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Updated with analyst comment, new stock price.



) -- A personalized cellular therapy developed by

Aastrom Biosciences


significantly restored damaged tissue in the legs of patients with arteries that are severely blocked, according to results from a mid-stage study presented Monday.

Based on Monday's results, Aastrom will soon begin a phase III study to determine whether the cellular therapy, which is custom grown for patients from their own bone-marrow stem cells, can reduce amputations and prolong survival in patients with severe cases of critical limb ischemia (CLI).

Patients with chronic CLI have obstructed arteries and reduced blood flow in the arms and legs, which can lead to open wounds and amputation in the most severe cases. CLI affects about 1 million people in the U.S. each year and leads to about 160,000 limb amputations each year.

In the mid-stage study, 72 patients with CLI were treated with a one-time series of 20 injections in the legs and foot containing either Aastrom's cellular therapy, known as ixmyelocel-T, or a sham control.

After one year of follow-up, treatment with Aastrom's cellular therapy demonstrated a statistically significant 62% reduction in the time to treatment failure compare to the sham control. Time to treatment failure is a composite endpoint that measures amputation, the onset of gangrene, wound size doubling and death.

The cellular therapy outperformed the control for each of the individual components of the composite endpoint with the exception of mortality. A small, similar percentage of patients died in both the study arms.

FDA will only approve a therapy for CLI if it can significantly reduce amputations because patients are at a much greater risk of dying following amputation. About 25% of patients die after undergoing a CLI-induced amputation.

Aastrom's cellular therapy reduced the risk of amputation or death in the mid-stage study by 32% compared to the sham control, although the benefit was not statistically significant.

"We were one event

amputation away from reaching statistical significance," says Aastrom CEO Tim Mayleben, in a phone interview Friday.

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Final results from the mid-stage, or phase II, study were presented at the American Heart Association Scientific Sessions taking place on Orlando, Fla. Aastrom has previously released and presented interim results from the same study.

Aastrom's cellular therapy performed better in patients with more advanced CLI, or those patients who entered the study with leg wounds caused by chronic lack of blood flow.

For these sicker patients who made up approximately 60% of the study, the cellular therapy demonstrated a 77% reduction in the time to treatment failure compare to the sham control. Most importantly, there was a statistically significant 61% reduction in the risk of amputation compared to the control -- or almost a doubling of the amputation-avoidance benefit seen in the overall patients population

The analysis of sicker subgroup of CLI patients in the study was not pre-planned so therefore must be viewed with caution, but the amputation event rate observed in the control group was consistent with other, separate studies of similar CLI patients. This suggests the benefit observed from the company's cellular therapy could be replicated in a larger study.

For that reason, Aastrom will restrict enrollment in its soon-to-start phase III study to patients with severe CLI and leg wounds.

"Everyone knows the risks to interpreting a post-hoc analysis, but as long as we're being scientifically honest and rigorous, the data can speak for itself," said Aastrom CEO Mayleben. "All components of the time-to-treatment-failure endpoint are in the right direction, which suggests our therapy is have a positive effect."

Aastrom will conduct the phase III study under a Special Protocol Agreement, or SPA, reached with the U.S. Food and Drug Administration. The study's price tag is estimated to be $20-25 million and will likely take 18 months to two years to complete.

"I think the data look solid, particularly the post-hoc analyses on the baseline wound patients which shows greater separation between ixmyelocel-T and the control," said Zacks biotech analyst Jason Napodano. "These are the patients Aastrom will be testing in the phase 3 trial, so our confidence level in that program has increased."

Aastrom reported about $12 million in cash at the end of the third quarter. The company will need to raise additional money to complete the phase III study.

Aastrom shares were down 7 cents to $2.68 in Monday trading following the presentation and release of the final data from the CLI trial.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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