On March 16, 2020 Athersys, Inc. (NASDAQ: ATHX) reported its fourth quarter 2019 and annual 2019 financial results and recent highlights (Press release, Athersys, MAR 16, 2020, View Source [SID1234555595]).
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"Throughout all of 2019, we made important progress in our key clinical programs in stroke and in other areas, as evidenced by the highly promising clinical results from our ARDS program. Those results led to the subsequent Fast Track designation from the FDA," commented Dr. Gil Van Bokkelen, Chairman and Chief Executive Officer of Athersys. "The importance of this program has been reinforced by the recent COVID-19 outbreak, where many patients have subsequently become critically ill with ARDS, which a recent World Health Organization analysis has confirmed is the primary cause of death for these patients. This often fatal syndrome can be induced by a range of pathogens, including COVID-19, SARS, MERS and virulent influenza.
"Other than placing patients on a ventilator, there is no effective treatment for ARDS. In January, in the early stages of the COVID-19 outbreak, as part of the U.S. Government’s COVID-19 CoronaWatch program, we were approached by BARDA in its leadership role focused on expediting diagnostics, vaccines, antivirals and therapeutic treatments for these patients. After undergoing multiple reviews, we are pleased to announce that MultiStem was designated as a "Highly Relevant" therapeutic for COVID-19 by BARDA. We now are working to expedite the further advancement of the program, which has also shown relevance to certain other areas of interest for BARDA," added Dr. Van Bokkelen.
Fourth Quarter 2019 and Recent Highlights:
Completed our exploratory clinical study of MultiStem cell therapy for ARDS and announced positive 28-day and one-year results; MultiStem treated patients reported consistent improvement in quality of life over the one-year evaluation period and showed marked improvements in key clinical metrics, including ICU-free days, ventilator-free days and reduced mortality compared to placebo, especially in patients with pneumonia-induced ARDS;
Advanced through Japanese partner, HEALIOS K.K. (Healios), its ARDS and ischemic stroke programs, with Healios expecting to finish enrollment of both its ONE-BRIDGE ARDS study and the TREASURE stroke study this year;
Athersys’ ARDS program received Fast Track designation from the U.S. Food and Drug Association (FDA);
Healios ARDS program, using HLCM051 (as MultiStem cell therapy is designated in Japan), received orphan regenerative medicine designation from Japan’s Ministry of Health, Labour and Welfare;
Appointed Mr. Ivor Macleod as our Chief Financial Officer to help plan and execute our financial strategy as we approach potential product commercialization and beyond;
Launched new clinical sites for our MASTERS-2 Phase 3 registration study for ischemic stroke from which we are observing good enrollment rates;
Actively engaged in partnering discussions with companies interested in MultiStem commercialization in Europe and other regions;
Recognized revenues of $0.3 million and net loss of $9.9 million, or $0.06 net loss per share, for the quarter ended December 31, 2019; and
Ended 2019 with $35.0 million in cash and cash equivalents.
Other 2019 and Recent Highlights:
Advanced preparations for planned Phase 2 trauma clinical study and a Phase 3 ARDS clinical study, following the success of our ARDS exploratory trial;
Hosted a successful investor day in New York City in May 2019 highlighting our capabilities and technologies, as well as progress made developing the MultiStem product platform;
Participated in several events throughout the year, including the American Thoracic Society International Conference in May 2019 and the International Society of Cell and Gene Therapy Conference in June 2019, among others, which included podium presentations and panel participation, further establishing the Company as a leader and significant contributor in the field of cell therapy;
Expanded our process development and manufacturing efforts, added diversification in our manufacturing networks and delivered all the investigational clinical product to Healios to finish the ONE-BRIDGE and TREASURE studies;
Added to our talent pool increasing our employee base by 17% in 2019; and
Entered into a new equity facility during the fourth quarter of 2019 as a follow-on to the existing facility, giving us the ability to sell up to $100 million of our common stock over a three-year period, providing access to capital to support operations.
"We remain highly focused on achieving our core goals and are making excellent progress. Our near-term priorities are to finalize and implement an alliance with BARDA, establish a high value collaboration around our critical care programs, and continue to advance our clinical programs, while we add additional talent and leadership to the organization and expand our capabilities," concluded Dr. Van Bokkelen.
Fourth Quarter 2019 Financial Results
Revenues decreased to $0.3 million for the three months ended December 31, 2019 compared to $1.5 million for the three months ended December 31, 2018. Our collaboration revenues are primarily derived from our Healios arrangement and declined in the fourth quarter of 2019 as certain services, such as clinical product supply, were concluded. We expect our collaboration revenues to vary over time as we contract with Healios to perform manufacturing services and as we potentially enter into new collaborations.
Research and development expenses decreased to $7.6 million for the three months ended December 31, 2019 from $10.2 million for the comparable period in 2018. The $2.6 million decrease is primarily associated with the conclusion of the manufacturing campaign for Healios’ clinical trials and the reduction in technology transfer activities associated with planned Japan manufacturing for Healios, as well as the timing of reagent purchases used for our internal process development activities.
General and administrative expenses decreased to $2.4 million for the three months ended December 31, 2019 from $2.8 million in the comparable period in 2018. The $0.4 million decrease in the fourth quarter of 2019 was due primarily to lower professional service fees and lower personnel costs associated with no bonus accrual for the Company’s leadership.
Net loss for the fourth quarter was $9.9 million in 2019 compared to a net loss of $11.3 million in the fourth quarter of 2018. The difference of $1.4 million reflects the above variances, as well as a decrease of $0.4 million in other income items.
Full Year 2019 Financial Results
Revenues decreased to $5.6 million for the year ended December 31, 2019 from $24.3 million in 2018. Our contract revenues from our collaboration with Healios decreased $16.8 million year over year, reflecting the expansion of our collaboration in June 2018 to include additional licensed indications, and the decline in certain Healios-funded services in 2019. Included in our 2018 revenues were royalties and other contract revenues of $1.5 million primarily related to our collaboration with RTI Surgical, Inc., which has since ceased distribution of its bone graft product that utilized our technology.
Research and development expenses increased to $39.0 million for the year ended December 31, 2019 from $38.7 million for the year ended December 31, 2018. The increase in research and development expenses year-over-year of $0.3 million related primarily to increases in personnel costs of $1.5 million, including stock-based compensation, consulting costs of $0.6 million, and other costs of $0.1 million. These increases were partially offset by decreases in clinical trial and manufacturing process development costs of $1.1 million and license fees of $0.8 million. We expect our research and development expenses to increase in 2020 primarily related to our clinical development and manufacturing process development activities.
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General and administrative expenses increased to $11.4 million in 2019 from $10.4 million in 2018. The $1.0 million increase was due primarily to increases in legal and professional services, other outside services and stock compensation expense. We expect our general and administrative expenses to increase in 2020 primarily related to personnel costs.
Net loss was $44.6 million in 2019 compared to a net loss of $24.3 million in 2018. The difference of $20.3 million reflects the above variances, as well as an increase of $0.3 million in other net expenses.
In the twelve months ended December 31, 2019, net cash used in operating activities was $35.3 million compared to $13.4 million in the twelve months ended December 31, 2018. The difference is primarily associated with license fees paid by Healios in 2018 in connection with the collaboration expansion, combined with overall increases in cash usage to fund our clinical development activity in 2019.
At December 31, 2019, we had $35.0 million in cash and cash equivalents, compared to $51.1 million at December 31, 2018.
Conference Call
Members of the management team will host a conference call today to review the results as follows:
Date
March 16, 2020
Time
4:30 p.m. (Eastern Time)
Telephone access: U.S. and Canada
(877) 396-3286
Telephone access: International
(647) 689-5528
Encore Password (needed for the replay only)
9937937
Live webcast
www.athersys.com, under the Investors section
We encourage shareholders to listen using the webcast link, and to use the phone line if you intend to ask a question. A replay will be available on the webcast link at www.athersys.com under the investors section approximately three hours after the call has ended. Shareholders may also call in for on-demand listening shortly after the completion of the call until 11:59 PM Eastern Time on March 21, 2020 by dialing (800) 585-8367 or (416) 621-4642 and entering the conference code 9937937.
The archived webcast will be available for one year at the aforementioned URL.