Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-33876

Athersys, Inc.

(Exact name of registrant as specified in its charter)

Delaware

20-4864095

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

3201 Carnegie Avenue,	Cleveland,	Ohio	44115-2634

(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (216) 431-9900

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, $0.001 par value, as of November 10, 2023 was 61,718,815.

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ATHERSYS, INC.

TABLE OF CONTENTS

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS		2
PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27
ITEM 4.	Controls and Procedures	27
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	27
ITEM 1A.	Risk Factors	27
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
ITEM 3.	Defaults Upon Senior Securities	30
ITEM 4.	Mine Safety Disclosures	30
ITEM 5.	Other Information	30
ITEM 6.	Exhibits	31
SIGNATURES

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CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) 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 timing of initiation of new clinical sites and patient enrollment in our clinical trials, 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. These forward-looking statements appear in a number of places in this Quarterly Report.

In addition, 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 are the risks and uncertainties inherent in the process of discovering, developing, and commercializing products that are safe and effective for use as therapeutics, including the uncertainty regarding market acceptance of our product candidates and our ability to generate revenues. The following risks and uncertainties 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:

	•	our ability to raise capital to fund our operations in the near term and long term, including our ability to obtain funding through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources, on terms acceptable to us or at all, and to continue as a going concern;

	•	in the event Athersys is unable in the near-term to enter into a strategic transaction or obtain adequate financing, it expects to have to file for protection under the bankruptcy laws to allow the Company to conduct an orderly wind down of operations;

•

our collaborators’ ability and willingness to continue to fulfill their obligations under the terms of our collaboration agreements and generate sales related to our technologies;

•

the possibility of unfavorable results from ongoing and additional clinical trials involving MultiStem;

•

the risk that positive results in a clinical trial may not be replicated in subsequent or confirmatory trials or success in an early stage clinical trial may not be predictive of results in later stage or large scale clinical trials;

•

the timing and nature of results from MultiStem clinical trials, including the MASTERS-2 Phase 3 clinical trial evaluating the administration of MultiStem for the treatment of ischemic stroke;

•

our ability to meet milestones and earn royalties under our collaboration agreements, including the success of our collaboration with Healios;

•

the success of our MACOVIA clinical trial evaluating the administration of MultiStem for the treatment of ARDS induced by COVID-19 and other pathogens, and the MATRICS-1 clinical trial being conducted with UT Health evaluating the treatment of patients with serious traumatic injuries;

•

the availability of product sufficient to meet our clinical needs and potential commercial demand following any approval;

•

the possibility of delays in, adverse results of, and excessive costs of the development process;

•

our ability to successfully initiate and complete clinical trials of our product candidates;

•

the possibility of delays, work stoppages or interruptions in manufacturing by third parties or us, such as due to material supply constraints, contamination, operational restrictions due to COVID-19 or other public health emergencies, labor constraints, regulatory issues or other factors that could negatively impact our trials and the trials of our collaborators;

•

uncertainty regarding market acceptance of our product candidates and our ability to generate revenues, including MultiStem cell therapy for neurological, inflammatory and immune, cardiovascular and other critical care indications;

•

changes in external market factors;

•

changes in our industry’s overall performance;

•

changes in our business strategy;

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	•	our ability to protect and defend our intellectual property and related business operations, including the successful prosecution of our patent applications and enforcement of our patent rights, and operate our business in an environment of rapid technology and intellectual property development;

	•	the possibility that we will not be able to be successful in our defense of active litigation;

•

our possible inability to realize commercially valuable discoveries in our collaborations with pharmaceutical and other biotechnology companies;

•

the success of our efforts to enter into new strategic partnerships and advance our programs;

•

our possible inability to execute our strategy due to changes in our industry or the economy generally;

•

changes in productivity and reliability of suppliers;

•

the success of our competitors and the emergence of new competitors;

•

our ability to identify, evaluate, and complete any strategic alternative that yields value for our stockholders; and

•

the risks mentioned elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2022 under Item 1A, “Risk Factors.” and in our other filings with the SEC.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, operating results, growth strategy and liquidity. Although we currently believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee our future results, levels of activity or performance. You should not place undue reliance on these forward-looking statements because such statements speak only as of the date when made. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. You are advised, however, to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K filed or furnished to the SEC. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Athersys, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

	*September 30,*			December 31,
	*2023*			2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents		1,020			9,038
Accounts receivable from Healios		-			716
Prepaid clinical trial costs		-			2,747
Prepaid expenses and other		1,210			1,034
Total current assets		2,230			13,535
Operating right-of-use assets, net		26			7,846
Property and equipment, net		4,236			4,214
Other Assets		936			2,136
Total assets		7,428			27,731
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		9,295			27,765
Deferred accounts payable to Supplier		7,862			-
Operating lease liabilities, current		7,792			746
Accrued compensation and related benefits		890			1,090
Accrued clinical trial related costs		360			7,231
Accrued expenses and other		1,490			1,078
Note Payable		10,785			-
Deferred revenue - Healios		150			-
Warrant liability		-			534
Total current liabilities		38,624			38,444
Operating lease liabilities, non-current		-			7,939
Advance from Healios		5,199			5,199
Stockholders’ equity:
Preferred stock, at stated value; 10,000,000 shares authorized, and no shares issued and outstanding at September 30, 2023 and December 31, 2022		-			-
Common stock, $0.001 par value; 600,000,000 shares authorized with 26,758,431 and 17,986,147 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		27			18
Additional paid-in capital		642,754			632,009
Accumulated deficit		(680,384	)		(655,878	)
Accumulated other comprehensive income		1,208			-
Total stockholders’ deficit		(36,395	)		(23,851	)
Total liabilities and stockholders’ equity		7,428			27,731

See accompanying notes to unaudited condensed consolidated financial statements.

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Athersys, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

	*Three months ended September 30,*						*Nine months ended September 30,*
	*2023*			2022			*2023*			2022
Revenues
Contract revenue from Healios		-			65			49			5,294
Total revenues		-			65			49			5,294
Costs and expenses
Research and development		3,995			12,424			19,111			54,162
General and administrative		2,808			3,737			7,968			12,999
Depreciation		977			617			1,072			1,482
Total costs and expenses		7,780			16,778			28,151			68,643
Loss from operations		(7,780	)		(16,713	)		(28,102	)		(63,349	)
Other income, net¹		4,009			3,044			3,596			3,816
Net loss		(3,771	)		(13,669	)		(24,506	)		(59,533	)
Net loss per share, basic and diluted		(0.15	)		(1.15	)		(1.16	)		(5.58	)
Weighted average shares outstanding, basic and diluted		24,492			11,855			21,184			10,676
Other comprehensive income
Net loss		(3,771	)		(13,669	)		(24,506	)		(59,533	)
Fair value change due to company credit risk		1,208			-			1,208			-
Total Other comprehensive income		1,208			-			1,208			-
Net loss and comprehensive loss		(2,563	)		(13,669	)		(23,298	)		(59,533	)

See accompanying notes to unaudited condensed consolidated financial statements.

¹ See Footnote 10 for components of other income, net

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Athersys, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

	*Preferred Stock*				*Common Stock*				*Additional*			*Accumulated*					*Total*
	*Number*		*Stated*		*Number*		*Par*		*Paid-in*			*Other Comprehensive*		*Accumulated*			*Stockholders’*
	*of Shares*		*Value*		*of Shares*		*Value*		*Capital*			*Loss*		*Deficit*			*Equity*
Balance at December 31, 2022		—	$	—		17,986,147	$	18	$	632,009		$	—	$	(655,878	)	$	(23,851	)
Stock-based compensation		—		—		—		—		707			—		—			707
Stock Issue- warrant exercise		—		—		344,170		—		—			—		—			—
Issuance of common stock under equity compensation plan		—		—		118,172		—		(56	)		—		—			(56	)
Net and comprehensive loss		—		—		—		—		—			—		(7,811	)		(7,811	)
Balance at March 31, 2023		—		—		18,448,489		18		632,660			—		(663,689	)		(31,011	)
Stock-based compensation		—		—		—		—		568			—		—			568
Stock Issue- warrant exercise		—		—		813,000		1		(1	)		—		—			—
Issuance of common stock		—		—		2,315,000		2		3,336			—		—			3,338
Warrant Liability		—		—		—		—		2,685			—		—			2,685
Issuance of common stock under equity compensation plan		—		—		257,358		—		(75	)		—		—			(75	)
Net and comprehensive loss		—		—		—		—		—			—		(12,924	)		(12,924	)
Balance at June 30, 2023		—		—		21,833,847		21		639,173			—		(676,613	)		(37,419	)
Stock-based compensation		—		—		—		—		646			—		—			646
Stock Issue- warrant exercise		—		—		557,000		1		(1	)		—		—			—
Issuance of common stock		—		—		4,212,500		4		2,987			—		—			2,991
Other comprehensive income		—		—		—		—		—			1,208		—			1,208
Issuance of common stock under equity compensation plan		—		—		155,084		1		(51	)		—		—			(50	)
Net and comprehensive loss		—		—		—		—		—			—		(3,771	)		(3,771	)
Balance at September 30, 2023		—		—		26,758,431		27		642,754			1,208		(680,384	)		(36,395	)

	Preferred Stock				Common Stock				Additional			Accumulated					Total
	Number		Stated		Number		Par		Paid-in			Other Comprehensive		Accumulated			Stockholders’
	of Shares		Value		of Shares 1		Value		Capital			Loss		Deficit			Equity
Balance at December 31, 2021		—	$	—		9,713,767	$	10	$	599,703		$	—	$	(583,344	)	$	16,369
Stock-based compensation		—		—		—		—		1,410			—		—			1,410
Issuance of common stock		—		—		129,333		—		4,803			—		—			4,803
Issuance of common stock under equity compensation plan		—		—		148,611		—		(58	)		—		—			(58	)
Net and comprehensive loss		—		—		—		—		—			—		(22,216	)		(22,216	)
Balance at March 31, 2022		—		—		9,991,711		10		605,858			—		(605,560	)		308
Stock-based compensation		—		—		—		—		1,945			—		—			1,945
Issuance of common stock, net of issuance cost		—		—		784,724		1		9,697			—		—			9,698
Issuance of common stock under equity compensation plan		—		—		227,955		—		(40	)		—		—			(40	)
Net and comprehensive loss		—		—		—		—	$	—			—		(23,648	)		(23,648	)
Balance at June 30, 2022		—		—		11,004,390		11	$	617,460			—		(629,208	)		(11,737	)
Stock-based compensation		—		—		—		—		2,001			—		—			2,001
Issuance of common stock, net		—		—		1,200,000		1		4,592			—		—			4,593
Pre-funded warrant exercise		—		—		720,000		1		2,232			—		—			2,233
Issuance of common stock under equity compensation plan		—		—		9,346		—		(33	)		—		—			(33	)
Net and comprehensive loss		—		—		—		—		—			—		(13,669	)		(13,669	)
Balance at September 30, 2022		—	$	—		12,933,736	$	13	$	626,252		$	—	$	(642,877	)	$	(16,612	)

See accompanying notes to unaudited condensed consolidated financial statements.

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Athersys, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	*Nine months ended*
	*September 30,*
	*2023*			2022
Operating activities
Net loss	$	(24,506	)	$	(59,533	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,072			1,482
Gain on debt extinguishment		(2,611	)		—
Loss from impairment of assets		7,746			5,435
Allowance for doubtful accounts		664			—
Stock-based compensation		1,921			5,356
Change in Paid-in-Kind (PIK) Interest Accrual		568			—
Change in fair value of Note Payables		(3,192	)		—
Gain on sale of assets		—			(11	)
Loss on abandonment of fixed assets		427			—
Change in fair value of warrant liabilities		2,151			(2,784	)
Issuance costs allocated to warrant liabilities		—			560
Changes in operating assets and liabilities:
Accounts receivable from Healios - billed and unbilled		52			3,754
Prepaid expenses, deposits and other		(163	)		(1,262	)
Accounts payable, accrued expenses and other		1,323			4,472
Accounts payable to Healios		—			(1,119	)
Deferred revenue - Healios		150			(3,340	)
Net cash used in operating activities		(14,398	)		(46,990	)
Investing activities
Proceeds from the sale of equipment		227			41
Purchases of equipment		—			(2,044	)
Net cash provided (used) in investing activities		227			(2,003	)
Financing activities
Proceeds from issuance of common stock, net of issuance cost		—			14,500
Proceeds from the issuance of common stock and warrants, net of issuance cost		6,334			10,997
Proceeds from the exercise of pre-funded warrants		1			2
Shares retained for withholding tax payments on stock-based awards		(182	)		(131	)
Net cash provided by financing activities		6,153			25,368
Decrease in cash and cash equivalents		(8,018	)		(23,625	)
Cash and cash equivalents at beginning of the period		9,038			37,407
Cash and cash equivalents at end of the period	$	1,020		$	13,782
Noncash financing activities
Issuance of warrants				$	413
Reclass of warrant liability to additional paid-in capital upon exercise	$	2,685		$	2,231

See accompanying notes to unaudited condensed consolidated financial statements.

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Athersys, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Three- and Nine- Month Periods Ended September 30, 2023 and 2022

1. Background and Basis of Presentation

Organization

Athersys, Inc., including its consolidated subsidiaries (collectively, “we,” “us,” “our,” “Athersys,” and the “Company”), is a biotechnology company focused in the field of regenerative medicine and operates in one business segment. Our operations consist of research, clinical development activities, manufacturing and manufacturing process development activities, and our most advanced program is in a pivotal Phase 3 clinical trial for the treatment of ischemic stroke.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 3, 2023. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments and disclosures that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our critical accounting policies, estimates and assumptions are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this Quarterly Report on Form 10-Q in Part I, Item 2.

Reverse Stock Split

On August 26, 2022, the Company amended its Certificate of Incorporation to implement a 1-for-25 reverse stock split of its common stock. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company adjusted the share amounts under its employee equity incentive plans, inducement awards and common stock warrant agreements with third parties. All disclosures of common shares and per common share data in the accompanying interim financial statements and related notes reflect the reverse stock split for all periods presented.

2. Going Concern

At September 30, 2023, we had cash and cash equivalents of $1.0 million. We will need substantial additional funding to develop our MultiStem product candidate and to continue our operations. Significant additional capital will be required to continue our research and development programs, including progressing our clinical product candidates to potential commercialization and preparing for commercial-scale manufacturing and sales. We intend to continue exploring available strategic options. However, in the event Athersys is unable in the near-term to enter into a strategic transaction or obtain adequate financing, it expects to have to file for protection under the bankruptcy laws to allow the Company to conduct an orderly wind down of operations. If we decide to dissolve and liquidate our assets or to seek protection under the bankruptcy laws, it is unclear to what extent we will be able to pay our obligations, and, accordingly, it is further unclear whether and to what extent any resources will be available for distributions to stockholders. For the foreseeable future, our ability to continue our operations is dependent upon the ability to obtain additional funding through public or private equity offerings, debt financings, collaborations and/or licensing arrangements. However, there can be no assurance that we will be able to obtain such funding on terms acceptable to us, on a timely basis or at all, particularly in light of our current stock price and liquidity. If we are unable to obtain funding, we may be required to further delay, reduce or eliminate our MultiStem product candidate approval and commercialization efforts, which would adversely affect our business prospects, and we likely will be unable to continue operations. Additionally, our ability to make timely payments on obligations to the supplier we have entered into the Forbearance Agreement, discussed in more detail below, is dependent on future capital raise. The supplier has the right to call the full amount of the debt due immediately if we are late on a payment and do not remedy the delinquent payment in the allotted cure period. The accompanying unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern.

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3. Accounting Standards Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326). This ASU replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Subsequent to issuing ASU 2016-13, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326): Effective Dates, delaying the effective date for smaller reporting companies until January 2023. The impact of adoption of this standard did not have a material impact on the consolidated financial statements and disclosures.

4. Net Loss per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of our common stock outstanding during the period.

As of September 30, 2023, we have outstanding options, restricted stock units and warrants that were not used in the calculation of diluted net loss per share because to do so would be anti-dilutive. As of September 30, 2023, we had warrants outstanding to purchase an aggregate of 400,000 shares of our common stock that were issued to HEALIOS K.K. (“Healios”) in August 2021 and are not yet exercisable according to their terms. Additionally, as of September 30, 2023, we had outstanding warrants to purchase 1,920,000, 2,000,000, 9,109,090, 3,685,000, and 28,600,000 shares of our common stock that were issued in August 2022, September 2022, November 2022, April 2023, and August 2023, respectively. Additionally, we had shares related to the convertible note that have been excluded from the calculation, as these would be anti-dilutive.

The following instruments were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

Stock options

1,119,369

1,280,173

1,119,369

1,280,173

Restricted stock units

301,029

103,065

301,029

103,065

Convertible Note - refer to Note 11

11,538,461

—

11,538,461

—

Warrants - refer to Note 8

45,714,090

3,920,000

45,714,090

4,320,000

Total

58,672,949

5,303,238

58,672,949

5,703,238

5. Property and Equipment, net

	*For the periods ended*
	*September 30,*			December 31,
Property and equipment consists of (in thousands):	*2023*			2022
Laboratory equipment	$	8,352		$	7,576
Office equipment and leasehold improvements		3,398			3,934
Equipment not yet in service		2,850			2,313
		14,600			13,823
Accumulated depreciation and amortization		(10,364	)		(9,609	)
	$	4,236		$	4,214

Long-lived assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the asset or related group of assets may not be recoverable. In June 2022, we announced a restructuring plan (the “Plan”) of our organization with the intention of significantly reducing expenses, conserving cash, improving the focus of the Company’s activities and becoming more attractive to potential financial and strategic partners. The Plan included a significant reduction in our workforce and changes to our management team. The Plan also includes the reduction of our internal research function, the decommissioning of certain equipment and pausing our manufacturing and process development efforts toward commercializing our MultiStem product candidate. As a result of these actions, during 2022, we recorded impairment charges of approximately $7.2 million to adjust the carrying amount of certain equipment assets to the estimated market value of similar assets.

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We have disposed of gross assets of approximately $1.0 million with accumulated depreciation of $0.4 million, for $0.3 million in cash, which resulted in a loss of $0.3 million for the nine months ended September 30, 2023. We had no material disposals for the same period ended September 30, 2022. Additionally, we accelerated depreciation for assets no longer expected to be used in operations to their expected salvage values, which resulted in additional depreciation of $0.9 million being record for the three months ending September 30, 2023. We reduced the useful lives of equipment resulting in additional depreciation of $0.4 million for the nine months ended September 30, 2022.

On June 9, 2023, our landlord for the property in Stow, Ohio, Seasons Business Center Four, LLC, brought suit against the Company in the Summit County, Ohio Court of Common Pleas asserting claims for Breach of Contract (Lease), Promissory Estoppel, and Unjust Enrichment relating to the subject lease between the parties. As a result of the Company surrendering possession of the property and returning the keys to the landlord the Company recorded an impairment charge related to the right-of-use asset. During the nine months ended September 30, 2023, we recorded $7.9 million of impairment charges to fixed assets. The impairment charge is recorded in research and development costs and expenses. The right-of-use liability has all been reclassified to current.

6. Collaborative Arrangements and Revenue Recognition

Healios Collaboration

We have a licensing agreement with Healios to primarily develop and commercialize our cell therapy technologies for certain disease indications in Japan, pursuant to which we received nonrefundable license fee payments and are entitled to royalties on net sales. We also have the right to receive development and commercial milestone payments from Healios, subject to certain potential credits that have been negotiated from time-to-time and are associated with modifications to the arrangement. Healios is responsible for the development and commercialization of the licensed products in the licensed territory, and we provide certain services to Healios for which we are paid.

In August 2021, the Company and Healios entered into a Comprehensive Framework Agreement for Commercial Manufacturing and Ongoing Support, or the Framework Agreement, which provided for clarification under and modified the existing agreements between the parties. It also provided Healios with deferral of certain milestone payments. Under the Framework Agreement, the Company was entitled to payments for reimbursable services of $0.7 million. The amount, which was included in accounts receivable from Healios has been fully offset by an allowance for doubtful accounts at September 30, 2023 due to the length of time the receivable has been outstanding without collection.

In addition, under the Framework Agreement, the Company was entitled to a $3.0 million milestone payment from Healios and was obligated to pay Healios $1.1 million by December 31, 2022. In September 2022, we received $1.9 million from Healios, which represents the milestone payment net of amounts owed to Healios. Additionally, to assist Healios with the advancement of its ischemic stroke and acute respiratory distress syndrome (“ARDS”) programs in Japan, in September 2022, we granted to Healios, subject to the terms of the licensing agreement, a non-exclusive license to make and have made MultiStem for the treatment of ischemic stroke and ARDS worldwide solely for import for use in Japan. In connection with the execution of the Framework Agreement, the Cooperation Agreement was amended to extend certain customary standstill provisions until the conclusion of our 2023 annual meeting of stockholders.

In August 2021, we also issued two warrants (together, the “2021 Warrants”) to Healios in connection with the Framework Agreement to purchase up to a total of 400,000 shares of our common stock. The 2021 Warrants are being accounted for as consideration paid or payable to a customer according to Topic 606, Revenue from Contracts with Customers, and Topic 718, Compensation Stock Compensation, under which the recognition of such equity instruments is required at the time that the underlying performance conditions become probable or are satisfied. As of September 30, 2023, the 2021 Warrants have not been recorded as the underlying performance conditions have not been satisfied and are not yet considered probable. Refer to Note 8, “Stockholders’ Equity and Warrants”, for further information.

In August 2023, the Company entered into a Memorandum of Understanding (“MOU”) with Healios, which memorializes the terms between the Company and Healios regarding consultation services the Company agreed to provide Healios as it explores its effort to join and participate in the Company’s ongoing MASTERS-2 Study. In exchange, Healios agreed to compensate the Company for consulting services. Healios made a $150,000 deposit which is recorded in Deferred revenue - Healios.

Healios has alleged that we are in material breach of our Framework Agreement for, among other things, not meeting our supply obligations and cooperation and assistance obligations. We strongly disagree with Healios’ allegations and will continue to work with Healios to try to resolve this dispute. However, there can be no assurance that we will be able to resolve this dispute without legal proceedings.

Healios Revenue Recognition

At the inception of the Healios arrangement and again each time that the arrangement has been modified, all material performance obligations were identified, which include (i) licenses to our technology, (ii) product supply services, and (iii) manufacturing services provided on Healios’ behalf.

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Under the Framework Agreement, it was determined there was one performance obligation for services necessary for regulatory approvals, manufacturing readiness, and commercial launch in Japan. We determined the transaction price included estimated payments for reimbursable services to be performed by us for Healios and the $3.0 million milestone payment. We allocated the total transaction price to this one performance obligation. We began recognizing revenue in the third quarter of 2021 as the services were being performed. At September 30, 2023, the services related to this performance obligation are largely complete and consist of minimal close-out activities which are immaterial. During the three months ended September 30, 2023, we recognized no revenue associated with this performance obligation, compared to $0.1 million for three months ended September 30, 2022. We recognized no revenue for three months ended September 30, 2023 and September 30, 2022 from performance obligations satisfied in previous periods.

Accounts receivable from Healios

Accounts receivable from Healios are related to our contracts and are recorded when the right to consideration is unconditional at the amount that management expects to collect. Accounts receivable from Healios do not bear interest if paid when contractually due, and payments are generally due within thirty to forty-five days of invoicing. As of September 30, 2023, we have increased our allowance for doubtful accounts to cover the full amount of balance that we showed as outstanding, due to the length of time the invoices have been outstanding.

Deferred Revenue - Healios

The amounts included in deferred revenue - Healios are considered a contract liability connected to the funds received as part of the MOU. During the nine months ended September 30, 2023, no revenue was recognized from contract liabilities, compared to $2.8 million of revenue recognized during the nine months ended September 30, 2022.

Advance from Healios

In 2017, we amended the clinical trial supply agreement for the manufacturing of clinical product for TREASURE to clarify a cost-sharing arrangement. The proceeds from Healios that relate specifically to the cost-sharing arrangement may either (i) result in a reduction in the proceeds we receive from Healios upon the achievement of two potential milestones and an increase to a commercial milestone under the license agreement for stroke or (ii) be repaid to Healios at our election, as defined. The cost-sharing proceeds received are recognized in advance from Healios on the unaudited condensed consolidated balance sheets until the earlier of the milestones being achieved or such amounts being repaid to Healios at our election, at which time the culmination of the earnings process or the repayment will be complete.

Disaggregation of Revenues

We recognize product supply revenue at a point in time upon delivery, as defined in the applicable product supply contracts, while service revenue is recognized when earned over time. The following table presents our contract revenues disaggregated by timing of revenue recognition (in thousands):

	*Three months ended*				Three months ended
	*September 30, 2023*				September 30, 2022
	*Point in*				Point in
	*Time*		*Over Time*		Time		Over Time
Contract Revenue from Healios
Product supply revenue	$	—	$	—	$	—	$	—
Service revenue		—		—		—		65
Total disaggregated revenues	$	—	$	—	$	—	$	65

	*Nine months ended*				Nine months ended
	*September 30, 2023*				September 30, 2022
	*Point in*				Point in
	*Time*		*Over Time*		Time		Over Time
Contract Revenue from Healios
Product supply revenue	$	49	$	—	$	—	$	—
Service revenue		—		—		—		5,294
Total disaggregated revenues	$	49	$	—	$	—	$	5,294

7. Stock-Based Compensation

Our 2019 Equity and Incentive Compensation Plan (the “EICP”) authorized at inception, an aggregate of approximately 3,700,000 shares of our common stock for awards to employees, directors and consultants. The EICP authorizes the issuance of stock-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock-based awards. As of September 30, 2023, a total of 1,185,543 shares (including 11,289 shares related to an expired incentive plan) of common stock have been issued under our equity incentive plans.

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On September 27, 2022, the stockholders of the Company approved the amendment and restatement of the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the “Amended EICP”). The Amended EICP continues to provide stock-based compensation as described above. Subject to adjustment, an additional 2,000,000 shares of Company common stock are available for awards under the Amended EICP.

As of September 30, 2023, a total of 2,095,332 shares were available for issuance under our EICP, and stock-based awards representing 990,898 (including 19,084 shares related to an expired incentive plan) of common stock were outstanding. Additionally, inducement stock options granted outside of our equity incentive plans to purchase 429,500 shares of common stock were outstanding at September 30, 2023. For the three months ended September 30, 2023 and 2022, stock-based compensation expense was approximately $0.7 million and $2.0 million, respectively. At September 30, 2023, total unrecognized estimated compensation cost related to unvested stock-based awards was approximately $3.2 million, which is expected to be recognized by the end of 2026 using the straight-line method.

8. Stockholders’ Equity and Warrants

At September 30, 2023 and September 30, 2022, we had 600,000,000 shares of common stock and 10,000,000 shares of undesignated preferred stock authorized. No shares of preferred stock have been issued as of September 30, 2023 and 2022.

August 2022 Securities Purchase Agreement

On August 15, 2022, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners (“A.G.P.”), pursuant to which A.G.P. agreed to serve as exclusive placement agent for the issuance and sale of common stock and warrants. A.G.P. received a placement fee of approximately $0.8 million and approximately $0.1 million for the reimbursement of expenses.

On August 15, 2022, the Company entered into a securities purchase agreement (the “August 2022 Purchase Agreement”) with an investor, pursuant to which the Company agreed to issue and sell, in a registered direct offering, (i) an aggregate of 1,200,000 shares of the Company’s common stock, (ii) pre-funded warrants (the “August 2022 Pre-Funded Warrants”) exercisable for an aggregate of 720,000 shares of common stock and (iii) warrants (the “August 2022 Common Warrants”) exercisable for an aggregate of 1,920,000 shares of common stock, in combinations of one share of common stock or one August 2022 Pre-Funded Warrant and one August 2022 Common Warrant for a combined purchase price of $6.25 (less $0.0025 for any August 2022 Pre-Funded Warrant). Subject to certain ownership limitations, under the terms of the August 2022 Purchase Agreement, the August 2022 Pre-Funded Warrants were exercisable upon issuance, and the August 2022 Common Warrants were exercisable upon the six-month anniversary of issuance for a five-year period. Under the August 2022 Purchase Agreement, each August 2022 Pre-Funded Warrant was exercisable for one share of common stock at a price per share of $0.0025 and each August 2022 Common Warrant was exercisable for one share of common stock at a price per share of $6.385. The offering closed on August 17, 2022 and the Company received net proceeds of approximately $11.0 million, after giving effect to the payment of placement fees and expenses. On August 29, 2022, the August 2022 Pre-Funded Warrants were exercised in full and re-measured to fair value. Upon remeasurement and exercise, we recorded a gain of $0.8 million to adjust the warrant liability associated with the August 2022 Pre-Funded Warrants to fair value and reclassified the $3.8 million warrant liability to additional paid-in capital. The fair value adjustment is recorded in other income, net on the condensed consolidated statement of operations and comprehensive loss.

Pursuant to the August 2022 Purchase Agreement, in the event the Company proposes a future offering to sell shares of common stock during the twelve months following the closing date, the investor has the right to participate in each offering in an amount up to 30.0%.

On September 22, 2022, the Company entered into an amendment to the August 2022 Purchase Agreement (the “August 2022 Purchase Agreement Amendment”) with the investor to, among other things, (i) amend the August 2022 Common Warrants to be exercisable for a seven-year period after the six-month anniversary of the closing date, (ii) reduce the standstill period, (iii) reduce the term and the amount of the participation right, and (iv) require the investor, subject to certain conditions, to participate in future offerings to sell certain securities to investors primarily for capital raising purposes.

On September 22, 2022, in consideration of the August 2022 Purchase Agreement Amendment, and without receiving any cash proceeds, the Company issued to the investor additional warrants exercisable for 2,000,000 shares of common stock (the “September 2022 Warrants”) at a price of $6.385 for a seven-year period after the six-month anniversary of the date of issuance thereof.

The Company has assessed the August 2022 Pre-Funded Warrants, the August 2022 Common Warrants and the September 2022 Warrants (collectively, the “Warrants”) for appropriate equity or liability classification pursuant to the Company’s accounting policy as described in Note C, in the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022. The Warrants contain a provision pursuant to which the warrant holder has the option to receive cash in the event there is a fundamental transaction (contractually defined to include various merger, acquisition or stock transfer activities). The Warrants met the definition of a derivative pursuant to ASC 815, Derivatives and Hedging and did not meet the derivative scope exception. As a result, the Warrants were initially recorded as liabilities and measured at fair value using the Black-Scholes valuation model. Issuance costs of $0.5 million were allocated to the Pre-Funded Warrants and Common Warrants and recorded in other income, net on the condensed consolidated statement of operations and comprehensive loss in the three ended September 30, 2022. The remaining issuance costs of $0.4 million were allocated to the common stock and recorded in additional paid-in capital.

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On April 17, 2023, the Company amended the August 2022 Warrants and the September 2022 Warrants to, among other things, reduce the exercise price to $0.96 per share with respect to 1,920,000 shares of common stock covered by the August 2022 Common Warrants and 1,760,000 shares of common stock covered by the September Warrants. As a result of the amended agreement, the August 2022 Common Warrants and the September 2022 Warrants now meet the guidance for equity classification in accordance with ASC 815, Derivatives and Hedging. Such warrants were adjusted to their fair value on April 17, 2023, inclusive of the change in exercise price and the change in fair value was recorded in other (expense) income, net and then the warrants were reclassified to additional paid-in-capital (APIC).

On August 17, 2023, the Company further amended the August Warrants and the September Warrants to, among other things, reduce the exercise price to $0.32 per share with respect to 1,920,000 shares of Common Stock covered by the August Warrants and 2,000,000 shares of Common Stock covered by the September Warrants.

During the three- and nine months ended September 30, 2023, the Company recognized no other expense and other expense of $2.2 million, respectively, for the fair value adjustment related to the warrant liabilities. During the three and nine months ended September 30, 2022, the Company recognized a net gain of $2.8 million for the fair value adjustment related to the warrant liabilities, which includes a charge of $0.4 million recorded upon issuance of the New Warrants.

November 2022 Securities Purchase Agreement

On November 9, 2022, the Company entered into a placement agency agreement with A.G.P. pursuant to which A.G.P. agreed to serve as exclusive placement agent for the issuance and sale of common stock and warrants. A.G.P received a placement fee of approximately $0.4 million and approximately $0.1 million for the reimbursement of expenses.

On November 9, 2022, the Company entered into a securities purchase agreement (the “November 2022 Purchase Agreement”) with investors, pursuant to which the Company agreed to issue and sell, in a public offering, (i) an aggregate of 3,927,275 shares of the Company’s common stock, (ii) pre-funded warrants (the “November 2022 Pre-Funded Warrants”) exercisable for an aggregate of 1,077,270 shares of common stock and (iii) warrants (the “November 2022 Common Warrants”) exercisable for an aggregate of 10,009,090 shares of common stock, in combinations of one share of common stock or one November 2022 Pre-Funded Warrant and two November 2022 Common Warrants for a combined purchase price of $1.10 (less $0.0001 for any November 2022 Pre-Funded Warrant). Subject to certain ownership limitations, under the terms of the November 2022 Purchase Agreement, the November 2022 Pre-Funded Warrants and November 2022 Common Warrants were exercisable upon issuance. Under the November 2022 Purchase Agreement, each November 2022 Pre-Funded Warrant was exercisable for one share of common stock at a price per share of $0.0001 and each November 2022 Common Warrant is exercisable for one share of common stock at a price per share of $1.10 for a five-year period after the date of issuance. The offering closed on November 10, 2022, and the Company received net proceeds of approximately $5.0 million, after giving effect to the payment of placement fees and expenses. The November 2022 Pre-Funded Warrants were exercised in full at the closing.

The November 2022 Common Warrants meet the requirements to be classified as equity in accordance with ASC 815, Derivatives and Hedging. The November 2022 Common Warrants were recorded at their relative fair value at issuance in the stockholders’ equity section of the balance sheet.

April 2023 Securities Purchase Agreement

On April 18, 2023, the Company entered into a placement agency agreement with A.G.P. pursuant to which A.G.P. agreed to serve as the exclusive placement agent for the issuance and sale of common stock and warrants. A.G.P. received a placement fee of approximately $0.2 million and approximately $0.1 million for the reimbursement of expenses.

On April 18, 2023, the Company entered into a securities purchase agreement (the “April 2023 Purchase Agreement”) with investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering, (i) an aggregate of 2,315,000 shares of the Company’s common stock and (ii) pre-funded warrants (the “April 2023 Pre-Funded Warrants”) exercisable for an aggregate of 1,370,000 shares of common stock, together with warrants (the “April 2023 Common Warrants”) exercisable for an aggregate of 3,685,000 shares of the Company’s common stock in a private placement, in combinations of one share or one April 2023 Pre-Funded Warrant and one April 2023 Common Warrant for a combined purchase price of $1.00. Subject to certain ownership limitations, the April 2023 Pre-Funded Warrants are exercisable upon issuance, and the April 2023 Common Warrants are exercisable upon the six-month anniversary of issuance. Each April 2023 Pre-Funded Warrant is exercisable for one share of common stock at a price per share of $0.0001 (as adjusted from time to time in accordance with the terms thereof) and does not expire. Each April 2023 Common Warrant is exercisable into one share of common stock at a price per share of $0.96 (as adjusted from time to time in accordance with the terms thereof) for a seven-year period after the six-month anniversary of the date of issuance. The offering closed on April 19, 2023, and the Company received net proceeds of approximately $3.4 million, after giving effect to the payment of placement fees and expenses.

The April 2023 Common Warrants meet the requirements to be classified as equity in accordance with ASC 815, Derivatives and Hedging. The April 2023 Common Warrants were recorded at their relative fair value at issuance in the stockholders’ equity section of the balance sheet.

August 2023 Securities Purchase Agreement

On August 17, 2023, the Company entered into a placement agency agreement with A.G.P. pursuant to which A.G.P. agreed to serve as the exclusive placement agent for the issuance and sale of common stock and warrants. A.G.P. received a placement fee of approximately $0.2 million and approximately $0.2 million for the reimbursement of expenses.

On August 17, 2023, the Company entered into a securities purchase agreement (the “August 2023 Purchase Agreement”) with investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering, (i) an aggregate of 4,212,500 shares of the Company’s common stock, (ii) pre-funded warrants (the “August 2023 Pre-Funded Warrants”) exercisable for an aggregate of 6,725,000 shares of common stock, (iii) Series A common stock purchase warrants (the “Series A Common Warrants”) exercisable for an aggregate of 10,937,500 shares of the Company’s common stock, and (iv) Series B common stock purchase warrants (the “Series B Common Warrants” and together with the Series A Common Warrants, the “August 2023 Common Warrants”) exercisable for an aggregate of 10,937,500 shares of the Company’s common stock, in combinations of one share or one August 2023 Pre-Funded Warrant and one of each Series A Common Warrant and Series B Common Warrant for a combined purchase price of $0.32. Subject to certain ownership limitations, the August 2023 Pre-Funded Warrants and the August 2023 Common Warrants are exercisable upon issuance. Each August 2023 Pre-Funded Warrant is exercisable for one share of common stock at a price per share of $0.0001 (as adjusted from time to time in accordance with the terms thereof) and does not expire. Each Series A Common Warrant is exercisable into one share of common stock at a price per share of $0.32 (as adjusted from time to time in accordance with the terms thereof) for a five-year period, and each Series B Common Warrant is exercisable into one share of common stock at a price per share of $0.32 (as adjusted from time to time in accordance with the terms thereof) for a one and a half year period. The offering closed on August 21, 2023, and the Company received net proceeds of approximately $3.0 million, after giving effect to the payment of placement fees and expenses.

The August 2023 Common Warrants and 6,725,000 of the August 2023 Pre-Funded Warrants, which remain outstanding, meet the requirements to be classified as equity in accordance with ASC 815, Derivatives and Hedging. The August Common Warrants were recorded at their relative fair value at issuance in the stockholders’ equity section of the balance sheet.

On October 11, 2023, the Company entered into a warrant exercise inducement offer letter with a holder of certain existing warrants to receive new warrants to purchase up to a number of shares of common stock equal to 200% (the “Inducement Warrants”) of the number of warrant shares issued pursuant to the exercise of such certain existing warrants to purchase shares of common stock (the "Existing Warrants") pursuant to which the Holder agreed to exercise for cash their Existing Warrants to purchase up to 28,124,540 shares of the Company’s common stock, at a reduced exercise price of $0.1395 per share in exchange for the Company’s agreement to issue the Inducement Warrants to purchase up to 56,249,080 shares of the Company’s common stock (the “Inducement Warrant Shares”). The Existing Warrants consist of the Company’s common warrants issued on August 17, 2022, September 22, 2022, November 10, 2022, and August 21, 2023. We received aggregate gross proceeds of approximately $3.9 million from the exercise of the Existing Warrants before deducting financial advisory fees and other expenses payable by us.

On October 30, 2023, the Company entered into an offer letter with a holder of the Company's common stock Existing Warrants issued on October 16, 2023 to (1) reduce the exercise price of the Existing Warrants from $0.1395 to $0.01 per share (the “Reduced Exercise Price”), (2) issue to the Holder new common stock purchase warrants (the “New Warrants”) to purchase up to 20,000,000 shares of the Company’s common stock at an exercise price of $0.01 per share; and (3) make the Existing Warrants immediately exercisable.

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Healios 2021 Warrants

In August 2021, we issued the 2021 Warrants to Healios to purchase up to an aggregate of 400,000 shares of our common stock. One of the 2021 Warrants is for the purchase of up to 120,000 shares at an exercise price of $45.00 per share, subject to specified increases, and generally is only exercisable within 60 days of receipt of either conditional or full marketing approval from the Pharmaceuticals and Medical Devices Agency in Japan (the “PMDA”) for the intravenous administration of MultiStem to treat patients who are suffering from acute respiratory distress syndrome. The other 2021 Warrant is for the purchase of up to 280,000 shares at an exercise price of $60.00 per share, subject to specified increases, and generally is only exercisable within 60 days of receipt of either conditional or full marketing approval from the PMDA for the intravenous administration of MultiStem to treat patients who are suffering from ischemic stroke. The 2021 Warrants may be terminated by us under certain conditions and have an exercise cap triggered at Healios’ ownership of 19.9% of our common stock.

Equity Purchase Agreement

We previously had equity purchase agreements in place since 2011 with Aspire Capital Fund, LLC (“Aspire Capital”) that provided us with the ability to sell shares to Aspire Capital from time to time. On May 12, 2022, we entered into an agreement (the “2022 Equity Facility”) that included Aspire Capital’s commitment to purchase up to an aggregate of $100.0 million of shares of our common stock over a defined timeframe. The terms of the 2022 Equity Facility were similar to the previous equity facilities with Aspire Capital. Our prior equity facility was entered into on June 24, 2021 (the "2021 Equity Facility") and included Aspire Capital’s commitment to purchase up to an aggregate of $100.0 million of shares of our common stock over a defined timeframe. The terms of the 2021 Equity Facility were similar to the previous equity facilities with Aspire Capital. The 2021 Equity Facility was fully utilized and automatically terminated during the second quarter of 2022.

On July 6, 2022, Aspire Capital terminated the 2022 Equity Facility. Aspire Capital had the right to terminate the 2022 Equity Facility at the time or any time after any of the Company’s then current executive officers ceased to be an executive officer or full-time employee of the Company, which right was triggered in connection with the departures of William Lehmann, former president and Chief Operating Officer, John Harrington, Former Executive Vice President and Chief Scientific Officer, and Ivor MacLeod, former Chief Financial Officer.

During quarter ended September 30, 2022, we sold no shares to Aspire Capital.

9. Fair Value Measurements

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their respective fair values due to the short-term nature of such instruments.

Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. The requirement requires judgements to be made. Our Level 3 financial liabilities consist of warrant liabilities prior to their reclassification to equity and a convertible note payable for which there is no current market such that the determination of fair value requires judgement or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company uses the Black-Scholes option valuation model to value the Level 3 warrant liabilities at inception and on subsequent valuation dates. This model incorporates transaction detail such as the Company’s stock price, contractual terms, maturing, risk free rates as well as volatility. The unobservable input for the Level 3 warrant liabilities includes volatility, which is not significant to the fair value measurement of the warrant liabilities.

A reconciliation of the beginning and ending balances for the warrant liabilities which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows (in thousands):

	Warrant Liabilities
Balance December 31, 2022	$	(534	)
Fair Value Adjustment - March 31, 2023		(629	)
Balance March 31, 2023		(1,163	)
Fair Value Adjustment - April 18, 2023		(1,522	)
Reclassification to Additional paid in capital		2,685
Balance June 30, 2023	$	—

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The Company uses the Lattice Model to value the Level 3 note payable liabilities at inception and for subsequent valuation dates. This model incorporates transaction detail such as the term of the note, the nominal value of the note at inception, the coupon rate of the note, the conversion price of the note, the Company’s stock price, risk-free rate and implied bond yield as well as volatility. The unobservable input for the Level 3 note payable includes volatility and implied bond yield, which are significant to the fair value measurement of the note payable. The Company’s stock is publicly traded and is readily determinable. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the Note. We determine volatility by using our historical stock volatility. The implied bond yield is based on the required rate of return for mezzanine financing for similar companies.

The following weighted-average input assumptions were used in determining the fair value of the note at inception, as of June 30, 2023, and as of September 30, 2023. Volatility was 49.5% on May 17, 2023, 50.6% on June 30, 2023, and 77.9% on September 30, 2023, and the implied bond yield was 18.9% on May 17, 2023, 19.6% on June 30, 2023, and 30.7% on September 30, 2023

A reconciliation of the beginning and ending balances for the note payable which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows (in thousands):

	*Note Payable*			*Credit Risk Change*			*Accrued Interest*			*Total Fair Value*
Balance March 31, 2023	$—			$—			$—			$—
Initial Transaction Fair Value - May 17		15,000			—			—			15,000
Accrued Paid-in-Kind (PIK) Interest as of June 30, 2023		—			—			185			185
Fair Value Adjustment - June 30, 2023		640			—			—			640
Balance June 30, 2023		15,640			—			185			15,825
Accrued Paid-in-Kind (PIK) Interest added to Principal		185			—			(185	)		—
Accrued Paid-in-Kind (PIK) Interest as of September 30, 2023		—			—			383			383
Fair Value Adjustment - September 30, 2023		(3,832	)		(1,208	)		—			(5,040	)
Balance September 30, 2023	$	11,993		$	(1,208	)	$	383		$	11,168

10. Other Income and Expense

Other (expense) income consists of loss from extinguishment of debt, interest expense, foreign exchange gain/(loss), fair value change from warrants, gain/(loss) on disposal of assets and other.

	*Three months ended*						*Nine months ended*
	*September 30,*						*September 30,*
	*2023*			2022			*2023*			2022
Gain/(Loss) from extinguishment of debt	$	—		$	—		$	2,611		$	—
Change in fair value - note payable		3,832			—			3,192			—
Interest expense		(211	)		44			(545	)		31
Foreign exchange gain/(loss)		287			631			109			915
Fair value change - warrants		—			2,784			(2,151	)		2,784
Gain/(Loss) on disposal of assets		(467	)		11			(321	)		11
Other		568			(426	)		701			75
	$	4,009		$	3,044		$	3,596		$	3,816

11. Forbearance Agreement and Convertible Note

On May 17, 2023, the Company entered into a Forbearance, Restructuring and Settlement Agreement (the “Forbearance Agreement”) with a supplier, which amends certain supply agreements between the Company and the supplier.

The Forbearance Agreement provides that the supplier agrees to forbear from exercising rights and remedies available as a result of existing overdue amounts under existing agreements, so long as the Company pays to the supplier an aggregate of $11.8 million in deferred accounts payable, in monthly payments of $0.25 million, commencing in October 2023. Pursuant to the terms of the Forbearance Agreement, the Company also issued a convertible promissory note to the supplier in the principal amount of $15.0 million (the “Note”).

The Company accounted for the restructuring as an extinguishment and recorded the new liabilities at fair value of $7.9 million for the deferred accounts payable and $15.0 million for the Note. The Company recorded a gain on extinguishment of $2.6 million as a result of the restructuring.

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The Note bears interest at a rate of 10.0% per annum, which shall be capitalized and added to the principal amount semi-annually on January 1 and July 1, commencing on July 1, 2023, and must be repaid in full, including accrued and unpaid interest thereunder, on (or before, subject to certain conditions) May 17, 2026. The Note provides for customary events of default, including nonpayment, failure to comply with covenants or other agreements in the Note, certain events of bankruptcy and an adverse judgment for payment of $3.0 million or more (each, an “Event of Default”). Upon and during the continuance of any Event of Default, the rate of interest shall increase to 14%. The obligations under the Note are guaranteed by certain of the Company’s existing subsidiaries. Subject to a beneficial ownership limitation of 19.99% of the Company’s outstanding common stock and any shareholder approval requirements, the supplier may elect, at its sole discretion, to convert any outstanding principal and interest on the Note into shares of common stock of the Company at a conversion price of $1.30 per share (subject to adjustment as provided under the Note), which amounts to 11,538,461 convertible shares, at any time after the 18-month anniversary of the date of issuance of the Note (or upon an Event of Default) until the total outstanding balance of the Note is paid.

The Company has elected the fair value option under ASC 825-10-25 to measure the Note at fair value at inception and in subsequent periods, with changes in fair value reported in earnings, except for changes in fair value caused by instrument-specific credit risk which is reported in other comprehensive income. The Note is eligible for the fair value option as it is a permissible instrument within the scope of ASC 825-10-15. The Company incurred debt issuance costs (legal fees) of $16,679 which were expensed at issuance. The fair value of the Note on June 30, 2023 was $15.8 million and the change in fair value of $0.8 million was reported in other (expense) income, net, with $0.2 million being recorded as Paid-in-Kind interest and the remaining $0.6 million being the fair value adjustment, increasing the interest expense and note payable balance. As of September 30, 2023, the value of the Note was $10.8 million and the change in fair value for the nine months ended September 30, 2023 of $3.8 million was reported in other (expense) income, net, with the changes in fair value caused by instrument-specific credit risk of $1.2 million (net of tax) was reported in other comprehensive income, and with $0.4 million being recorded as Paid-in-Kind interest. See a reconciliation of the change in fair value of the Note in Note 9, “Fair Value Measurements”.

The Note is an unsecured obligation. The Note is unconditionally and irrevocably guaranteed by certain guarantors.

If an Event of Default occurs under points (1) through (6) below, the holder of the Note may request for acceleration of maturity of 100% of the Note principal. Upon the request for acceleration of maturity, the Note principal will be due immediately. If an Event of Default occurs under clause (4) and (5) below, 100% of the principal amount of the Note will be automatically and immediately due and payable to the holder of the note.

An Event of Default is defined in the Agreement as any of the following:

Company defaults in the payment of principal, accrued and unpaid interest or any other amounts owing under the Note

Any representation or warranty made by the Company proves to have been false

The Company defaults in the performance of, or fails to comply with, any other terms, provision, condition, covenant or agreement contained in the Note

Company files for bankruptcy

Court appoints a custodian, receiver, trustee or other officer for dissolution, winding-up, or liquation of the Company

One or more judgments for payment of money in excess of $3 million shall be rendered against the Company

The deferred accounts payable does not accrue interest as long as all monthly payments are made on or before the last day of each calendar month, starting in October 2023 and running for 48 months or until the full $11.8 million balance has been repaid. Any cash payment not paid when due shall be subject to interest at the rate of 10% per annum running from the date of the last cash payment made by or on behalf of the Company. If any cash payment remains unpaid for more than 60 days following the date such cash payment was due, the supplier has the right to declare the entire remaining balance due immediately and payable without further notice. Cash payments automatically become immediately due and payable upon the commercial readiness by the Company. The Company made the first payment before the end of October 2023.

12. Restructuring Charges

In June 2022, we announced the Plan, including an approximate 70% reduction in our workforce. As part of the Plan, we also announced changes to our executive team. Mr. Lehmann left the Company on May 31, 2022. Dr. Harrington and Mr. Macleod left the Company on June 30, 2022.

The Company’s restructuring efforts are intended to preserve cash and reduce operating expenses going forward. In addition to the workforce reductions, the Company’s restructuring efforts include the reduction of our internal research function, the decommissioning of certain equipment and pausing our manufacturing and process development efforts toward commercializing our MultiStem product candidate.

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The following table sets forth certain details associated with the restructuring charges incurred in the three and nine months ended September 30, 2023 and the obligations recorded for the expenses associated with the Plan (in thousands). It is anticipated the Plan will be completed by the end of 2023.

	*Balances*				*Cash*			*Balances*
	*January 1, 2023*		*Charges*		*(payments)*			*September 30, 2023*
Employee severance and benefits	$	935	$	—	$	(621	)	$	314
Legal and professional fees		35		61		(65	)		31
Other		15		—		(15	)		—
	$	985	$	61	$	(701	)	$	345

	*Balances*				*Cash*			*Balances*
	*June 30, 2023*		*Charges*		*(payments)*			*September 30, 2023*
Employee severance and benefits	$	314	$	—	$	—		$	314
Legal and professional fees		27		30		(26	)		31
Other		—		—		—			—
	$	341	$	30	$	(26	)	$	345

The current portion of our restructuring accrual is included in accrued compensation and related benefits and accounts payable and there is no long-term portion of our restructuring accrual.

Restructuring charges are recorded general and administrative costs and expenses for the three months ended September 30, 2023.

13. Income Taxes

We have United States (“U.S.”) federal net operating loss and research and development tax credit carryforwards, as well as state and city net operating loss carryforwards, which may be used to reduce future taxable income and tax liabilities. We also have foreign net operating loss and tax credit carryforwards, and the foreign net operating loss carryforwards do not expire. Substantially all of our deferred tax assets have been fully offset by a valuation allowance due to our cumulative losses. The carrying value of our deferred tax assets and liabilities is determined by the enacted U.S. corporate income tax rate. Consequently, any changes in the U.S. corporate income tax rate impacts the carrying value of our deferred tax assets and liabilities. Also, there are significant limitations on our ability to utilize our net operating loss and tax credit carryforwards generated prior to October 2012 under Section 382 of the Internal Revenue Code of 1986, as amended. Utilization of some of the federal and state net operating loss and tax credit carryforwards generated after October 2012 may be subject to additional annual limitations due to the “change in ownership” provisions of the IRC and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before utilization. The Company has not performed a Section 382 study subsequent to October 2012 as of September 30, 2023. We will update our analysis under Section 382 prior to using these attributes.

14. Subsequent Events

Animal Health Transaction

On October 3, 2023, the Company announced the signing of a licensing agreement with Ardent Animal Health ("Ardent"). Ardent is a privately held veterinary biotechnology company developing regenerative medicine and cancer therapies for animals. Under the terms of the agreement, Athersys will receive an initial fee of $0.1 million from Ardent in exchange for an exclusive license to Athersys’ Multipotent Adult Progenitor Cell (MAPC®) technology for non-human mammal applications in the United States and equipment fees. The agreement includes pre- and post-regulatory approval milestone payments to Athersys, including payments on conditional and full product approval for each species/indication combination. Athersys will also receive tiered, double-digit royalties on commercial sales. Athersys has also granted Ardent rights of first refusal to be the exclusive distributor for Athersys’ novel cryogenic storage system, the Secure Integrated Freezer Unit (SIFU) in the United States animal health space.

Healios Update

On October 10, 2023, ABT Holding Company ("ABT Holding") and Healios entered into a binding memorandum of understanding (the “October MOU”), pursuant to which, among other things, ABT Holding entered into (i) an amendment (the “Fifth Amendment to License Agreement”) to that certain license agreement, dated as of January 8, 2016, as amended (the “Existing License Agreement”), and (ii) an assignment agreement for ARDS (as defined below) clinical doses (the “Assignment Agreement”), each with Healios and dated of even date with the October MOU.

Under the Fifth Amendment to License Agreement, the Company agreed to grant Healios a non-exclusive worldwide license to develop and commercialize MultiStem with respect to treating acute respiratory distress syndrome (“ARDS”) in exchange for potential development and sales milestone payments and additional royalties totaling up to $150 million in the aggregate. The Assignment Agreement provides for ABT Holding’s assignment of certain MultiStem doses manufactured by using a 3D bioreactor process to Healios. On October 12, 2023, ABT Holding received the first milestone payment of $1.5 million, and then on November 9, 2023, the Company received the second milestone payment of $1.5 million. The Company may receive another $1.5 million which is contingent on Healios closing on financing.

Nasdaq Notices

On October 14, 2022, we received a written notice (the “October 2022 Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the requirement to maintain a minimum market value of listed securities of $35 million, as set forth in Nasdaq Listing Rule 5550(b)(2) (the “Market Value Standard”) because the market value of the common stock was below $35 million for 30 consecutive business days. The Company had been granted by the Nasdaq Hearings Panel (the “Panel”) until October 10, 2023, to regain compliance with the Market Value Standard, which represents the full extent of the Panel’s discretion to grant continued listing while the Company is non-compliant. On October 12, 2023, Nasdaq requested an update from the Company and, in response, the Company submitted an update to Nasdaq on October 13, 2023, and requested additional time to regain compliance.

On October 16, 2023, the Company received a delisting determination letter from Nasdaq advising the Company that the Panel had determined that the Company was unable to demonstrate compliance with the Market Value Standard. As a result, trading of the Company’s common stock was suspended at the opening of business on October 18, 2023. The Company anticipates that a Form 25-NSE will be filed with the U.S. Securities and Exchange Commission, removing the Company’s securities from listing and registration on Nasdaq.

The Company’s common stock is currently quoted on the Pink Open Market tier operated by OTC Markets Group, Inc. under the symbol “ATHX.”

Warrant Inducement Offer, Warrant Restructure Transaction, and Related Agreements

On October 11, 2023, the Company entered into a warrant exercise inducement offer letter (the “Inducement Letter”) with a holder of certain existing warrants (“Warrant Holder”) to receive new warrants to purchase up to a number of shares of common stock equal to 200% (the “Inducement Warrants”) of the number of warrant shares issued pursuant to the exercise of such certain existing warrants to purchase shares of common stock (the “Existing Warrants”) pursuant to which the Warrant Holder agreed to exercise for cash their Existing Warrants to purchase up to 28,124,540 shares of the Company’s common stock, at a reduced exercise price in exchange for the Company’s agreement to issue the Inducement Warrants to purchase up to 56,249,080 shares of the Company’s common stock (the “Inducement Warrant Shares”). The Existing Warrants consist of the Company’s common warrants issued on August 17, 2022, September 22, 2022, November 10, 2022, and August 21, 2023. Pursuant to the Inducement Letter, upon the exercise of any Existing Warrants, the reduced exercise price of $0.1395 per share. We received aggregate gross proceeds of approximately $3.9 million from the exercise of the Existing Warrants before deducting financial advisory fees and other expenses payable by us.

On October 30, 2023, the Company entered into an offer letter (the “Letter Agreement”) with the Warrant Holder, to (1) reduce the exercise price of the Inducement Warrants from $0.1395 to $0.01 per share, (2) issue to the Warrant Holder new common stock purchase warrants (the “New Warrants”) to purchase up to 20,000,000 shares of the Company’s common stock at an exercise price of $0.01 per share; and (3) make the Inducement Warrants immediately exercisable.

Pursuant to the Letter Agreement, the Holder agreed to (A) reduce the period of the subsequent equity sale restrictions contained in Section h)(i) of Annex A to the Inducement Letter from 60 days to 30 days; (B) reduce the applicable period in each and all of the provisions relating to restrictions on the Company (or any of its subsidiaries) involving a “Variable Rate Transaction” (as such term, or a term of similar meaning, is defined in the applicable document) so that each such period terminates on March 1, 2024 in all stock purchase agreements, related letter agreements, and all other related agreements with the Holder; and (C) vote as set forth below in connection with a Fundamental Transaction.

The Warrant Holder agreed that upon the occurrence of a Fundamental Transaction (as defined in the New Warrants), if the Holder holds any shares of the Company’s common stock and a stockholder vote is required for such Fundamental Transaction, then the Warrant Holder agreed to vote all shares of its common stock that it holds as of any such record date that may be taken the vote of stockholders that are entitled to vote on such Fundamental Transaction in accordance with the recommendations of the Company’s board of directors.

In addition, on October 30, 2023, the Company and the Warrant Holder entered into an Amendment to Series A Common Stock Purchase Warrants (the “Warrant Amendment”) which amended the Inducement Warrants to reflect (i) the reduced exercise price of $0.01 per share, (ii) that the Inducement Warrants are now immediately exercisable, and (iii) that the Inducement Warrants will terminate on October 30, 2028.

Biomedical Advanced Research and Development (BARDA)

As previously disclosed, the Company responded to a request for proposal by the Biomedical Advanced Research and Development Authority, an agency within the U.S. Department of Health and Human Services (“BARDA”), with a view to include MultiStem in a BARDA-sponsored phase 2 platform clinical trial (“BARDA-Sponsored Clinical Trial”) for acute respiratory distress syndrome (“ARDS”).

On October 13, 2023, BARDA notified the Company that MultiStem has not been selected for inclusion in the BARDA-Sponsored Clinical Trial.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022. Operating results are not necessarily indicative of results that may occur in future periods. See also “Cautionary Note on Forward-Looking Statements” preceding Part I.

Overview and Recent Developments

We are a biotechnology company that is focused primarily in the field of regenerative medicine. Our MultiStem® (invimestrocel) cell therapy, a patented and proprietary allogeneic stem cell product candidate, is our lead platform product and is currently in clinical development. Our most advanced program is an ongoing Phase 3 clinical trial for the treatment of ischemic stroke. Our clinical development programs are focused on treating neurological conditions, inflammatory and immune disorders, certain pulmonary conditions and other conditions where the current standard of care is limited or inadequate for many patients, particularly in the critical care segment. On October 10, 2023, the Company announced the interim analysis for its ongoing Phase 3 trial, which concluded that the current sample size of 300 patients is insufficiently powered to achieve the primary endpoint of mRS Shift analysis at Day 365. The Company has paused enrollment of new patients while evaluating strategic options.

Restructuring and Financial

In June 2022, we announced a restructuring of our organization, including an approximate 70% reduction in workforce. As part of the restructuring plan, we also announced changes to our executive team. William (B.J.) Lehmann, former President and Chief Operating Officer, left the Company on May 31, 2022. John Harrington, former Executive Vice President and Chief Scientific Officer, and Ivor Macleod, former Chief Financial Officer, left the Company on June 30, 2022.

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In addition to the workforce reductions, in an effort to conserve cash and maintain adequate liquidity, we suspended operations in a number of areas including the reduction of our internal research function, plans for decommissioning certain equipment and suspending our manufacturing and process development efforts toward commercializing our MultiStem product candidate, if approved, as discussed below. We are currently unable to predict the duration of the suspension, and we plan to continue limited operations until we obtain additional funding. Our current development activities are limited to progressing our pivotal Phase 3 clinical trial of MultiStem cell therapy for the treatment of ischemic stroke, referred to as MASTERS-2 and supporting the Phase 2 clinical trial evaluating MultiStem cell therapy for the early treatment of traumatic injuries and the subsequent complications that result following severe trauma being conducted by UTHealth, at the Memorial Hermann-Texas Medical Center, or UTHealth, in Houston, Texas one of the busiest Level 1 trauma centers in the United States.

As of November 10, 2023, we had $5.7 million of cash and cash equivalents and current liabilities of $27.1 million, which consists of accounts payable of $16.9 million, of which $8.5 million is related to deferred accounts payable to supplier, accrued liabilities of $1.5 million, lease liabilities of $7.8 million, and accrued payroll and benefits of $0.9 million. To conserve cash, we have been managing our disbursements and working with our suppliers and service providers to address the outstanding accounts payable. To preserve liquidity in the Company, named executive officers, including severance to former executives, have agreed to defer compensation. The accumulated amount of compensation as of October 31, 2023, owed to these executives was approximately $0.3 million. In the near term, we will need to obtain significant capital through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources to continue to fund our operations. However, there can be no assurance that we will be able to obtain such funding on terms acceptable to us, on a timely basis or at all, particularly in light of our current stock price and liquidity. If we are unable to obtain adequate financing, we likely would have to file for protection under the bankruptcy laws to continue to pursue potential transactions and conduct a wind down of our Company. If we decide to dissolve and liquidate our assets or to seek protection under the bankruptcy laws, it is unclear to what extent we will be able to pay our obligations, and, accordingly, it is further unclear whether and to what extent any resources will be available for distributions to stockholders.

Current Programs

Our MultiStem cell therapy product development programs in the clinical development stage include the following:

• Ischemic Stroke: Our MASTERS-2 clinical trial is a randomized, double-blind, placebo-controlled clinical trial that was designed to enroll 300 patients in the United States and certain other international locations. The interim analysis completed in October 2023, concluded that the current sample size of 300 patients was insufficiently powered to achieve the primary endpoint of mRS Shift analysis at Day 365. There were no safety issues identified. Because the sample size required to achieve statistical significance is considerably larger, Athersys intends to conduct additional data analysis with independent statisticians. The Company plans to pause enrollment of new patients while this analysis is being conducted.

The MASTERS-2 study has received several regulatory designations and regulatory agreements including Special Protocol Assessment agreement, or SPA, Fast Track designation, Regenerative Medicine Advanced Therapy, or RMAT, designation and initial pediatric study plan, or iPSP agreement, from the U.S. Food and Drug Administration, or FDA, as well as a Final Scientific Advice positive opinion, Advanced Therapy Medicinal Product, or ATMP, quality certification and pediatric investigation plan, or PIP, agreement from the European Medicines Agency, or EMA.

On March 21, 2023, we held a Type B meeting with the FDA to address proposed modifications to our primary and secondary endpoints for our MASTERS-2 clinical trial protocol. We proposed four modifications, all of which were accepted.

•

Changed the timing of the primary endpoint assessed by shift analysis in modified Rankin Scale, or mRS, score to Day 365, from Day 90.

•

Retained shift analysis in mRS score at Day 90 as a key secondary endpoint, along with other revised secondary endpoints.

•

Removed eligibility caps on concomitant reperfusion therapy to ensure the final study population is reflective of the current standard of care in the population eligible for this therapy

•

We may elect to have an independent statistician conduct an interim analysis to assess potential sample size adjustment.

The fact that we were previously granted RMAT, Fast Track Designation and SPA agreement for the use of MultiStem enabled sponsors to work closely with the FDA and receive guidance on expediting the advancement of the designation program. We believe the proposed changes allow us to thoroughly evaluate the mechanisms through which MutliStem treatment can provide benefit to patients suffering an acute ischemic stroke. We believe this outcome more accurately reflects our belief that MultiStem’s treatment effects extend beyond Day 90 and is better reflected with a Day 365 assessment of recovery.

In addition, Healios, our collaborator in Japan, conducted a clinical trial, TREASURE, evaluating the safety and efficacy of administration of MultiStem cell therapy for the treatment of ischemic stroke. In May 2022, Healios reported topline results for the TREASURE study. While the TREASURE trial did not reach statistical significance on its primary endpoint, Excellent Outcome at 90 days, it did demonstrate improvement in pre-specified measures of functional “independence” and good outcomes, such as mRS < 2, Barthel Index > 95 and Global Recovery.

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The proposed adjustments to our MASTERS-2 trial, based on our Type B meeting with the FDA, will impact the timing of enrollment completion. In addition, given our liquidity issues, we have postponed initiating new clinical sites. To complete enrollment of our MASTERS-2 trial, we are dependent on our primary contract manufacturer to release clinical product. Due to these uncertainties, at this time, we are unable to predict when we will complete enrollment in our MASTERS-2 study, if at all. We will need to raise additional funding in order to complete our MASTERS-2 trial.

As previously announced in March 2023, the Company held a Type B Meeting with the U.S. Food & Drug Administration (the “FDA”) and received approval on recommended protocol changes to the MASTERS-2 trial, including changing the Primary Endpoint to mRS Shift Analysis at Day 365 and adding an unblinded interim analysis for the purpose of study size adjustment. On October 10, 2023, the Company announced the interim analysis for its ongoing Phase 3 trial, which concluded that the current sample size of 300 patients is insufficiently powered to achieve the primary endpoint of mRS Shift analysis at Day 365.

• ARDS: In January 2019 and January 2020, we announced summary results and one-year follow up results, respectively, from our exploratory clinical study of the intravenous administration of MultiStem cell therapy to treat patients who are suffering from acute respiratory distress syndrome, or ARDS, which is referred to as the MUST-ARDS study. The study results demonstrated a predictable and favorable tolerability profile. Importantly, there were lower mortality and greater ventilator-free days. or VFD, and ICU-free days in the MultiStem-treated patient group compared to the placebo group. Average quality-of-life outcomes were higher in the MultiStem group compared to placebo through one year. In April 2019, the MultiStem cell therapy received Fast Track designation for the treatment of ARDS, and in September 2020, RMAT designation was received for the same program. In April 2020, in response to the COVID-19 pandemic, the FDA authorized the initiation of a Phase 2/3 pivotal study to assess the safety and efficacy of MultiStem therapy in subjects with moderate to severe ARDS, or the MACOVIA study. The MACOVIA study features an open-label lead-in dose escalation portion of the study, followed by double-blinded, randomized, placebo-controlled study cohorts, and the study is designed to enroll up to approximately 400 patients at leading pulmonary critical care centers throughout the United States. During 2021, we amended the protocol with the FDA to adjust the scope of the MACOVIA study to include subjects with ARDS induced by pathogens other than COVID-19. We received approval from the FDA to use MultiStem product manufactured with our bioreactor-based technology in the study, an important product development milestone. We have suspended initiating new sites and enrolling patients in the Phase 2 part of the MACOVIA trial prior to enrolling patients using our bioreactor-based technology. We now have data evaluating two different dosing levels of MultiStem. Analysis of this data will help inform the design of the next phase of the trial once we are ready to restart utilizing bioreactor manufactured MultiStem product. However, we are currently focusing resources on our MASTERS-2 study. Until we receive additional financing or establish a partnership to move forward with the next phase of the study, the MACOVIA trial has been suspended.

Further, in 2019, Healios initiated the ONE-BRIDGE study in Japan for patients with pneumonia-induced and COVID-induced ARDS and, in August 2021, Healios reported top-line data from the ONE-BRIDGE study. We and Healios have conducted thorough analyses of the data from the MUST-ARDS and ONE-BRIDGE studies. The studies had comparable patient populations receiving the same MultiStem dose amount shortly following an ARDS diagnosis. Between the studies, excluding the COVID-ARDS cohort in the ONE-BRIDGE study, 60 ARDS subjects were enrolled in the studies with 40 receiving MultiStem treatment and the remaining 20 receiving placebo or standard of care. On a pooled basis, strong trends were observed in VFD, survival, improved quality-of-life and reduction of key inflammatory biomarkers. For example, MultiStem-treated subjects had, on average, 5.5 more VFD in the first 28 days following diagnosis than non-treated subjects (p=0.07) and, on a median basis, 10.5 more VFD. In April 2022, Healios announced that, while the PMDA did not disagree with the efficacy and safety conclusions of the ONE-BRIDGE study, the PMDA advised Healios that additional supporting data is necessary for application for approval of MultiStem treatment for the ARDS indication in Japan. As a result of the guidance from the PMDA, Healios disclosed that it will continue discussions with PMDA.

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• Trauma: In April 2020, the FDA authorized the initiation of a Phase 2 clinical trial evaluating MultiStem cell therapy for the early treatment of traumatic injuries and the subsequent complications that result following severe trauma. The trial is being conducted by UTHealth, at the Memorial Hermann-Texas Medical Center in Houston, Texas, one of the busiest Level 1 trauma centers in the United States. This study is being supported under a grant awarded to the McGovern Medical School at UTHealth from the Medical Technology Enterprise Consortium, and the Memorial Hermann Foundation is providing additional funding. We are providing the investigational clinical product manufactured with our bioreactor-based technology for the trial as well as regulatory and operational support.

Although some of our collaborators continue to engage in preclinical development and evaluation of MultiStem cell therapy in other indications for human health, we have suspended all of our own internal research efforts at this time to conserve cash and decrease expenses.

Recent Developments

In connection with our restructuring plan, in the second quarter of 2022, we paused work performed at our Belgian subsidiary, ReGenesys, which was evaluating our cell therapy for use in treating disease and conditions in the animal health segment. We are exploring opportunities to out-license this program. The restructuring also resulted in the closing of Athersys’ ReGenesys facility in Belgium at the end of 2022, although we are still actively exploring potential business development partners for the animal health program.

On April 21, 2023, we made the decision to and notified our landlord for the facility in Stow, Ohio that we surrendered possession of the property and returned the keys to the landlord. As a result of this decision, we note there will be an impact on operating results and cash flows, the Company has determined impairment indicators exist. In the current period, we have expensed the amount that we had previously been carrying as a Right of Use Asset as a general and administrative expense in the Statements of Operations and Comprehensive Loss. Additionally, we have reclassified the full liability to be all current in the Balance Sheet. On June 9, 2023, our landlord for the property in Stow, Ohio, Seasons Business Center Four, LLC, brought suit against the Company, see further discussion in Item 1. Legal Proceedings.

We have agreements with our primary contract manufacturing organization for the manufacture of our MultiStem product candidate to supply our planned and ongoing clinical trials. In June 2022, we suspended these agreements and attempted to negotiate payment terms. On May 17, 2023, we entered into a Forbearance, Restructuring and Settlement Agreement (the “Forbearance Agreement”) with a supplier, which amends certain supply agreements between the Company and the supplier.

The Forbearance Agreement, among other things, restructures the Company’s matured and unmatured liabilities owed to the supplier under the Agreements, comprised of past due and current due obligations in the approximate amount of $20.9 million and future obligations in the approximate amount of $9.8 million, less (i) approximately $3.9 million in credits applied by the strategic supplier based upon prior agreements. The Forbearance Agreement provides that the supplier agrees to forbear from exercising rights and remedies available as a result of existing overdue amounts under the Agreements, so long as the Company pays to the supplier an aggregate of $11.8 million, in monthly payments of $0.25 million, commencing in October 2023. The first payment was made before the end of October 2023. The Forbearance Agreement also grants the supplier a right of first refusal in the form of an exclusive option to supply 50% of all material required for the manufacture of MultiStem® (invimestrocel) and any derivative products for five years after the date that MultiStem receives regulatory approval for commercial sale. Finally, under the Forbearance Agreement, the Company is granting a limited release and exculpation of the supplier for accrued or unaccrued claims arising out of the Agreements, except that the limited release does not release: (i) any claims arising out of the supplier’s contractual warranty relating to product delivered or services performed by the supplier pursuant to the Agreements or (ii) any claims that may arise out of the performance by the supplier of its obligations under the Agreements following the effective date of the Forbearance Agreement.

Pursuant to the terms of the Forbearance Agreement, on May 17, 2023, the Company issued a convertible promissory note to the supplier in the principal amount of $15.0 million (the “Note”). The Note bears interest at a rate of 10.0% per annum, which shall be capitalized and added to the principal amount semi-annually on January 1 and July 1, commencing on July 1, 2023, and must be repaid in full, including accrued and unpaid interest thereunder, on (or before, subject to certain conditions) May 17, 2026 (the “Maturity Date”). The Note provides for customary events of default, including nonpayment, failure to comply with covenants or other agreements in the Note, certain events of bankruptcy and an adverse judgment for payment of $3.0 million or more (each, an “Event of Default”). If an Event of Default occurs, then (i) the interest on the Note shall accrue at a rate of 14.0% per annum (or, if less, the maximum rate permitted by applicable law) and (ii) the Maturity Date may be accelerated. The obligations under the Note are guaranteed by certain of the Company’s existing subsidiaries. Subject to a beneficial ownership limitation of 19.99% of the Company’s outstanding common stock and any shareholder approval requirements, the supplier may elect, at its sole discretion, to convert any outstanding principal and interest on the Note into shares of common stock of the Company at a conversion price of $1.30 per share at any time after the 18-month anniversary of the date of issuance of the Note (or upon an Event of Default) until the total outstanding balance of the Note is paid.

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Financial

On August 15, 2022, the Company entered into a placement agency agreement with A.G.P./Alliance Global Partners, or A.G.P., pursuant to which A.G.P. agreed to serve as exclusive placement agent for the issuance and sale of common stock and warrants. A.G.P received a placement fee of approximately $0.8 million and approximately $0.1 million for the reimbursement of expenses.

On August 15, 2022, the Company entered into a securities purchase agreement, or the August 2022 Purchase Agreement, with an investor, pursuant to which the Company agreed to issue and sell, in a registered direct offering, (i) an aggregate of 1,200,000 shares of the Company’s common stock, (ii) pre-funded warrants, or the August 2022 Pre-Funded Warrants, exercisable for an aggregate of 720,000 shares of common stock and (iii) warrants, or the August 2022 Common Warrants, exercisable for an aggregate of 1,920,000 shares of common stock, in combinations of one share of common stock or one August 2022 Pre-Funded Warrant and one August 2022 Common Warrant for a combined purchase price of $6.25 (less $0.0025 for any August 2022 Pre-Funded Warrant). Subject to certain ownership limitations, under the terms of the August 2022 Purchase Agreement, the August 2022 Pre-Funded Warrants were exercisable upon issuance, and the August 2022 Common Warrants were exercisable upon the six-month anniversary of issuance for a five-year period. Under the August 2022 Purchase Agreement, each August 2022 Pre-Funded Warrant was exercisable for one share of common stock at a price per share of $0.0025 and each August 2022 Common Warrant is exercisable for one share of common stock at a price per share of $6.385. The offering closed on August 17, 2022, and the Company received net proceeds of approximately $11.0 million, after giving effect to the payment of placement fees and reimbursed expenses. On August 29, 2022, the August 2022 Pre-Funded Warrants were exercised in full.

On September 22, 2022, the Company entered into an amendment to the August 2022 Purchase Agreement, or the August 2022 Purchase Agreement Amendment, with the investor to, among other things, (i) amend the August 2022 Common Warrants to be exercisable for a seven-year period after the six-month anniversary of the closing date, (ii) reduce the standstill period, (iii) reduce the term and the amount of the participation right, and (iv) require the investor, subject to certain conditions, to participate in future offerings to sell certain securities to investors primarily for capital raising purposes.

On September 22, 2022, in consideration of the August 2022 Purchase Agreement Amendment, and without receiving any cash proceeds, the Company issued to the investor additional warrants exercisable for 2,000,000 shares of common stock, or the September 2022 Common Warrants, at a price of $6.385 for a seven-year period after the six-month anniversary of the date of issuance thereof.

On April 17, 2023, the Company amended the August 2022 Common Warrants and the September 2022 Common Warrants to, among other things, reduce the exercise price to $0.96 per share with respect to 1,920,000 shares of common stock covered by the August 2022 Common Warrants and 1,760,000 shares of common stock covered by the September 2022 Common Warrants.

On November 9, 2022, the Company entered into a placement agency agreement with A.G.P. pursuant to which A.G.P. agreed to serve as exclusive placement agent for the issuance and sale of common stock and warrants. A.G.P. received a placement fee of approximately $0.4 million and approximately $0.1 million for the reimbursement of expenses.

On November 9, 2022, the Company entered into a securities purchase agreement, or the November 2022 Purchase Agreement, with investors, pursuant to which the Company agreed to issue and sell, in a public offering, (i) an aggregate of 3,927,275 shares of the Company’s common stock, (ii) pre-funded warrants, or the November 2022 Pre-Funded Warrants, exercisable for an aggregate of 1,077,270 shares of common stock and (iii) warrants, or the November 2022 Common Warrants, exercisable for an aggregate of 10,009,090 shares of common stock, in combinations of one share of common stock or one November Pre-Funded 2022 Warrant and two November 2022 Common Warrants for a combined purchase price of $1.10 (less $0.0001 for any November 2022 Pre-Funded Warrant). Subject to certain ownership limitations, under the terms of the November 2022 Purchase Agreement, the November 2022 Pre-Funded Warrants and the November 2022 Common Warrants were exercisable upon issuance. Under the November 2022 Purchase Agreement, each November 2022 Pre-Funded Warrant was exercisable for one share of common stock at a price per share of $0.0001 and each November 2022 Common Warrant is exercisable for one share of common stock at a price per share of $1.10 for a five-year period after the date of issuance. The offering closed on November 10, 2022, and the Company received net proceeds of approximately $5.0 million, after giving effect to the payment of placement fees and reimbursed expenses. The November 2022 Pre-Funded Warrants were exercised in full at the closing.

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On April 18, 2023, the Company entered into a securities purchase agreement, or the April 2023 Purchase Agreement, with investors, pursuant to which the Company agreed to issue and sell, in a public offering, (i) an aggregate of 2,315,000 shares of the Company’s common stock and (ii) pre-funded warrants, or the April 2023 Pre-Funded Warrants, exercisable for an aggregate of 1,370,000 shares of common stock, together with warrants, or the April 2023 Common Warrants, exercisable for an aggregate of 3,685,000 shares of common stock in a private placement, in combinations of one share or one April 2023 Pre-Funded Warrant and one April 2023 Common Warrant for a combined purchase price of $1.00, in a private placement. Subject to certain ownership limitations, the April 2023 Pre-Funded Warrants are exercisable upon issuance, and the April 2023 Common Warrants are exercisable upon the six-month anniversary of issuance. Each April 2023 Pre-Funded Warrant is exercisable for one share of common stock at a price per share of $0.0001 (as adjusted from time to time in accordance with the terms thereof) and does not expire. Each April 2023 Common Warrant is exercisable into one share of common stock at a price per share of $0.96 (as adjusted from time to time in accordance with the terms thereof) for a seven-year period after the six-month anniversary of the date of issuance. The offering closed on April 19, 2023, and the Company received net proceeds of approximately $3.4 million, after giving effect to the payment of placement fees and expenses.

On August 17, 2023, the Company entered into a securities purchase agreement, or the August 2023 Purchase Agreement, with investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering, (i) an aggregate of 4,212,500 shares of the Company’s common stock, (ii) pre-funded warrants, or the August 2023 Pre-Funded Warrants, exercisable for an aggregate of 6,725,000 shares of common stock, (iii) Series A common stock purchase warrants, or the Series A Common Warrants, exercisable for an aggregate of 10,937,500 shares of the Company’s common stock, and (iv) Series B common stock purchase warrants, or the Series B Common Warrants, exercisable for an aggregate of 10,937,500 shares of the Company’s common stock, in combinations of one share or one August 2023 Pre-Funded Warrant and one of each Series A Common Warrant and Series B Common Warrant for a combined purchase price of $0.32. Subject to certain ownership limitations, the August 2023 Pre-Funded Warrants, the Series A Common Warrants, and the Series B Common Warrants are exercisable upon issuance. Each August 2023 Pre-Funded Warrant is exercisable for one share of common stock at a price per share of $0.0001 (as adjusted from time to time in accordance with the terms thereof) and does not expire. Each Series A Common Warrant is exercisable into one share of common stock at a price per share of $0.32 (as adjusted from time to time in accordance with the terms thereof) for a five-year period, and each Series B Common Warrant is exercisable into one share of common stock at a price per share of $0.32 (as adjusted from time to time in accordance with the terms thereof) for a one and a half year period. The offering closed on August 21, 2023, and the Company received net proceeds of approximately $2.9 million, after giving effect to the payment of placement fees and expenses.

We have entered into a series of agreements with Healios, our collaborator in Japan. Under the collaboration that began in 2016, Healios is responsible for the development and commercialization of the MultiStem product for the licensed fields in the licensed territories, and we provide services to Healios for which we are compensated. Each license agreement with Healios has defined economic terms, and we may receive success-based milestone payments, some of which may be subject to credits. In August 2021, we entered into a Comprehensive Framework Agreement for Commercial Manufacturing and Ongoing Support, or the Framework Agreement, with Healios, which provides for resolution of certain issues under the existing agreements between the parties and reframes our collaboration to set the stage for productive efforts as Healios and our collaboration move towards commercialization of MultiStem in Japan. It also provides Healios with deferral of certain milestone payments during the expensive initial commercial launch period. Under the Framework Agreement, we were entitled to a milestone payment in the amount of $3.0 million. Additionally, under the terms of the Framework Agreement, we were obligated to pay Healios $1.1 million by December 31, 2022. In September 2022, we received $1.9 million from Healios, which represents the milestone payment net of amounts owed to Healios. Additionally, to assist Healios with the advancement of its ischemic stroke and ARDS programs in Japan, in September 2022, we granted to Healios, subject to the terms of the licensing agreement, a non-exclusive license to make and have made MultiStem for the treatment of ischemic stroke and ARDS worldwide solely for import into Japan for use in Japan.

Healios has alleged that we are in material breach of our Framework Agreement for, among other things, not meeting our supply obligations and cooperation and assistance obligations. We strongly disagree with Healios’ allegations and will continue to work with Healios to try to resolve this dispute. However, there can be no assurance that we will be able to resolve this dispute without legal proceedings.

Results of Operations

Since our inception, our revenues have consisted of license fees, contract revenues, royalties and milestone payments from our collaborators, and grant proceeds. We have not derived revenue from our commercial sale of therapeutic products to date since we are in clinical development. In prior periods, research and development expenses consisted primarily of external clinical and preclinical study fees, manufacturing and process development costs, salaries and related personnel costs, legal expenses resulting from intellectual property prosecution processes, facility costs, restructuring charges and laboratory supply and reagent costs. We expense research and development costs as they are incurred. General and administrative expenses consist primarily of salaries and related personnel costs, professional fees, restructuring charges and other corporate expenses. We expect to continue to incur substantial losses through at least the next several years.

Three Months Ended September 30, 2023 and 2022

Revenues. Revenues for the three months ended September 30, 2023 no revenue was recognized compared to $0.1 million for the three months ended September 30, 2022. The revenue related to 2022 was primarily associated with services provided to Healios under the Framework Agreement. At September 30, 2022, the services under the Framework Agreement are largely complete, and are limited to minimal close-out activities. Our collaboration revenues will fluctuate from period-to-period based on the services provided under our arrangement with Healios.

Research and Development Expenses. Research and development expenses decreased to $4.0 million for the three months ended September 30, 2023 from $12.4 million for the comparable period in 2022. The $8.4 million decrease is due to our restructuring plan which resulted in reduced manufacturing cost of $5.9 million, preclinical costs of $1.1 million, salaries and benefits of $1.3 million, and other research and development costs of $0.1 million. Our clinical development, clinical manufacturing, and manufacturing process development expenses vary over time based on the timing and stage of clinical trials underway, manufacturing campaigns for clinical trials and manufacturing process development projects. These variations in activity level may also impact our accounts payable, accrued expenses, prepaid expenses and deposits balances from period to period. Other than external expenses for our clinical and preclinical programs, we generally do not track our research expenses by project; rather, we track such expenses by the type of cost incurred.

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General and Administrative Expenses. General and administrative expenses decreased to $2.8 million for the three months ended September 30, 2023, from $3.7 million for the comparable period in 2022. The $0.9 million decrease is due to our restructuring plan which resulted in reduced salaries and benefits of $0.6 million, outside services of $0.3 million, and other general and administrative costs costs of $0.1 million. We expect our annual 2023 general and administrative expenses to decrease compared to 2022 in connection with our restructuring plan.

Depreciation. Depreciation expense was $1.0 million for the three months ended September 30, 2023 and $0.6 million for the comparable period in 2022.The increase is due to taking additional accelerated depreciation for assets no longer expected to be used in operations to their expected salvage values, compared to the same period in 2022, as a result of our restructuring plan.

Other Income, net. Other income, net, was $4.0 million for the three months ended September 30, 2023, compared to $3.0 million for the same period in 2022. The balance in 2023 is primarily made up of the change in fair value of note payable of $3.8 million.

Nine Months Ended September 30, 2023 and 2022

Revenues. Revenues for the nine months ended September 30, 2023 were $48.8 thousand compared to $5.3 million for the nine months ended September 30, 2022. The revenue for the nine months ended September 30, 2022, was primarily associated with services provided to Healios under the Framework Agreement. At September 30, 2022, the services under the Framework Agreement are largely complete, and are limited to minimal close-out activities. Our collaboration revenues will fluctuate from period-to-period based on the services provided under our arrangement with Healios.

Research and Development Expenses. Research and development expenses decreased to $19.1 million for the nine months ended September 30, 2023 from $54.2 million in the comparable period in 2022. The $35.1 million decrease is due to our restructuring plan which resulted in reduced manufacturing cost of $25.4 million, salaries and benefits of $9.2 million, legal and professional costs of $0.6 million, and other research and development costs of $0.2 million. Our clinical development, clinical manufacturing, and manufacturing process development expenses vary over time based on the timing and stage of clinical trials underway, manufacturing campaigns for clinical trials and manufacturing process development projects. These variations in activity level may also impact our accounts payable, accrued expenses, prepaid expenses and deposits balances from period to period. Other than external expenses for our clinical and preclinical programs, we generally do not track our research expenses by project; rather, we track such expenses by the type of cost incurred.

General and Administrative Expenses. General and administrative expenses decreased to $8.0 million for the nine months ended September 30, 2023 from $13.0 million in the comparable period in 2022. The $5.0 million decrease is due to our restructuring plan which resulted in reduced salaries and benefits of $4.4 million, outside services of $0.4 million, and other general and administrative costs costs of $0.2 million. We expect our annual 2023 general and administrative expenses to decrease compared to 2022 in connection with our restructuring plan.

Depreciation. Depreciation expense of $1.1 million for the nine months ended September 30, 2023 compared to $1.5 million for the comparable period in 2022. The decrease is due to both the sale of equipment associated with the decommissioning of certain equipment resulting in fewer depreciating assets in 2023 as well as recording accelerated depreciation on certain assets in 2022, as a result of our restructuring plan that exceeded accelerated depreciation of additional assets in the current period.

Other Income, net. Other income, net. was $3.6 million for the nine-month period ended September 30, 2023 and $3.8 million for the comparable 2022 period. The balance in 2023 is primarily made up of gain from extinguishment of $2.6 million and change in fair value of note payable of $3.2 million, offset by loss of $2.2 million due to change in Warrant fair value.

Liquidity and Capital Resources

Our primary source of liquidity is our cash balance. At September 30, 2023, we had $1.0 million in cash and cash equivalents. We have primarily financed our operations through business collaborations, grant funding and equity financing. We conduct all of our operations through our subsidiary, ABT Holding Company. Consequently, our ability to fund our operations depends on ABT Holding Company’s financial condition and its ability to make dividend payments or other cash distributions to us. There are no restrictions such as government regulations or material contractual arrangements that restrict the ability of ABT Holding Company to make dividend and other payments to us.

Our current capital requirements depend on a number of factors, including progress in our MASTERS-2 trial, additional external costs, such as payments to contract research organizations and contract manufacturing organizations, personnel costs and the costs of filing and prosecuting patent applications and enforcing patent claims. Furthermore, continued delays in product supply caused by nonpayment to our primary contract manufacturer for our clinical trials may impact the timing and cost of such studies.

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We are entitled to receive potential milestones payments, subject to certain credits, and royalties from Healios under our licensed programs. Under the Framework Agreement, in September 2022, we received $1.9 million from Healios which represents a milestone payment in the amount of $3.0 million, net of amounts payable to Healios. We invoice Healios for certain manufacturing support services. Payments from Healios may be used by Healios to offset milestone payments that may become due in the future.

We have prepared our unaudited condensed consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. However, we have incurred losses since inception of our operations in 1995, have negative operating cash flows, including in each of the last three years, and had an accumulated deficit of $682.6 million at September 30, 2023. Our losses have resulted principally from costs incurred in research and development, clinical and preclinical product development, manufacturing and process development, acquisition and licensing costs, and general and administrative costs associated with our operations. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying unaudited condensed financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning our ability to continue as a going concern.

While we believe our restructuring plan will reduce costs and alleviate to some extent the conditions that raise substantial doubt, these plans are not entirely within our control and cannot be assessed as being probable of occurring. For the foreseeable future, our ability to continue our operations is dependent upon our ability to obtain additional capital, which may not be available to us on acceptable terms, on a timely basis or at all.

We expect to continue to incur substantial losses through at least the next several years and may incur losses in subsequent periods. The amount and timing of our future losses are highly uncertain. Our ability to achieve and thereafter sustain profitability will be dependent upon, among other things, successfully developing, commercializing and obtaining regulatory approval or clearances for our technologies and products resulting from these technologies.

Cash Flow Analysis

Net cash used in operating activities was $14.4 million for the nine months ended September 30, 2023 compared to $47.0 million for the nine months ended September 30, 2022. Net cash used in operating activities may fluctuate significantly on a quarter-to-quarter basis, as it has over the past several years, primarily due to the receipt of fees from our collaborators and payment of clinical trial costs, such as clinical manufacturing campaigns, contract research organization costs and manufacturing process development projects. These variations in activity level may also impact our accounts receivable, accounts payable, accrued expenses, prepaid expenses and deposits balances from period to period.

Net cash provided in investing activities was $0.0 million for the nine months ended September 30, 2023 compared to cash used of $2.0 million for the nine months ended September 30, 2022. The fluctuations over the periods were due to the timing of disposal to property and equipment primarily due our restructuring efforts.

Financing activities provided cash of $6.2 million and $25.4 million for the nine months ended September 30, 2023 and 2022, respectively. The decrease from the comparable period is primarily related to the termination of our equity purchase agreement with Aspire Capital in July 2022. Also included in financing activities for the nine months ended September 30, 2023 and September 30, 2022 are shares retained for withholding tax payments on stock-based awards.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

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Critical Accounting Policies and Management Estimates

The SEC defines critical accounting policies as those that are in management’s view, important to the portrayal of our financial condition and results of operation and demanding of management’s judgement. Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires us to make estimates on experience and on various assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The following accounting estimates are deemed to be critical to us.

Stock-Based Compensation

We determine the estimated fair value of each stock option on the date of grant using the Black-Scholes option-pricing model. The expected term of stock options granted represent the period of time that stock option grants are expected to be outstanding and subsequent to June 2020, is determined based on our historical experience and patterns. Prior to June 2020, we used the “simplified” method to calculate the expected term of option grants. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock option at the time of the grant. We determine volatility by using our historical stock volatility. We account for forfeitures as they occur. We have never paid or declared dividends or paid dividends on our common stock and have no plans to do so in the foreseeable future. Changes in these assumptions may lead to variability with respect to the amount of stock compensation expense we recognize related to stock options.

Additionally, stock-based compensation for an award with a performance condition requires the judgement of management. For such awards, stock-based compensation is recognized when the achievement of such performance condition is determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized.

Fair Value of Warrant Liabilities

In August 2022, we entered into the August 2022 Purchase Agreement, which resulted in the issuance of common stock, the August 2022 Pre-Funded Warrants, and the August 2022 Common Warrants, exercisable for a specified price, starting after a specified period of time, and for a specified period of time after the deal had closed. The August 2022 Common Warrants meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging, and do not meet the derivative scope exception. As a result, the August 2022 Common Warrants were initially recorded as liabilities and measured at fair value using the Black-Scholes valuation model. The warrants are adjusted to fair value at the end of each quarter. The adjustment to fair value is recorded in Other Income in the Statement of Operations and Comprehensive Loss

We use a valuation expert to help us determine the fair value of the August 2022 Common Warrants, using the Black-Scholes model to estimate the fair value of the August 2022 Common Warrants. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the common warrants at the time of the issuance. We determine volatility by using our historical stock volatility. We have never paid or declared dividends or paid dividends on our common stock and have no plans to do so in the foreseeable future. Changes in these assumptions may lead to variability with respect to the amount of gain or loss in fair value of the August 2022 Common Warrants.

The issuance of the November 2022 Common Warrants was deemed to be equity accounting and no estimates are required for this transaction.

Fair Value of Note Payable

On May 17, 2023, we entered into a Forbearance, Restructuring and Settlement Agreement (the “Forbearance Agreement”) with a supplier, which amends certain supply agreements between the Company and the supplier. Pursuant to the terms of the Forbearance Agreement, on May 17, 2023, the Company issued a convertible promissory note to the supplier in the principal amount of $15.0 million (the “Note”).The Company has elected the fair value option under ASC 825-10-25 to measure the Note at fair value at inception and in subsequent periods, with changes in fair value reported in earnings. The Note is eligible for fair value option as it is a permissible instrument within the scope of ASC 825-10-15. As a result, the Note is recorded as a liability and measured at fair value using the Lattice Model valuation model. The Note is adjusted to fair value at the end of each quarter. The adjustment to fair value is recorded in Other Income in the Statement of Operations and Comprehensive Loss, except for changes in fair value caused by instrument-specific credit risk which is reported in other comprehensive income.

We use a valuation expert to assist us in determine the fair value of the Note using the Lattice Model valuation model to estimate the fair value of the Note. This model incorporates transaction detail such as the term of the Note, the nominal value of the Note at inception, the coupon rate of the Note, the conversion price of the Note, the Company’s stock price, risk-free rate and implied bond yield as well as volatility. The Company’s stock is a publicly traded stock and is readily determinable. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the Note. We determine volatility by using our historical stock volatility. The implied bond yield is based on the required rate of return for mezzanine financing of similar companies. Changes in these assumptions may lead to variability with respect to the amount of gain or loss in fair value of the Note.

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Refer to Note C, Accounting Policies, in the notes to consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022, for a discussion of our accounting policies and recently issued accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There were no material changes in our exposure to market risk since the disclosure included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our management, under the supervision of and with the participation of our Chief Executive Officer and our interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, our Chief Executive Officer and interim Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, certain of our disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting, as a result of insufficient resources with appropriate knowledge and expertise to design, implement, document and operate effective internal controls over financial reporting relating to complex transactions, including accounting for the issuance of convertible notes.

Remediation Efforts to Address Disclosed Material Weakness

Our management, with oversight from our audit committee, is in the process of implementing steps to use third party specialists to assist with accounting and finance technical issues as needed.

Changes in Internal Control Over Financial Reporting

During the last fiscal quarter covered by this Quarterly Report on Form 10-Q, there has been a change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

As of September 30, 2023, management has concluded that there was a material weakness as described above in “Disclosure Controls and Procedures”.

Inherent Limitations

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of business. On June 9, 2023, our landlord for the property in Stow, Ohio, Seasons Business Center Four, LLC, brought suit against the Company in the Summit County, Ohio Court of Common Pleas asserting claims for Breach of Contract (Lease), Promissory Estoppel, and Unjust Enrichment relating to the subject Lease between the parties. The amount sought is undetermined but in excess of $25,000. The Company filed its Answer and Affirmative Defenses by the August 15, 2023 deadline and intends to defend against the claims asserted.

Item 1A. Risk Factors.

In addition to the other information set forth elsewhere in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors set forth below and the other risk factors discussed in Part I, Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Those factors, if they were to occur, could cause our actual results to differ materially from those expressed in our forward-looking statements in this report, and materially adversely affect our financial condition or future results. Although we are not aware of any other factors that we currently anticipate will cause our forward-looking statements to differ materially from our future actual results, or materially affect the Company’s financial condition or future results, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial might materially adversely affect our actual business, financial condition and/or operating results.

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There is substantial doubt about our ability to continue as a going concern, which may affect our ability to obtain future financing and may require us to curtail our operations. We will need substantial additional funding to develop our products and for our future operations. If we are unable to obtain the funds necessary to do so, we may be required to further delay, scale back or eliminate our product development activities or may be unable to continue our business.

The audited financial statements and accompanying notes presented in our Annual Report on Form 10-K for the year ended December 31, 2022 include disclosures and an opinion from our independent registered public accounting firm stating that our recurring losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. Our financial statements as of December 31, 2022 and 2021 were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

The development of our product candidates will require a commitment of substantial funds to conduct the research, which may include preclinical and clinical testing, necessary to obtain regulatory approvals and bring our products to market. Net cash used in our operations was $59.0 million in 2022, $76.2 million in 2021 and $61.8 million in 2020.

At December 31, 2022, we had $9.0 million of cash and cash equivalents. As of September 30, 2023, we had accounts payable of $9.3 million and we only had cash and cash equivalents of $1.0 million. Accordingly, we will need substantially more funding to advance our product candidates through development and into commercialization, including to put in place manufacturing capacity to support such commercial activity. Our future capital requirements will depend on many factors, including:

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our ability to raise capital to fund our operations;

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the progress, scope, costs and results of our clinical and preclinical testing of any current or future product candidates;

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the possibility of delays in, adverse events of and excessive costs of the development process;

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the cost of manufacturing our product candidates;

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the cost of prosecuting, defending and enforcing patent claims and other intellectual property rights;

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the time and cost involved in obtaining regulatory approvals;

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expenses related to complying with cGMP of therapeutic product candidates;

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costs of financing or acquiring additional capital equipment and development technologies;

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competing technological and market developments;

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our ability to establish and maintain collaborative and other arrangements with third parties to assist in bringing our products to market and the cost of such arrangements;

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the amount and timing of payments or equity investments that we receive from collaborators or changes in or terminations of future or existing collaboration and licensing arrangements and the timing and amount of expenses we incur to support these collaborations and license agreements;

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costs associated with the integration of any new operation, including costs relating to future mergers and acquisitions with companies that have complementary capabilities;

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expenses related to the establishment of sales and marketing capabilities for products awaiting approval or products that have been approved;

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expenses related to establishing manufacturing capabilities;

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the level of our sales and marketing expenses; and

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our ability to introduce and sell new products.

We have secured capital historically from grant revenues, collaboration proceeds and debt and equity offerings. We will need to secure substantial additional capital to fund our future operations. We cannot be certain that additional capital will be available on acceptable terms or at all. To the extent we raise additional capital through the sale of equity securities, the ownership position of our existing stockholders could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt securities, these securities are likely to have rights, preferences and privileges senior to our common stock. Fluctuating interest rates could also increase the costs of any debt financing we may obtain.

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Importantly, we expect that the results of our MASTERS-2 clinical trial, will have a significant impact, favorable or unfavorable, on our ability to access capital from potential third-party commercial partners or the equity capital markets. Depending on the nature of these results, we may accelerate or may delay certain programs. In the longer term, we will have to continue to generate additional capital to meet our needs until we would become cash flow positive as a result of the sales of our clinical products, if they are approved for marketing.

Failure to successfully address ongoing liquidity requirements will have a material adverse effect on our business. If we are unable to obtain additional capital on acceptable terms when needed, we may be required to take actions that harm our business and our ability to achieve cash flow in the future, including possibly the surrender of our rights to some technologies or product opportunities, delaying our clinical trials or curtailing or ceasing operations.

Risks Related to Our Common Stock

Currently there is a limited public market for our common stock, and we cannot predict the future prices or the amount of liquidity of our common stock.

Currently, there is a limited public market for our common stock. Our common stock is quoted on the OTC Pink under the symbol “ATHX.” However, the OTC Pink is not a liquid market in contrast to the major stock exchanges. Prices for securities traded solely on the OTC Pink may be difficult to obtain and holders of common stock may be unable to resell their securities at or near their original offering price or at any price. We cannot assure you as to the liquidity or the future market prices of our common stock if a market does develop. If an active market for our common stock does not develop, the fair market value of our common stock could be materially adversely affected. We cannot predict the future prices of our common stock.

Trading in our common stock on the OTC Pink has been subject to wide fluctuations.

Our common stock is currently quoted for public trading on the OTC Pink. The trading price of our common stock has been subject to wide fluctuations. Trading prices of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management’s attention and resources.

Our common stock is currently quoted only on the OTC Pink, which may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the OTC Pink, which is a significantly more limited market than the New York Stock Exchange, the NYSE American, or The Nasdaq Stock Market. The quotation of our shares of common stock on the OTC Pink may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.

There can be no assurance that there will be an active market for our shares of common stock either now or in the future. Market liquidity will depend on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment in our shares of common stock or liquidate at a price that reflects the value of the business. As a result, holders of our shares of common stock may not find purchasers for such shares should they desire to sell them. Consequently, our shares of common stock should be purchased only by investors having no need for liquidity in their investment and who can hold such shares for an indefinite period of time.

The Company’s common stock is considered a “penny stock” and may be difficult to sell.

The Company’s common stock is considered to be a “penny stock” under rules promulgated pursuant to the Exchange Act. Reasons for categorization as a penny stock include but are not limited to the following: (i) the stock trades at a price less than $5.00 per share; (ii) it is not traded on a “recognized” national exchange; (iii) it is not quoted on The Nasdaq Stock Market, or even if so, has a price less than $5.00 per share; or (iv) it is issued by a company with net tangible assets less than $2.0 million, if in business more than a continuous three years, or with average revenues of less than $6.0 million for the past three years. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend the stock but must trade in it on an unsolicited basis.

Additionally, Section 15(g) of the Exchange Act and Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account.

Holders in the Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to: (i) obtain from the investor information concerning its financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for holders of the Company’s common stock to resell their shares to third parties or to otherwise dispose of them in the market or otherwise.

The Financial Industry Regulatory Authority (“FINRA”), has adopted sales practice requirements that may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

On October 10, 2023, our subsidiary, ABT Holding Company (“ABT Holding”), and HEALIOS K.K. (“Healios”) entered into a binding memorandum of understanding (the “October MOU”), pursuant to which, among other things, ABT Holding entered into (i) an amendment (the “Fifth Amendment to License Agreement”) to that certain license agreement, dated as of January 8, 2016, as amended (the “Existing License Agreement”), and (ii) an assignment agreement for ARDS (as defined below) clinical doses (the “Assignment Agreement”), each with Healios and dated of even date with the October MOU.

Under the Fifth Amendment to License Agreement, the Company agreed to grant Healios a non-exclusive worldwide license to develop and commercialize MultiStem with respect to treating acute respiratory distress syndrome (“ARDS”) in exchange for potential development and sales milestone payments and additional royalties totaling up to $150 million in the aggregate. The Assignment Agreement provides for ABT Holding’s assignment of certain MultiStem doses manufactured by using a 3D bioreactor process to Healios. On October 12, 2023, ABT Holding received the first milestone payment of $1.5 million, and then on November 9, 2023, the Company received the second milestone payment of $1.5 million. The Company may receive another $1.5 million which is contingent on Healios closing on financing.

Copies of the October MOU, the Fifth Amendment to License Agreement, and the Assignment Agreement are filed as exhibits to this Quarterly Report, and the description of such documents is qualified in its entirety by reference to such exhibits.

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Item 6. Exhibits.

Exhibit No.		Description

3.1		Certificate of Incorporation of Athersys, Inc., as amended as of June 20, 2013 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with the Commission on May 8, 2019).

3.2		Certificate of Amendment to Certificate of Incorporation of Athersys, Inc., as amended as of June 7, 2017 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with the Commission on August 9, 2017).

3.3		Bylaws of Athersys, Inc., as amended and restated as of March 13, 2019 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with the Commission on May 8, 2019).

3.4		Certificate of Amendment to Certificate of Incorporation of Athersys, Inc., as amended, effective as of June 16, 2021 (incorporated herein by reference to Exhibit 3.3 to the registrant’s Registration Statement on Form S-3 (Commission No. 333-257409) filed with the Commission on June 25, 2021).

3.5		Certificate of Amendment to Certificate of Incorporation of Athersys, Inc., as amended, effective as of August 26, 2022 (incorporated herein by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K (Commission No. 001-33876) filed with the Commission on August 29, 2022).

4.1		Form of Series A Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K (Commission No. 001-33876) filed with the Commission on October 12, 2023).

4.2		Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K (Commission No. 001-33876) filed with the Commission on October 30, 2023).

4.3		Form of Warrant Amendment (incorporated herein by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K (Commission No. 001-33876) filed with the Commission on October 30, 2023).

10.1		Forbearance, Restructuring and Settlement Agreement, dated as of May 17, 2023, between Athersys, Inc., certain subsidiaries of Athersys, Inc., and Lonza (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with the Commission on August 16, 2023).

10.2		Athersys, Inc. 2019 Equity and Incentive Compensation Plan, as amended and restated (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K (Commission No. 001-33876) filed with the Commission on October 2, 2023).

10.3*		Memorandum of Understanding, dated October 10, 2023, by and between ABT Holding Company and HEALIOS K.K.

10.4*		Fifth Amendment to License Agreement, dated October 10, 2023, by and between ABT Holding Company and HEALIOS K.K.

10.5*		Assignment Agreement, dated October 10, 2023, by and between ABT Holding Company and HEALIOS K.K.

31.1*		Certification of Daniel Camardo, Chief Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Kasey Rosado, interim Chief Financial Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Daniel Camardo, Chief Executive Officer, and Kasey Rosado, interim Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from Athersys’ Quarterly Report on Form 10-Q for the period ended September 30, 2023, are formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Loss; (iii) the Condensed Consolidated Statements of Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; (v) Notes to Unaudited Condensed Consolidated Financial Statements; and (vi) document and entity information.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101).

*	Filed herewith

The certification attached as Exhibit 32.1 accompanying this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, shall not be deemed “filed” by the registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ATHERSYS, INC.

Date: November 16, 2023		/s/ Daniel Camardo
		Daniel Camardo
		Chief Executive Officer and Duly Authorized Officer

C TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE SUCH TERMS ARE BOTH NOT MATERIAL AND ARE THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

THESE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT WITH THREE ASTERISKS [***]

CONFIDENTIAL

Memorandum of Understanding Regarding Expansion of Healios Territory and Clinical Supply for ARDS

This Memorandum of Understanding Regarding Expansion of Healios Territory and Clinical Supply for ARDS ( "MOU")dated October 10, 2023 ("the MOU Effective Date"), is made by and between HEALIOS K.K., a Japanese company, having its principal place of business at Hibiya Mitsui Tower l 2F, 1-1-2 Yurakucho Chiyoda-ku, Tokyo 100-0006, Japan ("Healios") and ABT Holding Company, a Delaware corporation, having its principal place of business at 3201 Carnegie Avenue, Cleveland, Ohio, 44115-2634, U.S.A. ("ATHX ") (each a "Party" and together, the "Parties").

Background

A. Healios and ATHX have entered into the Initial License Agreement as of January 8, 2016 (as amended, "Initial License Agreement") for the purpose of development and commercialization of the Product, a Quality Agreement as of September 1, 2016 (as amended, "Quality Agreement")for the purpose of defining the right s and responsibilities relating to quality management of the manufacturing and supply of Investigational Product, and a Clinical Trial Supply Agreement as of Januar y 19, 2017 (as amended, "Clinical Supply Agreement") for the purpose of governing ATHX' s supply of Investigational Product and related materials to Healios for use in clinical studies;

B. Healios and ATHX wish to amend the Initial License Agreement to provide Healios with a worldwide license in the ARDS Field, on the terms set forth in the Fifth Amendment to Initial License Agreement (defined below). The Parties acknowledge the high clinical development and commercial manufacturing preparation costs required to advance ARDS globally, which they anticipate will likely exceed $100 million. By accepting a worldwide license, Healios will take on the responsibility for such costs and thereby create the opportunity for Athersys, Inc. ("Athersys") to generate potential revenue from the milestones and royalties defined in the amended License Agreement;

Healios and ATHX further intend for a clinical trial in the ARDS Field (the

"HealiosJapan ARDS Trial") to be conducted by Healio s in Japan;

D. Subject to the terms of the Clinical Supply Agreement and the Quality Agreement, ATHX shall supply to Healios 3D Investigational Product previously manufactured for ATHX by Lonza Singapore and currently stockpiled by ATHX (the "Lonza 3D Product") at a facility controlled by Lonza Singapore at a price to be set in this MOU;

E. Healios will use commercially reasonable efforts to execute a financing as soon as practicable for various corporate purposes ("the Healios Financing");

F. Healios has incorporated a subsidiary, ProcellCure, Inc. ("ProcenCure") which will be involved in the development and marketing of ARDS Product and is seeking financing for such activities separate and apart from the Healios Financing (the "ProcellCureFinancing");

CONFIDENTIAL

G. Healios wishes to conduct stability testing of the Lonza 3D Product at Healios' own expense for the benefit of both the Parties; and therefore

H. This MOU provides for an amendment to the Initial License Agreement, for supply of Lonza 3D Product by ATHX to Healios for the Healios ARDS Trial, and provision of other ancillary materials and information in support of ARDS global development, all as provided in the Fifth Amendment to Initial License Agreement.

II.

Agreement of the Parties

A. Capitalized terms used in this MOU but not defined have the meaning set forth in the Initial License Agreement, the Quality Agreement, and/or the Clinical Supply Agreement.

B. The Initial License Agreement is hereby amended as described in Exhibit 1 (the "Fifth Amendment to Initial License Agreement") as of the date the Fifth Amendment is fully executed.

C. Healios agrees to pay to ATHX within [***] business days of execution of the latest signed of this MOU; the Fifth Amendment to Initial License Agreement; and the Assignment Agreement for ARDS Clinical Doses (Exhibit 2 hereto) one million five hundred thousand US Dollars ($1,500,000 US Dollars) (the "Initial Payment").

D. Simultaneously with the execution of this MOU, ATHX shall assign title to [***] clinical doses and [***] placebo doses stored at Lonza Singapore, and [***] vials for stability testing of the Lonza 3D Product stored either at Lonza Singapore or at Labcorp, by executing the Assignment Agreement for ARDS Clinical Doses attached to this Agreement as Exhibit 2 and shall provide notice of such assignment to Lonza Singapore and Labcorp and request acknowledgement of the same.

E. Healios agrees to further pay to ATHX within [***] business days of receiving acknowledgement from Lonza Singapore of Healios' ownership of the [***] clinical and [***] placebo doses described in paragraph D above one million five hundred thousand US Dollars ($1,500,000 US Dollars) (the "Second Payment").

F. Healios will use commercially reasonable efforts to conclude each of the Healios Financing and the ProcellCure Financing as soon as practicable. Contingent on the closing of both the Healios Financing and ProcellCure Financing (together, the "Financings"), Healios agrees to pay to ATHX within [***] days of the closing of the Financings a further one million five hundred thousand US Dollars ($1,500,000 US Dollars) ("the Third Payment").

G. After delivery of the [***] clinical and [***] placebo doses pursuant to paragraph D above, ATHX agrees to provide up to [***] additional doses of the Lonza 3D Product and [***] placebo doses to Healios upon request at a set price of [***] per clinical dose/placebo pair for potential use in clinical trials by Healios.

H. ATHX shall provide the Lonza 3D Product to Healios is accordance with the Clinical Supply Agreement and the Quality Agreement except that Article 5 of the Clinical Supply Agreement is superseded by the payment terms set forth in this MOU.

CONFIDENTIAL

I. ATHX agrees to cooperate with Healios' conduct of the Healios Japan ARDS Trial and any other ARDS trials run by Healios to the full extent required by any of the Initial License Agreement, the Clinical Supply Agreement and/or the Quality Agreement provided that, without prejudice to Healios' rights under any other agreements, ATHX shall not be in breach of this Section I if it is unable to fulfill any such obligations as a result of insufficient staff or financial resources.

J. ATHX further agrees to share without cost to Healios at Healios' request any and all data in ATHX's possession, custody or control, regarding any prior or current non clinical or clinical trials in the ARDS Field, including but not limited to data associated with the MACOVIA and MUST-ARDS trials.

K. Promptly after executing this MOU and pursuant to an SOW to be executed between the Parties, ATHX further agrees to ship or arrange to be shipped to Healios or its designee [***] vials of reference standard cells for each of (a) CSFE assay testing and (b) IL-2 assay testing for use in relation to stability testing and/or 3D manufacturing process development at a cost of [***] per vial plus any shipping related costs to be invoiced in due course.

L. Promptly after executing this MOU and pursuant to an SOW to be executed between the Parties, ATHX further agrees to ship or arrange to be shipped to Healios or its designee [***] vials of non-GMP grade research cell bank associated with master cell bank 1 and [***] vials of GMP grade working cell bank associated with master cell bank 2 for use in 3D manufacturing process development, to Healios at a cost of [***] per vial for research cell bank and [***] per vial for GMP grade working cell bank plus any shipping related costs to be invoiced in due course.

M. Notwithstanding the foregoing, should ATHX be required to generate new data and information for provision to Healios for its use in relation to development of ARDS in any geography, Healios and ATHX will enter into an SOW to compensate ATHX for such work in accordance with the Master Support Services Agreement dated August 4, 2021.

N. This MOU shall be governed by and construed under the Laws of State of New York without regard to its choice of law principles to the extent they would mandate the law of any other jurisdict ion. All disputes arising out of or relating to this MOU shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules. The seat of the arbitration shall be Tokyo. The language to be used in the arbitration shall be English. The award rendered by arbitration shall be final and binding upon the Parties and judgment upon the award may be entered into in any court having jurisdiction for enforcement thereof. The Parties shall treat all matters relating to the arbitration, including, but not limited to, the existence of the arbitration, all documents produced by one Party in the arbitration, or the award rendered by the arbitration as Confidential Information.

0. ATHX shall be responsible for paying any and all taxes levied on account of, or measured in whole or in part by reference to, any payments it receives hereunder. Healios shall deduct or withhold from any such payments to ATHX any taxes that Healios is required to deduct or withhold under applicable law. Notwithstanding the foregoing, if ATHX is entitled under any

CONFIDENTIAL

applicable tax treaty to a reduction in the rate of, or the elimination of, applicable withholding tax, it may deliver to ATHX or the appropriate governmental authority (with the assistance of Healios to the extent that such assistance is reasonably required and is requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve Healios of its obligation to withhold tax, and Healios shall apply the reduced rate of withholding, or dispense with withholding, as the case may be, provided that Healios has received evidence, in a form reasonably satisfactory to Healios, of ATHX's delivery of all applicable forms (and, if necessary, its receipt of appropriate governmental authorization) at least [***] business days prior to the time that the payments are due. If, in accordance with the foregoing, Healios withholds any amount, it shall

(a)

timely remit to ATHX the balance of such payment excluding the withheld tax; (b) timely remit the full amount withheld to the proper governmental authority; and (c) send to ATHX written proof ofremittance of the full amount withheld within [***] following remittance.

P. This MOU may be executed in separate counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

Agreed:

ABT Holding Company		Healios K.K.
By: /s/ Daniel Camardo		By: /s/ Tadahisa Kagimoto
Date: October 10, 2023		Date: October 10, 2023
Name: Daniel Camardo		Name: Tadahisa Kagimoto
Title: CEO		Title: CEO

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE SUCH TERMS ARE BOTH NOT MATERIAL AND ARE THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

THESE REDACTED TERMS HAVE BEEN MARKED IN THIS EXHIBIT WITH THREE ASTERISKS [***]

Exhibit 1

Fifth Amendment to Initial License Agreement

This Fifth Amendment to the Initial License Agreement (the "Fifth Amendment") is made and entered into as of October . 2023 ("Fifth Amendment Effective Date") between ABT Holding Company ("ATHX"), a Delaware corporation having its principal place of business at 320l Carnegie Avenue, Cleveland, OH 44115 and a wholly-owned subsidiary of Athersys, Inc. ("Athersys"), and HEALIOS, K.K. ("Healios"), a Japanese company having its principal place of business at Hibiya Mitsui Tower 12F, 1-1-2 Yurakucho Chiyoda-ku, Tokyo 100-0006, Japan, and solely with respect to the guarantee set forth herein, Athersys.

WHEREAS, the Parties entered into the Initial License Agreement effective as of January 8, 2016, which was subsequently amended pursuant to (1) the First Amendment to License Agreement dated July 21, 2017; (2) the Second Amendment to License Agreement dated September 19, 2017;

(3) the Third Amendment to License Agreement dated June 6, 2018; and (4) the Fourth Amendment to Initial License Agreement, executed in connection with the Comprehensive Framework Agreement for Commercial Manufacturing and Ongoing Support, effective as of August 5, 2021.

WHEREAS, the Parties have entered into the Initial License Agreement, under the terms and conditions of which the Parties continue to perform;

WHEREAS, ATHX has entered into that certain Forbearance, Restructuring and Settlement Agreement dated as of May 17, 2023 by and among Lonza Netherlands B.V., Lonza Bioscience Singapore LTD, ATHX and the other parties thereto (the "Forbearance Agreement") pursuant to which, among other things, Lonza (as defined in the Forbearance Agreement) has certain rights set forth in Section 2 thereof (the "Lonza Rights"); and

WHEREAS, the Parties wish to amend certain provisions of the Initial License Agreement to expand Healios' Territoryfor the ARDS Field; and

NOW, THEREFORE, in consideration of the above premises and the mutual promises set forth below, and other good and valuable consideration, the receipt and sufficiencyof which are hereby acknowledged, the Parties agree to amend the Agreement as follows:

The definition of "Territory" shall be amended as follows:

The term "Territory" shall mean (1) the entire world with respect to the ARDS Field; and (2) Japan with respect to the lschemic Stroke Field.

Section 2.1 shall be replaced with the following language:

Subject to the terms and conditions of this Agreement, ATHX grants to Healios, under the ATHX MultiStem Background Patents and ATHX MultiStem Background Know How (collectively "ATHX MultiStem Background IP"), an exclusive, non-transferable and non-assignable (except as provided pursuant to Section Error! Reference source not found.) license to research, develop, use, distribute, promote, market, offer for sale, sell and import Products in the Territory solely for and in the Primary Field, provided, that this license is subject to the Lonza Rights solely with respect to the ARDS Field outside of Japan. The foregoing license includes the right to sublicense (a) without consent of ATHX, to Affiliates of Healios and to contractors engaged by Healios or its Affiliates to develop (including to conduct clinical trials) and distribute, promote, market, offer for sale, se11 and import Products in the Primary Field in the Territory and for such purpose and (b) without requiring consent of ATHX but with advance, written notice to ATHX, to all other non-Affiliates of Healios or for any other purpose.

Section 2.2 of the Initial License agreement shall be replaced by the following language:

Subject to the terms and conditions of this Agreement, ATHX grants to Healios under the ATHX MultiStem Background IP, a non-exclusive, non-transferable and non-assignable (except as provided pursuant to Section 19.6) license to make and have made Products worldwide solely for use in the Primary Field in the Territory or for sale to ATHX, its affiliates or licensees provided, that this license is subject to the Lonza Rights solely with respect to the ARDS Field outside of Japan. The foregoing license includes the right to sublicense(a) without consent of ATHX, to Affiliates of Healios and to contractors engaged by Healios or its Affiliate to make and have made Products for such purpose and

(a)

without requiring consent of ATHX , but with advance, written notice to ATHX, to a11 other non-Affiliates of Healios or for any other purpose.

4. Schedules 1 and 2 to the Initial License Agreement as previously amended in the Third Amendment to the License Agreement shall be replaced by the attached Amended Schedules 1 and 2.

Section 3.1 shall be replaced with the following language:

Subject to the terms and conditions of this Agreement, ATHX shall grant, and hereby grants immediately upon the existence of any Foreground IP of ATHX, to Healios, an exclusive, non-transferable and non-assignable (except as provided pursuant to Section 19.6) license under Foreground IP of ATHX to research, develop, use, distribute, promote, market, offer for sale, sell and import Products in the Territory solely for and in the Primary Field provided, that this license is subject to the Lonza Rights solely with respect to the ARDS Field outside of Japan. The foregoing license includes the right to sublicense (a) without consent of ATHX, to Affiliates of Healios and to contractors engaged by Healios or its Affiliate to develop (including to conduct clinical trials) and distribute, promote, market, offer for sale, sell and import Products in the Primary Field in the Territory and for such purpose and (b) without requiring consent of ATHX, but with advance, written notice to ATHX, to all other non-Affiliates of Healios or for any other purpose.

Section 3.2 of the Initial License agreement shall be replaced by the following language:

Subject to the terms and conditions of this Agreement, ATHX grants to Healios under the Foreground IP of ATHX, a non-exclusive, non-transferable and non-assignable (except as provided pursuant to Section 19.6) lice nse to make and have made Products worldwide solely for use in the Primary Field in the Territory or for sale to ATHX, its affiliates or licensees provided that this license is subject to the Lonza Rights solely with respect to the ARDS Field outside of Japan. The foregoing license includes the right to sublicense

(a)

without consent of ATHX, to Affiliates ofHealios and to contractors engaged by Healios or its Affiliate to make and have made Products for such purpose and (b) without requiring consent of ATHX , but with advance, written notice to ATHX, to all other non Affiliates of Healios or for any other purpose.

The first sentence of Section 6.2 shall be replaced as follows:

As between the Patties, ATHX shall have the right to register and maintain the Trademark for the Product at competent authorities in the Territory including the Japan Patent Office and/or other patent or trademark offices as appropriate under the circumstances.

Section 7.5 shall be replaced in its entirety with the following language:

7.5

Healios shall pay to ATHX, in addition to the milestone payments under Sections 7.3 and 7.4, the following ("ARDS Development Milestone Payments"), which shall be non-refundable, non-creditable towards future royalties or any other payments due from Healios under this Agreement:

(a)

$10,000,000 US Dollars within 30 days filing for Conditional Approval or Full Approval for the first ARDS Product in Japan; and

(b)

at Healios' election within 30 days after the first Conditional Approval or Full Approval of any ARDS Product in Japan, either:

(i)

(A)$15,000,000 US Dollars upon the first Net Sales in Japan of any ARDS Product after a Conditional Approval; and

(B)

$25,000,000 US Dollars upon the first Net Sales in Japan of any ARDS Product after a Full Approval;

(ii)

(A) $20,000,000 US Dollars upon (x) Conditional Approval or (y) Full Approval obtained without a prior Conditional Approval of an ARDS Product; and

(B)

$10,000,000 US Dollars upon Net Sales of ARDS Products of¥12,000,000,000 Japanese Yen (JPY);

provided, however, that if a payment under Section 7.5(b)(ii)(A) is not made within 30 days after the first Conditional Approval or Full Approval of an ARDS Product in Japan, then Healios shall be deemed to have elected the foregoing option under Section 7.5 (b)(i);

(c)

$15,000,000 US Dollars within 30 days of receiving Conditional Approval or Full Approval for the first ARDS Product in the United States; and

(d)

$5,000,000 US Dollars within 30 days of receiving Conditional Approval or Fu ll Approval for the first ARDS Product in the European Union.

(e)

$5,000,000 US Dollars within 30 days of receiving Conditional Approval or Full Approval for the first ARDS Product in the first country outside of Japan, the United States, and the European Union.

Section 7.6 shall be replaced in its entirety with the following:

Healio s s hall pay to ATHX the following sales milestone payments upon first achievement of the Net Sales of ARDS Products provided in Table 7.6.1 with respect to Net Sales in Japan (the "Japan ARDS Sales Milestone Payments") and Table 7.6.2 with respect to Net Sales in the rest of the world (i.e., anywhere but Japan) (the "Restof World ARDS Sales Milestone Payments"). The milestone payments set forth in Tables 7.6.l and 7.6.2 shall be non refundable, non-creditable towards future royalties or any other payments due from Healios under this Agreement and shall be due within 45 days from the end of the calendar quarter in which the milestone is achieved:

Table 7.6.1-Japan ARDS Sales Milestone Payments
Net Sales of Products in Japan	Milestone Payment
≥ 75 ,000,000,000 JPY in the ARDS Field in any 4 consecutive calendar quarters.	$25,000,000 US Dollars
≥125,000,000,000 JPY in the ARDS Fie ld in any 4 consecutive calendar quarters.	$50,000,000 US Dollars
≥ 200 ,000 ,000 ,000 JPY in the ARDS Field in any 4 consecutive calendar quarters.	$100,000,000 US Dollars

Table 7.6.2-Rest of World ARDS Sales Milestone Payments
Net Sales of Products outside Japan	Milestone Payment
≥$100,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$2,500,000 US Dollars
≥$200,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$5,000,000 US Dollars
≥$400,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$10,000,000 US Dollars
≥$600,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$15,000,000 US Dollars
≥$750,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$17,500,000 US Dollars
≥$1,000,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$25,000,000 US Dollars
≥$2,000,000,000 US Dollars in the ARDS Field in any 4 consecutive calendar quarters.	$50,000,000 US Dollars

10.

Section 7.8 shall be replaced in its entirety with the following:

7.8

Royalties will be addressed as follows:

(a)

As partial consideration for the rights granted, and in addition to any payments due under Sections 7.1 -7.7, Healios shall pay to ATHX royalties on the portion of Net Sales of Products in a calendar year at the rates set forth in Table 7.8 below on (i) all Net Sales in Japan of 3D product, whether as an ARDS Product or lschemic Stroke Product, and (ii) all Net Sales in Japan of 2D Products starting six (6) years after the first sale following Conditiona l Approval or Full Approval of any ARDS Product or lschemic Stroke Product in the Territory.

Table 7.8 -Royalty Rates for Japan
Net Sales of Products in Japan	Royalty Rate
≤20 billion JPY	10%
> 20 billion and ≤ 30 billion JPY	12%
> 30 billion and ≤ 40 billion JPY	14 %
> 40 billion and ≤ 50 billion JPY	16%
> 50 billion JPY	18%

The foregoing rates will be applied on an incremental basis throughout a calendar year. For examp le, if Net Sales for a certain calendar year is JPY 22 billion, the royalty will be: (JPY 20 billion) x 0.l 0+(JPY 2 billion) x 0.12 =JPY 2.24 billion.

Healios shall pay to ATHX royalties on the portion of Net Sales of ARDS Products outside of Japan in a calendar year at a rate of 5%. Royalties shall be payable from the first commercial sale until the last to expire of the ATHX MultiStem Background Patents and ATHX MAPC Background Patents collectively in a given jurisdiction or, if no ATHX MultiStem Background Patents and/or ATHX MAPC Background Patents have issued in a given jurisdictio n, as to that jurisdiction, ten (10) years from the first commercial sale.

(b)

The term "AGM' means the average gross margin (Net Sales minus cost of goods sold) per unit of 2D Product as calculated for a calendar quarter by Healios in accordance with IFRS as consistently applied. Subject to Section 7.8(a) above, until 3 years after the first sale following Conditional Approval or Full Approval of any 2D Product, whether as an ARDS Product or Ischemic Stroke Product, for each 2D Product for whic h the AGM is (i) greater than 5.5 million JPY, Healios will pay to ATHX the amount of royalties that would be due if calculated under Section 7.8(a) above ("Full Royalties" ) for s uch sales and (ii) less than 5.5 million JPY, Healio s w ill pay to ATHX royalties based upon the following formula:

Royalties = Greater of (1) zero and (2) (Full Royalties minus AGM Reduction) wherein,

"AGM Reduction " is equal to A minus B, wherein "A" is eq ual to 5.5 million JPY multiplied by the number of 2D Products sold during the calendar quarter being reported, and "B" is equal to the actual AGM of such 2D Products multiplied by such number of Products.

For the avoidance of any doubt, if during such 3-year period Healios begins sales of 3D Product in Japan, then Full Royalties will accrue as to such 3D Product.

(c)

Subject to Section 7.8(a) above, upon and after 3 years after the first sale following Conditi ona l Approval or Fu ll Approval of any 2D Product, whether as

an ARDS Product or Jschemic Stroke Product , the royalties due shall be calculated as the greater of(i) the royalties that would be due if calculated under Section 7.8(b) above or (ii) the amount that would be due if calculated under Section 7.8(a) using royalty rates at 50% of the Full Royaltie s. For the avoidance of any doubt, if during such 3-yearperiod Healios begins sales of 3D Product in Japan, then Full Royalties will accrue as to such 3D Product.

11.

Section 8.1 shall be replaced with the following language:

8.l Healios shall be responsible to file applications for and to obtain and hold Conditional Approvals and Full Approvals for the Products in the Territory applicable to such Products, as well as application for regulatory price listings for the Products in the Territory applicable to such Products if required. Healios shall be the responsible Patty for funding and conducting all clinical studies for the Products in the Territory applicable to such Products. ATHX, at its discretion upon the request of Healios, will consult with and provide information and advice to Healios to support Healios' regulatory and development activities within the Primary Field.

12.

The first sentence of Sect io n 8.2 shall be replaced by the following language:

ATHX remains responsible to file applications for approval and to obtain and hold all regulatory app rovals for Products in the Primary Field outside the Territory applicable to such Products, at its discretion.

13.

Section 9 shall be replaced with the followi ng language:

9.1 In order to develop, to file applications for and to obtain and hold Conditional Approvals and Full Approvals for the Products in the Territory as smoothly and expeditiously as possible, ATHX and Healios shall establish a Joint Development Committee (the "JDC ' ) as a body for discussion and decision about all important courses of action to take in due course after the Effective Date; provided that ATHX shall not be in breach if it is unable to fulfill its obligations as a result of insufficient staff or financial resources and during the period that such condition exists Healios will have the right to make the decisions which the JDC is empowered to make.

9.2

Agenda of the JDC will cover the following:

(a) Determination of an overall development plan of Products in the Territory and the life cycle management such as commencement and/or discontinuance of development of such Products in the Territory;

(b) Reporting and review of the progress of the development plan of Products in the Territory, and revision, if necessary, of such plan; and

(c)

Reporting and review of the application strategy for the approval of the Products in the Territoryand the strategy for filing of application thereof and for the NHI Price listings.

9.3 The JDC shall consist of 6 representatives appointed respectively by each Party, 3 representatives from ATHX and 3 representatives from Healios. Such representatives shall be at a senior management level, and may be changed by either Party appointing them. A chairperson of the JSC shall be appointed by Healios from its representatives.

9.4 The meetings of the JDC shall be held twice per year as an ordinary meeting and at any time upon reasonable request from either Party as an extraordinary meeting for any urgent matters.

9.5 In the case of failure to form unanimity in the JDC, decisions shall be made by vote as follows: (i) ATHX representatives will collectively have one vote; (ii) Healios representatives will collectively have one vote; and (iii) in the event of a tie, the chairperson of the JDC will have the tie-breaking vote, subject to Section 0.

9.6 When a decision of JDC is reasonably expected to have a material effect on ATHX's develop ment, reimbursement, pricing or commercialization outside the Primary Field or the Territory, the chairperson of the JDC shall fairly and reasonably consider the material effect of such a decision. When either Party is dissatisfied with the judgment, the Party may submit such dispute to mediation in accordance with the mediation rules of the International Chamber of Commerce. The place of mediation shall be Tokyo. The language to be used in the mediation shall be English. If the Paities cannot agree upon the course of action to be taken as a result of such mediation, either Party may submit the dispute for final resolution by arbitration pursuant to Section Error! Reference source not found.. Unless and until such dispute is finally resolved by such arbitration or the Parties otherwise mutual agree as to the action to be taken (or not taken) regarding the disputed subject, the judgment shall have no effect and neither Party may take such action (or refrain from taking such action) that was the subject of such judgment.

14.

Section 14.4 shall be replaced with the following language:

Healios shall use commercially reasonable efforts to develop and achieve approval for the Ischemic Stroke Products in the lschemic Stroke Field in the Territory and the

ARDS Products in the ARDS Field in the Territory. Following any such approval, Healios shall use commercially reasonable efforts to commercialize such Products in the Primary Field throughout the Territory. Without limiting the foregoing, if Healios for a period of 12 months fails to (a) engage in any material development activities to obtain approval of Products in at least one country in the Tenitory or (b) commercialize, promote, market, distribute, offer for sale and sell Products in at least one country in the Territory, such failure shall constitute a breach of this Section and a material breach of this Agreement subject to termination under Section 13.3. In any such event, ATHX may elect to terminate this Agreement in its entiretyor in part only with respect to the particular subset of Products that are the subject of the breach.

Upon execution of this Fifth Amendment by the Parties, this Fifth Amendment shall be made a part of and shall be incorporated by reference into the Initial License Agreement. All defined terms used but not defined in this Fifth Amendment shall have the meanings ascribed to them in

the Initial License Agreement or in previous amendments to the Initial License Agreement. All terms and conditions of the Initial License Agreement not amended hereby shall remain in full force and effect and are hereby ratified by the Parties.

IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed by their duly authorized officers upon the date set out below.

ABT Holding Company		Healios K.K.
By: /s/ Daniel Camardo		By: /s/ Tadahisa Kogimoto
Date: October 10, 2023		Date: October 10, 2023
Name: Daniel Camardo		Name: Tadahisa Kagimoto
Title: CEO		Title: CEO

UNDERTAKING AND GUARANTEE BY ATHERSYS, INC.

Athersys, Inc. hereby irrevocably guarantees the performance of all of ATHX's obligations under this Agreement.

Athersys, Inc.

By: /s/ Daniel Camardo

Date: October 10, 2023

Name: Daniel Camardo

Title: CEO

Exhibit 2

Assignment Agreement for ARDS Clinical Doses

This Assignment Agreement for ARD S Clini cal Doses (" A ssi gnment Agreement") is made and entered into as of October 10 , 2023 (" Effective Date") between ABT Holding Company (" A TH X"), a Delaware corporation having its principal place of business at 3201Carnegie Avenue, Cleveland, OH 44115 and a wholly-owned subsidiary of A thersys, Inc. (" Athersys"), and

HEALIOS, K.K. (" Healios"), a Japanese company having its principal place of busin essat Hibiya

Mitsui Tower 12F, 1-1-2 Yurakucho Chiyoda-ku, Tokyo 100-0006, Japan, and solely with respect to the guarantee set forth herein, Athersys.

WHEREAS, the Parties entered into the Initial License Agreement effective as of January 8, 2016, which was subsequently amended pursuant to (1) the First Amendment to License Agreement dated July 21, 2017; (2) the Second Amendment to License Agreement dated September 19, 2017;

WHEREAS, the Parties are entering concurrently with this Assignment Agreement a Memorandum of Understanding Regarding Expansion of Healios Territory and Clinical Supply for ARDS (the "MOU") under which ATH X agrees to assi gn certain doses of 3D Product to Healios currently held by ATHX at a facility controlled by Lonza Singapore (the " L onza 3D Product");

NOW, THEREFORE, The Parties agree and ATHX undertakes as follows:

ATHX warrants and represents that it has:

good and valid title to the Lonza 3D Product and the Lonza 3D Product is not subject to any lien, pledge, mortgage, security interest, option, transfer restriction or other encumbrance whatsoever; and

the full right, power, authority and capacity to transfer title to the Lonza 3D Product to Healios.

2. In exchange for the consideration set forth in the M OU , ATHX hereby sells, assigns, grants, conveys and transfers to Healios all right, title and interest in and to the following Lonza 3D Product:

[***] clinical doses of the Lonza 3D Product;

[***] placebo doses of the Lonza 3D Product; and

[***] vials of the Lonza 3D Product for ongoing stability testing.

3. This Assignment Agreement shall be governed by and construed under the Laws of State of New York without regard to its choice of law principles to the extent they would mandate the law of any other jurisdiction.

4. ATHX shall execute and deliver, at the reasonable request of Healios, such additional documents, instruments, conveyances and assurances and take such further actions as Healios may reasonably request to carry out the provisions of this Assignment and give effect to the transactions contemplated therein.

IN WITNESS WHEREOF the Parties have caused this Assignment to be executed by their duly authorized officers upon the date set out below.

ABT Holding Company		Healios K.K.
By: /s/ Daniel Camardo		By: /s/ Tadishia Kagimoto
Date: October 10, 2023		Date: October 10, 2023
Name: Daniel Camardo		Name: Tadahisa Kagimoto
Title: CEO		Title: CEO

UNDERTAKING AND GUARANTEE BY ATHERSYS, INC.

Athersys, Inc. hereby irrevocably guarantees the performance of all of ATHX' s obligations under this Agreement.

Athersys, Inc.

By: /s/ Daniel Camardo

Date: October 10, 2023

Name: Daniel Camardo

EXHIBIT 31.1

CERTIFICATIONS

I, Daniel Camardo., certify that:

I have reviewed this quarterly report on Form 10-Q of Athersys, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


	Date: November 16, 2023

	/s/ Daniel Camardo
	Daniel Camardo
	Chief Executive Officer

EXHIBIT 31.2

CERTIFICATIONS

I, Kasey Rosado, certify that:

I have reviewed this quarterly report on Form 10-Q of Athersys, Inc.;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


	Date: November 16, 2023

	/s/ Kasey Rosado
	Kasey Rosado
	Interim Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Athersys, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.


Date: November 16, 2023

	/s/ Daniel Camardo
	Name: Daniel Camardo
	Title: Chief Executive Officer


Date: November 16, 2023

	/s/ Kasey Rosado
	Name: Kasey Rosado
	Title: Interim Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

Document And Entity Information - shares	9 Months Ended
Document And Entity Information - shares	Sep. 30, 2023	Nov. 10, 2023
Document Information [Line Items]
Entity Central Index Key	0001368148
Entity Registrant Name	ATHERSYS, INC / NEW
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-33876
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-4864095
Entity Address, Address Line One	3201 Carnegie Avenue
Entity Address, City or Town	Cleveland
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44115-2634
City Area Code	216
Local Phone Number	431-9900
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		61,718,815

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 1,020	$ 9,038
Prepaid clinical trial costs	0	2,747
Prepaid expenses and other	1,210	1,034
Total current assets	2,230	13,535
Operating right-of-use assets, net	26	7,846
Property and equipment, net	4,236	4,214
Other Assets	936	2,136
Total assets	7,428	27,731
Current liabilities:
Accounts payable	9,295	27,765
Deferred accounts payable to Supplier	7,862	0
Operating lease liabilities, current	7,792	746
Accrued compensation and related benefits	890	1,090
Accrued clinical trial related costs	360	7,231
Accrued expenses and other	1,490	1,078
Note Payable	10,785	0
Deferred revenue - Healios	150	0
Warrant liability	0	534
Total current liabilities	38,624	38,444
Operating lease liabilities, non-current	0	7,939
Stockholders’ equity:
Preferred stock, at stated value; 10,000,000 shares authorized, and no shares issued and outstanding at September 30, 2023 and December 31, 2022	0	0
Common stock, $0.001 par value; 600,000,000 shares authorized with 26,758,431 and 17,986,147 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	27	18
Additional paid-in capital	642,754	632,009
Accumulated deficit	(680,384)	(655,878)
Accumulated other comprehensive income	1,208	0
Total stockholders’ deficit	(36,395)	(23,851)
Total liabilities and stockholders’ equity	7,428	27,731
Affiliated Entity [Member]
Current assets:
Accounts receivable from Healios	0	716
Current liabilities:
Advance from Healios	$ 5,199	$ 5,199

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	600,000,000	600,000,000
Common stock, shares issued (in shares)	26,758,431	17,986,147
Common stock, shares outstanding (in shares)	26,758,431	17,986,147

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Revenues

Contract revenue from Healios

$ 0

$ 65

$ 49

$ 5,294

Total revenues

5,294

Costs and expenses

Research and development

3,995

12,424

19,111

54,162

General and administrative

2,808

3,737

7,968

12,999

Depreciation

977

617

1,072

1,482

Total costs and expenses

7,780

16,778

28,151

68,643

Loss from operations

(7,780)

(16,713)

(28,102)

(63,349)

Other income, net1

^[1]

4,009

3,044

3,596

3,816

Net loss

$ (3,771)

$ (13,669)

$ (24,506)

$ (59,533)

Net loss per share, basic and diluted (in dollars per share)

$ (0.15)

$ (1.15)

$ (1.16)

$ (5.58)

Weighted average shares outstanding, basic and diluted (in shares)

24,492

11,855

21,184

10,676

Other comprehensive income

Net loss

$ (3,771)

$ (13,669)

$ (24,506)

$ (59,533)

Fair value change due to company credit risk

1,208

Total Other comprehensive income

1,208

Net loss and comprehensive loss

$ (2,563)

$ (13,669)

$ (23,298)

$ (59,533)

[1]	See Footnote 10 for components of other income, net

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2021	0	9,713,767
Balance at Dec. 31, 2021	$ 0	$ 10	$ 599,703	$ 0	$ (583,344)	$ 16,369
Stock-based compensation	$ 0	$ 0	1,410	0	0	1,410
Issuance of common stock under equity compensation plan (in shares)	0	148,611
Issuance of common stock under equity compensation plan	$ 0	$ 0	(58)	0	0	(58)
Net loss	$ 0	$ 0	0	0	(22,216)	(22,216)
Issuance of common stock (in shares)	0	129,333
Issuance of common stock	$ 0	$ 0	4,803	0	0	4,803
Stock Issued During Period, Shares, New Issues (in shares)	0	129,333
Balance (in shares) at Mar. 31, 2022	0	9,991,711
Balance at Mar. 31, 2022	$ 0	$ 10	605,858	0	(605,560)	308
Balance (in shares) at Dec. 31, 2021	0	9,713,767
Balance at Dec. 31, 2021	$ 0	$ 10	599,703	0	(583,344)	16,369
Net loss						(59,533)
Other comprehensive income						0
Balance (in shares) at Sep. 30, 2022	0	12,933,736
Balance at Sep. 30, 2022	$ 0	$ 13	626,252	0	(642,877)	(16,612)
Balance (in shares) at Mar. 31, 2022	0	9,991,711
Balance at Mar. 31, 2022	$ 0	$ 10	605,858	0	(605,560)	308
Stock-based compensation	$ 0	$ 0	1,945	0	0	1,945
Issuance of common stock under equity compensation plan (in shares)	0	227,955
Issuance of common stock under equity compensation plan	$ 0	$ 0	(40)	0	0	(40)
Net loss	$ 0	$ 0	0	0	(23,648)	(23,648)
Issuance of common stock (in shares)	0	784,724
Issuance of common stock	$ 0	$ 1	9,697	0	0	9,698
Stock Issued During Period, Shares, New Issues (in shares)	0	784,724
Balance (in shares) at Jun. 30, 2022	0	11,004,390
Balance at Jun. 30, 2022	$ 0	$ 11	617,460	0	(629,208)	(11,737)
Stock-based compensation	$ 0	$ 0	2,001	0	0	2,001
Issuance of common stock under equity compensation plan (in shares)	0	9,346
Issuance of common stock under equity compensation plan	$ 0	$ 0	(33)	0	0	(33)
Net loss	$ 0	$ 0	0	0	(13,669)	(13,669)
Issuance of common stock (in shares)	0	1,200,000
Issuance of common stock	$ 0	$ 1	4,592	0	0	4,593
Other comprehensive income						0
Stock Issued During Period, Shares, New Issues (in shares)	0	1,200,000
Pre-funded warrant exercise (in shares)	0	720,000
Pre-funded warrant exercise	$ 0	$ 1	2,232	0	0	2,233
Balance (in shares) at Sep. 30, 2022	0	12,933,736
Balance at Sep. 30, 2022	$ 0	$ 13	626,252	0	(642,877)	(16,612)
Balance (in shares) at Dec. 31, 2022	0	17,986,147
Balance at Dec. 31, 2022	$ 0	$ 18	632,009	0	(655,878)	(23,851)
Stock-based compensation	$ 0	$ 0	707	0	0	707
Stock Issue- warrant exercise (in shares)	0	344,170
Stock Issue- warrant exercise	$ 0	$ 0	0	0	0	0
Issuance of common stock under equity compensation plan (in shares)	0	118,172
Issuance of common stock under equity compensation plan	$ 0	$ 0	(56)	0	0	(56)
Net loss	$ 0	$ 0	0	0	(7,811)	(7,811)
Balance (in shares) at Mar. 31, 2023	0	18,448,489
Balance at Mar. 31, 2023	$ 0	$ 18	632,660	0	(663,689)	(31,011)
Balance (in shares) at Dec. 31, 2022	0	17,986,147
Balance at Dec. 31, 2022	$ 0	$ 18	632,009	0	(655,878)	(23,851)
Net loss						(24,506)
Other comprehensive income						1,208
Balance (in shares) at Sep. 30, 2023	0	26,758,431
Balance at Sep. 30, 2023	$ 0	$ 27	642,754	1,208	(680,384)	(36,395)
Balance (in shares) at Mar. 31, 2023	0	18,448,489
Balance at Mar. 31, 2023	$ 0	$ 18	632,660	0	(663,689)	(31,011)
Stock-based compensation	$ 0	$ 0	568	0	0	568
Stock Issue- warrant exercise (in shares)	0	813,000
Stock Issue- warrant exercise	$ 0	$ 1	(1)	0	0	0
Issuance of common stock under equity compensation plan (in shares)	0	257,358
Issuance of common stock under equity compensation plan	$ 0	$ 0	(75)	0	0	(75)
Net loss	$ 0	$ 0	0	0	(12,924)	(12,924)
Issuance of common stock (in shares)	0	2,315,000
Issuance of common stock	$ 0	$ 2	3,336	0	0	3,338
Warrant Liability	$ 0	$ 0	2,685	0	0	2,685
Stock Issued During Period, Shares, New Issues (in shares)	0	2,315,000
Balance (in shares) at Jun. 30, 2023	0	21,833,847
Balance at Jun. 30, 2023	$ 0	$ 21	639,173	0	(676,613)	(37,419)
Stock-based compensation	$ 0	$ 0	646	0	0	646
Stock Issue- warrant exercise (in shares)	0	557,000
Stock Issue- warrant exercise	$ 0	$ 1	(1)	0	0	0
Issuance of common stock under equity compensation plan (in shares)	0	155,084
Issuance of common stock under equity compensation plan	$ 0	$ 1	(51)	0	0	(50)
Net loss	$ 0	$ 0	0	0	(3,771)	(3,771)
Issuance of common stock (in shares)	0	4,212,500
Issuance of common stock	$ 0	$ 4	2,987	0	0	2,991
Other comprehensive income	$ 0	$ 0	0	1,208	0	1,208
Stock Issued During Period, Shares, New Issues (in shares)	0	4,212,500
Balance (in shares) at Sep. 30, 2023	0	26,758,431
Balance at Sep. 30, 2023	$ 0	$ 27	$ 642,754	$ 1,208	$ (680,384)	$ (36,395)

Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating activities
Net loss	$ (13,669)	$ (24,506)	$ (59,533)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	617	1,072	1,482
Gain on debt extinguishment	0	(2,611)	0
Loss from impairment of assets		7,746	5,435
Allowance for doubtful accounts		664	0
Stock-based compensation		1,921	5,356
Change in Paid-in-Kind (PIK) Interest Accrual		568	0
Change in fair value of Note Payables	(0)	(3,192)	0
Gain on sale of assets		0	(11)
Loss on abandonment of fixed assets		427	0
Change in fair value of warrant liabilities	(2,784)	2,151	(2,784)
Issuance costs allocated to warrant liabilities	500	0	560
Changes in operating assets and liabilities:
Accounts receivable from Healios - billed and unbilled		52	3,754
Prepaid expenses, deposits and other		(163)	(1,262)
Accounts payable, accrued expenses and other		1,323	4,472
Accounts payable to Healios		0	(1,119)
Deferred revenue - Healios		150	(3,340)
Net cash used in operating activities		(14,398)	(46,990)
Investing activities
Proceeds from the sale of equipment		227	41
Purchases of equipment		0	(2,044)
Net cash provided (used) in investing activities		227	(2,003)
Financing activities
Proceeds from issuance of common stock, net of issuance cost		0	14,500
Proceeds from the issuance of common stock and warrants, net of issuance cost		6,334	10,997
Proceeds from the exercise of pre-funded warrants		1	2
Shares retained for withholding tax payments on stock-based awards		(182)	(131)
Net cash provided by financing activities		6,153	25,368
Decrease in cash and cash equivalents		(8,018)	(23,625)
Cash and cash equivalents at beginning of the period		9,038	37,407
Cash and cash equivalents at end of the period	$ 13,782	1,020	13,782
Noncash financing activities
Issuance of warrants			413
Reclass of warrant liability to additional paid-in capital upon exercise		$ 2,685	$ 2,231

Note 1 - Background and Basis of Presentation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. Background and Basis of Presentation

Organization

Basis of Presentation

Reverse Stock Split

Note 2 - Going Concern

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Substantial Doubt about Going Concern [Text Block]

2. Going Concern

Note 3 - Accounting Standards Adopted

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

3. Accounting Standards Adopted

Note 4 - Net Loss Per Share

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

4. Net Loss per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of our common stock outstanding during the period.

The following instruments were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive.

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

Stock options

1,119,369

1,280,173

1,119,369

1,280,173

Restricted stock units

301,029

103,065

301,029

103,065

Convertible Note - refer to Note 11

11,538,461

—

11,538,461

—

Warrants - refer to Note 8

45,714,090

3,920,000

45,714,090

4,320,000

Total

58,672,949

5,303,238

58,672,949

5,703,238

Note 5 - Property and Equipment, Net

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

5. Property and Equipment, net

	*For the periods ended*
	*September 30,*			December 31,
Property and equipment consists of (in thousands):	*2023*			2022
Laboratory equipment	$	8,352		$	7,576
Office equipment and leasehold improvements		3,398			3,934
Equipment not yet in service		2,850			2,313
		14,600			13,823
Accumulated depreciation and amortization		(10,364	)		(9,609	)
	$	4,236		$	4,214

Note 6 - Collaborative Arrangements and Revenue Recognition

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Collaborative Arrangement Disclosure [Text Block]

6. Collaborative Arrangements and Revenue Recognition

Healios Collaboration

Healios Revenue Recognition

Accounts receivable from Healios

Deferred Revenue - Healios

Advance from Healios

Disaggregation of Revenues

	*Three months ended*				Three months ended
	*September 30, 2023*				September 30, 2022
	*Point in*				Point in
	*Time*		*Over Time*		Time		Over Time
Contract Revenue from Healios
Product supply revenue	$	—	$	—	$	—	$	—
Service revenue		—		—		—		65
Total disaggregated revenues	$	—	$	—	$	—	$	65

	*Nine months ended*				Nine months ended
	*September 30, 2023*				September 30, 2022
	*Point in*				Point in
	*Time*		*Over Time*		Time		Over Time
Contract Revenue from Healios
Product supply revenue	$	49	$	—	$	—	$	—
Service revenue		—		—		—		5,294
Total disaggregated revenues	$	49	$	—	$	—	$	5,294

Note 7 - Stock-based Compensation

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

7. Stock-Based Compensation

Note 8 - Stockholders' Equity and Warrants

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Equity [Text Block]

8. Stockholders’ Equity and Warrants

August 2022 Securities Purchase Agreement

November 2022 Securities Purchase Agreement

April 2023 Securities Purchase Agreement

August 2023 Securities Purchase Agreement

Healios 2021 Warrants

Equity Purchase Agreement

During quarter ended September 30, 2022, we sold no shares to Aspire Capital.

Note 9 - Fair Value Measurements

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9. Fair Value Measurements

Liabilities Measured at Fair Value on a Recurring Basis

	Warrant Liabilities
Balance December 31, 2022	$	(534	)
Fair Value Adjustment - March 31, 2023		(629	)
Balance March 31, 2023		(1,163	)
Fair Value Adjustment - April 18, 2023		(1,522	)
Reclassification to Additional paid in capital		2,685
Balance June 30, 2023	$	—

	*Note Payable*			*Credit Risk Change*			*Accrued Interest*			*Total Fair Value*
Balance March 31, 2023	$—			$—			$—			$—
Initial Transaction Fair Value - May 17		15,000			—			—			15,000
Accrued Paid-in-Kind (PIK) Interest as of June 30, 2023		—			—			185			185
Fair Value Adjustment - June 30, 2023		640			—			—			640
Balance June 30, 2023		15,640			—			185			15,825
Accrued Paid-in-Kind (PIK) Interest added to Principal		185			—			(185	)		—
Accrued Paid-in-Kind (PIK) Interest as of September 30, 2023		—			—			383			383
Fair Value Adjustment - September 30, 2023		(3,832	)		(1,208	)		—			(5,040	)
Balance September 30, 2023	$	11,993		$	(1,208	)	$	383		$	11,168

Note 10 - Other Income and Expense

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Other Nonoperating Income and Expense [Text Block]

10. Other Income and Expense

Other (expense) income consists of loss from extinguishment of debt, interest expense, foreign exchange gain/(loss), fair value change from warrants, gain/(loss) on disposal of assets and other.

	*Three months ended*						*Nine months ended*
	*September 30,*						*September 30,*
	*2023*			2022			*2023*			2022
Gain/(Loss) from extinguishment of debt	$	—		$	—		$	2,611		$	—
Change in fair value - note payable		3,832			—			3,192			—
Interest expense		(211	)		44			(545	)		31
Foreign exchange gain/(loss)		287			631			109			915
Fair value change - warrants		—			2,784			(2,151	)		2,784
Gain/(Loss) on disposal of assets		(467	)		11			(321	)		11
Other		568			(426	)		701			75
	$	4,009		$	3,044		$	3,596		$	3,816

Note 11 - Forbearance Agreement and Convertible Note

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Long-Term Debt [Text Block]

11. Forbearance Agreement and Convertible Note

The Note is an unsecured obligation. The Note is unconditionally and irrevocably guaranteed by certain guarantors.

An Event of Default is defined in the Agreement as any of the following:

Company defaults in the payment of principal, accrued and unpaid interest or any other amounts owing under the Note

Any representation or warranty made by the Company proves to have been false

The Company defaults in the performance of, or fails to comply with, any other terms, provision, condition, covenant or agreement contained in the Note

Company files for bankruptcy

Court appoints a custodian, receiver, trustee or other officer for dissolution, winding-up, or liquation of the Company

One or more judgments for payment of money in excess of $3 million shall be rendered against the Company

Note 12 - Restructuring Charges

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Restructuring and Related Activities Disclosure [Text Block]

12. Restructuring Charges

	*Balances*				*Cash*			*Balances*
	*January 1, 2023*		*Charges*		*(payments)*			*September 30, 2023*
Employee severance and benefits	$	935	$	—	$	(621	)	$	314
Legal and professional fees		35		61		(65	)		31
Other		15		—		(15	)		—
	$	985	$	61	$	(701	)	$	345

	*Balances*				*Cash*			*Balances*
	*June 30, 2023*		*Charges*		*(payments)*			*September 30, 2023*
Employee severance and benefits	$	314	$	—	$	—		$	314
Legal and professional fees		27		30		(26	)		31
Other		—		—		—			—
	$	341	$	30	$	(26	)	$	345

The current portion of our restructuring accrual is included in accrued compensation and related benefits and accounts payable and there is no long-term portion of our restructuring accrual.

Restructuring charges are recorded general and administrative costs and expenses for the three months ended September 30, 2023.

Note 13 - Income Taxes

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13. Income Taxes

Note 14 - Subsequent Events

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Subsequent Events [Text Block]

14. Subsequent Events

Animal Health Transaction

Healios Update

Nasdaq Notices

The Company’s common stock is currently quoted on the Pink Open Market tier operated by OTC Markets Group, Inc. under the symbol “ATHX.”

Warrant Inducement Offer, Warrant Restructure Transaction, and Related Agreements

Biomedical Advanced Research and Development (BARDA)

On October 13, 2023, BARDA notified the Company that MultiStem has not been selected for inclusion in the BARDA-Sponsored Clinical Trial.

Significant Accounting Policies (Policies)	9 Months Ended
Significant Accounting Policies (Policies)	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Accounting, Policy [Policy Text Block]	Basis of Presentation The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on April 3, 2023. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments and disclosures that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our critical accounting policies, estimates and assumptions are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this Quarterly Report on Form 10-Q in Part I, Item 2.
Stockholders' Equity, Policy [Policy Text Block]	Reverse Stock Split On August 26, 2022, the Company amended its Certificate of Incorporation to implement a 1-for-25 reverse stock split of its common stock. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company adjusted the share amounts under its employee equity incentive plans, inducement awards and common stock warrant agreements with third parties. All disclosures of common shares and per common share data in the accompanying interim financial statements and related notes reflect the reverse stock split for all periods presented.

Note 4 - Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

Three months ended

Nine months ended

September 30,

2023

2022

2023

2022

Stock options

1,119,369

1,280,173

1,119,369

1,280,173

Restricted stock units

301,029

103,065

301,029

103,065

Convertible Note - refer to Note 11

11,538,461

—

11,538,461

—

Warrants - refer to Note 8

45,714,090

3,920,000

45,714,090

4,320,000

Total

58,672,949

5,303,238

58,672,949

5,703,238

Note 5 - Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Property, Plant and Equipment [Table Text Block]

	*For the periods ended*
	*September 30,*			December 31,
Property and equipment consists of (in thousands):	*2023*			2022
Laboratory equipment	$	8,352		$	7,576
Office equipment and leasehold improvements		3,398			3,934
Equipment not yet in service		2,850			2,313
		14,600			13,823
Accumulated depreciation and amortization		(10,364	)		(9,609	)
	$	4,236		$	4,214

Note 6 - Collaborative Arrangements and Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	*Three months ended*				Three months ended
	*September 30, 2023*				September 30, 2022
	*Point in*				Point in
	*Time*		*Over Time*		Time		Over Time
Contract Revenue from Healios
Product supply revenue	$	—	$	—	$	—	$	—
Service revenue		—		—		—		65
Total disaggregated revenues	$	—	$	—	$	—	$	65

	*Nine months ended*				Nine months ended
	*September 30, 2023*				September 30, 2022
	*Point in*				Point in
	*Time*		*Over Time*		Time		Over Time
Contract Revenue from Healios
Product supply revenue	$	49	$	—	$	—	$	—
Service revenue		—		—		—		5,294
Total disaggregated revenues	$	49	$	—	$	—	$	5,294

Note 9 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2023

Notes Payable to Banks [Member]

Notes Tables

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	*Note Payable*			*Credit Risk Change*			*Accrued Interest*			*Total Fair Value*
Balance March 31, 2023	$—			$—			$—			$—
Initial Transaction Fair Value - May 17		15,000			—			—			15,000
Accrued Paid-in-Kind (PIK) Interest as of June 30, 2023		—			—			185			185
Fair Value Adjustment - June 30, 2023		640			—			—			640
Balance June 30, 2023		15,640			—			185			15,825
Accrued Paid-in-Kind (PIK) Interest added to Principal		185			—			(185	)		—
Accrued Paid-in-Kind (PIK) Interest as of September 30, 2023		—			—			383			383
Fair Value Adjustment - September 30, 2023		(3,832	)		(1,208	)		—			(5,040	)
Balance September 30, 2023	$	11,993		$	(1,208	)	$	383		$	11,168

Warrant [Member]

Notes Tables

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Warrant Liabilities
Balance December 31, 2022	$	(534	)
Fair Value Adjustment - March 31, 2023		(629	)
Balance March 31, 2023		(1,163	)
Fair Value Adjustment - April 18, 2023		(1,522	)
Reclassification to Additional paid in capital		2,685
Balance June 30, 2023	$	—

Note 10 - Other Income and Expense (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of Other Nonoperating Income (Expense) [Table Text Block]

	*Three months ended*						*Nine months ended*
	*September 30,*						*September 30,*
	*2023*			2022			*2023*			2022
Gain/(Loss) from extinguishment of debt	$	—		$	—		$	2,611		$	—
Change in fair value - note payable		3,832			—			3,192			—
Interest expense		(211	)		44			(545	)		31
Foreign exchange gain/(loss)		287			631			109			915
Fair value change - warrants		—			2,784			(2,151	)		2,784
Gain/(Loss) on disposal of assets		(467	)		11			(321	)		11
Other		568			(426	)		701			75
	$	4,009		$	3,044		$	3,596		$	3,816

Note 12 - Restructuring Charges (Tables)

9 Months Ended

Sep. 30, 2023

Notes Tables

Schedule of Restructuring Reserve by Type of Cost [Table Text Block]

	*Balances*				*Cash*			*Balances*
	*January 1, 2023*		*Charges*		*(payments)*			*September 30, 2023*
Employee severance and benefits	$	935	$	—	$	(621	)	$	314
Legal and professional fees		35		61		(65	)		31
Other		15		—		(15	)		—
	$	985	$	61	$	(701	)	$	345

	*Balances*				*Cash*			*Balances*
	*June 30, 2023*		*Charges*		*(payments)*			*September 30, 2023*
Employee severance and benefits	$	314	$	—	$	—		$	314
Legal and professional fees		27		30		(26	)		31
Other		—		—		—			—
	$	341	$	30	$	(26	)	$	345

Note 1 - Background and Basis of Presentation (Details Textual)		9 Months Ended
	Aug. 26, 2022	Sep. 30, 2023
Number of Operating Segments		1
Reverse Stock Split [Member]
Stockholders' Equity Note, Stock Split, Conversion Ratio	25

Note 2 - Going Concern (Details Textual) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Cash and Cash Equivalents, at Carrying Value	$ 1,020	$ 9,038

Note 4 - Net Loss Per Share (Details Textual) - shares	Aug. 31, 2023	Apr. 30, 2023	Nov. 30, 2022	Sep. 30, 2022	Aug. 31, 2022	Aug. 31, 2021
Healios Framework Agreement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)	28,600,000	3,685,000	9,109,090	2,000,000	1,920,000	400,000

Note 4 - Net Loss Per Share - Anti-dilutive Securities (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive securities (in shares)	58,672,949	5,303,238	58,672,949	5,703,238
Share-Based Payment Arrangement, Option [Member]
Antidilutive securities (in shares)	1,119,369	1,280,173	1,119,369	1,280,173
Restricted Stock Units (RSUs) [Member]
Antidilutive securities (in shares)	301,029	103,065	301,029	103,065
Convertible Debt Securities [Member]
Antidilutive securities (in shares)	11,538,461	0	11,538,461	0
Warrant [Member]
Antidilutive securities (in shares)	45,714,090	3,920,000	45,714,090	4,320,000

Note 5 - Property and Equipment, Net (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Impairment, Long-Lived Asset, Held-for-Use			$ 7,900	$ 7,200
Property, Plant and Equipment, Disposals			1,000	0
Restructuring and Related Cost, Accelerated Depreciation	$ 900		400	400
Proceeds from Sale of Property, Plant, and Equipment			300
Gain (Loss) on Disposition of Property Plant Equipment	$ (467)	$ 11	$ (321)	$ 11

Note 5 - Property and Equipment, Net - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Property and equipment, gross	$ 14,600	$ 13,823
Accumulated depreciation and amortization	(10,364)	(9,609)
Property, Plant and Equipment, Net	4,236	4,214
Equipment [Member]
Property and equipment, gross	8,352	7,576
Office Equipment and Leasehold Improvements [Member]
Property and equipment, gross	3,398	3,934
Equipment Not Yet in Service [Member]
Property and equipment, gross	$ 2,850	$ 2,313

Note 6 - Collaborative Arrangements and Revenue Recognition (Details Textual)	1 Months Ended	3 Months Ended		9 Months Ended
	Sep. 30, 2022 USD ($) shares	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($) shares	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($) shares	Aug. 31, 2023 USD ($) shares	Apr. 30, 2023 shares	Nov. 30, 2022 shares	Aug. 31, 2022 shares	Aug. 31, 2021 USD ($) shares	Dec. 31, 2017
Healios Framework Agreement [Member]
Accounts Receivable, after Allowance for Credit Loss, Current		$ 700,000		$ 700,000
Revenue From Contract With Customer, Potential Revenue From Milestones										$ 3,000,000
Revenue From Contract With Customer, Milestones Obligation to Pay										$ 1,100,000
Revenue from Contract with Customer, Including Assessed Tax	$ 1,900,000
Class of Warrant or Right, Outstanding (in shares) \| shares										2
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares) \| shares	2,000,000		2,000,000		2,000,000	28,600,000	3,685,000	9,109,090	1,920,000	400,000
Number of Performance Obligation for Services Necessary for Regulatory Approvals										1
Contract with Customer, Liability, Revenue Recognized		0	$ 0.1	$ 0	$ 2,800,000
Contract with Customer, Performance Obligation Satisfied in Previous Period		$ 0	$ 0
Number of Future Milestones Achieved											2
Healios Framework Agreement [Member] \| Minimum [Member]
Contract with Customer, Asset, Threshold Period Past Due (Day)		30 days		30 days
Healios Framework Agreement [Member] \| Maximum [Member]
Contract with Customer, Asset, Threshold Period Past Due (Day)		45 days		45 days
Healios Memorandum of Understanding [Member]
Contract with Customer, Liability						$ 150,000

Note 6 - Collaborative Arrangements and Revenue Recognition - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Contract revenue from Healios	$ 0	$ 65	$ 49	$ 5,294
Transferred at Point in Time [Member]
Contract revenue from Healios	0	0	49	0
Transferred over Time [Member]
Contract revenue from Healios	0	65	0	5,294
Product [Member] \| Transferred at Point in Time [Member]
Contract revenue from Healios	0	0	49	0
Product [Member] \| Transferred over Time [Member]
Contract revenue from Healios	0	0	0	0
Service [Member] \| Transferred at Point in Time [Member]
Contract revenue from Healios	0	0	0	0
Service [Member] \| Transferred over Time [Member]
Contract revenue from Healios	$ 0	$ 65	$ 0	$ 5,294

Note 7 - Stock-based Compensation (Details Textual) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 27, 2022
Share-Based Payment Arrangement, Expense	$ 0.7	$ 2.0
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 3.2		$ 3.2
Inducement Stock Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Number (in shares)	429,500		429,500
The 2019 Equity and Incentive Compensation Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized (in shares)	3,700,000		3,700,000
Shares Issued, Shares, Share-Based Payment Arrangement, after Forfeiture (in shares)			1,185,543
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant (in shares)	2,095,332		2,095,332	2,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Common Stock, Outstanding, Number (in shares)	990,898		990,898
Expired Incentive Plan [Member]
Shares Issued, Shares, Share-Based Payment Arrangement, after Forfeiture (in shares)			11,289
Share-based Compensation Arrangement by Share-based Payment Award, Common Stock, Outstanding, Number (in shares)	19,084		19,084

Note 8 - Stockholders' Equity and Warrants (Details Textual) - USD ($) $ / shares in Units, $ in Thousands								1 Months Ended	3 Months Ended			9 Months Ended
	Oct. 11, 2023	Aug. 21, 2023	Aug. 17, 2023	Apr. 18, 2023	Nov. 09, 2022	Sep. 22, 2022	Aug. 15, 2022	Aug. 31, 2021	Sep. 30, 2023	Jun. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Oct. 30, 2023	Apr. 17, 2023	Dec. 31, 2022	May 12, 2022	Jun. 30, 2021
Common Stock, Shares Authorized (in shares)									600,000,000		600,000,000	600,000,000	600,000,000			600,000,000
Preferred Stock, Shares Authorized (in shares)									10,000,000		10,000,000	10,000,000	10,000,000			10,000,000
Preferred Stock, Shares Issued (in shares)									0		0	0	0			0
Fair Value Adjustment of Warrants									$ (0)		$ (2,784)	$ 2,151	$ (2,784)
Adjustments to Additional Paid in Capital, Warrant Issued										$ 2,685
Issuance Costs Allocated to Warrant Liabilities											500	0	560
Adjustments to Additional Paid in Capital, Stock Issued, Issuance Costs											$ 400
Proceeds from Warrant Exercises												1	2
August 2022 Pre-Funded Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)							720,000
Number of Warrants Per Unit (in shares)							1
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)							1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)							$ 0.0025
August 2022 Common Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)							1,920,000
Number of Warrants Per Unit (in shares)							1
Warrants and Rights, Exercisable Period (Month)						6 months	6 months
Warrants and Rights Outstanding, Term (Year)						7 years	5 years
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)							1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)							$ 6.385
September Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			2,000,000			2,000,000									1,760,000
Warrants and Rights, Exercisable Period (Month)						6 months
Warrants and Rights Outstanding, Term (Year)						7 years
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)						$ 6.385
August Warrants and September Warrants [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)			$ 0.32												$ 0.96
Fair Value Adjustment of Warrants									$ 0			$ 2,200	2,800
Proceeds from Issuance of Warrants													$ 400
August Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			1,920,000												1,920,000
November 2022 Pre-Funded Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)					1,077,270
Number of Warrants Per Unit (in shares)					1
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)					1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)					$ 0.0001
November 2022 Common Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)					10,009,090
Number of Warrants Per Unit (in shares)					2
Warrants and Rights Outstanding, Term (Year)					5 years
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)					1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)					$ 1.1
April 2023 Pre-Funded Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)				1,370,000
Number of Warrants Per Unit (in shares)				1
Warrants and Rights, Exercisable Period (Month)				6 months
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)				1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)				$ 0.0001
April 2023 Common Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)				3,685,000
Number of Warrants Per Unit (in shares)				1
Warrants and Rights, Exercisable Period (Month)				6 months
Warrants and Rights Outstanding, Term (Year)				7 years
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)				1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)				$ 0.96
August 2023 Pre-funded Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)		6,725,000
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)		1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)		$ 0.0001
Class of Warrant or Right, Outstanding (in shares)									6,725,000			6,725,000
August 2023 Series A Common Stock Purchase Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)		10,937,500
Warrants and Rights Outstanding, Term (Year)		5 years
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)		1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)		$ 0.32
August 2023 Series B Common Stock Purchase Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)		10,937,500
Warrants and Rights Outstanding, Term (Year)		1 year 6 months
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)		1
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)		$ 0.32
Inducement Warrant Shares [Member] \| Subsequent Event [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)	56,249,080
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)	$ 0.1395													$ 0.01
Warrants or Rights, Percent of Stock Purchasable	200.00%
Proceeds from Warrant Exercises	$ 3,900
Existing Warrants [Member] \| Subsequent Event [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)	28,124,540
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)	$ 0.1395													$ 0.01
Proceeds from Issuance or Sale of Equity	$ 3,900
The New Warrants [Member] \| Subsequent Event [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)														20,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)														$ 0.01
The 2021 Warrants [Member] \| Healios [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)								400,000
Class of Warrant or Right, Exercise Cap Triggering Percentage								19.90%
The 2021 Warrants, Type One [Member] \| Healios [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)								120,000
Warrants and Rights, Exercisable Period (Month)								60 days
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)								$ 45
The 2021 Warrants, Type Two [Member] \| Healios [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)								280,000
Warrants and Rights, Exercisable Period (Month)								60 days
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)								$ 60
August 2022 Securities Purchase Agreement [Member]
Stock Issued During Period, Shares, New Issues (in shares)							1,200,000
Number of Shares Per Unit Issued (in shares)							1
Equity Offering, Unit Purchase Price (in dollars per share)							$ 6.25
Equity Offering, Deduction Per Unit for Prefunded Warrant (in dollars per share)							$ 0.0025
Proceeds from Issuance or Sale of Equity							$ 11,000
Fair Value Adjustment of Warrants							(800)
Adjustments to Additional Paid in Capital, Warrant Issued							$ 3,800
Equity Offering, Participation Right Percentage							30.00%
August 2022 Securities Purchase Agreement [Member] \| Placement Agent Fee [Member]
Payments of Stock Issuance Costs							$ 800
August 2022 Securities Purchase Agreement [Member] \| Reimbursement of Expense [Member]
Payments of Stock Issuance Costs							$ 100
November 2022 Securities Purchase Agreement [Member]
Stock Issued During Period, Shares, New Issues (in shares)					3,927,275
Number of Shares Per Unit Issued (in shares)					1
Equity Offering, Unit Purchase Price (in dollars per share)					$ 1.1
Equity Offering, Deduction Per Unit for Prefunded Warrant (in dollars per share)					$ 0.0001
Proceeds from Issuance or Sale of Equity					$ 5,000
November 2022 Securities Purchase Agreement [Member] \| Placement Agent Fee [Member]
Payments of Stock Issuance Costs					400
November 2022 Securities Purchase Agreement [Member] \| Reimbursement of Expense [Member]
Payments of Stock Issuance Costs					$ 100
April 2023 Securities Purchase Agreement [Member]
Stock Issued During Period, Shares, New Issues (in shares)				2,315,000
Number of Shares Per Unit Issued (in shares)				1
Equity Offering, Unit Purchase Price (in dollars per share)				$ 1
Proceeds from Issuance or Sale of Equity				$ 3,400
April 2023 Securities Purchase Agreement [Member] \| Placement Agent Fee [Member]
Payments of Stock Issuance Costs				200
April 2023 Securities Purchase Agreement [Member] \| Reimbursement of Expense [Member]
Payments of Stock Issuance Costs				$ 100
August 2023 Securities Purchase Agreement [Member]
Stock Issued During Period, Shares, New Issues (in shares)		4,212,500
Equity Offering, Unit Purchase Price (in dollars per share)		$ 0.32
Proceeds from Issuance or Sale of Equity		$ 3,000
August 2023 Securities Purchase Agreement [Member] \| A.G.P. [Member]
Payments of Stock Issuance Costs			$ 200
August 2023 Securities Purchase Agreement [Member] \| Reimbursement of Expenses [Member] \| A.G.P. [Member]
Payments of Stock Issuance Costs			$ 200
The 2022 Equity Facility [Member]
Equity Offering, Maximum Shares Committed																	$ 100,000
The 2021 Equity Facility [Member]
Equity Offering, Maximum Shares Committed																		$ 100,000
The 2021 Equity Facility [Member] \| Aspire Capital [Member]
Stock Issued During Period, Shares, New Issues (in shares)											0

Note 9 - Fair Value Measurements (Details Textual) - Notes Payable to Banks [Member]	Sep. 30, 2023	Jun. 30, 2023	May 17, 2023
Measurement Input, Price Volatility [Member]
Long-Term Debt, Measurement Input	0.779	0.506	0.495
Measurement Input, Bond Yield Rate [Member]
Long-Term Debt, Measurement Input	0.307	0.196	0.189

Note 9 - Fair Value Measurements - Reconciliation of Warrant Liabilities (Details) - Warrant [Member] - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2023	Mar. 31, 2023
Balance	$ (1,163)	$ (534)
Fair Value Adjustment	(1,522)	(629)
Reclassification to Additional paid in capital	2,685
Balance	$ 0	$ (1,163)

Note 9 - Fair Value Measurements - Reconciliation of Note Payable (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2023	Jun. 30, 2023
Notes Payable to Banks [Member]
Balance	$ 15,640
Initial Transaction Fair Value - May 17		15,000
Accrued Paid-in-Kind (PIK) Interest	0	0
Fair Value Adjustment	3,832	640
Accrued Paid-in-Kind (PIK) Interest added to Principal	185
Fair Value Adjustment	(3,832)	(640)
Balance	11,993	15,640
Credit Risk Change [Member]
Balance	0
Initial Transaction Fair Value - May 17		0
Accrued Paid-in-Kind (PIK) Interest	0	0
Fair Value Adjustment	1,208	0
Accrued Paid-in-Kind (PIK) Interest added to Principal	0
Fair Value Adjustment	(1,208)	(0)
Balance	(1,208)	0
Accrued Interest [Member]
Balance	185
Initial Transaction Fair Value - May 17		0
Accrued Paid-in-Kind (PIK) Interest	383	185
Fair Value Adjustment	0	0
Accrued Paid-in-Kind (PIK) Interest added to Principal	(185)
Fair Value Adjustment	0	(0)
Balance	383	185
Notes Payable, Including Accrued Interest [Member]
Balance	15,825
Initial Transaction Fair Value - May 17		15,000
Accrued Paid-in-Kind (PIK) Interest	383	185
Fair Value Adjustment	5,040	640
Accrued Paid-in-Kind (PIK) Interest added to Principal	0
Fair Value Adjustment	(5,040)	(640)
Balance	$ 11,168	$ 15,825

Note 10 - Other Income and Expense - Other (Expense) Income (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2023

Sep. 30, 2022

Sep. 30, 2023

Sep. 30, 2022

Gain/(Loss) from extinguishment of debt

$ 0

$ 2,611

$ (0)

Change in fair value - note payable

(3,832)

(0)

(3,192)

Interest expense

(211)

(545)

Foreign exchange gain/(loss)

287

631

109

915

Fair value change - warrants

2,784

(2,151)

2,784

Gain/(Loss) on disposal of assets

(467)

(321)

Other

568

(426)

701

Nonoperating Income (Expense)

^[1]

$ 4,009

$ 3,044

$ 3,596

$ 3,816

[1]	See Footnote 10 for components of other income, net

Note 11 - Forbearance Agreement and Convertible Note (Details Textual) - USD ($)		3 Months Ended		6 Months Ended	9 Months Ended
	May 17, 2023	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Forbearance Agreement, Deferred Accounts Payable	$ 11,800,000
Forbearance Agreement, Deferred Accounts Payable, Monthly Payments	250,000
Deferred Accounts Payable, Fair Value	$ 7,900,000
Gain (Loss) on Extinguishment of Debt		$ 0	$ 0		$ 2,611,000	$ (0)
Paid-in-Kind Interest					568,000	0
Change in Fair Value of Note Payables		(3,832,000)	(0)		(3,192,000)	0
Forbearance Agreement, Deferred Accounts Payable, Payment Term (Month)	48 months
Forbearance Agreement, Deferred Accounts Payable, Cash Payment Not Paid When Due Subject to Interest Rate	10.00%
Forbearance Agreement, Deferred Accounts Payable, Cash Payment Due Benchmark Period (Day)	60 days
OCI, Market Risk Benefit, Instrument-Specific Credit Risk, Gain (Loss), after Adjustments and Tax, Parent		1,208,000	$ 0		1,208,000	$ 0
Convertible Debt [Member] \| Supplier [Member]
Debt Instrument, Face Amount	$ 15,000,000
Gain (Loss) on Extinguishment of Debt	$ 2,600,000
Debt Instrument, Interest Rate, Stated Percentage	10.00%
Debt Instrument, Event of Default, Payment	$ 3,000,000
Debt Instrument, Event of Default, Interest Rate	14.00%
Debt Instrument, Convertible, Beneficial Ownership Limitation	19.99%
Debt Instrument, Convertible, Conversion Price (in dollars per share)	$ 1.3
Debt Conversion, Converted Instrument, Shares Issued (in shares)	11,538,461
Debt Instrument, Convertible, Conversion Period After Date of Issuance (Month)	18 months
Debt Issuance Costs, Net	$ 16,679
Notes Payable, Fair Value Disclosure		$ 10,800,000		$ 15,800,000	10,800,000
Paid-in-Kind Interest				200,000	400,000
Change in Fair Value of Note Payables				600,000
Debt Instrument, Event of Default, Percentage of Principal for Acceleration of Maturity	100.00%
Debt Instrument, Event of Default, Percentage of Principal Automatically and Immediately Due	100.00%
Debt Instrument, Event of Default, Judgement Payment Rendered Against Company	$ 3,000,000
OCI, Market Risk Benefit, Instrument-Specific Credit Risk, Gain (Loss), after Adjustments and Tax, Parent					1,200,000
Convertible Debt [Member] \| Supplier [Member] \| Other Nonoperating Income (Expense) [Member]
Fair Value, Option, Changes in Fair Value, Gain (Loss)				$ 800,000	$ 3,800,000

Note 12 - Restructuring Charges (Details Textual) - USD ($) $ in Thousands	1 Months Ended
	Jun. 30, 2022	Sep. 30, 2023
Restructuring and Related Cost, Reduction in Workforce, Percentage	70.00%
Restructuring Reserve, Noncurrent		$ 0

Note 12 - Restructuring Charges - Restructuring Charges (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Balances	$ 341	$ 985
Charges	30	61
Cash (Payments)	(26)	(701)
Balances	345	345
Employee Severance [Member]
Balances	314	935
Charges	0	0
Cash (Payments)	0	(621)
Balances	314	314
Legal and Professional Fees [Member]
Balances	27	35
Charges	30	61
Cash (Payments)	(26)	(65)
Balances	31	31
Other Restructuring [Member]
Balances	0	15
Charges	0	0
Cash (Payments)	0	(15)
Balances	$ 0	$ 0

Note 14 - Subsequent Events (Details Textual) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Millions	Nov. 09, 2023	Oct. 12, 2023	Oct. 11, 2023	Oct. 30, 2023	Oct. 10, 2023	Oct. 03, 2023
Inducement Warrant Shares [Member]
Warrants or Rights, Percent of Stock Purchasable			200.00%
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			56,249,080
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)			$ 0.1395	$ 0.01
Inducement Warrant Shares [Member] \| Maximum [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			56,249,080
Existing Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			28,124,540
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)			$ 0.1395	$ 0.01
Proceeds from Issuance or Sale of Equity			$ 3.9
Existing Warrants [Member] \| Maximum [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)			28,124,540
The New Warrants [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in shares)				20,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)				$ 0.01
Licensing Agreement With Ardent [Member]
License Agreement, Initial Fee						$ 0.1
Fifth Amendment to License Agreement [Member]
License Agreement, Potential Development and Sales Milestone Payments and Royalties					$ 150.0
Revenue from Contract with Customer, Including Assessed Tax	$ 1.5	$ 1.5
License Agreement, Expected Payments					$ 1.5

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