Q1 2021 Athersys Inc Earnings Call
Buy back on to the average since first quarter 2021 results conference call.
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Thank you and good afternoon, everyone I'm, Karen <unk> director of corporate Communications and Investor Relations for answers it.
Thank you for joining today's call. If you do not have a copy of the press release issued at the close of market. It is available on <unk> website and at <unk> Dot com.
And here with BJ Lehmann, President and Chief operating Officer, and interim CEO, John Harrington Executive Vice President and our Chief Scientific Officer, and Ivor Macleod, our Chief Financial Officer.
A webcast of the audio will be available starting tomorrow Friday may 7th at 12 P. M. Eastern time on our website under the events section.
Access information for the replay is also in 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 statements as a result of various important factors, including those discussed in our forms 10-Q, 10-K and other public SEC filings.
We anticipate that subsequent events and developments may cause our outlook to change.
While we may elect to update these forward looking statements at some point and the future, we specifically disclaim any obligation to do so.
For the benefit of those who may be listening to the replay this call we call and recorded on May six of 2021.
And then we may have made announcements related to the topics discussed. So please reference our most recent press releases and SEC filings.
With that I'd like to turn the call over to Vijay Lincoln D. J.
Thanks, Karen and BJ Lehmann President.
Hello, and interim CEO of addresses.
It's been just six weeks since we had our 2020 year on earnings call.
We remain on track with our priorities and look forward to important progress during the remaining of course for the year.
And our call today I will provide a short update on our business operations.
And then hand, it off for John Harrington, Our Chief Scientific Officer, who will share some highlights of our activities associated with developing and preparing for commercial scale manufacturing and.
And finally, Ivor Macleod, our Chief Financial Officer will share information about the company's financial position.
This will be followed by brief question and answer period.
To get started I would like to provide a short reminder of our priorities. This year first we are focused on advancing our clinical programs with particular attention to our masters two study.
And and supporting Helios, and our partner in Japan as it prepares for applications to the <unk> for potential approval and Multistem therapy for arts and stroke <unk>.
Sumit and successful trial Readouts.
Second we are preparing for a commercial product manufacturing.
By further developing our bioreactor based process for commercial scale production.
Planning for manufacturing capacity for this purpose and <unk>.
Taking the first steps on the path to put this capacity in place.
Third we have underway important activities intended to prepare us for commercialization, assuming successful trial results and marketing approval applications.
And a prudent and staged way, we will continue to develop and invest and commercialization enabling capabilities.
As for important 2021 milestones of particular note.
We expect to see top line results from our Japanese partners ischemic stroke study treasure, providing us a first look at late stage clinical trial data for the treatment of stroke with Multistem cell therapy.
Or and the Master cell. We are also working to refine our large scale manufacturing process, establishing technology transfer readiness to enable us to transfer officially the process into the GMP manufacturing environment.
And Japan, Helios recently announced the completion of enrollment of its one bridge clinical trial, which is evaluating multistem treatment of pneumonia induced and COVID-19 induced acute respiratory distress syndrome or <unk>.
This study, including 35 subjects was designed as an open label study.
Though the size and design of this study may affect the weight of the findings we hope to see results that are in line with our previous must Ards study and that can provide the foundation for conditional or full approval for this orphan indication and Japan.
Overall, and the short period from our last call. We are operating on plan and in line with expectations shared on that call.
We look forward to updating you on progress and subsequent calls over the course of the year.
On another note I would like to remind you that our annual meeting of stockholders is approaching.
You should be receiving our annual report and proxy statement by regular mail or E mail very soon.
We encourage you to vote on the proposals included in the proxy statement.
And our board of directors recommends unanimously that you vote in favor of this for proposals.
I would like to bring to your attention one of the proposals and particular the proposal to increase the number of shares of authorized common stock, which requires the approval of at least 50% of the total outstanding shares.
And makes your voting participation, especially important.
With respect to the path of our development into a commercial stage biopharmaceutical company 2021 is an important transition year as we await completion and results of our own pivotal studies, such as masters to favorable results from the Japanese clinical trials and successful establishment of a large scale manufacturing.
Factoring process.
And we expected to provide the foundation for putting in place over the next several years the capabilities and assets to enable long term success, including commercial operations commercial manufacturing capacity and distribution among other things.
Ultimately, we may put these capabilities in place through partnerships hiring or investment.
By approving the proposal and increasing the authorized number of common shares you would be providing the company with the ability and flexibility to consider business or financial transactions involving stock.
Which are intended to support when needed.
The development of these important capabilities and assets essentially for commercial success.
It is important to keep in mind.
And for the company to issue shares and the context of a business or financial transaction and the approval of our board of directors is required.
This authorization would enable the board to make financing decisions and the best interest of the company and our shareholders.
Without approval of this proposal by our stockholders and the company may be hamstrung, and its ability to invest and commercial preparations and conjunction with favorable results potentially delaying our impact with patients and adversely affecting our commercial opportunities.
We ask you to vote and vote in favor of the for proposals recommended by the board of directors.
Thank you.
I would now like to turn it over to John Harrington to highlight our recent process development and large scale manufacturing preparation activities and accomplishments John.
P J and good afternoon on John Harrington, Chief Scientific officer here at average day.
As we near key clinical readout for us in Japan, and for our partner and acuity.
And then subsequently in the United States and Europe, we have begun and building our commercial capabilities, including manufacturing.
In particular over the past several years, we've invested we've invested significantly and our process development and manufacturing of NDS for sale with the objective of increasing annual production capacity and reducing cost of goods.
Historically, we've utilized for two dimensional manufacturing process and cell factory, which has allowed us to move efficiently and to clinical development to establish proof of concept.
It is also facilitated discussion with key regulatory agencies.
<unk> FDA EMA and P&A.
With this as a foundation and we are focused on developing a commercial scale bioreactor process capable fully supply and <unk> product and meet the commercial needs of Asics and.
And our partners.
To this day, we've carried out.
For small scale experiment and.
And scaled down bioreactor models to optimize media formulation product yield operating parameters and of course product quality.
And this work has led to the development of an intermediate scale bioreactor process that has now been transferred to our manufacturing partner Rhonda and GMP production. Using this process is currently underway to support ongoing clinical study.
At the same time, we have continued our process development work and progressively larger and larger Bioreactors and we've now achieved proof of concept that are 500 liter bioreactor scale.
And I'm not going to discuss the specifics on.
On our final manufacturing process due to the proprietary nature of this work. We've now developed bioreactor based manufacturing processes to significantly increase that size and reduce cost of goods.
These processes and fully scaled out will allow us to be hundreds of thousands of doses.
And more than the net net yourself per year.
And the coming months and quarters, we plan to continue our discussions with regulatory agencies about the implementation of these newly developed manufacturing processes and to complete the work necessary to enable us to transfer and implement these process b and a GMP manufacturing facility.
For more information on our process development and manufacturing activity and.
I'd like to refer you to our recently uploaded video and other material on our company website Www Dot <unk> Dot com.
And with that I'd like to turn it over to Ivor for a discussion of the company's financial results for the quarter Ivor.
Thank you John.
Good afternoon everybody.
Thank you once again for joining today's call.
I'm Tycho Mcleod Chief financial officer of emphasis on it is my pleasure to give you an overview of the financial results for the first quarter of 2021.
And there were known revenues for the three months ended March 31 2021.
On March 31 2022, respectively.
Our collaboration revenues currently fluctuate from period to period based on the delivery of goods and services under our arrangement with our Japanese partner.
Research and development expenses decreased to 17 5 million for the three months ended March 31, 2021 from $12 1 million for them from.
The comparable period in 2020.
The $5 4 million increase is primarily associated with increases and clinical trial and manufacturing process development costs of $4 3 million Chris.
Personnel costs for 700000.
And stock compensation costs of 400 meters.
Our clinical development clinical manufacturing and manufacturing process development expenses vary over time.
Based on the timing and stage of clinical trials underway.
Manufacturing campaigns for clinical trials and manufacturing process development projects.
General and administrative expenses increased to eight 8 million for the three months ended March 31 2021.
Compared to $3 $5 million from the comparable period and 2020.
The $5 3 million increase was primarily due to one time charges related to the settlement litigation between the company and Doctor Cabinet Zone.
CEO of <unk> and a director for your company.
And also the resignation of our CEO, Dr Gil and bulk, including $2 $3 million and accelerated stock compensation costs.
Our net loss for the first quarter of 2021 was $26 million.
Compared to a net losses of $50 six and then it goes and the first quarter 2020.
The difference primarily results from the previously mentioned variances.
During the three months ended March 31, 2021, net cash used in operating activities was $17 1 million.
Compared to $12 1 million and the.
Three months ended March 31, 2000 expenses.
At March 31, 2021, we had $64 2 million and cash and cash equivalents.
<unk> to <unk>, 51, and a half million tones and.
December 31 2020.
Before we open this up for some questions from those who called in.
We would like to address some written questions for the submission.
P J and I take it from here.
Sure.
First thank you to all of you who have submitted questions on <unk>.
To address a few of these here.
The first question is about the timing of data from the Japanese studies and particularly the one bridge study for Arts and the treasure study for ischemic stroke.
And as I noted before Helios has announced the completion of enrollment and the one bridge study with respect to the topline results.
Helios controls the timing and nature of any public disclosure, which will depend on the completion of the analysis of the study data typically and surcharge studies. The first 60 days following treatment represented core window for patient data collection.
So with this in mind, we hope that we will see the top line results available relatively soon.
At this point, it's difficult to be very precise about the timing of top line data from the treasure study.
Based on the disclosed study status and trial design.
We hope to see and that topline data later in the year.
Though like the art study Helios controls the timing and the nature of the data availability and the public disclosures.
A second question was about the status of the search for a new CEO, we thought we'd address that one here as well.
First the board has already launched a comprehensive process to identify and attract a leader who can guide the company effectively into commercialization.
As we stated in the past our objective overall is to have the best leadership and talent available to lead us forward towards the commercial stage.
At this point, we can and cannot provide any guidance about the timing of the process.
We will provide further updates on the search when there's something to report, but in the meantime, we do have in place and experienced committed executive and leadership team with the support of the board.
To continue and drive our operations forward over the course of the year and achieve our priority initiatives.
So with that we'd be happy to take a few additional questions from todays participants.
And as a reminder, if you'd like to ask a question and please press star one on your telephone keypad.
The first question comes from the line of Greg Harrison with Bank of America.
Hey, guys, just and Olivia brayer on for Gregg. Thanks for question and my first one is on the Masters two trial design can you just talked about from the similarities between your trial and Helios treasure trial data that could be positive indicator of success for your study down the road and and then also what.
And there was any level of patient enrichment beyond what we've done and the Japanese study and then I have one follow up afterwards.
Sure.
Let me talk about the design and similarities I think that'll give you a pretty good idea first off with respect to the patients that are coming into the study.
Patients are essentially very similar these are patients that have moderate to moderate severe strokes as measured by <unk>.
And IHS, which is one of the standard scales for evaluating neurological function following and event like a stroke.
And that is between 8% and <unk> on that scale at the time of entry into the study.
It's got to be a durable stroke and so we evaluate these patients for some period of time to make sure it's not a transient stroke event.
And that's important for ultimately the dataset and the robustness of the data set.
These are also patients.
Who are being treated with an 18 to 36 hours and both cases.
And.
And there also.
Have available to them.
The doctors, who are treating them other.
Device and a tpa and technology that could help us for you for fusion. So in all cases, we are including patients that could have had reperfusion therapy, so long as that reperfusion therapy.
Doesn't fully address the stroke and they remain within the targeted patient criteria and I. Just mentioned so those are the similarities with respect to the patient population, obviously, it's a Japanese population there.
I think with respect to the endpoints again very similar.
We are looking at a set of primary and secondary endpoints that are also covered off in the treasure study. The primary endpoint for US is something called the MRM shift analysis, which is essentially and analysis of the distribution of mris scale scores and the population comparing.
Placebo treatment.
We have as key secondary endpoints.
Things like excellent outcome evaluating Ah patients essential essentially the recovery to normal state.
And we have as well evaluations at day, 90, and <unk> hundred 65, and a series of other secondary endpoints that are similar between the studies.
The treasure study has the same endpoints however, their primary.
Is the excellent outcome.
Measure and a key secondary for them is the MRI shift analysis, it's a smaller study about 220 patients.
We do believe it will be some.
And what predictive.
Our outcome, but remember it's a different patient population and while there is a good degree of similarity and standard of care. There there are some differences such as.
On a lower rate of the <unk> therapies and the like so we do think it is going to be very informative with respect to how we view and the potential for masters two.
Okay, Great. That's helpful. And then in terms of your EU partnering strategy can you just give us an update there now now that we're getting a little closer to the to the Japan data for for both programs and.
Whether thats still wait and see approach or whether there is more of a near term prioritization.
We continue to have discussions with potential partners.
With respect to rights in Europe and outside of Europe.
And it's possible that we could do something before data or after data at.
At the end of the day, we want to find the right partner.
And he brings the right capabilities to the table to help us be successful and commercialization and I think the expectation and Europe is defined a potential partner with deep commercialization experience and capabilities preferably in the indication.
And the indications we are working to the critical care indications.
And who's got a demonstrated commitment to the space and cell therapy gene therapy space.
So that's what we're looking for and the timing is really going to be driven around finding that right deal.
We are approaching the data now.
Certainly that could have some impact.
On the nature of the deal.
That will be taken into consideration as we continue to have our discussions going forward.
Great. Thanks, so much guys.
Thank you.
Your next question comes from the line of Jason Kolbert with Dawson James.
Hi, guys good to hear your voice.
John I understood a little debt about what you were talking about not <unk>, but when I started to connect it to the numbers and what <unk> was talking about in terms of for R&D expense. So my question for you is on an ongoing basis.
Should we be thinking about cost of goods, obviously right now it's very high because it's in a clinical trial period, but it sounds like youre, making a lot of progress towards driving that process to be more efficient I E. Lower Cogs. So can you help put your comments and perspective.
In terms of the cost that's showing up now versus what the cost might be under commercialization.
Very good ideas and good to hear from you.
Yes.
And as I mentioned in my comment the.
And the initial.
First generic and manufacturing process with a two dimensional cell factory based processes and relatively manual relatively.
<unk>.
And allowed us to move quickly and clinical development and allowed us to work with regulatory agencies to define.
The key parameters around.
Ultimately the commercial process.
And why.
Ultimately has a good and is driven by a number of and raw.
Raw materials is the big one <unk> facility.
Et cetera, and as you increase that Si.
And through for example, a bottleneck and processed raw material and become a larger component of cost for good and we've optimized the cost for those raw material through optimization process needs and processes et cetera, and we've dramatically reduced waiver, we dramatically reduced facility and ether.
<unk> three <unk>.
Bye.
And we Canada associated with it from a.
Economies of scale, and we can capture and Keith scale out that bottleneck of profit.
So overall.
Moving to mobile and reactive process.
And will impact on cost of debt, namely.
And it will reduce cost and good.
Significant and has already mentioned that we had and intermediate scale biogas and process, we're producing and E&P fraud losses.
And we plan to use that and general clinical trial.
And that until we're ready.
Meaningful reduction and the cost of goods, but the.
And more significant reduction and cost of goods.
The final.
Large scale bioreactor process now.
And we've initiated the process transfer and that final commercial scale cloud and reactive process to a CMO and we're exploring the possibility and bringing that in house as well and the pattern of that investment.
And will be.
Likely around.
And a key clinical data readout.
Yes.
But overall, there will be a substantial reduction in costs and good cost.
Cost of goods will be we expect and Canada and the biologic space.
And these are complex products.
And can grow.
There are a lot of challenges and producing at large scale and unique.
Drug and you got very you've got their historical on.
And then restore processing timelines et cetera, and as Inc.
That guidance, you have more and more material that needs to be processed and a very finite period on this.
Susan Mike and antibody or comment on proteins that can be produced at screening and and processed over days a week, we have ours the process and the theory, all purify concentrated formulation and file and then ultimately as you know.
Product and its credit reserves will be and assortment and to do that and that creates challenges I think we've largely overcome the major challenges and we developed a process.
In the process and the and of our corporate development group like for Bob.
And so we expect to move that forward into commercial scale production in the coming years.
With potentially material available.
And sort of top end and that but ultimately.
It's been a major focus of the company.
And the Asia investment in terms of people and processes and and we're quite happy with where we are and net profit.
Is that for a second TPS.
<unk>.
Yes.
And I understand how much is actually in there and it will take some time to unpack that but what I hear you, saying is on good clinical data the justification to put money in the ground and potentially bring manufacturing, even and how to realize the economies of scale as a possibility.
Sure.
Yes, we're going on we're going to look at that that's going to be one of the options that we would have going forward yes.
And BJ. Thank you John.
And one of the transition that I get asked a lot about is Gil <unk> departure, and you've talked about commercialization and bringing in our CEO and commercial experience and remember when Josh Vogel the founder of vertex stepped down everybody was shocked and it made a lot of sense, because they brought somebody and who had commercial experience.
And so what are the.
What does the resume to look like for the person you are bringing in is it somebody with.
Big pharma and and.
Essentially stroke.
Experience too.
Launch this product.
I don't want to comment too much on this I think we have a strong process in place being led by the board, but suffice it to say, we're going to cast the net broadly because we want to look at a variety of different capabilities that can help us and the commercial stage and that could be large pharma and can be smaller biotech.
It could be experience and biologics it might not be so we want to bring the right set of capabilities into the company and that's something that complements the team here.
A person who's got.
For the set of capabilities beyond just commercialization as well because thats going to be important to over the next couple of years, but other than that I would leave it to our search team at the board level to drive it forward I had seen the process outline and we participated.
I think it's a robust process I think we're going to find some very strong candidates, who can really bring value to the company. So, let's let that develop and we'll report back.
Okay. Thanks for the update guidance.
Okay. Thank you.
Thank you I'll now turn it back over to BJ Lehmann for closing remarks.
Thank you.
In closing I'd like to thank you all for participating today.