On May 10, 2018 Athersys, Inc. (NASDAQ:ATHX) reported its financial results for the three months ended March 31, 2018 (Press release, Athersys, MAY 10, 2018, View Source [SID1234526466]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
Highlights of the first quarter of 2018 and recent events include:
Completed a $21.1 million equity investment and announced plans to expand the HEALIOS K.K. ("Healios") collaboration by June 1, 2018. This proposed expansion includes a $10 million license fee funded in an escrow account and a potential additional $25 million of committed payments over time, as well as additional possible payments including milestones and royalties, if the collaboration is fully expanded in accordance with the letter of intent disclosed in March 2018;
Advanced our preparations for the MASTERS-2 Phase 3 registration study for ischemic stroke to enable initiation of this important study and supported the continued enrollment of Healios’ TREASURE study;
Progressed Phase 1/2 study evaluating MultiStem therapy in acute respiratory distress syndrome (ARDS) patients;
Announced plans with The University of Texas Health Science Center at Houston to conduct a Phase 2 clinical trial evaluating MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury;
Established a new equity facility with Aspire Capital Fund LLC, as a follow-on to a prior facility, providing the Company with access to additional capital as needed to support its ongoing operations;
Recognized revenues of $1.1 million for the quarter ended March 31, 2018 and a net loss of $10.2 million, or $(0.08) per share; and
Ended the 2018 first quarter with $49.7 million of cash and cash equivalents, excluding the $10 million in escrow from Healios related to the proposed collaboration expansion.
"We finished the first quarter in a strong financial position, with approximately $50 million on the balance sheet and look forward to building on that as we work to complete the expansion of our partnership with Healios," commented Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "As we and Healios recently disclosed, we have extended the timeline to complete the agreements to expand our collaboration until the end of May, and we are working together to achieve that goal.
"We are also focused on preparing for the upcoming initiation of our MASTERS-2 trial, while we continue to support the ongoing TREASURE trial in Japan," added Dr. Van Bokkelen. "In addition, we have been advancing our other clinical programs and broadening our portfolio of new opportunities, as evidenced by the recent announcement related to a clinical study in trauma. This represents another significant area of unmet clinical need that we are now well-positioned to pursue with funding support from the Medical Technology Enterprise Consortium and our collaborator, UTHealth," concluded Dr. Van Bokkelen.
First Quarter Results
Revenues decreased to $1.1 million for the three months ended March 31, 2018 compared to $1.5 million for the three months ended March 31, 2017 . Our revenues are comprised of revenue from manufacturing-related activities for Healios, royalty and related contract revenue from our collaboration with RTI Surgical, Inc. and grant revenue. Our revenue from Healios increased during the first quarter of 2018 compared to the prior year first quarter by approximately $0.3 million as we continue to supply clinical product to Healios and provide other manufacturing-related services, and we expect these revenues will be higher for the 2018 annual period as compared to the 2017 year. Regarding our royalty revenue, excluding a $1.0 million milestone payment from RTI in the 2017 first quarter, royalty revenues increased by approximately $0.2 million in the first quarter of 2018 as a result of an increase in the royalty rate that became effective late 2017 associated with our technology license to RTI. Grant revenue varies from period-to-period with new and completed grants, and the timing of grant-funded activities. Absent new grant awards, we expect our annual grant revenue to decline in 2018 from 2017 with the expiration of certain grant-funded programs.
Research and development expenses increased to $8.9 million for the three months ended March 31, 2018 from $5.6 million in the comparable period in 2017. The $3.3 million increase is primarily comprised of an increase in preclinical and clinical development costs of $2.7 million, an increase in personnel costs of $0.3 million, and an increase in internal research supplies and other research costs of $0.3 million. The increase in our clinical and preclinical costs is primarily a result of increased process development activities to support large-scale manufacturing and clinical product manufacturing costs during the period.
General and administrative expenses increased to $2.7 million for the three months ended March 31, 2018 from $2.1 million in the comparable period in 2017. The $0.6 million increase was due primarily to an increase of $0.3 million in professional fees and increases in personnel costs, stock-based compensation costs and other administrative costs compared to the same period last year.
Net loss was $10.2 million in 2018 compared to $5.6 million in 2017. The difference of $4.6 million reflects the above variances, as well as $0.4 million in insurance proceeds that we received this quarter, which were offset by a $0.7 million non-cash gain related to the fair value of our warrant liabilities recorded in the first quarter of 2017 for warrants that expired in 2017. The warrant issued in March 2018 to Healios in connection with its equity investment was treated as equity with its value recorded as additional paid-in capital with an offset in other current assets.
Net cash used in operating activities was $5.7 million for the three months ended March 31, 2018 and $5.4 million for the three months ended March 31, 2017, reflecting the increased net loss in the first quarter of 2018 (i.e., cash used to fund preclinical and clinical development activities) compared to the prior year period, as offset in part by proceeds received from Healios for our cost-share arrangement for clinical product supply and an increase in accounts payable due to service providers, such as contract manufacturers, under longer-term contracts. As of March 31, 2018, we had $49.7 million in cash and cash equivalents, compared to $29.3 million at December 31, 2017, which includes, among other things, the investment made by Healios in March 2018 and excludes the $10 million that Healios has funded into an escrow account to be released to us upon execution of the expansion agreements.
Conference Call
Gil Van Bokkelen, Chairman and Chief Executive Officer, and William (BJ) Lehmann, President and Chief Operating Officer, will host a conference call today to review the results as follows:
Date Thursday, May 10, 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 1189915
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 May 24, 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 1189915.
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.