) --

Aastrom Biosciences


expects to complete a financing this quarter to fully fund a pivotal trial of a personalized cellular therapy to treat severely blocked leg arteries.

"I'm 100% confident we'll get a deal done," said Aastrom CEO Tim Mayleben, adding the company is working to negotiate the best terms possible to raise about $30 million in the most shareholder-friendly way possible.

The recent slide in Aastrom's stock price -- down 30% since the company presented

positive phase II data on its cellular therapy

at the American Heart Association's Scientific Sessions in mid-November -- has been anything but friendly for current shareholders. Aastrom shares look set to open Wednesday at $1.92.

"Transparency is not always a great thing," said Mayleben, referring to the company's decision to speak openly about its plans to raise cash. The looming financing has been an overhang on the stock as investors wait for the deal to get done.

Aastrom hoped to complete the financing before the end of December, but the company wasn't happy with big discouns and overly generous "end of year" terms requested by potential investors reluctant to invest in new stocks or risk their returns in December, Mayeleben said.

As a micro-cap stock, Aastrom runs into difficulty attracting institutional investors --the company's current institutional ownership is only around 15-20%. Aastrom has to offer inducements and discounts to attract investors, but Mayleben is hopeful that that this new year brings more attractive terms.

Mayleben was in San Francisco last week during the J.P. Morgan Healthcare conference, meeting with prospective investors, bankers and possible partners for the company's cellular therapy.

Along with the financing, Aastrom plans to begin screening patient next month for its phase III study. The company held an investigators' meeting in December in which 90% of the trial sites participated. The study is expected to take 18 months to enroll and patients will be followed for 12 months.

The phase III study is designed to determine whether Aastrom's cellular therapy, known by the unwieldy name ixmyelocel-T and 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). Aastrom and FDA

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.

Aastrom's cellular therapy significantly

restored damaged tissue in the legs of patients

with arteries that were severely blocked, according to results from a randomized and controlled phase II study presented in November.

The economics of personalized cellular therapies have come under some added scrutiny because of the poor gross margins posted by Dendreon in recent quarters for Provenge. While Aastrom's ixmyelocel-T is also custom-made for each patient like Provenge, the manufacturing process is more automated and cost efficient, said Mayleben.

"We think we can ultimately achieve gross margins in the 80% to 90% range at peak," he added.

--Written by Adam Feuerstein in Boston.

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