March 22, 2013

Dear Shareholder:

Please join us for our Annual Meeting of Shareholders on Thursday, May 2, 2013 at 8:30 a.m., local time, at Aastrom Biosciences, Inc.’s headquarters located at 24 Frank Lloyd Wright Drive, Lobby K, Ann Arbor, Michigan, 48105.  You are cordially invited to attend.

At this Annual Meeting, the agenda includes (1) the election of five (5) directors, (2) the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2013, and (3) the approval on an advisory basis of the compensation of our named executive officers.  The Board of Directors unanimously recommends that you vote FOR the election of each director nominee, FOR the ratification of the appointment of PricewaterhouseCoopers LLP, and FOR the approval, on an advisory basis, of the compensation of our named executive officers.

All shareholders are cordially invited to attend the Annual Meeting in person.

Under Securities and Exchange Commission rules, Aastrom is providing access to the proxy materials for the Annual Meeting to shareholders via the Internet.  Accordingly, you can access the proxy materials and vote at www.proxyvote.com.  Instructions for accessing the proxy materials and voting are described below and in the shareholder meeting notice that you received in the mail.  Please review the proxy materials prior to voting.

Your vote is very important.  Even if you do not plan to attend the Annual Meeting of Shareholders, please vote by one of the following methods:

1.              BY INTERNET, by going to the Internet web address www.proxyvote.com and following the instructions on the Notice you received in the mail and on the website.  In order to vote via the Internet, you must use the numbers provided in the shaded bar of the Notice.  Click on “Cast Your Vote or Request Materials.”  Proxies submitted by the Internet must be received by 11:59 P.M., Eastern Time, on May 1, 2013.

2.              BY TELEPHONE, by dialing 1-800-690-6903 within the United States, U.S. territories, and Canada any time on a touch tone telephone and following the instructions provided by the recorded message.  In order to vote via telephone, you must use the numbers provided in the shaded bar of the Notice.  Proxies submitted by telephone must be received by 11:59 P.M., Eastern Time, on May 1, 2013.

3.              BY PROXY CARD, if you have requested a proxy card by mail in accordance with the instructions in the Notice, by completing, dating, signing, and returning the proxy card in the postage-prepaid envelope provided.  If you vote by Internet or telephone, please do not mail your proxy card.  Your proxy card must be received prior to the Annual Meeting.

If you attend the Annual Meeting, you may vote in person by ballot even if you have previously voted by Internet, by telephone or by returning your proxy card.  Any proxy may be revoked by delivery of a later dated proxy.

TABLE OF CONTENTS

AASTROM BIOSCIENCES, INC.

24 Frank Lloyd Wright Drive, Lobby K

Ann Arbor, MI 48105

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held May 2, 2013

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY COMPLETE YOUR PROXY AS INDICATED ABOVE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. PLEASE REVIEW THE INSTRUCTIONS FOR EACH OF YOUR VOTING OPTIONS DESCRIBED IN THIS PROXY STATEMENT AND THE NOTICE YOU RECEIVED IN THE MAIL.

AASTROM BIOSCIENCES, INC.

24 Frank Lloyd Wright Drive, Lobby K

Ann Arbor, Michigan 48105

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors”) of Aastrom Biosciences, Inc., a Michigan corporation, for use at the Annual Meeting of Shareholders to be held on Thursday, May 2, 2013 at 8:30 a.m., local time, at our headquarters located at 24 Frank Lloyd Wright Drive, Lobby K, Ann Arbor, Michigan, 48105, or at any adjournments or postponements thereof (the “Annual Meeting”).  An Annual Report to Shareholders, containing financial statements for the year ended December 31, 2012, and this Proxy Statement are being made available to all shareholders entitled to vote at the Annual Meeting.  This Proxy Statement and the form of proxy were first made available to shareholders on or about March 22, 2013.  Unless the context requires otherwise, references to “we,” “us,” “our,” and “Aastrom” refer to Aastrom Biosciences, Inc.

GENERAL INFORMATION ABOUT THE MEETING, SOLICITATION AND VOTING

What am I voting on?

There are three proposals scheduled to be voted on at the Annual Meeting of Shareholders:

1. Election of directors;

2. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2013 fiscal year; and

3. Approval on an advisory basis of the compensation of our named executive officers.

Who is entitled to vote?

Shareholders as of the close of business on March 5, 2013 (the “Record Date”) may vote at the Annual Meeting of Shareholders.  You have one vote for each share of common stock and one vote per 1/1,000 share of Series B-2 preferred stock you held on the Record Date, including shares:

·                  Held directly in your name as “shareholder of record” (also referred to as “registered shareholder”); and

·                  Held for you in an account with a broker, bank or other nominee (shares held in “street name”).  Street name holders generally cannot vote their shares directly and must instead instruct the brokerage firm, bank or nominee how to vote their shares.

What constitutes a quorum?

A majority of the outstanding shares entitled to vote, present or represented by proxy, constitutes a quorum for the Annual Meeting of Shareholders.  Abstentions are counted as present and entitled to vote for purposes of determining a quorum.  “Broker non-votes” (described below) are also counted as present and entitled to vote for purposes of determining a quorum.  As of March 5, 2013, 45,664,079 shares of Aastrom common stock were outstanding and entitled to vote, and 12,308 shares of Series B-2 preferred stock were outstanding and entitled to vote.

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How many votes are required to approve each proposal?

The following explains how many votes are required to approve each proposal, provided that a majority of our shares is present at the Annual Meeting of Shareholders (in person or by proxy).

·                  The five candidates for election who receive a plurality vote in the affirmative will be elected;

·                  Ratifying PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year ending December 31, 2013 requires the affirmative vote of a majority of the votes cast on the proposal; and

·                  Approval of the non-binding, advisory resolution regarding the compensation of our named executive officers requires the affirmative vote of a majority of the votes cast on the proposal.

How are votes counted and who are the proxies?

You may either vote “FOR” or “WITHHOLD” authority to vote for each nominee for the Board of Directors.  Shares present or represented and not so marked as to withhold authority to vote for a particular nominee will be voted in favor of a particular nominee and will be counted toward such nominee’s achievement of a plurality.  Shares present at the meeting or represented by proxy where the shareholder properly withholds authority to vote for such nominee in accordance with the proxy instructions and “broker non-votes” will not be counted toward such nominee’s achievement of plurality.

You may vote “FOR” “AGAINST” or “ABSTAIN” on the ratification of PricewaterhouseCoopers LLP.  If you abstain from voting on the proposal to ratify PricewaterhouseCoopers LLP, it will have no effect on the voting of the proposal.  Brokers, bankers and other nominees have discretionary voting power on this routine matter and, accordingly, “broker non-votes” will have no effect on the ratification.

You may vote “FOR” “AGAINST” or “ABSTAIN” on the non-binding, advisory resolution approving the compensation of our named executive officers.  If you abstain from voting on the non-binding, advisory resolution approving the compensation of our named executive officers, it will have no effect on the voting of the proposal.  If you just sign and submit your proxy card without marking your voting instructions, your shares will be voted “FOR” the resolution approving the compensation of our named executive officers.

The persons named as attorneys-in-fact in the proxies, Dominick C. Colangelo and Brian D. Gibson, were selected by the Board of Directors and are officers of Aastrom.  All properly executed proxies submitted in time to be counted at the Annual Meeting will be voted by such persons at the Annual Meeting.  Where a choice has been specified on the proxy with respect to the foregoing matters, the shares represented by the proxy will be voted in accordance with the specifications.

What is a broker non-vote?

If you hold your shares in street name and do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote (a “broker non-vote”).  Shares held by brokers who do not have discretionary authority to vote on a particular matter and who have not received voting instructions from their customers are counted as present for the purpose of determining whether there is a quorum at the Annual Meeting of Shareholders, but are not counted or deemed to be present or represented for the purpose of determining whether shareholders have approved that matter. Pursuant to applicable rules, brokers will have discretionary authority to vote on the proposal to ratify the appointment of PricewaterhouseCoopers LLP.

How does the Board of Directors recommend that I vote?

Our Board of Directors recommends that you vote your shares:

· “FOR” each of the nominees to the Board of Directors;

· “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as Aastrom’s independent registered public accounting firm for fiscal year ending December 31, 2013; and

· “FOR” the non-binding, advisory basis resolution approving the compensation of our named executive officers.

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How do I vote my shares without attending the meeting?

If you are a shareholder of record, you may vote by granting a proxy.  For shares held in street name, you may vote by submitting voting instructions to your broker or nominee.  In any circumstance, you may vote:

·                  By Internet or Telephone — You may vote by Internet or telephone by following the instructions on your proxy card and on www.proxyvote.com or as directed by your broker or other nominee.  In order to vote via the Internet or by telephone, you must have the shareholder identification number which is provided in your proxy card.

·                  By Mail — If you requested a proxy card by mail, you may vote by signing, voting and returning your proxy card in the envelope provided.  You should sign your name exactly as it appears on the proxy card.  If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), you should indicate your name and title or capacity.  If you vote by Internet or telephone, please do not mail the proxy card.  Your proxy card must be received prior to the Annual Meeting.

Internet and telephone voting facilities will close at 11:59 p.m., Eastern Time, on May 1, 2013.

How do I vote my shares in person at the meeting?

If you are a shareholder of record (also referred to as “registered shareholder”) and prefer to vote your shares in person at the meeting, bring proof of identification and request a ballot to vote at the meeting.  You may vote shares held in street name only if you obtain a signed proxy from the record holder (broker or other nominee) giving you the right to vote the shares.

Even if you plan to attend the meeting, we encourage you to vote in advance by Internet, telephone or mail so that your vote will be counted even if you are unable to attend the meeting.

May I change my vote?

Yes. Whether you have voted by Internet, telephone or mail you may change your vote and revoke your proxy by:

· Sending a written statement to that effect to the Corporate Secretary of Aastrom;

· Voting by Internet or telephone at a later time;

· Submitting a properly signed proxy card with a later date; or

· Voting in person at the Annual Meeting of Shareholders.

What are the costs associated with the solicitation of proxies?

The cost of soliciting proxies will be borne by Aastrom. Aastrom has retained Broadridge Financial Solutions (“Broadridge”) to solicit registered shareholders and to request banks and brokers, and other custodians, nominees and fiduciaries, to solicit their customers who have stock of Aastrom registered in the names of such persons, at a cost of approximately $70,000, which includes mailing costs and reimbursement of reasonable out-of-pocket expenses.  Aastrom may supplement the original solicitation of proxies by Internet, telephone, mail, electronic mail or personal solicitation by our officers, directors, and other regular employees, without additional compensation.  Voting results will be tabulated and certified by Broadridge.  Aastrom may solicit shareholders by mail through its regular employees, and will request banks and brokers, and other custodians, nominees and fiduciaries, to solicit their customers who have stock of Aastrom registered in the names of such persons and will reimburse them for their reasonable, out-of-pocket costs.  Aastrom may use the services of its officers, directors, and others to solicit proxies, personally or by telephone, without additional compensation.

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PROPOSAL 1

ELECTION OF DIRECTORS

Our Bylaws provide that the Board of Directors will consist of not less than five nor more than nine members, as fixed from time to time by a resolution of the Board of Directors and that all directors will be elected annually.  The Board of Directors currently consists of six directors.  The persons named below as nominees for director will, if elected, each serve a term of one year expiring at the 2014 Annual Meeting of Shareholders and until their successors are elected and qualified.

The table below sets forth Aastrom’s directors and nominees and their respective ages as of February 28, 2013.

*                 Director nominee.

Director Nominees for Election at the 2013 Annual Meeting of Shareholders

The biographical description below for each director nominee includes the specific experience, qualifications, attributes and skills that led to the conclusion by the Board of Directors that such person should serve as a director of Aastrom.

Robert L. Zerbe, M.D., a Director since January 2006 and Chairman of the Board of Directors since October 2012, is the Chief Executive Officer of QUATRx Pharmaceuticals Company, a venture-backed drug development company which he co-founded in 2000.  Prior to his role at QUATRx, Dr. Zerbe held several senior executive management positions with major pharmaceutical companies including Eli Lilly (from 1982 to 1993) and Pfizer (formerly Parke-Davis) (from 1993 to 2000).  During his tenure at Eli Lilly, Dr. Zerbe’s clinical research and development positions included Managing Director, Lilly Research Center U.K., and Vice President of Clinical Investigation and Regulatory Affairs.  He joined Parke Davis in 1993, becoming Senior Vice President of Worldwide Clinical Research and Development.  In this capacity he led the clinical development programs for a number of key products, including Lipitor ® and Neurontin ®.  Dr. Zerbe received his M.D. from the Indiana University School of Medicine, and has completed post-doctoral work in internal medicine, endocrinology and neuroendocrinology at Indiana University and the National Institutes of Health.  Dr. Zerbe currently serves on the board of directors of Optimer Pharmaceuticals, Inc. (since 2009), a biopharmaceutical company.  He also serves on the board of directors of, Edgemont Pharmaceuticals, a private specialty pharma company.  The Board of Directors believes Dr. Zerbe’s qualifications to sit on our Board of Directors include his management positions at major pharmaceutical companies, including the experience he gleaned in his clinic development roles.

Dominick C. Colangelo, Mr. Colangelo joined Aastrom in 2013 with more than twenty years of executive management and corporate development experience in the biopharmaceutical industry, including nearly a decade with Eli Lilly and Company.  Most recently, he was President and Chief Executive Officer of Promedior, Inc.  During his career, he has held a variety of executive positions of increasing responsibility in product development, pharmaceutical operations, sales and marketing, and corporate development.  He has extensive experience in the acquisition, development and commercialization of therapies to treat fibrovascular, metabolic and cardiovascular diseases.  During his tenure at Eli Lilly and Company, he held positions as Director of Strategy and Business Development for Lilly’s Diabetes Product Group and also served as a founding Managing Director of Lilly Ventures.  Mr. Colangelo received his B.S.B.A. in Accounting, Magna Cum Laude, from the State University of New York at Buffalo and a J.D. degree, with Honors, from the Duke University School of Law.  The Board of Directors believes Mr. Colangelo’s qualifications to sit on our Board of Directors include his significant contributions within the biopharmaceutical industry.

Ronald M. Cresswell, PhD, a Director since October 2010, retired in 1999 from Warner-Lambert Company, a developer and manufacturer of health care and consumer products, where he had been Senior Vice President and Chief Scientific Officer since October 1998.  He was formerly Vice President and Chairman, Parke-Davis Pharmaceutical Research, a Warner-Lambert Company, since 1989.  Prior thereto, he served as Chief Operating Officer of Laporte Industries, an internationally oriented chemical company, since 1987.  Dr. Cresswell served 25 years at Burroughs Wellcome, a London-based international pharmaceutical firm, where he held a broad range of research and development positions, culminating in being the main board member for global research and development.  He earned B.Sc. and Ph.D. degrees in applied chemistry at the University of Glasgow.  He completed post-doctoral work in the field of nucleoprotein chemistry at Sloan Kettering Hospital in New York and is a graduate of the Harvard Advanced

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Management Program.  Dr. Cresswell is actively involved with the University of Michigan as a member of the Pharmacy Advancement Steering Committee for the College of Pharmacy.  Dr. Cresswell has also served on the Board of Directors of Albachem Ltd., Allergan, Inc., CuraGen Corporation, Esperion Therapeutics, Inc. and Vasogen Inc.  The Board of Directors believes Dr. Cresswell’s qualifications to sit on our Board of Directors include his significant contributions at global pharmaceutical companies.

Alan L. Rubino, a Director since September 2005, recently assumed the CEO and President of Emisphere Technologies, Inc., a publicly-held company headquartered in Roseland, NJ.  He and a new management team will be repositioning/transitioning the company from a drug-delivery company only firm, into a more expanded specialty pharma company that will continue to include new delivery system partnerships, NDA Rx and Rx medical food products at the commercial stage.  Just prior to Emisphere, Mr. Rubino served as Chief Executive Officer and President of New American Therapeutics, Inc., a specialty pharmaceutical company, since October 2010 where he led the acquisition of penciclovir from Novartis AG.  He and his team re-marketed the product and significantly advanced its sale, which resulted in a return to the company’s investors.  Previously, Mr. Rubino served as the Chief Executive Officer and President of Akrimax Pharmaceuticals, LLC, an integrated specialty pharmaceutical company, since February 2008.  Prior to this he served as President and Chief Operating Officer of Pharmos Corporation, a biopharmaceutical company, from November 2005 to December 2007.  Mr. Rubino has continued to expand upon a highly successful and distinguished career that included Hoffmann-La Roche, Inc., a research-focused healthcare company, from 1977 to 2001, where he was a member of the U.S. Executive and Operating Committees and a Securities and Exchange Commission, or SEC, corporate officer.  During his Roche tenure, he held a series of key executive positions in marketing, sales, business operations, supply chain and human resource management.  In addition, he was assigned to various executive committee roles in the areas of marketing, project management, and globalization of Roche Holdings.  Mr. Rubino also held senior executive positions at PDI, Inc., a sales and marketing support company, and Cardinal Health, a company focused on improving the cost-effectiveness of health care, from 2001 to 2005. He received Bachelor of Arts degree in economics from Rutgers University with a minor in biology/chemistry and also completed post-graduate educational programs at the University of Lausanne and Harvard Business School.  Additionally, he serves on the Board of Rutgers University School of Business and the Lerner Center for Pharmaceutical Studies.  The Board of Directors believes Mr. Rubino’s qualifications to sit on our Board of Directors include his leadership roles in the life sciences industry in a wide range of positions, including positions focused on sales and marketing and SEC matters.

Nelson M. Sims, a Director since February 2006 and was Chairman of the Board from 2007 through 2009.  He served as the President and Chief Executive Officer (from 2003 through 2005) of Novavax, Inc., an international health and life science company.  From 1973 through 2001, Mr. Sims served in various executive positions in sales, marketing, business development, and general management of Eli Lilly and Company, a pharmaceutical company, including Executive Director of Alliance Management, Vice President, Sales and Marketing of Hybritech, Inc. (which was acquired by Eli Lilly) and President of Eli Lilly Canada.  Mr. Sims received a Bachelor of Science degree in Pharmacy from Southwestern Oklahoma State University, and completed the Tuck Executive Program at the Amos Tuck School of Business at Dartmouth College.  In addition to serving as a board member of companies where he also led the executive management team, Mr. Sims has other significant board experience serving both public and private companies, including MDS, Inc., ATS Automation Tooling Systems, Inc. and Novavax, Inc. Currently, in addition to Aastrom, Mr. Sims sits on the board of Tosca, Inc.  The Board of Directors believes Mr. Sims’s qualifications to sit on our Board of Directors include his significant contributions at global life sciences companies.

Vote Required and Board of Directors’ Recommendation

The affirmative vote of a plurality of the total shares of common stock represented in person or by proxy and entitled to vote is required for the election of each of the nominees. It is the intention of the persons named as proxies to vote such proxy FOR the election of all nominees, unless otherwise directed by the shareholder.  The Board of Directors knows of no reason why any of the nominees would be unable or unwilling to serve, but if any nominee should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board of Directors may recommend in the place of such nominee.

Shares present or represented and not so marked as to withhold authority to vote for a particular nominee will be voted in favor of a particular nominee and will be counted toward such nominee’s achievement of a plurality.  Shares present at the meeting or represented by proxy where the shareholder properly withholds authority to vote for such nominee in accordance with the proxy instructions and “broker non-votes” will not be counted toward such nominee’s achievement of plurality.

The Board of Directors recommends that shareholders vote FOR the election of each nominee named in the above table.

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Board Meetings and Committees

During the fiscal year ended December 31, 2012, the Board of Directors held 15 meetings and acted by written consent once.  Each director serving on the Board of Directors in such fiscal year attended at least 75% of such meetings of the Board of Directors and the Committees on which he served.

Audit Committee

Under the terms of its current Charter, the Audit Committee’s responsibilities include reviewing with Aastrom’s independent accountants and management the annual financial statements and independent accountants’ opinion, reviewing the scope and results of the examination of Aastrom’s financial statements by the independent accountants, reviewing all professional services performed and related fees by the independent accountants, approving the retention of the independent accountants and periodically reviewing Aastrom’s accounting policies and internal accounting and financial controls. The Audit Committee may delegate duties or responsibilities to subcommittees or to one member of the Audit Committee.  Mr. Sims (Chair), Mr. Rubino and Dr. Cresswell were members of the Audit Committee during the fiscal year ended December 31, 2012.  During the fiscal year ended December 31, 2012, the Audit Committee held 5 meetings.  All members of our Audit Committee are independent (as independence is defined in Rule 5605(a)(2) and as required under Rule 5605(c)(2) of the NASDAQ listing standards).  Since September 2009, Mr. Sims has been designated as an audit committee financial expert as defined in the rules of the SEC.  The Audit Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page at our website, www.aastrom.com, and by following the Corporate Governance link.  For additional information concerning the Audit Committee, see “Report of the Audit Committee of the Board of Directors.”

Compensation Committee

Under the terms of its current Charter, the Compensation Committee’s responsibilities include determining and approving salary and bonus levels and stock option or restricted stock grants with respect to executive officers, and determining and approving stock option or restricted stock grants with respect to all employees.  In carrying out these responsibilities, the Compensation Committee reviews all components of executive officer compensation for consistency with the Compensation Committee’s compensation philosophy and strategy.  The Compensation Committee may delegate duties or responsibilities to subcommittees or to one member of the Compensation Committee.  Mr. Rubino (Chair), and Dr. Zerbe were members of the Compensation Committee during the fiscal year ended December 31, 2012.  Harold C. Urschel was a member of the Compensation Committee until the fourth quarter of 2012.  During the fiscal year ended December 31, 2012, the Compensation Committee held 5 meetings.  All members of our Compensation Committee are independent (as independence is defined in Rule 5605(a)(2) of the NASDAQ listing standards).  The Compensation Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page at our website, www.aastrom.com, and by following the Corporate Governance link.

Governance and Nominating Committee

Under the terms of its current Charter, the Governance and Nominating Committee (the “Governance Committee”) responsibilities include assisting Aastrom’s Board of Directors in fulfilling its responsibilities by reviewing and reporting to the Board of Directors on (i) corporate governance compliance mechanisms, (ii) corporate governance roles amongst management and directors, and (iii) Board of Directors process enhancement.  The Governance Committee may delegate duties or responsibilities to subcommittees or to one member of the Governance Committee.  The Governance Committee also considers qualified candidates for appointment and nomination for election to the Board of Directors and makes recommendations concerning such candidates.  Consistent with this function, the Governance Committee encourages continuous improvement of, and fosters adherence to, our corporate governance policies, procedures and practices at all levels.  Dr. Zerbe (Chair) and Mr. Sims were members of the Governance Committee for all of the fiscal year ended December 31, 2012.  Harold C. Urschel was a member of the Governance Committee until the fourth quarter of 2012.  During the fiscal year ended December 31, 2012, the Governance Committee held 4 meetings.  All members of the Governance Committee are independent (as independence is defined in Rule 5605(a)(2) of the NASDAQ listing standards).  The Governance Committee acts pursuant to a written charter, a current copy of which is available on the Investor Relations page at our website, www.aastrom.com, and by following the Corporate Governance link.

Director Nominations

The Governance Committee evaluates and recommends to the Board of Directors the nominees for each election of directors.  In fulfilling its responsibilities, the Governance Committee considers the following factors, among others:

· the appropriate size of our Board of Directors and its committees;

· the needs of Aastrom with respect to the particular talents and experience of its directors;

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· the nominee’s interest in becoming an effective, collaborative Board of Directors member, and the nominee’s ability to work in a collegial style with other Board of Directors members;

· the knowledge, skills and experience of nominees, including experience in the life sciences industry, medical products, medical research, medicine, business, finance, administration or public service;

· experience with accounting rules and practices;

· experience with regulatory and SEC requirements applicable to public companies;

· experience with regulatory requirements applicable to our industry;

· appreciation of the relationship of our business to the changing needs of society; and

· balance between the benefit of continuity and the desire for a fresh perspective provided by new members.

The Governance Committee’s goal is to assemble a Board of Directors that brings to Aastrom a variety of perspectives and skills derived from high quality business and professional experience.  In doing so, the Governance Committee also considers candidates with appropriate non-business backgrounds.

Neither the Governance Committee nor the Board of Directors has a specific policy with regard to the consideration of diversity in identifying director nominees.  However, both may consider the diversity of background and experience of a director nominee in the context of the overall composition of the Board of Directors at that time, such as diversity of knowledge, skills, experience, geographic location, age, gender, and ethnicity.  In general, the Governance Committee seeks director nominees with the talents and backgrounds that provide the Board of Directors with an appropriate mix of knowledge, skills and experience for the needs of Aastrom’s business.  The Governance Committee and the Board of Directors discuss the composition of directors on the Board of Directors, including diversity of background and experience, as part of the annual Board of Directors evaluation process.

Other than the criteria listed above, there are no stated minimum criteria for director nominees.  The Governance Committee does, however, recognize that under applicable regulatory requirements at least one member of the Board of Directors must meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that at least a majority of the members of the Board of Directors must meet the definition of “independent director” under the NASDAQ listing standards or the listing standards of any other applicable self regulatory organization.  The Governance Committee also believes it appropriate for at least one member of Aastrom’s management to participate as a member of the Board of Directors.

The Governance Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service.  Current members of the Board of Directors with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective.  If any member of the Board of Directors up for re-election at an upcoming annual meeting of shareholders does not wish to continue in service, the Governance Committee identifies the desired skills and experience of a new nominee in light of the criteria above.  Current members of the Governance Committee and Board of Directors will be polled for suggestions as to individuals meeting the criteria of the Governance Committee.  Research may also be performed to identify qualified individuals.  If the Governance Committee believes that the Board of Directors requires additional candidates for nomination, the Governance Committee may explore alternative sources for identifying additional candidates.  This may include engaging, as appropriate, a third-party search firm to assist in identifying qualified candidates.

The Governance Committee will evaluate any recommendation for director nominee proposed by a shareholder who (i) has continuously held at least 1% of the outstanding shares of our common stock entitled to vote at the annual meeting of shareholders for at least one year by the date the shareholder makes the recommendation and (ii) undertakes to continue to hold the common stock through the date of the meeting.  In order to be evaluated in connection with Aastrom’s established procedures for evaluating potential director nominees, any recommendation for director nominee submitted by a qualifying shareholder must be received by Aastrom no later than 120 days prior to the anniversary of the date proxy statements were made available to shareholders in connection with the prior year’s Annual Meeting of Shareholders.  Any shareholder recommendation for director nominee must be submitted to the Corporate Secretary, in writing at 24 Frank Lloyd Wright Drive, Lobby K, Ann Arbor, Michigan 48105 and must contain the following information:

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·                     a statement by the shareholder that he/she is the holder of at least 1% of our common stock and that the stock has been held for at least a year prior to the date of the submission and that the shareholder will continue to hold the shares through the date of the Annual Meeting of Shareholders;

·                     the candidate’s name, age, contact information and current principal occupation or employment;

·                     a description of the candidate’s qualifications and business experience during, at a minimum, the last five years, including the candidate’s principal occupation and employment and the name and principal business of any corporation or other organization in which the candidate was employed; and

·                     the candidate’s resume.

The Governance Committee will evaluate recommendations for director nominees submitted by directors, management or qualifying shareholders in the same manner, using the criteria stated above.

All directors and director nominees will submit a completed form of directors’ and officers’ questionnaire as part of the nominating process.  The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Governance Committee.

Board of Directors Leadership Structure

The Board of Directors’ general policy is that the position of Chairman of the Board of Directors may be held by the CEO, but that if those positions are held by the same individual or if the Chairman is otherwise not independent, the Board of Directors shall appoint an independent Lead Director.  The CEO shall preside at all meetings of the shareholders and, unless a Chairman has been elected, at all meetings of the Board of Directors at which he is present.  If a Chairman has been elected, he shall preside at all Board of Directors meetings at which he is present and, if independent, at all executive sessions of the independent directors, and shall perform such other powers and duties as may be assigned to him by the Board of Directors.  If the Chairman is not independent and a Lead Director is appointed, he shall preside at executive sessions of the independent directors and will bear such further responsibilities as the full Board of Directors may designate from time to time.  Currently, the position of Chairman of the Board of Directors is held by Dr. Zerbe.

The independent members of the Board of Directors have periodically reviewed this leadership structure and believe it is appropriate for Aastrom at the current time.  The CEO is responsible for setting the strategic direction for Aastrom and the day-to-day leadership and performance of Aastrom, while the Chairman of the Board of Directors provides guidance to the CEO and sets the agenda for Board of Directors meetings and presides over meetings of the full Board of Directors.  The CEO and Chairman of the Board of Directors provide leadership to the Board of Directors and work with the Board of Directors to define its structure and activities in the fulfillment of its responsibilities.  The Chairman of the Board of Directors presides over executive sessions and ensures that no conflict of interest arises between management and the functions of the Board of Directors and facilitates communication among the directors.  The Chairman of the Board of Directors and the CEO work together to provide an appropriate information flow to the Board of Directors and the Chairman of the Board of Directors works with other Board of Directors members to provide strong, independent oversight of Aastrom’s management and affairs.  Thus, the Board of Directors believes that the current structure balances the needs for the CEO to run Aastrom on a day-to-day basis with the benefit provided to Aastrom by significant involvement and leadership of an independent Chairman of the Board of Directors.

Shareholder Communications with Directors

The Board of Directors has adopted a Shareholder Communications with Directors Policy.  The Shareholder Communications with Directors Policy is available on the Investor Relations page at our website, www.aastrom.com, and by following the Corporate Governance link.

Director Attendance at Annual Meetings

The Board of Directors has adopted a Director Attendance at Annual Meetings Policy.  This policy is available on the Investor Relations page at our website, www.aastrom.com, and by following the Corporate Governance link.  All of the directors then in office attended the Annual Meeting of Shareholders held in May 2012.

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Code of Ethics

The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors as well as a separate Code of Ethics for Senior Financial Officers.  These Codes of Ethics are available on the Investor Relations page at our website, www.aastrom.com, and by following the Corporate Governance link.  We will also make information related to any amendments to, or waivers from these Codes of Ethics, available on the website.

Board of Directors Member Independence

The Board of Directors has determined that all of the members of the Board of Directors, other than Mr. Colangelo and Mr. Mayleben, are independent within the meaning of the director independence standards of NASDAQ and the SEC.  Mr. Colangelo is not considered independent because of his current employment by Aastrom and Mr. Mayleben is not considered independent because of his former role as the President, Chief Executive Officer and Chief Financial Officer of Aastrom until December 2012.

Risk Oversight

Assessing and managing risk is the responsibility of Aastrom’s management.  The Board of Directors oversees and reviews certain aspects of our risk management efforts.  The Board of Directors is involved in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board of Directors and its committees.  Among other areas, the Board of Directors is directly involved in overseeing risks related to Aastrom’s overall strategy, including clinical and product development strategies, financing strategies, business continuity, crisis preparedness and corporate reputational risks.

The committees of the Board of Directors execute their oversight responsibility for risk management as follows:

·                  The Audit Committee has responsibility for overseeing Aastrom’s internal financial and accounting controls, work performed by Aastrom’s independent registered public accounting firm and internal audit function.  As part of its oversight function, the Audit Committee regularly discusses with management and our independent registered public accounting firm our major financial and controls-related risk exposures and steps that management has taken to monitor and control such exposures.  In addition, Aastrom, under the supervision of the Audit Committee, has established procedures available to all employees for the anonymous and confidential submission of complaints relating to any matter to encourage employees to report questionable activities directly to Aastrom’s senior management and the Audit Committee.  The Audit Committee also reviews transactions between Aastrom and its officers, directors, affiliates of officers and directors or other related parties for conflicts of interest.

·                  The Compensation Committee is responsible for overseeing risks related to Aastrom’s cash and equity-based compensation programs and practices and ensuring that executive and employee compensation plans are appropriately structured so as not to incent excessive risk taking and are not reasonably likely to have a material adverse effect on Aastrom.

·                  The Governance Committee is responsible for overseeing risks related to the composition and structure of the Board of Directors and its committees and our corporate governance and works to ensure that our corporate governance does not encourage or promote excessive risk taking on the part of the Board of Directors or by employees of Aastrom.

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PROPOSAL 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Overview

The Audit Committee has selected PricewaterhouseCoopers LLP as Aastrom’s independent registered public accounting firm to audit the consolidated financial statements of Aastrom for the fiscal year ending December 31, 2013.  PricewaterhouseCoopers LLP has acted in such capacity since its appointment in fiscal year 1997.

Shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise.  However, the Board of Directors is submitting the selection of PricewaterhouseCoopers LLP to the shareholders for ratification as a matter of good corporate practice.  If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm.  Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent accountant at any time during the year if they determine that such a change would be in the best interests of Aastrom and its shareholders.

As part of its duties, the Audit Committee considered the provision of services, other than audit services, during the fiscal year ended December 31, 2012 by PricewaterhouseCoopers LLP, our independent registered public accounting firm for that period, to ensure they maintain their independence.  The following table sets forth the aggregate fees accrued by Aastrom for the fiscal years ended December 31, 2011 and 2012, respectively, by PricewaterhouseCoopers LLP:

(1)         The Audit Fees for the years ended December 31, 2011 and 2012, respectively, were for professional services rendered for the audits and reviews of the consolidated financial statements of Aastrom, professional services rendered for issuance of consents, comfort letters and assistance with review of documents filed with the SEC.

(2)         Annual license fee for technical accounting research software.

The Audit Committee approves in advance the engagement and fees of the independent registered public accounting firm for all audit services and non-audit services, based upon independence, qualifications and, if applicable, performance.  The Audit Committee may form and delegate to subcommittees of one or more members of the Audit Committee the authority to grant pre-approvals for audit and permitted non-audit services, up to specific amounts.  All audit services provided by PricewaterhouseCoopers LLP for the fiscal years ended December 31, 2011 and 2012, respectively, were pre-approved by the Audit Committee.

Representatives of PricewaterhouseCoopers LLP attended all of the meetings of the Audit Committee during each of the fiscal years ended December 31, 2011 and 2012, respectively.  We expect that a representative of PricewaterhouseCoopers LLP will attend the Annual Meeting, and the representative will have an opportunity to make a statement if he or she so desires.  The representative will also be available to respond to appropriate questions from shareholders.

Vote Required and Board of Directors’ Recommendation

The affirmative vote of a majority of the votes cast on the proposal on the ratification of this appointment, at the Annual Meeting of Shareholders at which a quorum representing a majority of all outstanding shares of common stock of Aastrom is present, either in person or by proxy, is required for ratification of this proposal.  If you abstain from voting on this Proposal, it has no effect on the voting of the proposal.  If you submit your proxy without indicating your voting instructions, your shares will be voted “FOR” this

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proposal.  Brokers, bankers and other nominees have discretionary voting power on this routine matter and, accordingly, “broker non-votes” will have no effect on the ratification.

The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Aastrom’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2013.

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PROPOSAL 3

ADVISORY VOTE ON THE COMPENSATION

OF OUR NAMED EXECUTIVE OFFICERS

Overview

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, known as the Dodd-Frank Act, this proposal gives our shareholders the opportunity to vote to approve or not approve, on an advisory basis, the compensation of our named executive officers.  This is commonly known as, and is referred to herein as, a “say-on-pay” proposal or resolution.  Under Section 14A(a)(1) of the Exchange Act, generally, each public company must submit a say-on-pay proposal to its shareholders not less frequently than once every three years after the first date of submission.  This vote is not intended to address any specific item of compensation or the compensation of any particular officer, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices.

As discussed under Compensation Discussion and Analysis, we believe that our executive compensation programs emphasize sustainable growth through a pay-for-performance orientation and a commitment to both operational and organizational execution.  We believe that our compensation program for our named executive officers was instrumental in helping us achieve our strong strategic and financial performance.

Accordingly, we are asking our shareholders to vote “FOR” the following resolution at our Annual Meeting:

“RESOLVED, that the compensation paid to Aastrom’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

We are asking our shareholders to indicate their support for our named executive officers’ compensation as described in this proxy statement.  This vote is not limited to any specific item of compensation, but rather addresses the overall compensation of our named executive officers and our philosophy, policies and practices relating to their compensation as described in this proxy statement pursuant to Item 402 of Regulation S-K.

Vote Required and Board of Directors’ Recommendation

The say-on-pay resolution is advisory, and therefore will not have any binding legal effect on Aastrom or the Compensation Committee.  However, the Compensation Committee does value the opinions of our shareholders and intends to take the results of the vote on this proposal into account in its future decisions regarding the compensation of our named executive officers.  Abstentions and broker non-votes will have no effect on this Proposal 3.  If you sign and submit your proxy card without marking your voting instructions, your shares will be voted “FOR” Proposal 3.

We believe that our compensation program for our named executive officers is in the best interest of Aastrom and our shareholders.  Therefore, the Board of Directors unanimously recommends a vote FOR the approval of this resolution.

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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of January 31, 2013, or as otherwise set forth below, with respect to the beneficial ownership of Aastrom’s common stock by (i) all persons known by Aastrom to be the beneficial owners of more than 5% of the outstanding common stock of Aastrom; (ii) each director and director nominee of Aastrom, (iii) each executive officer of Aastrom named in the Summary Compensation Table, and (iv) all executive officers and directors of Aastrom as a group.

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EXECUTIVE COMPENSATION AND RELATED INFORMATION

Compensation Discussion and Analysis

The Compensation Committee of our Board of Directors, which is comprised solely of independent directors as defined by NASDAQ, outside directors as defined by Section 162(m) of the Internal Revenue Code and non-employee directors as defined by Rule 16b-3 under the Exchange Act, has been delegated the authority and responsibility to review and determine or, in their discretion, recommend to our Board of Directors for determination, the compensation packages of our executive officers.  Our named executive officers for fiscal 2012 are those five individuals listed in the “2012 Summary Compensation Table” below.  Other information concerning the structure, roles and responsibilities of our Compensation Committee is set forth in “Board Meetings and Committees—Compensation Committee” section of this Proxy Statement.

A discussion of the policies and decisions that shape our executive compensation program, including the specific objectives and elements, is set forth below.

Executive Compensation Objectives and Philosophy

The objective of our executive compensation program is to attract, retain and motivate talented executives who are critical for the continued growth and success of Aastrom and to align the interests of these executives with those of our shareholders.  To this end, our compensation programs for executive officers are designed to achieve the following objectives:

·                  attract and retain talented and experienced executives;

·                  motivate, reward and retain executives whose knowledge, skills and performance are critical to our success;

·                  ensure fairness among the executive management team by recognizing the contributions each executive makes to our success;

·                  focus executive behavior on achievement of our corporate objectives and strategy;

·                  build a culture of “pay for performance”; and

·                  align the interests of management and shareholders by providing management with longer-term incentives through equity ownership.

The Compensation Committee reviews the allocation of compensation components regularly to help ensure alignment with strategic and operating goals, competitive market practices and legislative changes.  The Compensation Committee does not apply a specific formula to determine the allocation between cash and non-cash forms of compensation.  Certain compensation components, such as base salaries, benefits and perquisites, are intended primarily to attract and retain qualified executives.  Other compensation elements, such as annual and long-term incentive opportunities, are designed to motivate and reward performance.  The annual incentive motivates named executive officers to achieve specific operating objectives for the fiscal year.  Long-term incentives are intended to reward Aastrom’s long-term performance and achievement of specific financial goals and to strongly align named executive officers’ interests with those of shareholders.

Elements of Executive Officer Compensation

Our executive officer compensation program is comprised of: (i) base annual salary; (ii) annual incentive compensation, which is based on overall company performance and the achievement of individual goals; and (iii) long-term equity incentive compensation in the form of periodic stock option grants, with the objective of aligning the executive officers’ long-term interests with those of the shareholders.

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In establishing overall executive compensation levels and making specific compensation decisions for the executives in 2012, the Compensation Committee considered a number of criteria, including the executive’s position, any applicable employment agreement, prior compensation levels, scope of responsibilities, prior and current period performance, attainment of individual and overall company performance objectives, external market data and retention concerns.  In addition, the Compensation Committee considered the results of the advisory vote by shareholders on the “say-on-pay” proposal presented to stockholders at Aastrom’s 2012 annual meeting of shareholders.  There was support at the 2012 annual meeting for the compensation program offered to Aastrom’s named executive officers with more than 85% of votes cast in favor.  Accordingly, the Committee made no direct changes to Aastrom’s executive compensation program as a result of the say-on-pay vote.  At the 2012 annual meeting, the shareholders of Aastrom also voted in favor of an annual say-on-pay vote and Aastrom has elected to follow such advisory vote.

The Compensation Committee performs a review of compensation for our executive officers annually.  As part of this review, the Compensation Committee takes into consideration their understanding of external market data, including compensation practices of comparable companies (based on size and stage of development), and independent third party market data, including the Radford Global Life Sciences Survey.  At least every three years, the Compensation Committee engages an independent consultant to perform an analysis of the current compensation program.  In 2012, the Compensation Committee engaged Frederic W. Cook & Co., Inc. to perform an independent review of the direct compensation program for our executive officers.  The consultant reports directly to the Compensation Committee.  Other than the work it performs for the Compensation Committee and the Board, Frederic W. Cook & Co., Inc. does not provide any consulting services to Aastrom Biosciences, Inc. or its executive officers.  The review indicated that the CEO was in the median for base salary, 75th percentile for total cash compensation (base salary plus non-equity incentive compensation) and 75th percentile for long-term equity incentive compensation.  The other executive officers were below the 25th percentile for base salary, in the 25th to 50th percentile range for total cash compensation and near the median for equity compensation.  The Compensation Committee determined that 2013 cash and equity compensation would remain flat with 2012 levels.  We may also change the base salary of an executive officer at other times due to market conditions or if a change in the scope of the officer’s responsibilities justifies such consideration.  We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives.

Generally, our Compensation Committee reviews and, as appropriate, approves compensation arrangements for executive officers in the first quarter of each year subject to the terms of existing employment agreements with our named executive officers, as discussed below, and timing of the hiring of new executives.  Other than with respect to the compensation of our Chief Executive Officer, our Compensation Committee also takes into consideration the recommendations for executive compensation made by our Chief Executive Officer, which recommendations are generally presented at the time of our Compensation Committee’s review of executive compensation arrangements.

In considering compensation of executives, one of the factors the Compensation Committee takes into account is the anticipated tax treatment of various components of compensation.  We do not believe Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), which generally disallows a tax deduction for certain compensation in excess of $1 million to any of our named executive officers, will have a material effect on us.  Certain performance-based compensation approved by shareholders is not subject to this deduction limit.  Our Compensation Committee’s strategy in this regard is to be cost and tax efficient.  Therefore, the Compensation Committee intends to preserve corporate tax deductions, while maintaining the flexibility in the future to approve arrangements that it deems to be in our best interests and the best interests of our shareholders, even if such arrangements do not always qualify for full tax deductibility.

Base Salary

The Compensation Committee performs a review of base salaries for our executive officers annually.  We believe that a competitive base salary is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives.  We also believe that attractive base salaries can motivate and reward executives for their overall performance.  Base salaries are established in part based on the individual experience, skills and expected contributions of our executives and our executives’ performance during the prior year.  Dr. Bartel’s salary was adjusted in 2012 to $260,000.  The adjustment was due to increased responsibilities within the organization.  Mr. Orlando’s starting base salary is $285,000.  Dr. Watling and Mr. Gibson’s salaries remained unchanged as we believe they are consistent with our compensation philosophy.  On March 4, 2013, Mr. Colangelo was named the President and CEO of Aastrom.  His base salary of $430,000 was determined through the review of the third party market data and consideration of the compensation review results that were provided by Frederic W. Cook & Co.  The base salary is consistent with these benchmarks and with our compensation philosophy.

Annual Non-Equity Incentive Compensation

We are a clinical development stage company and our development programs are based on novel technologies.  Given the nature of our business, the determination of annual incentives for our executives is generally tied towards promoting our development

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programs.  Each executive officer has a target cash incentive amount that is based on a percentage of his or her base salary.  The amount of the cash incentives awarded by the Compensation Committee each year is tied to the achievement of performance and corporate goals set by the Board of Directors or the Compensation Committee, which are designed to capture the important operational and financial aspects of the organization.  The key 2012 corporate objectives were: (1) Successfully execute the Phase 3 REVIVE CLI clinical trial, (2) Successfully initiate and execute the Phase 2b ixCELL-DCM trial, (3) simplify our capital structure, (4) advance capital raising efforts to fund our clinical programs,  and (5) advance corporate partnering discussions.

The target incentive bonus percentages for 2012, as a percentage of base salary, were as follows: Mr. Mayleben, 45%, Mr. Orlando, 40%; Dr. Bartel, 35%, Dr. Watling, 35%, and Mr. Gibson, 30%.  If we achieve corporate performance goals in excess of target levels, or if the professional effectiveness of a specific executive officer helped us achieve specific corporate objectives or otherwise contributed to our overall success, the incentives paid to our executive officers can exceed the target amounts, with the amount treated as a bonus.  We have determined that no incentive bonus will be paid to employees for 2012.

Long-term Equity Incentive Compensation

Long-term incentive compensation allows the executive officers to share in any appreciation in the value of our common stock.  The Compensation Committee believes that stock option participation aligns executive officers’ interests with those of the shareholders.  The amounts of the awards are designed to reward past performance and create incentives to meet long-term objectives.  Awards are made at a level calculated to be competitive within the biotechnology industry, as well as a broader group of companies of comparable size and complexity.  In determining the amount of each grant, the Compensation Committee takes into account the number of shares held by the executive prior to the grant.

Stock option awards provide our executive officers with the right to purchase shares of our common stock at a fixed exercise price, subject to continued employment with our company.  Stock options are earned on the basis of continued service to us and generally vest over four years.  All grants need to be approved by our Board of Directors or Compensation Committee.  All stock options will be awarded at fair market value and based on our closing market price on the grant date.

Other Compensation

Generally, benefits available to executive officers are available to all employees on similar terms and include health and welfare benefits, paid time-off, life and disability insurance and a 401(k) plan.

We provide the benefits above to attract and retain our executive officers by offering compensation that is competitive with other companies similar in size and stage of development.  These benefits represent a relatively small portion of their total compensation.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

This report shall not constitute “soliciting material,” shall not be deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any of our other filings under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this report by reference therein.

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Summary Compensation Table

The following table summarizes all compensation awarded to, earned by or paid to Tim M. Mayleben, our chief executive officer until December 14, 2012, Daniel R. Orlando, our chief commercial officer (served as interim president and chief executive officer until March 4, 2013), Ronnda L. Bartel, our chief scientific officer, Sharon M. Watling, our vice president of clinical development and Brian D. Gibson, our vice president of finance, chief accounting officer and treasurer, (the “named executive officers”) during the six-month period ended December 31, 2010 and the 12-month fiscal years ended December 31, 2011 and 2012, respectively.

2012 SUMMARY COMPENSATION TABLE

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Grants of Plan-Based Awards

The following table sets forth information concerning non-equity incentive plan awards and individual grants of stock options and restricted stock made during the fiscal year ended December 31, 2012 to each of the named executive officers.

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Outstanding Equity Awards at Fiscal Year End

The table below reflects all outstanding equity awards made to each of the named executive officers that were outstanding at December 31, 2012.  We currently grant stock-based awards pursuant to our Incentive Plan and have outstanding awards under our 2004 Plan.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2012