Note 11 — Subsequent Events

On May 5, 2014, we announced preliminary efficacy and safety results of our RECOVER-Stroke Phase 2 clinical trial in patients with neurological damage arising from ischemic stroke and treated with ALD-401. Observed improvements in the primary endpoint (mean modified Rankin Score or mRS) of the trial were not clinically or statistically significant. In light of this outcome, we plan to discontinue further funding of the ALD-401 development program.

Our ongoing Phase 2 PACE clinical trial in patients with intermittent claudication and peripheral artery disease treated with ALD-301 continues to enroll patients. The study is being funded entirely by NHLBI/NIH. Additionally, we are continuing a Phase 1 clinical trial of ALD-301 in patients with grade IV malignant glioma following surgery, which is funded by Duke University. We have no current plans to change our approach with respect to these programs.

Our sole indefinite-lived intangible asset is the IPR&D acquired in connection with our acquisition of Aldagen, and consists of our ALDH bright cell platform including ALD-301 and ALD-401. We believe that our Phase 2 clinical trial results from the RECOVER-stroke trial announced on May 5, 2014 represents a “change in circumstances” which will require us to assess the IPR&D for possible impairment as of that date. We have begun that assessment and expect to be able to conclude as to any impairment during the quarter ending June 30, 2014. IPR&D is valued at $29.6 million as of March 31, 2014, so any impairment charge could have a material effect on our financial position and results of operations.

With the discontinuance of the ALD-401 program and with NIH and Duke fully supporting the other ALD trials, we plan to begin closing our research and development facility in Durham, North Carolina in the second quarter of 2014. Any such costs and liabilities related to this anticipated closure, including lease termination costs, asset disposal costs, and employee benefits, will be recognized and measured at fair value in the period when such costs are incurred, which likely will be during the remaining quarters of 2014.