require funding from Congress.
Given the discussions in Congress have recently broken down in there appears to be a significant impasse nobody has clarity on what might happen from here.
We understand that the most recent version of the legislation contained a significant amount of proposed funding for BARDA.
But even if the legislation passes it's unclear whether such funding will actually be administered through BARDA or whether it will be funnel through other initiatives such as operation Warp speed project active or through other vehicles.
As we've stated previously in regards to our efforts nothing is final until the process is complete and.
And we cannot provide any assurances at this point on the eventual outcome.
We can only state that we remain committed to this initiative and to helping patients that are seriously and critically ill.
In the meantime in addition to BARDA, we've submitted information to project active and that information is also under review.
So as not to jeopardize either of these parallel efforts, we're not able to provide further comment at this time. However, upon the completion of the process, we intend to provide more thorough and detailed update.
To be clear, we remain supportive of the administration's efforts to develop diagnostics vaccines and anti viral treatments for patients with cobot 19.
However, like many others, we have questions and concerns about the degree of support being provided for innovative therapies focused on treating patients that are seriously are critically hill and fighting for their lives.
We are encouraged by recent statements by the president and others on recognizing the innovative therapeutics for patients that are seriously are critically ill our priority.
However, so far Congress and the administration has spent several trillion dollars towards economic recovery efforts and only a tiny fraction of that amount towards advancing and expediting technologies that might ultimately advanced clinical care for these patients.
And virtually no funding has been deployed deployed to advanced innovative therapies for patients that are critically ill and on ventilator support.
This appears to be a somewhat glaring gap and it needs to be properly addressed.
We urge Congress the secretary of health and human services, the Vice President and the president to take greater action.
Furthermore, we urge everyone listening in on this call to contact your congressional Representatives Senators health and human services and the White house to ask them to address this important issue.
Well, we've engaged in these activities, we continue to make substantial progress and other key areas, including advancing our other clinical programs are supportive healios, our ongoing partnering discussions and our continued preparations for commercialization.
In terms of our clinical programs, while we've advanced Pharmacopeia trial for treating patients with cobot 19, and do start we await the resolution of our ongoing activities with BARDA and the project active teams as I described.
In the meantime, we continue to prep and qualify additional clinical sites and engage in corresponding manufacturing related activity.
We also continue to advance our ongoing phase III Masters two clinical trial for treating patients that have suffered a disabling ischemic stroke.
Some of the sites that when offline due to cope with 19 induced operational district restrictions have recently come back online and are actively screening and enrolling patients.
Other sites remain a work in progress.
While it's still too early to say, what the ultimate impact of Cobot 19 operational restrictions will be at this point, our focus is on activating or reactivating clinical sites in the coming months with the goal of having all masters two sites up and running in the first half of 2021.
And a goal of completing enrollment for the trial around the end of next year.
In the meantime, as Healios has reiterated in their quarterly earnings call. Several days ago. They remain on track to complete enrollment for both the treasure trial in ischemic stroke and the one bridge study in art by the end of this year.
And based on industry standards. They should have topline results a few weeks. After the clinical assessments are completed which would include the three month and one month follow up periods for treasure and one bridge respectively.
Finally, as we've described previously entering into additional partnerships around our critical care programs as a key objective and over the past three months. We've made continued progress on that front.
We remain actively engaged in negotiations and discussions with companies that are multinational biopharma companies and highly qualified potential partners and feel that we were in a good position to formalize an alliance in the coming months.
We must reiterate however that nothing is final until the process has been fully completed.
In the meantime, we maintain a strong and healthy balance sheet and are continuing to advance key initiatives that will support our transition to becoming a commercial company.
With recent and other planned additions to the leadership team and other parts of the organization, we have meaningfully advanced our plans for commercial manufacturing strengthening our supply chain and advancing our informatics capabilities, such as our proprietary seafood technology, including entering into an alliance with a company that has the capabilities to manufacture.
The technology, when we're ready to commercially deployed.
We remain fully engaged and focused on achieving our long term goals and objectives on behalf of our shareholders and the patients we're committed to serving.
As Ive are summarized earlier from a financial perspective, we have the strongest balance sheet, we've ever had in the history of the company.
With the completion of multiple important clinical trials that are in process the potential for new and substantial partnerships and other goals. We're focused on achieving we believe the future of the company is very bright.
With that I'll address a couple of questions that we received recently from shareholders.
By far and away. The most questions. We received in advance of the call today had to do with BARDA.
I've tried to cover that as extensively and clearly as I can in my earlier comments. Although there is one additional question I'd like to address specifically some have asked whether we have a contingency plan as it relates to BARDA and the conduct of the Mccovey a trial.
After is yes, we do have such a plant and then inhaled a multifaceted set of activities that relate to BARDA and other institutions, specifically and also to specific parameters regarding the conduct of the trial, but we're not going to elaborate on that today since its premature.
The second question has to do with our ongoing partnering discussions do we intend to enter into an alliance around only one therapeutic indication where multiple indications and can you comment on the geographic scope.
There are still several possibilities in this regard, but our primary objective is to partner around our portfolio of key critical care programs and to enter into a high value Alliance that focuses on development and commercialization in Europe initially.
But that could be expanded over time.
Accordingly, and ideal partner would be strong in Europe and have global commercialization capabilities and those are exactly the types of organizations that we're currently in discussions with.
With that we'd like to open it up for a few additional questions from analysts than others.
Thank you at this time I would remind everyone in order to ask a question. Please press star One. Your first question comes from Craig Harrison with Bank of America. Your line is open.
Hi, guys. Thanks for taking my question.
Brooklyn, I guess could you maybe provide some.
Some color on the co bid trial.
Timeline is there possibilities for interim analysis.
And the ongoing trial or.
Or some other way to either demonstrate proof of concept or some sort of differentiation.
To the final result, the thinking that in the context of competing therapy.
Starting to read out data.
People would be very interested and even seen just a few patients there are some signals of what the efficacy could be.
Yes, but the great question, Greg Thanks for joining today, so just a high level I'd like to remind people that some of Cobia study is designed as a 400 patient trial, it's a randomized double blind placebo controlled study and as we indicated previously we I think someone conservatively estimated that it would take us about a year to complete the study.
But that obviously depends on a number of factors that are still unclear to us like our so for example, nobody really knows it's going to happen in the remaining months of this year or whether or not we're going to see another surge when kids go back to school and then if that results in greater spread of the virus and kind of secondary waived beyond that.
Nobody really knows us so thats going to be an important determinant factor, but the way. We designed the study was to build in an interim assessment partway through the study.
Which basically a rests on the assumptions from the data that we from the results that we generated from our prior study.
So at less than halfway into the study.
Basically we have built in SMB assessment that if we see results anything close to what we saw in the last study they might be able to declare early victory and.
Make a decision based on that okay, I'm not going to give any more detail on that because I really don't want to go into that for competitive reasons.
But I think that hopefully gives you an answer to your question less than halfway through this study that will be in interim assessment conducted by the Dms at the SMB. They will evaluate the results and and essentially this is Don essentially so they can re size the study, but in an extreme success scenario they might actually be able to declare early victory.
Okay. That's helpful. And then just one other one when talking about the your discussion.
For partnerships.
How big of a priority is that right now to to be able to maybe secure some non dilutive capital.
Given the increasing questions around BARDA and also the larger number.
Trials that you're conducting recently.
I'd say it ranks on our top our top two to three priorities.
And I would also say that our optimism level is very high that we're going to be able to get the type of partnership that we want.
No guarantees until we're done given who we're in negotiations and discussions with given the types of discussions that we've been having with people. Our belief is that this is a very achievable goal and we think we're really good position, where we're at right now.
Great. Thanks, a lot.
Thanks appreciate it.
Your next question goes from David Hong with SMBC Nikko. Your line is open.
Hey, Joe Hey team, Thanks for the update and taking the question.
Do you my first one is in relation to thinking about.
Okay.
Obviously, you had with who will be ongoing but I just want to get a sense.
If you thought about dancing on cobot, Ards development, and how that might look like.
And whether the fact.
You Leos reports out positive data, it's Roger on the 30 page and non Kobe or will that influence how you proceed there.
Yes. So two really good question, so actually I think you're referring to one for its thats. There that there aren't study there are 30 patient study.
Treasures there there are 220 patient randomized double blind placebo controlled study for stroke for us stroke, but people get mixed up all the time, but in any event.
We have thought very carefully in fact, the design of the Mccombie a study was actually based on our envision design for a pivotal study in ards more broadly defined for all intents and purposes. These these study designs are essentially identical with the exception of the fact that be mccombie a study has been to.
Designed to focus on patients that have specifically kobin 19 to do starts because that's what part of with most interested in.
But without revealing too much information one might imagine that if we if we needed to pivot and broaden up that trial. So that included other forms of art, we think that that could actually be pretty straightforward in terms of working with the FDA to make that happen.
So that the trial was designed again based on our prior clinical results, which was not focused on a specific cause for ours that basically with more broadly defined in terms of accommodating patients that had.
Viral pneumonia or bacterial pneumonia or other types of.
Other types of things that could reduce our diluting trauma aspiration idiopathic Arts for example.
So our ultimate goal from a commercialization standpoint, everybody's hope is that the cobot 19 is going to be at a time limited phenomenon.
So I don't think it would be if rate strategy to basically build around developing a therapy for something that there might only be one customer forward at the end of the day that being the government or other governments around the world, which obviously, we're evaluating that those possibilities as well.
However, our commercial strategy was to do it has always been to advance this technology for arch broadly defined for a broad range of different things that might actually cause arts and thats, what our prior clinical data reflects.
So we think that if we need to make an adjustment there is a pretty good path for us to be able to do that.
And.
Essentially our goal to beginning of the year was to actually finalized, but a pivotal study might look like for arts by the ended the year using more traditional regulatory environment mindset approach all the other things that we needed to do.
So given the fact that we've already got a study up and running and we're already kind of meaningfully down that path. We feel like we're kind of ahead of the curve. It in terms of where we anticipated being at the beginning of the year now simply an open question as to whether or not or we successful with BARDA or with one of the other institutions that we're engaged in discussions with in terms of conducting the colby. Thanks.
And you start study specifically in which case, we may not a guaranteed certainty, but we would probably have to run a different more broad redefine.
Noncovered 19 to do start study.
But again that would be the discussion of.
That will be based on discussions with the FDA and other regulators.
Does that help.
Yes, and then for that yes, and then the second question was how much are we going to be influenced by what healios seats from their 30 patient study.
It's a little bit difficult to say I mean, obviously, they're taking a different approach where their enrollment criteria is a bit different than than what we're doing we're optimistic that they'll see positive results in that trial.
It again, they were focused on intrinsic pneumonia and specifically limiting into specific types of patients. So our criteria is a little bit different but they have applied some of the key learnings from what we saw in our prior study. So I think we will be informed by what they're doing the five patients that theyre treating and I know they announced recently that they enroll their first covered 19 patients in Japan.
[music].
It it's unclear, but thats really going to reveal by patients is kind of a small first off its open label in its a small dataset. We believe the right way to do it is to use randomized properly controlled study as a way to really.
Develop useful information that can be deployed it can be employed in a in a pivotal clinical trial.
Regulators tend to not play so much emphasis on small.
I don't want to call it anecdotal, but on small studies that are not design as as.
Randomized clinical trials, but I think it will be helpful. Mitel is something.
Okay, great. Thanks for that and then just add one of their.
Question around I know you have the phase two trial in trauma that laid it begins to so could you just remind us a little bit about what that trial could look like.
Great and then in terms of the funding for that if that's something that.
The cost is going to be picked up by UTI health or are you guys on the cost there.
Yes, great question. So it's approximately 150 patients study and again, it's properly randomized double blind and placebo control to two arms and that trial is now the thing that makes it different is being conducted at at the Herman Memorial Trauma Center down in Houston, which is widely regarded as being the leading.
North if you don't put a number one you certainly put it in the top handful of trauma centers in the United States, if not the world that study is pretty close to being getting ready to launch so they've already they've already undergone irve approval. So the FDA has already signed off in the study design.
There was a few things that we were just trying to work through with.
With with the FDA on a couple of other issues I won't go into but the point is it studies unauthorized for initiation. The IB approval has been obtain their undergoing one final internal clinically clinical approval mechanism, which they should have done shortly and then I think they're going to be ready to go that.
So again this is a funding for this study and reference the second part of your question.
Theres three sources of funding for the trial. The first is from the department of defense and specifically they have a funding aren't called amtech, which so as you might imagine the DMD is very interested in finding better solutions for dealing with trauma battlefield trauma as a huge problem for them, but non battlefield relate.
The problem is also problem because you might imagine there are plenty of risky.
Jobs that people having served in the military once upon a time way back when when I was in the Navy I can tell you first hand, there's a lot of people that are doing very dangerous jobs, even when they're not on the front line of what's going on so they have to deal with trauma.
On on kind of a widespread basis, if you will.
Furthermore, there are lot of people that when they come hall from having served are susceptible to various types of treatment. So it's something that the duty is deeply committed to coming out with better trauma related.
Solutions or treatments.
And so we work collaboratively with them the clinical leadership team at GTH, which by the way as all ex military they actually some of the clinical investigators ran field trauma units in places like Iraq, and Afghanistan and other parts of the world.
And so not only did video de provide funding for the trial, but you th also provided funding for the trial because they believe than it's so much and I think that speaks to their commitment and then of course, we are the third part of the funding for the trial, primarily was response responsible for producing the clinical material, providing regulatory support and.
Covering off on some other things basically that would not be specifically covered by the funding provided by the duty or amtech and NVH, but there are great partner, we're thrilled to be working with them and and we look forward to getting those first patients in this study and then completing it.
Very efficiently.
Okay. Thanks for taking my question.
Thanks, David appreciate it.
Your next question comes from Steve Brozak with what with WBB Securities. Your line is open.
Hi, good thanks for taking my question I just have one quick follow up on that you would started down the path of specific to 'em horns, and the agnostic nature Multistem can you just cover what the advantages or and what the issues might be into the future dealing with ards whether it's from.
Cobot or whatever cobot becomes and then everything else that might take place and I'll just hop back into queue. Thank you.
Yes, thanks, Dave Thanks for joining today as well so one of the things that I think has become abundantly clear based on some of the recent data when people have been looking at some of the innovative anti viral interventions or some of the immunomodulatory or anti inflammatory drugs. Some that are approved some that are in clinical development, but all of which share kind of a single can stay.
Great and that they focus on a single specific.
Mechanism, so whether its anti IL six or is designed to kind of lumpy iosix pathway or other types of inflammatory cascade and the reality of it is that we now have data what I'd say, we I mean collectively everybody that's falling what's going on it probably nine team. There has been data generated from multiple different studies and I think one thing is consistently and.
The abundantly and emphatically clear at this point none of those approaches are working on patients that are seriously are critically ill and that are out of ventilator with with coping thinking to do stars.
And I think one of the reasons for that but a lot of people that we spoken with AD for example, folks at the NIH or others. They recognize that what a single focal point is may not work and in fact, our belief is that it won't work.
And that is because a lot of emerging clinical data from people have looked at what is happening in koby 19. In these patients have correctly ascertain and I think there's a lot of data support this that just stopping one particular cytokine or one particular, pointing that cascade is not going to address all of the things that are happening in these patients.
As you and I think a few other people that are on this call realize we've done extensive work looking at the impact of multi stem clinically, but also through years of preclinical and various animal models and we have tons and tons of data that shows that when we administer multistem that it regulates multiple inflammatory multiple inflammatory pathways and and cash.
Cascades and these cells are dynamically regulated their homing decisive tissue damage and inflammation their homing to two key peripheral immune organs like the spleen or or other locations that are relevant and they are dramatically down regulating the things that are going haywire uncovered 19 patients in terms of the multiple.
Inflammatory pathways and can cascades that are expiring out of control and at the same time b cells are stimulating.
Other pathways that are really important and a key part of the healing process.
So we've talked about that on prior earnings calls I'm not going to go into into detail on it today, but I think one of the thing that appears to be resonating with people on that BARDA leadership correctly recognize early on was that look great. If we find a magic bullet that focuses on one thing some single cytokine or whatever it might.
Be if that really turns things in the right direction, then pay that's great. That's good news for everybody and we agree with that but I think what is becoming more and more clear is that is probably not going to provide a comprehensive in effective solution.
And frankly, even if it did it might be complementary to what we're doing and the point is that the mortality rate among patients with Kobin 19 into starts is still on comfortably hot as evidenced by the numbers that I referred to a little bit earlier.
Now you might be able to blend it with corticosteroids like DEXA methods on some of that data looks encouraging but if you look at the delta in terms of hospitalization and some of the other things that frankly, they didnt talk about it appears that the effects of that are not nearly as much as you would want at the end of the day in terms of being able to really healthy patients on a path to speedy recovery and a higher probably.
Believe recovery and getting them out of the hospital and back on their way with hopefully full the ability to full ability to actually regain their quality of life and functional independents are prior clinical data shows we can help in that regard and I think what we want to do now is resolve the outstanding issues move forward with a committed institutional part.
Her and demonstrate that Multistem can help patients covered nineteena do start through the proper conduct of a randomized double blind placebo controlled study that is the way that the FDA and others have said it needs to be done that is what we've already gotten authorization to do and we're excited about being able to do that.
Oh, Thank you for the due to really appreciate it thanks again.
Thanks, David.
The next question will come from Guild, Blumberg with Needham and company. Your line is open.
Although go on thanks for taking my question.
And congrats on the progress.
Mining.
We've kind of saw an uptick in R&D spend oh leave related to the Mcrobie. A study should we can you should we expect this acceleration on R&D spend to continue throughout the year next year.
I think what you're going to see in the second half of the years pretty consistent what we've seen in the first half of the year Something's may tick up a little bit, but I think that the we've been spending over the past couple of quarters, a fair amount on process development related work that we're committed to completing by around the end of the year and so I think something that are actually kind of ticked up while other things will fit.
We will tend to subside over time.
So one of the things we pride ourselves on is that we are very very fertile inefficient and we're very much a measure twice kept wants kind of organization.
We really are focused on our building the resource base. So that we can run faster in the areas that are really meaningful and most important and we're going to do that through strategic collaborations and alliances not only with other partners.
But also with other institutions potentially with BARDA or potentially with other institutions that are committed to the things, we're committed to and and really funding that expedited development, but as I said some of the things that we basically did in the second quarter. When we made a conscious decision to run faster on some of these things frankly, we did that because.
We had conveyed to part of it that we were actually going to get this trial up and running while we were trying to finalize things with that so it's a little bit frustrating to kind of being a holding pattern. When should we now find ourselves, but an answer to your question I think what you'll see in the second half the year is pretty consistent with what you've seen in the first half a year, but again something will move around.
A little bit and most importantly, we expect that as we put new relationships in place that's going to have a meaningful impact on our financial position, but we're already in a pretty and a very strong position I would say.
And just to kind of clarified for me as well if you had to would would you consider.
Continuing enrollment in the Mccolgan study by yourself.
What we're doing that now I mean, the reality of it is as it were going at a very measured pace, while we try to resolve things, but the reality of it is is that ice the kind of alluded too. If we decided that we wanted to modify this in turn it into kind of a more broad arts pivotal study.
That is something that I think we could discuss pretty efficiently with the FDA and other regulators and do that and if we needed to pivot than we can do it.
And the net effect based on where we started the beginning of the years that our whole timetable would've sped up by a few months.
I'm, not saying I'm not trying to find a silver lining in the storm clouds I'm, just making the point that we've thought about the contingencies, we plan for them and I think we are in a very strong position to do we need to do we are still planning and seeing it through with BARDA or other institutions that we're in discussions with in terms of the covered 19.
Specific focus from a covia, but the reality of it is that we have other ways. We can go and and frankly, we feel like we have a number of good options in front of us.
Right and maybe another clarification for me so.
Yes.
BARDA basically discontinuing.
Support of all in any.
Rdx related therapies I mean, there was some positive data from really small group of patients. This morning.
And my understanding is that company is in discussions with BARDA funding.
You know it's unclear I mean, it a lot of people are asking questions about who's really driving the boss right is is because so first up when we began this whole thing there was no operation works speech. There was no project active there weren't some of the other initiatives that it basically.
Emerged over time and what is clear is that some of the funding that was originally designated by Congress to go directly to BARDA has been kind of diverted another directions and focus on other activities.
But it's still a bit of administrative to folks about who's making the calls on this stuff and and is that going to continue or what's really going to happen over the course. The next several months, we get the emphasis on trying to get as much time between now in early November we understand why people are focused on that and why people want to make as much progress on.
Diagnostics vaccines and some of the anti viral therapies over the course of the next several months one of the things that we've always been committed to.
His thinking through how things should be done. So yes, we want to do things quickly and efficiently, but the reality of it is is that we want to make sure that things are done properly that's the most important.
Focal point for us and I think a lot of other people that were in discussions with feel exactly the same way.
So we're all trying to get to a better place of stability.
As soon as we all can.
But the reality of it is is that we have to do the right thing, but we're trying to get to that point and your question about BARDA is a good one we're not really sure exactly how some of the things are being done all we know for sure is what they publicly stated and and some of the other things we've learned from our discussions with them some of which we can't really go into.
All right. Thank you for taking my questions and.
Within the quarter.
Thanks, Bill we appreciate it give our best to chat please.
This concludes the Kunaev for today I'll turn the call back over to go for closing remarks.
Thanks, Jesse well as always I'd like to thank everybody for being part of the call today and for your continued support.
As we always say were fully committed to advancing our programs and achieving our goals and we look forward to making additional announcements and providing updates as we move forward. Thanks very much.
This concludes today's conference call you may now disconnect.
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