Dear Friends of Aastrom,

Dilated cardiomyopathy (DCM) is a progressive disease of heart muscle. It is now the third most common cause of heart failure, which affects approximately 4.9 million people in the United States (www.americanheart.org). Dilated cardiomyopathies are associated with both systolic abnormalities (difficulty of the left ventricle to empty or eject blood from its chamber) and diastolic abnormalities (increased resistance to filling of one or both ventricles). The progression of DCM can be rapid; studies have found that 50 percent of the deaths from DCM occur within two years of diagnosis (http://health.usnews.com).

Currently, there is no cure for DCM, but cardiac medications, lifestyle changes and implantable devices can help to control some symptoms.  When these treatment options can no longer control symptoms of DCM, heart transplantation may be the only option for many patients – in fact, DCM is now the most frequent cause of heart transplantation (www.americanheart.org).  Unfortunately, there are only enough donors for about 2,000 heart transplants each year.  More than 95% of patients with moderate or severe heart failure (NYHA Class III or IV) will not be able to get a transplant. (Zacks)

One sign of hope is research showing that mesenchymal cells, monocytes and alternatively activated macrophages can have a positive impact on heart muscle and function damaged by DCM.  These are the same types of cells that are expanded in the production of Aastrom’s cell therapy ixmyelocel-T, making  DCM an important focus for our clinical research and product development.  In May 2012, Aastrom presented positive results from a Phase 2a clinical trial of ixmyelocel-T in the treatment of DCM.  The results showed that ixmyelocel-T may repair heart muscle and reverse some heart failure symptoms associated with DCM. In June 2012, Aastrom presented data at the 18^th Annual International Society for Cellular Therapy Meeting demonstrating the ability of ixmyelocel-T to protect the ischemic heart from damage in a murine model of heart failure.  Results also indicate that ixmyelocel-T has a favorable risk profile for patients.  In more than 200 patients treated with ixmyelocel-T for various conditions thus far, therapy appears well-tolerated.

Based on these encouraging findings, Aastrom will initiate a Phase 2b clinical trial for ixmyelocel-T in the treatment of DCM patients in the near future. In planning for this clinical trial, we are fortunate to be working with many of the leading clinicians who specialize in the treatment of DCM.  Their input and guidance will be essential as we make the key final decisions regarding the design of the trial.

Our focus on DCM is a natural and logical extension of our strategy to maximize the clinical and commercial potential of ixmyelocel-T by targeting serious cardiovascular diseases for which there are no good treatment options.  Earlier this year, we initiated our REVIVE Phase 3 clinical trial for ixmyelocel-T in the treatment of critical limb ischemia (CLI), a serious vascular disease where patients have limited treatment options and where our clinical research has shown that ixmyelocel-T could have a significant positive impact on patient health and recovery.

From a business perspective, both CLI and DCM represent major commercial opportunities for Aastrom.  With an investigational product candidate that has so-far demonstrated a promising clinical safety profile, a technology platform with readily scalable manufacturing and production capabilities and the opportunity to address significant unmet needs in severely ill patients, we have all of the elements in place to build a successful commercial business while bringing an important new therapy to patients who desperately need it.  And most importantly, our efforts may lead to a safer, less-invasive, and more efficacious treatment option that will help patients live longer, healthier lives.

With regards,

Tim