On March 13, 2018 Athersys, Inc. (NASDAQ:ATHX) reported its fourth quarter 2017 and annual 2017 financial results and highlights (Press release, Athersys, MAR 13, 2018, View Source [SID1234524724]).
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"As we announced today in a separate press release, we have entered a letter of intent to expand our collaboration with Healios, and we are actively working with them with to complete the broader collaboration expansion by April 30, 2018, as we disclosed earlier today. In doing so, this would result in committed capital in the amount of $56.1 million, of which $31.1 million is already committed, in the form of the initial equity investment and license fee payments. Importantly, the broadened collaboration would lead to increased development of MultiStem treatment in Asia and provide us with capital to support our pivotal registration study for ischemic stroke, MASTERS-2, in the United States and Europe, as well as other important activities," commented Dr. Gil Van Bokkelen, CEO of Athersys.
Fourth Quarter 2017 and Recent Highlights:
Announced today plans to significantly expand our existing HEALIOS K.K. ("Healios") collaboration, including a $21.1 million equity investment and $10 million in guaranteed license fees, and, if the expansion is consummated, would also further provide an additional $25 million in committed payments over time. As part of the expansion, Healios would receive a license to MultiStem products for acute respiratory distress syndrome ("ARDS") and trauma in Japan, and Healios’ organ bud technology and certain ophthalmological indications globally. Also, Healios would receive an exclusive option to license MultiStem products for ischemic stroke, ARDS and trauma in China, and Athersys would be entitled to license fees, milestone payments and escalating royalties for the licensed indications;
Advanced our preparations for the MASTERS-2 Phase 3 registration study for ischemic stroke, to enable initiation of this important study;
Entered into a new equity facility in February 2018 as follow-on to current facility, with right to sell up to $100 million of common stock to Aspire Capital, LLC over three-year period, providing access to capital as needed to support our operations;
Recorded revenues of $1.2 million and a net loss of $13.1 million for the quarter ended December 31, 2017, noting that included in the net loss for the quarter was a $4.7 million non-recurring charge ($3.2 million of which was non-cash) related to a settlement and license agreement to resolve a long-standing intellectual property dispute; and
Ended 2017 with $29.3 million in cash and cash equivalents.
Other 2017 Highlights:
Received multiple special designations from regulators for our stroke program this year, including Regenerative Medicine Advanced Therapy designation and Fast Track designation from U.S. Food and Drug Administration, as well as a Final Scientific Advice positive opinion from European Medicines Device Agency;
Expanded manufacturing and process development collaborative relationships, including Nikon CeLL innovation Co., Ltd., and progressed key manufacturing campaigns and process development projects; and
Recorded revenues of $3.7 million and a net loss of $32.2 million, or $0.29 net loss per share, for the year ended December 31, 2017, again, factoring in the 2017 charge of $4.7 million for the intellectual property settlement and license.
"Over the course of 2017 and into 2018, we have undertaken and completed multiple initiatives that are intended to advance MultiStem therapy into registrational studies and ultimately to commercialization," stated Dr. Van Bokkelen. "We plan to launch our MASTERS-2 study in the second quarter, and continue to advance our manufacturing platform and capabilities. Importantly, through these activities and our collaboration expansion with Healios, we have further strengthened our financial position, while retaining North American and European rights for MultiStem therapy in ischemic stroke and other indications, while we continue to evaluate additional collaborative opportunities."
Fourth Quarter 2017 Financial Results
Total revenues for the fourth quarter of 2017 were $1.2 million compared to $1.0 million in the same period in the prior year, reflecting a combination of contract revenues and grant revenues.
Research and development expenses increased to $12.1 million in the 2017 fourth quarter from $7.1 million in the same period in the prior year. 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 to resolve a long-standing intellectual property dispute. After factoring in this one-time charge, the remaining difference of $0.3 million from year-to-year was primarily due to increased clinical and preclinical development costs, which vary based on trials underway, clinical manufacturing and process development activities.
General and administrative expenses remained relatively consistent at $2.1 million and $2.0 million in the 2017 and 2016 fourth quarters, respectively.
Net loss was $13.1 million in the fourth quarter of 2017, compared to net loss of $7.1 million for the same period of 2016. The increase in net loss was primarily due to the variances outlined above (e.g., settlement and license fees) and a $1.1 million gain in the fourth quarter of 2016 related to the fair value of our warrant liabilities (non-cash), with no corresponding warrant activity in the 2017 fourth quarter, since all of our warrants were either exercised or expired early in 2017.
Full Year 2017 Financial Results
Revenues decreased to $3.7 million for the year ended December 31, 2017 from $17.3 million in 2016, related to a $15.0 million payment received and recognized as revenue for the Healios collaboration entered into in January 2016, partially offset by 2017 increases in other contract revenues, including a $1.0 million milestone payment from our collaboration with RTI Surgical, Inc. and manufacturing and service proceeds from Healios.
Research and development expenses increased to $27.8 million for the year ended December 31, 2017 from $24.8 million for the year ended December 31, 2016. After factoring in the non-recurring charge of $4.7 million for license fees referred to above, the decrease in research and development expenses year-over-year of $1.7 million related primarily to reduced spending on research supplies of $0.9 million and sponsored research of $0.5 million.
General and administrative expenses increased to $8.5 million in 2017 from $7.8 million in 2016. The $0.7 million increase was due primarily to increases in personnel costs and legal and professional services.
Net loss was $32.2 million in 2017, compared to $15.3 million in 2016. The difference of $16.9 million reflects the variances above, particularly the $15.0 million Healios revenue in 2016 and the $4.7 million one-time license fee expense in 2017, as well as an increase in 2017 of $1.3 million in the gain in the fair value of warrant liabilities, a decrease in 2017 of $0.7 million in the gain from insurance proceeds, and overall variances in operational activities.
Cash used in operating activities was $24.0 million and $10.9 million for full year 2017 and full year 2016, respectively, which takes into account the $15.0 million initial license fee revenue from Healios in 2016 and the other variances noted above.
As of December 31, 2017, we had $29.3 million in cash and cash equivalents, compared to $14.8 million at December 31, 2016.
Conference Call
Gil Van Bokkelen, Chairman and Chief Executive Officer, William (BJ) 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 Tuesday, March 13, 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 8898346
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 March 27, 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 8898346. The archived webcast will be available for one year at the aforementioned URL.