On August 9, 2016 Athersys, Inc. (Nasdaq:ATHX) reported its financial results for the three months ended June 30, 2016 (Press release, Athersys, AUG 9, 2016, View Source [SID:1234514416]).
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Highlights of the second quarter of 2016 include:
Successful discussions with the Japanese Pharmaceuticals and Medical Devices Agency ("PMDA") on ischemic stroke study design and requirements, led by HEALIOS K.K. ("Healios") with Athersys support, laying the groundwork for study initiation later this year;
Productive discussions with U.S. Food and Drug Administration ("FDA") about the design of our planned international Phase 3 study of MultiStem treatment for ischemic stroke, and ongoing engagement with European regulators;
Inclusion of our common stock in the broad-market Russell 3000 Index as part of the Russell U.S. Indices annual reconstitution, which became effective in June 2016;
Recorded revenues of $0.6 million and net loss of $7.0 million for quarter ended June 30, 2016; and
Ended the quarter with $24.0 million in cash and cash equivalents and available-for-sale securities.
"Along with our partner, Healios, we are focused on completing the preparations and activities related to the initiation of the confirmatory clinical trial in Japan, and continue to make steady progress toward that goal. In addition, we are engaged in discussions with FDA and other regulators regarding our larger, Phase 3 international clinical trial for stroke," stated Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "We have had productive and successful engagement with the regulators, including completing an End of Phase 2 meeting with the FDA, and have advanced our operational preparations to support both studies. As we have described previously, the studies will be focused on ischemic stroke patients that have suffered meaningful disability and who can be treated within 36 hours of the event, which would represent a significant expansion of the treatment window for these patients, which is currently limited to several hours. This would overcome a key limitation of current standard of care, enable many more stroke victims to be treated, and could redefine stroke therapy as we know it. It also represents a substantial clinical and commercial opportunity.
"We believe that we could have a favorable path forward for the continued development of MultiStem for the treatment of ischemic stroke, which represents one of the greatest areas of unmet clinical need in medicine, and an urgent priority in many countries due to the growing impact of an expanding elderly population that is more susceptible to stroke," continued Dr. Van Bokkelen. "Based on discussions with the PMDA and recent precedents, we believe that a successful trial in Japan with positive results could make conditional, or even full, approval possible, utilizing Japan’s progressive regulations for the development and approval of regenerative medicine products. Moreover, our engagement so far with the FDA suggests that the data from this Japan study, together with data from our Phase 3 international study, could provide the basis for a Biologics License application ("BLA") for registration, meaning that we would have an accelerated path to commercialization in the United States, as well as potentially other regions.
"We continue to enroll our two grant-supported Phase 2 trials, in AMI and ARDS, although progress is slower than we would like," commented Dr. Van Bokkelen. "We have undertaken a number of actions to accelerate enrollment, including adding clinical sites. We believe that MultiStem cell therapy is well-suited to treat these acute conditions based on our preclinical and clinical experience to date.
"We continue to focus on other important areas, including actively exploring partnering opportunities. We also have a substantial manufacturing and process development efforts underway focused, first, on supplying our planned clinical studies, and second, on advancing our manufacturing platform and related capabilities to support eventual commercialization," concluded Dr. Van Bokkelen.
Second Quarter Results
For the three months ended June 30, 2016, total revenues were $0.6 million compared to $0.2 million in the same period in 2015, due to an increase of $0.1 million in contract revenues from royalties and a $0.3 million increase in grant revenue. Grant revenues relate to both clinical and preclinical studies.
Research and development expenses increased to $5.8 million in the 2016 second quarter from $5.3 million in the 2015 second quarter, primarily due to increased clinical and preclinical development. Our clinical and preclinical costs increased during the period as a result of our process development activities to support large-scale manufacturing, and clinical product manufacturing costs during the period, with such increases partially offset by a decrease in costs for our stroke B01-02 study that concluded this spring. General and administrative expenses were $2.0 million and $1.9 million for the three months ended June 30, 2016 and 2015, respectively.
We recognized net loss for the three months ended June 30, 2016 of $7.0 million compared to net loss of $1.0 million for the same period in 2015. The $6.0 million net variance is due primarily to a $5.7 million decrease in non-cash income from the change in the fair value of our warrant liabilities, combined with the net impact of the $0.4 million increase in revenues and the $0.7 million increase in operating expenses for the three-month period ended June 30, 2016. Cash used in operating activities was $6.5 million during the 2016 second quarter compared to $5.8 million in the 2015 second quarter. As of June 30, 2016, we had $24.0 million in cash and cash equivalents and available-for-sale securities, compared to $23.0 million at December 31, 2015.