On March 14, 2019 Athersys, Inc. (NASDAQ: ATHX) reported its fourth quarter 2018 and annual 2018 financial results and recent highlights (Press release, Athersys, MAR 14, 2019, View Source [SID1234534341]).
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"As we have announced previously, we had a number of important accomplishments in 2018, including the initiation of our Phase 3 MASTERS-2 study and the expansion of our partnership with Healios. Additionally, we completed enrollment of, and recently announced positive results for, our exploratory clinical study of MultiStem treatment of acute respiratory distress syndrome patients," commented Dr. Gil Van Bokkelen, Chairman and Chief Executive Officer of Athersys. "We also finished the year in a meaningfully stronger financial position, which was an important objective."
Fourth Quarter 2018 and Recent Highlights:
Announced positive results from our exploratory clinical study of MultiStem cell therapy for treatment of acute respiratory distress syndrome (ARDS), further confirming the tolerability and safety profile of MultiStem treatment and demonstrating trends of lower mortality and greater ventilator-free and ICU-free days; the study has been selected for presentation at the American Thoracic Society International Conference in May 2019;
Our partner, HEALIOS K.K. (Healios), announced plans to initiate an ARDS trial using MultiStem therapy for patients in Japan, which, if successful could lead to registration under Japan’s regenerative medicine regulatory framework;
Advanced our ischemic stroke program through continued support of Healios’ Japan TREASURE trial and enrollment of our MASTERS-2 Phase 3 registration study for ischemic stroke;
Received a $2.0 million payment from Healios for a right of first negotiation through June 2019 for an option to develop and commercialize MultiStem therapy for certain indications in China; Healios may extend the negotiation period through December 2019 with an additional payment of $3.0 million;
Recognized revenues of $1.5 million and net loss of $11.3 million, or $0.08 net loss per share, for the quarter ended December 31, 2018; and
Ended 2018 with $51.1 million in cash and cash equivalents and February 28, 2019 with $51.5 million in cash and cash equivalents, reflecting a solid financial foundation.
Other 2018 Highlights:
Expanded our collaboration with Healios in June 2018 to include additional areas – such as development for the treatment of ARDS in Japan, iPSC and MultiStem cells in combination to treat dysfunction in certain organs in Japan, and potential use of MultiStem cells alone or with RPE cells for certain ophthalmological indications globally – for $20 million in license fees, plus potential milestone payments and royalties; this followed a $21.1 million investment by Healios through the purchase of our common stock in March 2018;
Commenced the MASTERS-2 Phase 3 registration study for ischemic stroke and started enrolling patients;
Completed the enrollment of our exploratory clinical study of MultiStem cell therapy treatment for ARDS, and announced positive results soon thereafter as noted above;
Announced grant funding and began preparations to conduct a Phase 2 clinical trial evaluating MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury, in collaboration with The University of Texas Health Science Center at Houston and Hermann Memorial Trauma Center;
Expanded our process development and manufacturing efforts, including strategic leadership hires and diversification in our manufacturing networks; and
Entered into a new equity facility during the first quarter of 2018 as a follow-on to the existing facility, giving us the right to sell up to $100 million of common stock over a three-year period, providing access to capital, as needed, to support operations.
"We believe we are well-positioned to capitalize on our innovative MultiStem product platform and to develop and deliver highly effective new treatments to patients in areas of substantial unmet medical need, particularly in the critical care area. The Healios’ TREASURE trial and our MASTERS-2 trial are making continued progress, and the results from our exploratory ARDS trial illustrate the potential of MultiStem therapy in other acute care settings. We continue to work toward the scale-up of our manufacturing capabilities and to focus on the further development of other core capabilities and programs, while we continue to explore additional partnering opportunities," concluded Dr. Van Bokkelen.
Fourth Quarter 2018 Financial Results
Revenues increased to $1.5 million for the three months ended December 31, 2018 compared to $1.2 million for the three months ended December 31, 2017. Our revenues are generally derived from license fees, manufacturing-related services for Healios, royalty and related contract revenue from our collaborations, and grant revenue.
Research and development expenses decreased to $10.2 million for the three months ended December 31, 2018 from $12.1 million for the comparable period in 2017. In 2017, approximately $4.7 million of license fees were expensed (of which $3.2 million was non-cash) related to a settlement and license agreement. After factoring in this one-time charge, the net $2.8 million increase is associated with increased clinical development costs of $1.6 million, personnel costs of $0.6 million, internal research supplies of $0.2 million and other expenses of $0.4 million. The $1.6 million increase in our clinical costs during the period is primarily related to clinical product manufacturing, covered in part by Healios, technology transfer services associated with planned Japan manufacturing for Healios, process development activities to support large-scale manufacturing, and our MASTERS-2 clinical trial that began enrolling patients in the third quarter of 2018.
General and administrative expenses increased to $2.8 million for the three months ended December 31, 2018 from $2.1 million in the comparable period in 2017. The $0.7 million increase was due primarily to increases in personnel costs, professional fees, stock compensation costs and other administrative costs compared to the same period last year.
Net loss for the fourth quarter was $11.3 million in 2018 compared to a net loss of $13.1 million in the fourth quarter of 2017. The difference of $1.8 million reflects the above variances, as well as an increase of $0.3 million in other income items.
Full Year 2018 Financial Results
Revenues increased to $24.3 million for the year ended December 31, 2018 from $3.7 million in 2017. Our contract revenues from our collaboration with Healios increased $21.4 million year over year, reflecting the expansion of our collaboration in June 2018 to include additional licensed indications, among other things. Included in our 2018 revenues were royalties and other contract revenues of $1.5 million ($1.9 million in 2017) primarily related to our collaboration with RTI Surgical, Inc., which recently announced that it will cease distribution of its bone graft product that utilizes our technology.
Research and development expenses increased to $38.7 million for the year ended December 31, 2018 from $27.8 million for the year ended December 31, 2017. The increase in research and development expenses year-over-year of $10.9 million related to increases in clinical trial and manufacturing process development costs of $11.4 million, personnel costs of $1.6 million, and internal supply and other costs of $1.6 million. These increases were partially offset by a decrease in license fees of $3.7 million related to the settlement and license agreement in 2017 with one-time payments of cash and stock that concluded in 2018.
General and administrative expenses increased to $10.4 million in 2018 from $8.5 million in 2017. The $1.9 million increase was due primarily to increases in personnel costs, legal and professional services and stock compensation expense.
Net loss was $24.3 million in 2018 compared to a net loss of $32.2 million in 2017. The difference of $7.9 million reflects the above variances, as well as a decrease of $0.1 million in other net expenses.
In the twelve months ended December 31, 2018, net cash used in operating activities was $13.4 million compared to $24.0 million in the twelve months ended December 31, 2017. The difference reflects in part license fees paid by Healios in connection with the collaboration expansion being partially offset by an increase in clinical development activity in 2018.
At December 31, 2018, we had $51.1 million in cash and cash equivalents, compared to $29.3 million at December 31, 2017.
Conference Call
Gil Van Bokkelen, Chairman and Chief Executive Officer, William (B.J.) Lehmann, President and Chief Operating Officer, and Laura Campbell, Senior Vice President of Finance, will host a conference call today to review the results as follows:
Date March 14, 2019
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) 7677927
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 at www.athersys.com under the investors section approximately two 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, 2019 by dialing (800) 585-8367 or (416) 621-4642 and entering Encore passcode 7677927. The archived webcast will be available for one year at the aforementioned URL.