Stock Update (NASDAQ:ATHX): Athersys, Inc. Reports First Quarter 2015 Results

ATHXAthersys, Inc. (NASDAQ:ATHX) announced its financial results for the three months ended March 31, 2015.

Highlights of the first quarter of 2015 and recent events include:

  • Entered into an exclusive license agreement with Chugai Pharmaceutical Co., Ltd. (“Chugai”) to develop and commercialize our MultiStem® cell therapy for the treatment of ischemic stroke in Japan, which included an up-front payment of $10 million and an additional $195 million of potential future payments and royalties;
  • Announced interim results from the Phase 2 clinical study of MultiStem to treat ischemic stroke demonstrating that, while failing to meet the primary endpoints of this study, MultiStem cell therapy exhibits a favorable safety profile and appears to provide substantial benefit to ischemic stroke patients provided they receive treatment within 36 hours of the stroke;
  • Launched grant-supported Phase 2 clinical study to evaluate the administration of MultiStem cells to patients who have suffered a severe, non-ST-elevated acute myocardial infarction, based on promising preclinical and Phase 1 results;
  • Awarded grant of approximately £2.0 million from Innovate UK, the United Kingdom’s innovation agency which funds and supports innovation to accelerate sustained economic growth, with proceeds to be received over time to support a clinical study centered in the United Kingdom, exploring MultiStem treatment of acute respiratory distress syndrome (“ARDS”) patients;
  • Received notification from Pfizer Inc. that, following an internal portfolio review, it no longer intended to invest in the cell therapy program for ulcerative colitis and would terminate the 2009 license agreement between us, effectiveJuly 2015;
  • Reported revenues of $0.7 million for quarter ended March 31, 2015 and net loss of $12.5 million for the period, which includes non-cash expense of $5.6 million related to the change in fair value of our warrant liabilities and $0.8 million related to stock-based compensation;
  • Recorded net loss per share of $0.16 for the quarter ended March 31, 2015, which reflects the non-cash expense impact of $0.08 per share from the $6.4 million in aggregate non-cash items noted above, and also does not include any revenue from the Chugai collaboration which is deferred at March 31, 2015;
  • Added $11.4 million of cash to the balance sheet to date in 2015 from a combination of warrant exercises and stock sales under our equity facility; and
  • Ended the quarter with $35.5 million in cash and cash equivalents.

“We have made meaningful progress during the period,” said Dr. Gil Van Bokkelen, Chairman and CEO of Athersys, Inc.  “In March, we announced that we entered into a license agreement and collaboration with Chugai to develop MultiStem cell therapy for treating ischemic stroke in Japan.  More recently, we reported initial results from our ongoing Phase 2 trial for treating stroke, which suggest that patients who receive MultiStem treatment within 36 hours following the stroke may benefit substantially from the treatment, providing a good path for subsequent development.  In addition, we have launched our Phase 2 clinical trial evaluating MultiStem administration to patients that have suffered damage from a myocardial infarction, and we have received grant funding to support exploratory clinical work in ARDS, a serious immunological and inflammatory condition affecting the lungs.

“With respect to our stroke study results, MultiStem treatment was associated with favorable safety and tolerability, consistent with our prior studies,” continued Dr. Van Bokkelen.  “MultiStem treatment was also associated with lower rates of mortality and life threatening adverse events, infections and pulmonary events, and a reduction in hospitalization.  Additionally, a higher proportion of MultiStem treated patients achieved an excellent clinical outcome, which is defined by achieving excellent scores in each of the three clinical evaluation scales used to assess patient recovery.  Further, our analyses show that patients who received MultiStem treatment earlier in the treatment window (24-36 hours post-stroke) had better recovery in comparison to those patients that received placebo in a number of parameters, including substantially reduced hospitalization times and reduced time in the Intensive Care Unit.  Improved recovery was more pronounced for MultiStem administration earlier in the 24-36 hour timeframe.

“We believe the evidence indicating that patients who received MultiStem treatment early appeared to exhibit meaningfully better recovery is very important and promising,” added Dr. Van Bokkelen. “The results suggest the window of intervention with MultiStem therapy may meaningfully extend the limits of current standard of care and are generally consistent with our initial clinical hypothesis.

“Finally, we added capital to the balance sheet during the period through our license with Chugai, and as a result of warrant exercises and the utilization of our equity facility.  This has left us with a good foundation for supporting our ongoing and planned development,” concluded Dr. Van Bokkelen.

First Quarter Results  

For the three months ended March 31, 2015, there was no change from the prior year period in our revenues of $0.7 million, with both contract and grant revenues consistent with the prior-year period. The $10 million up-front payment from Chugai is recorded as deferred revenue at March 31, 2015, in accordance with our accounting policy for recognizing revenue for multiple element arrangements.

Research and development expenses were $5.7 million for the first quarter of 2015 compared to $6.2 million for the first quarter of 2014.  The decrease is comprised of lower clinical and preclinical development costs, patent legal fees and sponsored research costs, which were partially offset by higher personnel costs and stock-based compensation. General and administrative expenses were relatively consistent between the periods at $1.9 million for the three months ended March 31, 2015 and $1.8 million in the prior year three-month period. The non-cash expense from the change in the fair value of our warrant liabilities was $5.6 million in the first quarter of 2015 and $4.1 million in the prior-year period.

Net loss for the three months ended March 31, 2015 was $12.5 million, which includes non-cash expenses aggregating $6.4 million from warrant and stock-based compensation, compared to a net loss of $11.5 million for the three months ended March 31, 2014.

As of March 31, 2015, we had $35.5 million in cash and cash equivalents, compared to $26.1 million at December 31, 2014.  Cash provided by operating activities during the first quarter of 2015 was $1.1 million compared to $7.3 million cash used in the first quarter of 2014.  Included in the 2015 first quarter cash from operating activities was Chugai’s $10 million up-front payment, less $2 million temporarily withheld by the Japan taxing authorities, which is refundable to us under applicable U.S. and Japan tax treaties and is recorded as a current receivable.  Cash provided by financing activities was $8.3 million in the 2015 first quarter compared to $20.5 million in the prior-year first quarter.  While both periods included warrant exercises and proceeds from the use of our equity facility, the 2014 first quarter also included an equity financing. (Original Source)

Shares of Athersys closed today at $1.40, up $0.09 or 6.87%. ATHX has a 1-year high of $3.43 and a 1-year low of $0.90. The stock’s 50-day moving average is $2.14 and its 200-day moving average is $1.96.

On the ratings front, Maxim Group analyst Jason Kolbert maintained a Buy rating on ATHX, with a price target of $9, in a report issued on April 29. The current price target represents a potential upside of 542.9% from where the stock is currently trading. According to, Kolbert has a total average return of 0.5%, a 40.4% success rate, and is ranked #2049 out of 3596 analysts.

Athersys Inc is a biopharmaceutical company developing regenerative medicine. It is engaged in the discovery and development of therapies designed to extend and enhance human life.

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