Company also announces equity investment
and binding letter of intent to
expand HEALIOS K.K. collaboration, covered in
a separate release
Athersys, Inc. (NASDAQ:ATHX) announced today its fourth quarter
2017 and annual 2017 financial results and highlights.
“As we announced today in a separate press
release, we have entered a letter of intent to expand our
collaboration with Healios, and we are actively working with them
with to complete the broader collaboration expansion by April 30,
2018, as we disclosed earlier today. In doing so, this would
result in committed capital in the amount of $56.1 million, of
which $31.1 million is already committed, in the form of the
initial equity investment and license fee payments.
Importantly, the broadened collaboration would lead to increased
development of MultiStem treatment in Asia and provide us with
capital to support our pivotal registration study for ischemic
stroke, MASTERS-2, in the United States and Europe, as well as
other important activities,” commented Dr. Gil Van Bokkelen, CEO of
Athersys.
Fourth Quarter 2017 and Recent
Highlights:
- Announced today plans to
significantly expand our existing HEALIOS K.K. (“Healios”)
collaboration, including a $21.1 million equity investment and $10
million in guaranteed license fees, and, if the expansion is
consummated, would also further provide an additional $25 million
in committed payments over time. As part of the expansion, Healios
would receive a license to MultiStem® products for acute
respiratory distress syndrome (“ARDS”) and trauma in Japan, and
Healios’ organ bud technology and certain ophthalmological
indications globally. Also, Healios would receive an
exclusive option to license MultiStem products for ischemic stroke,
ARDS and trauma in China, and Athersys would be entitled to license
fees, milestone payments and escalating royalties for the licensed
indications;
- Advanced our preparations for the
MASTERS-2 Phase 3 registration study for ischemic stroke, to enable
initiation of this important study;
- Entered into a new equity facility
in February 2018 as follow-on to current facility, with right to
sell up to $100 million of common stock to Aspire
Capital, LLC over three-year period, providing access to
capital as needed to support our operations;
- Recorded revenues of $1.2 million
and a net loss of $13.1 million for the quarter ended December 31,
2017, noting that included in the net loss for the quarter was a
$4.7 million non-recurring charge ($3.2 million of which was
non-cash) related to a settlement and license agreement to resolve
a long-standing intellectual property dispute; and
- Ended 2017 with $29.3 million in
cash and cash equivalents.
Other 2017 Highlights:
- Received multiple special
designations from regulators for our stroke program this year,
including Regenerative Medicine Advanced Therapy designation and
Fast Track designation from U.S. Food and Drug Administration, as
well as a Final Scientific Advice positive opinion from European
Medicines Device Agency;
- Expanded manufacturing and process
development collaborative relationships, including Nikon CeLL
innovation Co., Ltd., and progressed key manufacturing campaigns
and process development projects; and
- Recorded revenues of $3.7 million
and a net loss of $32.2 million, or $0.29 net loss per share, for
the year ended December 31, 2017, again, factoring in the 2017
charge of $4.7 million for the intellectual property settlement and
license.
“Over the course of 2017 and into 2018, we have
undertaken and completed multiple initiatives that are intended to
advance MultiStem therapy into registrational studies and
ultimately to commercialization,” stated Dr. Van Bokkelen.
“We plan to launch our MASTERS-2 study in the second quarter, and
continue to advance our manufacturing platform and
capabilities. Importantly, through these activities and our
collaboration expansion with Healios, we have further strengthened
our financial position, while retaining North American and European
rights for MultiStem therapy in ischemic stroke and other
indications, while we continue to evaluate additional collaborative
opportunities.”
Fourth Quarter 2017 Financial
Results
Total revenues for the fourth quarter of 2017
were $1.2 million compared to $1.0 million in the same period in
the prior year, reflecting a combination of contract revenues and
grant revenues.
Research and development expenses increased to
$12.1 million in the 2017 fourth quarter from $7.1 million in the
same period in the prior year. In 2017, approximately $4.7
million of license fees were expensed (of which $3.2 million was
non-cash) related to a settlement and license agreement to resolve
a long-standing intellectual property dispute. After factoring in
this one-time charge, the remaining difference of $0.3 million from
year-to-year was primarily due to increased clinical and
preclinical development costs, which vary based on trials underway,
clinical manufacturing and process development activities.
General and administrative expenses remained
relatively consistent at $2.1 million and $2.0 million in the 2017
and 2016 fourth quarters, respectively.
Net loss was $13.1 million in the fourth quarter
of 2017, compared to net loss of $7.1 million for the same period
of 2016. The increase in net loss was primarily due to the
variances outlined above (e.g., settlement and license fees) and a
$1.1 million gain in the fourth quarter of 2016 related to the fair
value of our warrant liabilities (non-cash), with no corresponding
warrant activity in the 2017 fourth quarter, since all of our
warrants were either exercised or expired early in 2017.
Full Year 2017 Financial
Results
Revenues decreased to $3.7 million for the year
ended December 31, 2017 from $17.3 million in 2016, related to
a $15.0 million payment received and recognized as revenue for the
Healios collaboration entered into in January 2016, partially
offset by 2017 increases in other contract revenues, including a
$1.0 million milestone payment from our collaboration with RTI
Surgical, Inc. and manufacturing and service proceeds from
Healios.
Research and development expenses increased to
$27.8 million for the year ended December 31, 2017 from $24.8
million for the year ended December 31, 2016. After
factoring in the non-recurring charge of $4.7 million for license
fees referred to above, the decrease in research and development
expenses year-over-year of $1.7 million related primarily to
reduced spending on research supplies of $0.9 million and sponsored
research of $0.5 million.
General and administrative expenses increased to
$8.5 million in 2017 from $7.8 million in 2016. The $0.7 million
increase was due primarily to increases in personnel costs and
legal and professional services.
Net loss was $32.2 million in 2017, compared to
$15.3 million in 2016. The difference of $16.9 million
reflects the variances above, particularly the $15.0 million
Healios revenue in 2016 and the $4.7 million one-time license fee
expense in 2017, as well as an increase in 2017 of $1.3 million in
the gain in the fair value of warrant liabilities, a decrease in
2017 of $0.7 million in the gain from insurance proceeds, and
overall variances in operational activities.
Cash used in operating activities was $24.0
million and $10.9 million for full year 2017 and full year 2016,
respectively, which takes into account the $15.0 million initial
license fee revenue from Healios in 2016 and the other variances
noted above.
As of December 31, 2017, we had $29.3 million in
cash and cash equivalents, compared to $14.8 million at December
31, 2016.
Conference Call
Gil Van Bokkelen, Chairman and Chief Executive
Officer, William (BJ) Lehmann, President and Chief Operating
Officer, and Laura Campbell, Senior Vice President of Finance will
host a conference call today to review the results as follows:
Date |
Tuesday, March 13, 2018 |
Time |
4:30 p.m. (Eastern Time) |
Telephone access: U.S. and Canada |
800-273-1254 |
Telephone access: International |
973-638-3440 |
Access code |
8898346 |
Live webcast |
www.athersys.com, under the Investors section |
A replay will be available for on-demand
listening shortly after the completion of the call until 11:59
PM Eastern Time on March 27, 2018 at the
aforementioned URL, or by dialing (800) 585-8367 or (855) 859-2056
in the U.S. and Canada, or from abroad (404)
537-3406, and entering access code 8898346. The archived webcast
will be available for one year at the aforementioned URL.
About Athersys
Athersys is an international biotechnology
company engaged in the development of therapeutic products designed
to extend and enhance the quality of human life. The Company is
developing its MultiStem® cell therapy product, a patented,
adult-derived "off-the-shelf" stem cell product, initially for
disease indications in the neurological, cardiovascular, and
inflammatory and immune disease areas, and has several ongoing
clinical trials evaluating this potential regenerative medicine
product. Athersys has forged strategic partnerships and a broad
network of collaborations to further advance MultiStem cell therapy
toward commercialization. More information is available at
www.athersys.com. Follow Athersys on Twitter at
www.twitter.com/athersys.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties. These
forward-looking statements relate to, among other things, the
expected timetable for development of our product candidates, our
growth strategy, and our future financial performance, including
our operations, economic performance, financial condition,
prospects, and other future events. We have attempted to identify
forward-looking statements by using such words as "anticipates,"
"believes," "can," "continue," "could," "estimates," "expects,"
"intends," "may," "plans," "potential," "should," “suggest,”
"will," or other similar expressions. These forward-looking
statements are only predictions and are largely based on our
current expectations. A number of known and unknown risks,
uncertainties, and other factors could affect the accuracy of these
statements. Some of the more significant known risks that we face
that could cause actual results to differ materially from those
implied by forward-looking statements are the risks and
uncertainties inherent in the process of discovering, developing,
and commercializing products that are safe and effective for use as
human therapeutics, such as the uncertainty regarding regulatory
approval and market acceptance of our product candidates and our
ability to generate revenues, including MultiStem for the treatment
of ischemic stroke, acute myocardial infarction, spinal cord injury
and acute respiratory distress syndrome and other disease
indications, including graft-versus-host disease. These risks may
cause our actual results, levels of activity, performance, or
achievements to differ materially from any future results, levels
of activity, performance, or achievements expressed or implied by
these forward-looking statements. Other important factors to
consider in evaluating our forward-looking statements include: our
ability to work with Healios under the terms of the letter of
intent described elsewhere in the press release to successfully
negotiate the terms of and execute, the agreements necessary to
expand the existing collaboration; the success of our collaboration
with Healios and others, including our ability to reach milestones
and receive milestone payments, and whether any products are
successfully developed and sold so that we earn royalty payments;
our possible inability to realize commercially valuable discoveries
in our collaborations with pharmaceutical and other biotechnology
companies; our collaborators' ability to continue to fulfill their
obligations under the terms of our collaboration agreements; the
success of our efforts to enter into new strategic partnerships or
collaborations and advance our programs; our ability to raise
additional capital; results from our MultiStem clinical trials,
including the MASTERS-2 Phase 3 clinical trial and the TREASURE
trial in Japan; the possibility of delays in, adverse results of,
and excessive costs of the development process; our ability to
successfully initiate and complete clinical trials within the
expected time frame or at all; changes in external market factors;
changes in our industry's overall performance; changes in our
business strategy; our ability to protect our intellectual property
portfolio; our possible inability to execute our strategy due to
changes in our industry or the economy generally; changes in
productivity and reliability of suppliers; and the success of our
competitors and the emergence of new competitors. You should not
place undue reliance on forward-looking statements contained in
this press release, and we undertake no obligation to publicly
update forward-looking statements, whether as a result of new
information, future events or otherwise.
ATHX-G
Contact:
William (B.J.)
Lehmann
President and Chief Operating
Officer
Tel: (216) 431-9900bjlehmann@athersys.com
Karen Hunady Corporate Communications &
Investor RelationsTel: (216) 431-9900khunady@athersys.com
David Schull Russo Partners,
LLCTel: (212) 845-4271 or (858)
717-2310David.schull@russopartnersllc.com
(Tables Follow)
Athersys, Inc. |
Condensed Consolidated Balance
Sheets |
(In thousands)(Unaudited) |
|
|
|
|
|
|
|
December 31, |
December 31, |
|
2017 |
2016 |
Assets |
|
|
Cash and cash
equivalents |
$ |
29,316 |
$ |
14,753 |
Other current
assets |
|
1,874 |
|
1,527 |
Equipment, net |
|
2,206 |
|
2,605 |
Other assets |
|
197 |
|
175 |
Total
assets |
$ |
33,593 |
$ |
19,060 |
|
|
|
Liabilities and
stockholders’ equity |
|
|
Accounts payable and
accrued expenses |
$ |
9,312 |
$ |
6,875 |
Deferred revenue and
other |
|
905 |
|
-- |
Warrant liabilities and
note payable |
|
-- |
|
1,004 |
Total stockholders’
equity |
|
23,376 |
|
11,181 |
Total
liabilities and stockholders’ equity |
$ |
33,593 |
$ |
19,060 |
|
Athersys, Inc. |
Condensed Consolidated Statements of
Operations and Comprehensive Loss |
(In thousands, except per share data) |
(Unaudited) |
|
|
|
|
|
|
|
Three months ended |
Twelve months ended |
|
December 31, |
December 31, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Revenues |
|
|
|
|
Contract revenue |
$ |
955 |
|
$ |
828 |
|
$ |
2,843 |
|
$ |
16,238 |
|
Grant revenue |
|
215 |
|
|
155 |
|
|
865 |
|
|
1,109 |
|
Total revenues |
|
1,170 |
|
|
983 |
|
|
3,708 |
|
|
17,347 |
|
|
|
|
|
|
Costs and
expenses |
|
|
|
|
Research and
development |
|
12,134 |
|
|
7,088 |
|
|
27,841 |
|
|
24,838 |
|
General and
administrative |
|
2,075 |
|
|
2,004 |
|
|
8,466 |
|
|
7,835 |
|
Depreciation |
|
176 |
|
|
134 |
|
|
684 |
|
|
382 |
|
Total
costs and expenses |
|
14,385 |
|
|
9,226 |
|
|
36,991 |
|
|
33,055 |
|
Gain from insurance
proceeds, net |
|
-- |
|
|
-- |
|
|
-- |
|
|
682 |
|
Loss from
operations |
|
(13,215 |
) |
|
(8,243 |
) |
|
(33,283 |
) |
|
(15,026 |
) |
Income (expense) from change in fair value of warrants |
|
-- |
|
|
1,132 |
|
|
728 |
|
|
(557 |
) |
Other income (expense),
net |
|
115 |
|
|
(19 |
) |
|
314 |
|
|
209 |
|
Loss before
income taxes |
|
(13,100 |
) |
|
(7,130 |
) |
|
(32,241 |
) |
|
(15,374 |
) |
Income tax benefit |
|
-- |
|
|
3 |
|
|
-- |
|
|
37 |
|
Net loss and
comprehensive loss |
$ |
(13,100 |
) |
$ |
(7,127 |
) |
$ |
(32,241 |
) |
$ |
(15,337 |
) |
|
|
|
|
|
Basic net loss per share |
$ |
(0.11 |
) |
$ |
(0.08 |
) |
$ |
(0.29 |
) |
$ |
(0.18 |
) |
Weighted average shares outstanding, basic |
|
119,611 |
|
|
85,797 |
|
|
112,053 |
|
|
84,715 |
|
|
|
|
|
|
Diluted net (loss) income per share |
$ |
(0.11 |
) |
$ |
(0.10 |
) |
$ |
(0.29 |
) |
$ |
(0.18 |
) |
Weighted average shares outstanding, diluted |
|
119,611 |
|
|
86,603 |
|
|
112,053 |
|
|
84,715 |
|
|
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