On August 7, 2018 Athersys, Inc. (NASDAQ: ATHX) reported its financial results for the three months ended June 30, 2018 (Press release, Athersys, AUG 7, 2018, View Source [SID1234528510]).
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Highlights of the second quarter of 2018 and recent events include:
Announced the completion of an expansion of our collaboration with HEALIOS K.K. ("Healios") in June 2018 to develop and commercialize additional indications for $20 million in license fees, plus potential payments and royalties, which followed a $21.1 million investment by Healios in the Company’s common stock in March 2018;
Granted to Healios a time-limited first right of negotiation for an exclusive option for a license to develop and commercialize MultiStem therapy in China for several indications;
Launched the MASTERS-2 Phase 3 registration study for ischemic stroke and enrolled initial patients into the study;
Continued to support the enrollment of Healios’ ongoing TREASURE study for ischemic stroke in Japan by providing clinical product;
Made several strategic hires, including Greg Liposky as Senior Vice President of Commercial Manufacturing to lead the execution of our manufacturing strategy;
Progressed Phase 1/2 study evaluating MultiStem therapy in acute respiratory distress syndrome (ARDS) patients, nearing enrollment completion;
Announced the award of a grant from the Medical Technology Enterprise Consortium (funded through the Department of Defense) to The University of Texas Health Science Center at Houston and Hermann Memorial Trauma Center to conduct a Phase 2 clinical trial evaluating MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury;
Recognized revenues of $19.4 million for the quarter ended June 30, 2018 and net income of $6.9 million, or $0.05 per diluted share; and
Ended the second quarter with $53.4 million of cash and cash equivalents.
"We finished the second quarter in a strong financial position, following the successful recent expansion of our partnership with Healios. We continue to explore additional partnering opportunities," commented Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "Just as importantly, we have achieved the goal of initiating our Phase 3 MASTERS-2 trial evaluating the treatment of patients that have suffered a debilitating ischemic stroke, and we are pleased to report the trial is off to a strong start.
"The recent addition of key members to the organization underscores our commitment to systematically establishing the capabilities necessary to enable us to fulfill our vision of becoming a leading biopharma company. We’re very pleased with the talented individuals and leadership that have joined the company, and we look forward to working together to achieve our goals," concluded Dr. Van Bokkelen.
Second Quarter Results
Revenues increased by $18.7 million to $19.4 million for the three months ended June 30, 2018 compared to $0.7 million for the three months ended June 30, 2017. Our revenues are derived from license fees, manufacturing-related activities for Healios, royalty and other contract revenue, and grant revenue. Our revenue from Healios increased during the second quarter of 2018 compared to the prior year second quarter by approximately $18.5 million due to the collaboration expansion in June 2018, which included several additional licensed indications.
Research and development expenses increased to $10.1 million for the three months ended June 30, 2018 from $4.6 million in the comparable period in 2017. The $5.5 million increase is primarily comprised of an increase in preclinical and clinical development costs of $4.4 million, an increase in license fees of $0.6 million, an increase in personnel costs of $0.2 million, and an increase in internal research supplies and other research costs of $0.3 million. The increase in our clinical and preclinical costs during the period is primarily a result of increased clinical product manufacturing costs, a portion of which are invoiced to Healios, technology transfer services performed on Healios’ behalf in Japan that are reimbursed to us by Healios, start-up contractual costs related to our MASTERS-2 clinical trial, and process development activities to support large-scale manufacturing.
General and administrative expenses increased to $2.4 million for the three months ended June 30, 2018 from $2.2 million in the comparable period in 2017. The $0.2 million increase was due primarily to increases in professional fees, consulting services, personnel costs and other administrative costs compared to the same period last year.
Net income for the second quarter was $6.9 million in 2018 compared to a net loss of $6.3 million in 2017. The difference of $13.2 million reflects the above variances, as well as an increase of $0.2 million in other items.
Net cash provided by operating activities was $4.4 million in the three months ended June 30, 2018 and net cash used by operating activities was $5.7 million in the three months ended June 30, 2017, reflecting the receipt of $12.5 million of license fees from our expansion with Healios, partially offset by an increase in the use of cash to fund preclinical and clinical development activities. Of the $20 million of license fees related to the June 2018 expansion with Healios, we will receive the remaining $7.5 million from Healios over the next three quarters. At June 30, 2018, we had $53.4 million in cash and cash equivalents, compared to $29.3 million at December 31, 2017.
Conference Call
Laura Campbell, Senior Vice President of Finance and William (B.J.) Lehmann, President and Chief Operating Officer, will host a conference call today to review the results as follows:
Date Tuesday, August 7th, 2018
Time 4:30 p.m. (Eastern Time)
Telephone access: U.S. and Canada 800-273-1254
Telephone access: International 973-638-3440
Access code 5144048
Live webcast www.athersys.com, under the Investors section
A replay will be available for on-demand listening shortly after the completion of the call until 11:59 PM Eastern Time on August 21st, 2018 at the aforementioned URL, or by dialing (800) 585-8367 or (855) 859-2056 in the U.S. and Canada, or from abroad (404) 537-3406, and entering access code 5144048.
About MultiStem
MultiStem cell therapy is a patented regenerative medicine product in clinical development that has shown the ability to promote tissue repair and healing in a variety of ways, such as through the production of therapeutic factors produced in response to signals of inflammation and tissue damage. MultiStem therapy’s potential for multidimensional therapeutic impact distinguishes it from traditional biopharmaceutical therapies focused on a single mechanism of benefit. The therapy represents a unique "off-the-shelf" stem cell product that can be manufactured in a scalable manner, may be stored for years in frozen form, and is administered without tissue matching or the need for immune suppression. Based upon its efficacy profile, its novel mechanisms of action, and a favorable and consistent safety profile demonstrated in clinical studies, MultiStem therapy could provide a meaningful benefit to patients, including those suffering from serious diseases and conditions with unmet medical need.