Aastrom Moves Cell Therapy Into Phase III

The biotech talked about its late-stage clinical plans during a second quarter conference call.

Despite a widening loss during the second quarter, Aastrom Biosciences Inc. is right where investors had hoped the Michigan biotech would be. The company recently announced that it had finally nailed down the specifics of a Special Protocol Assessment (SPA) with FDA and revealed that its first drug is on the verge of entering Phase III.

The company began inquiring with FDA about the special protocol for the late stages of clinical development in October 2010. Since then, promising top-line data from its Phase IIb trial for its stem cell therapy have been announced. Aastrom plans to reveal the full data set at the American Heart Association meeting in Orlando in November.

Aastrom is studying the applications of cell therapy in critical limb ischemia (CLI), a condition that often results in amputation. In the US, more than 1.4 million people have CLI, resulting in about 100,000 amputations each year, and the situation is worse in developing nations where CLI-related amputation is much more common.

The company's Phase IIb trial of ixmyelocel-T was primarily to assess the safety of the procedure, but also looked at amputation rates, wound closure and blood flow in the affected limbs, patient quality of life, and the reduction of pain. Upcoming Phase III trials will help Aasrtom better understand just how effective the product is and what it will take to move it into the real-world environment, Aastrom CEO Timothy Mayleben told "The Pink Sheet" DAILY.

"We are on the verge of starting our Phase III clinical program and we will learn a lot about how we are going to detail it from that," he said.

There are about 3,000 vascular surgeons who would initially be targeted by the company. Once the procedure becomes more established, Aastrom expects to deal with wound clinics as well.

The first late-stage trial has been approved under an SPA, a milestone for which many investors have been waiting, and is expected to begin enrollment next quarter. The company plans to enroll about 594 patients, up from a previous count of 525. The trial will focus on a patient population that has exhausted all other options and is left with only the option of amputation. Aastrom's goal is to help these patients avoid amputation and regain a more normal way of life.

According Mayleben, the company has already begun looking at pricing and reimbursement for the procedure, "but it is three years in advance," he added, noting "that many factors could change during that time." Mayleben said that the company got a lot of good feedback from payers. Most insurance companies pay $30,000 to $40,000 for amputations, as well as $25,000 to $75,000 for prosthetic limbs, and another $35,000 annually for rehabilitation. Aastrom expects reimbursement in the $50,000 to $75,000 range. "This is a price that would take cost out of the healthcare system today," said Mayleben.

Once the "no-options" study is completed - about two and half years from now - Aastrom expects to file a biologics application with FDA. In the meantime, another Phase III study will also be underway looking at the treatment in patients with "few options," a larger, less studied population. This trial is expected to start enrolling patients at the beginning of next year. There will likely be another 200 patients in this program.

Now that Aastrom has its Phase IIb data in hand and has finalized its SPA, investors can expect news about a partnership. The company said that it has been talking to prospective partners and that many companies had been waiting for Phase III to begin and the final results of the Phase IIb before they would risk investing. "It is really hard to predict when these sorts of talks will come to a conclusion, but the tone of them has been positive," said Mayleben.

Aastrom had $18.5 million in cash at the end of June and said that it will be spending $7 million in each of the third and fourth quarters. Analysts expect the company to raise another $20 million or announce a partnership before the completion of Phase III. The company last raised money in December 2010 when it conducted a follow-on public offering that brought in $21.1 million.

-Lisa LaMotta ([email protected])