Q4 2020 Athersys Inc Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the App versus the fourth quarter and full year 2020 results conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the <unk>.
Moving to press Star one on your telephone please be advised the today's conference is being recorded I would now like to hand, the conference over to your speaker today, Ms. Karen <unk> director of corporate Communications and Investor Relations. Thank you. Please go ahead.
Thank you, Rob and good afternoon, everyone.
As I mentioned I'm curious on any director of corporate communications and Investor Relations for average debt.
Thank you for joining today's call.
Non of a copy of the press release issued at the close of market. It is available on the average sits website at <unk> Dot com.
B J Lehmann, President and Chief operating officer, and interim CEO is here to provide us with the corporate update and Ivor Macleod Chief Financial officer will be providing our financial update.
A webcast of the audio will be available three hours. After the call's conclusion on our website under the events section the access information for the replay is also on today's press release.
Any remarks that we may make about future expectations plans and prospects constitute forward looking statements for purposes of the safe Harbor provision under the private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by the forward looking statement as a result of various important factors, including those discussed on our forms 10-Q, 10-K and other public SEC filings.
We anticipate the subsequent events and developments may cause our outlook to change while we may elect to update these forward looking statements at some point from the future, we specifically disclaim any obligation to do so.
For the benefit of those who may be listening to the replay this call the talent and reported on March 25th of 2021.
Since then we may have made announcements related to the topics discussed the please reference our most recent press releases and SEC filings.
Now with that I'd like to turn the call over to B J Lehmann B Jamie.
Thanks, Karen.
B J Lehmann, President and Chief operating officer of actresses I am serving as interim CEO of of the company.
In addition to onboard and Karen I am joined today by John Harrington, Our Chief Scientific Officer.
And the departure from our past practice I will start with an update of the business and operations of the company.
<unk> will then share information about the company's finances.
This will be followed by a brief question and answer period.
Our intention today will be to focus less on a description of the opportunities ahead of us and more on the key aspects of our business and operations.
2020, and early 2021 of broad opportunities and challenges for example in 2020.
We seized in the opening provided by the Covid pandemic to accelerate the development of our multistem treatment for acute respiratory distress syndrome.
But the Covid pandemic also created challenges such as maintaining continuity in our R&D efforts.
Enrolling patients from some of our clinical trials from the face of clinical site shutdowns and slowdowns.
Unlike other companies navigating through potential material on product supply disruptions.
As most of the dough. We also resolved favorably recent legal matters and with the establishment of a cooperation agreement. This has set the stage for constructive progress together with our partner Helios and the advancement of the Multistem therapy in Japan.
And recently, we have continued to pursue our mission and successfully maintained focus on our critical objectives as we've gone through leadership change of the company.
The balance of 2021 will be an important period for the company.
We expect to see top line results from the Japan Treasure study, giving us our first look at late stage clinical trials trial data for the Multistem treatment of ischemic stroke.
We also expect to achieve proof of principle with respect to our large scale manufacturing processes.
To enable us to effectively serve large markets such as ischemic stroke and other critical care areas with our cell therapy product candidate.
Favorable clinical trial results and viable of large scale manufacturing processes would be expected to provide the foundation for us to put in place as we look ahead of the enablers of successful commercialization such as commercial operations commercial manufacturing capacity and distribution of among other things.
As we await results from our own pivotal trial activity.
Some of these things, we will do ourselves through hiring and investment in other things, we will establish through smart partnerships.
Now turning to our priorities.
Our scientific objective and company vision remain constant.
The scientifically our objective is to develop innovative cell therapies that provide substantial benefits to patients who face severe debilitation and loss of function material erosion of the quality of life and risk to survival as a result of the serious condition of trauma.
As for our company vision, we intend to build a global leader in regenerative medicine and cell therapy with the ability to innovate and develop cell therapies manufacture the product to serve our targeted markets.
And distribute and commercialize the products and markets internationally.
Yeah.
Clearly the key to our success will be the further demonstration in pivotal studies of substantial therapeutic impact from our therapies.
We have developed what we believe is an exciting portfolio of therapeutic programs.
The ischemic stroke program.
As our lead program is particular importance given the nature of the therapeutic opportunity and potential for clinical results in the near term.
We look forward later this year to the results from Helios as Treasure study. We believe these results will provide important insights about what to expect from our larger and better powered pivotal Masters two study.
And positive results could set the stage for Helios is application to the Japanese authorities for registration.
Our priorities for this year are focused on several key areas, having substantial expected impact on sustained value creation for the company for.
We will remain focused on advancing our clinical programs.
Particularly in continuing to progress enrollment of our Masters two study in.
In addition, we intend to work closely with our partner Helios to prepare for applications to the Pea MBA for potential approval of Multistem therapy for art from stroke, assuming successful trial readouts.
And then to help prepare for commercialization.
Second.
We will concentrate on preparing for commercial product manufacturing by further developing and refining our bioreactor based processes for commercial scale manufacturing.
Planning to build out an establishment of third party and internal manufacturing capacity for this purpose.
And taking the first step.
Of the stage process to put this capacity in place.
The pace of our build out and investment will depend on the nature and timing of our clinical trial results and our interactions with the regulators about the transition to large scale bioreactor based manufacturing.
And third we will continue our planning and preparations for commercialization, assuming successful trial results and applications for marketing approval for.
For example, we will continue to work with outside experts to evaluate the market access and reimbursement dynamics that will be important to our product its uptake and our commercial success.
Of note, we recently received World Health organization approval of our non proprietary product name and the Metro cell.
In the Metro cell reflects the international non proprietary name convention and includes the as the pre fix I envy eye, which represents innovation, which we believe is of core characteristic of our multi stem cell product.
We have also made progress with our proprietary product name, which ultimately will be subject to regulatory approval.
Over the course of the year, we intend to continue to build and the stage manner, our commercialization enabling capabilities, including.
Including adding experienced commercial leadership for the <unk> team.
Our plan in subsequent calls over the course of the year would.
It would be the dive in a little deeper and update you on progress in these key 2021 priority areas.
Turning to clinical development as you are aware, we have three of our own clinical studies underway. The masters two study evaluating multistem for moderate to moderately severe ischemic stroke. The covia initially designed for multistem treatment of Covid induced ards patients and matrix focus.
On the treatment of trauma patients with Multistem therapy.
As our lead program. The Masters two study is the priority for us too.
2020 was a challenging year for the study.
Covid affected many of our sites, causing some existing sites the shutdown for periods and others to reduce their operational intensity.
To some extent it further constrained our ability to open new sites.
These factors contributed together with some delays in product release, the disappointing enrollment through the year and help break the strong enrollment momentum we had at the beginning of 2020.
Thank you it appears that the Covid impact on trial operations, maybe abating in the first half of this year and will allow us to rebuild momentum expand our site network.
As we look forward risk the progress include lingering COVID-19 impact and possible product supply constraints should current clinical manufacturing be affected by any raw material supplier performance related issues.
Taking this into account we are not expecting to complete enrollment until 2022.
As we noted we expect the Helios for disclosed the 90 day results from its treasure study later this year.
The treasure study, though with less power than the Masters two trial and with the different primary endpoint is similar to the Masters two study.
As a result, we believe the treasurer results will provide important insights about expectations for our Masters two study.
Including our primary endpoint the MRI of shift analysis of day 90 post stroke, which is the secondary endpoint in the treasure study.
As for our Covia study, we continue to make steady progress as we prepare by design for bio react based product to be integrated into the study.
However, several factors are causing us to reconsider our strategy in the yards area.
First the.
For the arrival of vaccines in the development of other therapies in the developed countries raises questions about the sustainability of the business and therapeutic product opportunities focused solely on COVID-19 induced ards.
Second the Covid focus is limited us from concentrating on the more general large population.
For which we of promising clinical data.
Third the changes in the standard of care for Covid induced ards patients have.
Have changed treatment practices and shifted the patient population in the study to greater severity than when we started.
As a result, we have taken steps to expand the target population in our study to include any pathogen induced bark subjects.
We will carefully monitor progress in the study and May consider further adjustments to the study design as we deem necessary.
Yeah.
We remain bullish on the potential of Multistem cell therapy to benefit arts patients.
And look forward to continuing development based on available information with a more measured pace and posture.
Based on the rapidly developing COVID-19 environment and the potential for further modifications to the trial.
We currently would not expect this study to complete enrollment until after the Masters two study.
Briefly with respect to our matrix trauma clinical study.
Our first patient was enrolled into the study last December.
We continue to work with our partners the University of Texas Health Science Center, and the Memorial Hermann Texas Medical Center to advance enrollment in the study.
In terms of business development, we are active.
We have had and continue to have discussions and negotiations about the licensing of the multistem product in various indications and geographies.
Of particular focus as we have noted previously has been Europe.
For the discussions have not been limited to just Europe.
We are focused on establishing a partnership with the company that offers the right combination of value, creating commercialization capabilities and fit and deal structure and terms, including overall value.
It is clear from our discussions that the more of our lead program is de risk.
The greater the pool of attractive partners and the better the deal structure and deal terms would be.
As a result the <unk>.
Closer we get to important data readouts, such as the treasure study data the more.
For consideration, we will give to the impact of the readout on our partnership strategy.
Put another way we.
We do not feel compelled to complete a deal before we of clinical data.
It is more important for us to do the right deal with the right partner.
At the moment I'll turn it over to <unk> to speak about our financial results, but before I pass the baton I'd like to make a few closing comments.
First.
We believe we have the resources to achieve the important objectives. We have immediately ahead of us.
Further we have the ability to stage of our investments in accordance with important milestones such as clinical trial Readouts for partnerships.
Second we believe deeply in the strength and distinctiveness of our science and technology and the potential to help millions of patients.
Finally.
But we know there of risk ahead of us and possibly unknown risk because we saw last year with COVID-19.
We believe we are well positioned to advance materially the multistem franchise over the course of the year.
Igor.
Thank you for you Jay.
Good afternoon, everybody I'm on.
From a cloud Chief financial officer of emphasis I would like to thank all of you for joining today's call.
First of all give an overview of the fourth quarter results of 2020 and following on with the financial results for the full year.
Revenues were $1 3 million for the three months ended December 31, 2020 compared to 287000 for the same period in 2019.
The revenue is primarily related to ongoing services provided to our partner of Helios supporting our collaboration in Japan.
Research and development expenses were $18 7 million for the three months ended December 31 2020 on.
The increase of just over $11 million compared to the $7 6 million in the expenses for the comparable period in 2019.
The increase in expenditures was primarily related to an increase in manufacturing and process development costs of seven 4 million.
As well as an increase in internal research supplies of $1 6 million preclinical and clinical costs of 850000 on.
Personnel and associated costs of 880000, including stock based compensation costs.
General and administrative expenses increased to $4 3 million for the three months ended December 31, 2020 from $2 $4 million in the comparable period in 2019.
The increase in the fourth quarter of 2020 was due primarily to higher professional service fees of $1 $1 million on <unk>.
<unk> personnel and associated costs of approximately 440000, including stock based compensation costs.
The net loss for the fourth quarter was $22 2 million in 2020 compared to a net loss of $9 9 million in the fourth quarter of 2019 the <unk>.
<unk> of $12 3 million was primarily reflective of the previously described variances.
Turning now to the results for the full year.
Revenues were $1 $4 million from 2020 compared to $5 6 million in 2019 price.
Contract revenues from our collaboration with Helios decreased $4 $1 million year over year.
In 2020, we experienced the reduction in Helios funded services of certain.
Of the projects were concluded.
We expect our collaboration revenues to continue to vary over time, as we contract with Helios to perform future manufacturing and other services as well as to reflect the impact of potential new collaborations.
Research and development of expenses was $63 million from 2020 compared to $39 million in 2019.
The increase in expenditures is primarily related to an increase in manufacturing and process development costs of $13 2 million as well as the increase in internal research supplies of $4 2 million preclinical and clinical costs of $1 8 million.
Personnel and associated costs of $3 million, including stock based compensation.
The other costs of $1 8 million.
Our R&D expenses will continue to vary over time based on the clinical trials that we have underway. The number of manufacturing campaigns. We run on a continued process development activities as well as the other initiatives.
General and administrative expenses were $15 $9 million in 2020 compared to $11 4 million in 2019.
The $4 5 million variance is primarily related to increased legal and professional services of $1 2 million.
Personnel and associated costs of $2 5 million, which includes stock based compensation.
And outside services costs of approximately 460000.
Our net loss was $78 8 million in 2020 compared to a net loss of $44 6 million in 2019.
The $34 $2 million difference reflects the aforementioned variances.
In the 12 months ended December 31, 2020, net cash used in operating activities was $61 8 million.
Compared to $35 3 million in the 12 months ended December 31 2019.
At December 31, 2020, we had 51 $5 million in cash and cash equivalents.
<unk> to 35 million December 31, 2019.
At March 19, 2021 on cash balance was 61 $5 million $10 million higher than at the year end 2020.
This cash balance, reflecting our raising of $26 6 million of proceeds through our equity line.
Before we open the sub for some questions from those who called in.
I'd like to address some written questions that have been submitted.
VJ would you like to take the lead.
Sure.
First let me. Thank all of you who have submitted questions to us recently.
Tried to address most of the topics in our prepared remarks. However, there are a few late breaking in other questions or topics.
Thought we would address here.
First there.
There were questions around Florida, and our government funding for our Covid art work.
Currently we are not engaged in any discussions with BARDA.
It's hard for us of stay with the impact of the New administration will be at this point.
Clearly clearly there is an intense focus on vaccine production distribution.
And it is possible that new leadership, they refine the U S government's approach.
Our plan is to keep a close eye on is to evaluate whether there may be opportunities that makes sense for the company.
The more important point is that we remain positive about the potential for multistem treatment of <unk> patients are generally beyond just COVID-19 and intend to continue development in the area.
Potential opportunities to engage with the U S government emerge we should be in a good position to pursue them.
Second half of the specific question about Masters two in Europe.
We had hoped the launch of European sites by the end of 2020 and this did not happen.
A major contributor was the Covid the desk endemic many of our targeted sites it shifted their resources the dealing with the pandemic. In addition to generally and conduct on our site initiations in person, which was the current continued travel restrictions.
As may initiation difficult to do on Europe.
Additionally, it's taken us a little more time than expected to finalize regulatory authorizations to proceed in targeted countries.
Going forward the initiation of Masters two clinical trial activity outside of the U S will be a priority for us.
Particular over the next several quarters.
Third.
There were some questions about the facility and still.
We have entered into a lease of the building in Stow, Ohio, and just the short derived from our corporate headquarters.
And which we could build lab and manufacturing capacity.
It's too early today to describe our specific plans and timing related to the scale and our overall commercial manufacturing strategy.
But we look forward to sharing more details over the course of the year.
So with that we'd be happy to take a few questions from todays participants.
As a reminder to ask the question you will need the press star one on your telephone.
First question comes from the line of Greg Harrison from Bank of America. Your line is open.
Hey, guys. Thanks for taking the question.
Just wondering what your expectations are for the.
Treasurer of <unk>.
Trials in terms of the timing and also as well as the data all the world.
The kind of a hurdle rate or some level of efficacy that.
You think would be necessary.
Ill provide a strong positive read through of table Masters to Olivia Tong.
Thanks, Greg for the question.
So just to repeat the expectations for timing for.
The one bridge study in Japan in the Treasure study in Japan, and then the read through from the Treasure study to our Masters two study.
With respect to the timing at the end of the day, that's going to be driven by enrollment completion and some of the analytical and related work associated with getting to the data on that will be driven by Helios I think our expectations are that we will see top line data in the next couple of quarters.
But at the end of the day, we will have to look the Helios to provide further information publicly about the timing.
The question you asked about the read through from the treasure data to the masters to data is important.
Over the next.
A couple of months next interactions we have with you we will probably spend a bit more time setting expectations about how we think about interpreting the results from treasurer.
As I said in the prepared remarks, we do believe the information and data generated and treasurer will be important.
To helping us understand expectations about our masters two study for.
Particular, we will look at some of the key endpoints.
The 90 day Mris shift analysis is going to be one of the key things obviously, its our primary endpoint on the.
Treasury studies got substantial power of of 220 patients. There are a couple of other endpoints will be looking at very closely as well and we have done some analysis, but we will we'll begin to talk a little bit more about debt when we have more clarity.
With respect on the timing and availability of data.
Okay makes sense. Thanks, a lot thank.
Thank you.
Your next question comes from the line of David David Pang from <unk> Nikko Securities. Your line is open.
Hi, everyone. Thanks for taking the questions.
Right.
Round, albeit trial.
Was just wondering if you had actually started enrolling non COVID-19 ards patients into that study and then you of any expectations around the breakdown of.
Covid versus non Covid patients.
Are you is there still of interim analysis planned with the potential for resizing of the study I know that was part of the.
The original.
By the design.
Right right, so kind of three parts of the question.
Have we run through the amendment to include other patients our expectations of the breakdown between the sub population so to speak Covid and non Covid who starts.
And then interim.
Analysis.
So I will take each in turn we have we have amended the protocol and operationalize the sites I don't have a particular kind of perspective on the types of patients. We have enrolled at this point in time.
<unk> down.
In the cohorts in which we're operating right now.
But we are actively seeking patients now that are not the non COVID-19 induced ards patients.
With respect to the break down over time.
We have kind of multiple cohorts in the study design.
The cohort we're in right now will reflect a fairly heavy COVID-19 based population. We expect we do expect the mix of non COVID-19 patients as well as we look forward to the broader efficacy part of the study or an efficacy study of more generally we would expect the COVID-19.
Induced ards population to be of much smaller component.
As we expect Covid to abate pretty substantially as we progress forward.
It's hard for us to predict right now kind of what the proportions would be again, we may have some more perspective on that.
As the Covid progresses, and it hopefully is reduced on our end as our as our trial progresses.
With respect to interim analysis, I think we disclosed the quarter, we do have interim analysis built into the study.
An analysis focused on feasibility that's going to give us a good opportunity to look at the.
The kind of the.
<unk> if you will.
For the patient population more generally.
With respect that the who spent in changes in standard of care things of that nature and will help us think through how we move the study going forward.
At this point debt is meant to be a blinded analysis of its really going to help guide how we move forward more than anything else. We have built in in the efficacy part of the study.
An analysis really focused on sample size adjustment.
We're way ahead of both of those right now so there's not really anything to report on but there's still do exist in the design of the study currently.
Got it. Thanks, that's really helpful. And then just one on manufacturing I know that's going to be a priority.
The quarters.
Wondering how you're thinking about the overall capacity in terms of things you would do in house versus.
Where you would leverage the.
The <unk>.
External contract manufacturers.
Yes, I mean thats the key strategic question, it's one we're thinking through right now.
It will certainly of better perspective of deeper perspective over the course of the year, but I think generally speaking our perspective is over time, we're going to have both internal production capacity add external CMO production capacity, we believe that having that redundancy is going to be critical at.
It will also help us serve multiple geographies.
So that's the the basic overall strategy with respect to the sequencing and timing of the capacity and when it comes on.
Of working through that right now.
The good news is we've made really good progress on the process development side, we feel very confident at this point that we have a platform that would enable us to serve large markets.
As I noted in our prepared remarks, one of our key priorities is essentially achieving proof of principle around as we've already made great strides I expect.
Sure some additional information with you all about that and the.
The next couple of quarters.
But I would ask for your patience.
As we finalize our strategy with respect to the commercial manufacturing capacity.
And we share with more of that information over time with you all.
Great. Thanks for the color there and then maybe just one more if I may.
Sure.
Yes, just on cadence of operating expenses for the year.
Any color there.
How well positioned are you with your current cash runway.
I'll kick maybe at first kind of design.
We feel like we have.
Adequate resources to pursue what we need to pursue intermediate term I mean, we're really focused on the key priorities this year, which relate to advancing our clinical development activities.
Achieving proof of principle.
And planning for commercial manufacturing.
And then starting to lay the groundwork for broader commercial capabilities from the company. So we feel like we're well positioned to do that we have ahead of us potential milestones that also could play into how we invest going forward. Obviously the data readouts are going to be one of those potential business partnership is another.
One.
For those should factor in as well to how we think about investment.
Going forward either do you have the elster.
Just just to add and thanks for the question David.
Of our burn rate in the fourth quarter was actually slightly lower than our burn rate in the third quarter.
And as you know we work for.
Carefully to control our burn rate and we do have control over the allocation towards the priorities of capital availability will allow on as BJ says the.
There are potential opportunities in the near future to raise additional capital.
And we were successful raising a fair amount of capital on the first quarter. So.
Nothing else to add.
Thank you.
Thanks, David.
Thanks, So much I'll pass it along.
Thanks.
That is all the time, we have for today I will now turn the call back over the BJ for closing remarks.
Thanks.
Thank you all for participating in our conference call today, we look forward to a productive 2021.
And updating you on our progress over the course of the year have a good night. Thank.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Yes.