Q2 2021 Athersys Inc Earnings Call

And then.

[music].

Good day, and thank you for standard bus and lock on to the <unk> second quarter 2021 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.

Quick question on during the session you will need to press star 1 on your telephone.

And did acquire anywhere that assistance, Please press star zero and.

And I would like to hand, the conference over to your Speaker today current Kennedy. Please go ahead.

Thank you Ron and good afternoon, everyone I'm Kieran Kennedy director of corporate Communications and Investor Relations for <unk>.

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 the average this website at <unk> Dot com.

And here with BJ Lehmann, our president and Chief operating officer, and interim CEO and I on the call our Chief Financial Officer.

A webcast and audio will be available 3 hours after the call's conclusion on our website under the events section the access information for the replay is also in today's press release.

And we remain 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 and 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 there for others, who may be listening to the replay this call with child and recorded on August <unk> of 2021.

Since 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 would like to turn the call over to Keith.

And each a layman D J.

Thanks, Karen.

B J Lehmann President.

Hello, and interim CEO of mattresses.

And our call today, I will share an overview and some details of our recent corporate business and operational activities.

And cloud our Chief Financial Officer will then provide an update on our company's financial position and.

This will be followed by Q&A.

We will turn shortly to our recent announcements regarding our partnership with Helios and the 1 bridge study in Japan.

Before this I would like to describe briefly how we are tracking relative to key goals and milestones for the year.

First.

As we will discuss in a moment, we have resolved to open issues and put in place and enhanced collaboration structure with our partner Helios and tended to best position us and of Multistem cell therapy for regulatory and commercial success in Japan over the long term.

Which was an important objective for us and the first half of the year.

On the data front as we expected <unk> reported out top line data from the 1 bridge study and <unk>.

We appear to be on track with our treasure ischemic stroke study for.

Helios noted in their Q1 financial results that at the time, it were and the process of finalizing enrollment.

As described in our last earnings call by Dr. John Harrington and.

Another priority for the company. This year is to make substantial progress and establishing large scale bioreactor manufacturing to support eventual commercialization efforts and anticipation of receiving regulatory approvals for the multistem product.

We continue to make good progress and have recently initiated the process of transferring our larger scale 500 liter bioreactor process to a qualified GMP manufacturing facility.

Though these efforts naturally will take some time to complete.

This represents an important milestone for the company.

Finally, we have made progress and our masters 2 study, increasing enrollment and adding more sites during the second quarter.

We are poised to further ramp up our efforts during the second half of the year.

We are advancing on other fronts as well, we continue with our <unk> and matrix trauma studies and.

And plan to incorporate multistem product manufactured and Bioreactors into these studies during the second half of the year.

And though we have some time, we are moving forward with commercial planning and preparations for the U S and European markets on top of the support we are providing the helios for the Japanese market.

In addition to our work to prepare for commercial manufacturing.

Our efforts in this area are focused on developing our strategy for reimbursement and the United States and executing the first steps for this strategy.

And securing the best possible partner to develop the European markets with us for all Multistem critical care indications.

As we have noted in recent calls our current view is that we would be and the best positioned to find the right partner and the right deal with additional data from ischemic stroke clinical development and hand.

And short.

Though we will continue with current discussions however, we would not anticipate entering into a deal until next year. After topline data from the treasure study has been disclosed.

In general our ex U S commercial strategy, including Japan, and Europe will be founded on Parker commitment and execution.

With partner investment risk sharing and share rewards.

We believe that this approach offers the company and our shareholders and attractive balance of risk and reward.

Let's now turn to the top line 1 bridge study results reported by Helios last Friday.

We are enthusiastic about what we have seen so far from the results.

We believe that the 1 bridge study results together with our prior clinical study data may allow <unk> to move forward with and application for marketing approval in Japan for this orphan indication.

And so ongoing consultations with the Japanese regulator will be definitive.

With this data and our must ards clinical results and other research data.

We also remain confident that multistem treatment can have a meaningful therapeutic benefit for <unk> patients.

Let's start with some background information on the study design before we speak to the preliminary results.

The 1 bridge study is an open label trial with 2 patient cohorts. The first cohort includes 30 pneumonia induced arts subjects with 'twenty and the Multistem treatment group and 10 and in parallel standard treatment control growth.

A second cohort was added to include 5 COVID-19 induced ards patients who received Multistem administration.

By comparison, our previous must Ards study was a double blind placebo controlled study also with 30 subjects and the efficacy group with 20 subjects, receiving multistem treatment and 10 subjects getting placebo.

Over 70% of the patients and the must ards efficacy cohort had arts, resulting from pneumonia maker.

Making the 2 studies similar.

There were no COVID-19 induced art subjects and the must Ards trial. However, our ongoing <unk> study includes COVID-19 induced ards patients.

Helios reported higher ventilator free days over 28 day period, and lower mortality and the Multistem treated group compared to standard therapy and cohort 1.

<unk> of 20 days versus 11 days, and 90 day mortality of 26% versus 43% respectively.

This data is consistent.

Okay.

For all subjects and the efficacy group and also for the patients with pneumonia induced ards.

Additionally, Helios reported 25 ventilator free days and no mortality and it's COVID-19 induced patient cohort.

Which compares favorably with expectations for the severe ventilator dependent COVID-19 pneumonia patient population based on recent data and the field and according to Helios.

Even in view of the limitations of the study, namely its size and the open label design.

We view the data is very promising and supportive of our therapeutic hypothesis that multistem treatment can attenuate the severe inflammatory activity associated with arts and.

And can lead to greatly improved clinical outcomes.

We look forward to further analysis other exploratory data and.

And the 180 day follow up data from the 1 bridge study.

Additionally, we will work closely with Helios to support regulatory and manufacturing PREPA preparations to move the Arts program forward and Japan.

As noted earlier, our <unk> study is moving forward.

We've made some modifications to design to allow us to include in the study patients with ards induced by pathogens other than Covid.

We will continue to closely monitor changes and treatment practices and the patient population as COVID-19 ebbs and flows to ensure that our trial design and objectives are optimally and line for long term success in this area.

We are bullish on multistem potential for treating <unk> patients and look forward to continuing to develop.

<unk> development and a measured pace to take advantage of new information.

<unk> and Helios jointly announced last week, new agreements to enhance and expand our collaboration and Japan is helios moves closer to potential commercialization.

The changes reflect better clarity gained over the past couple of years about Japanese regulatory manufacturing and commercial.

Requirements and shorts the elements important successful commercialization in Japan.

The agreements are intended to align the collaboration structure to drive optimal investments and efforts and manufacturing and commercialization.

In particular, we are creating the mechanisms and incentives for Helios to take on greater responsibility for manufacturing for the Japanese market and to invest robustly and the commercial commercialization efforts in Japan.

We believe that this will allow us to focus our resources on our large scale advanced manufacturing activities and development, particularly in the United States and Europe.

While giving us the opportunity for a very attractive return from Japan over the longer term.

There are a number of important elements to our improved commercial partnership.

First we will provide helios access to assets. This is manufacturing technology to use with qualified manufacturers to make the product for the Japanese market.

As an important for step. This would include working directly with knee can't sell innovations.

Which is prepared under our guidance for manufacturing and Multistem product for commercial use and Japan.

This would also allow helios to invest directly and commercial manufacturer manufacturing preparations and product supply.

And for assets as to employ capital that would otherwise be dedicated for this purpose.

For advanced manufacturing and other development activities.

We will help shoulder the burden of this investment by Helios through deferrals and other adjustments to near term financial elements of the license agreement, including milestones and royalties.

Which would now be realized over time and with manufacturing and commercial success in Japan.

As our larger scale bioreactor based manufacturing comes online and is approved for commercial use and Japan, we would plan to supply and Multistem product for Helios and their commercial supply agreement.

Second half.

<unk> and Helios and clarified average this is roll and providing support services necessary for regulatory approvals manufacturing readiness and commercial launch in Japan and.

<unk>, we have put in place a framework for defining and services to be provided expectations and timing related to the services and terms of reimbursement where it is appropriate.

We believe that this will allow helios and us to work together much more efficiently and effectively.

Third our license with Helios is being expanded to include potentially 2 additional indications to be selected over the next several years under certain conditions.

This would enable helios to leverage further its investment and developing and commercializing the multistem product.

It would also provide to atlas's additional revenues from this important market.

For us to increase alignment between the companies and create further incentives for accelerated execution and investment we have added new financial elements to the arrangement.

<unk> has the potential to receive $8 million, new milestone payments from Helios tied to commercial manufacturing preparations for Japan, and the establishment of large scale manufacturing relevant to Japan.

And <unk> will issue to Helios warrants to purchase up to 10 million shares of <unk> common stock exercisable for 60 days following regulatory approval for arts and ischemic stroke, respectively.

The 3 million share <unk> warrants will be exercisable at between $1.80, and $2.18 per share depending on the timing of exercise.

And the 7 million share stroke warrant would be exercisable at between $2.40, and $2.64 per share again.

Depending on timing of exercise.

And finally outstanding claims and disputes between the parties have been released or are resolved.

Yes.

On balance we believe that this new arrangement puts helios and <unk> on a much better footing to successfully develop the Japanese market.

Bringing important new therapies to patients and creating significant value for both companies.

We look very much forward to positive progress on Japan on the art regulatory path and with treasure and the ischemic stroke program.

Sure.

With the top line <unk> data in hand, we should begin to set our expectations for the upcoming results from the important treasure study.

Evaluating Multistem administration to Japanese stroke patients.

This study is expected to have data from over 200 stroke patients randomized on a 1 to 1 basis to treatment with multistem cell therapy or placebo within 36 hours of the stroke.

This compares to the 126 patients from the double blind placebo controlled Masters, 1 study completed by us and the United States and the United Kingdom.

Of which about half of the patients were treated within the optimal 36 hours post stroke treatment window for Multistem.

As such the treasure study and will provide us with substantially greater power to evaluate the impact of multistem treatment and as quick and.

And ischemic stroke patients with.

And as more and the.

And the treasure study like its masters 2 cousin running in parallel and the U S and other countries.

It reflects and its design and other key improvements for the Masters..1 study such as noted above earlier administration from 18 to 36 hours post stroke and better patient screening.

Both the treasure study and the larger Masters 2 study with 300 patients are similar in design and underlying assumptions.

Based on differences and regulator preference the 2 studies have different primary endpoints.

Excellent outcome and.

And Japan.

<unk> modified Rankin scale shift analysis, and the United States.

But overall the each collect track and analyze essentially the same data.

Based on these factors, we expect the treasure study to be and an important indicator for the scheme ex stroke program.

However, we might expect some differences between the treasury and the Masters 2 studies.

For example, and general the stroke population and Japan is on average older than the stroke population and the United States and Europe.

And there are some differences and post stroke treatment.

And the utilization of Tpa and mechanical thrombectomy.

We take comfort, though and our data from the Masters, 1 study demonstrating meaningful benefit for multistem treatment and older patients and in patients with or without reperfusion therapy.

We look forward to the treasurer topline results, which we hope to see potentially before the end of the year.

And we look forward to Helios is up upcoming disclosure about their plans for analyzing and reporting such data.

Thus far our corporate update has been focused on our priorities for the year, our critical care programs and the announcements from last week, all very important topics to cover today.

However, it is important to keep in mind that we have ahead of us opportunities beyond what we have touched on today.

We have technologies, which we believe can be developed and applied for many diseases and conditions and.

In other words, we believe we have a platform of opportunities.

And we have prioritized our multistem critical care programs, we have conducted promising research and many other areas publishing many aspects of this work.

And we have developed other enabling technologies with applicability to cell based therapies more generally.

We believe these technologies and applications could help many people and create significant value for our shareholders over the long term.

We remain focused on the task immediately in front of us, but we will continue to cultivate the broader opportunities that would create value over the longer term.

I will now turn it over to I've worked for and update on our financial results.

Thank you for your J code.

Good afternoon, everybody once again and thank you for joining today's call.

I am Ivor Macleod, Chief financial officer of emphasis on it.

My pleasure to give you an overview of the financial results for the second quarter of 2021.

For the 3 months ended June 32021, we recognized no revenues compared to $84000 for the 3 months ended June 32020.

And our collaboration revenues currently fluctuate from period to period based on the delivery of goods and services under our arrangements with Helios.

Research and development expenditures were $17.7 million for the second quarter of 2021.

Compared to $13.8 million for the comparable period in 2020.

The $3.9 million the increase is associated with increases and clinical trial and manufacturing process development costs of $2.6 million.

Personnel costs of $800000 for.

Facilities costs of 300000 and.

Other costs of 300000.

Our clinical development clinical manufacturing and manufacturing process development expenses.

Very 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 decreased slightly to $4.2 million for the 3 months ended June 32021.

When compared to the $4.4 million and the comparable period in 2020.

The decrease was primarily related to lower stock compensation costs.

Net loss for the second quarter of 2021 was $22.6 million compared to a net loss of $18.4 million and the second quarter of 2020.

The difference is primarily a consequence of the previously mentioned variances.

During the 6 months ended June 30 of 2021 net.

Net cash used in operating activities was $37.2 million.

<unk> to $24.9 million and the 6 months ended June <unk> 2020.

At June 32021, we had $56.7 million and cash cash equivalents.

<unk> to 51.5 million at December 31, 2020.

We believe that our cash on hand is sufficient to fund on near term priorities.

While our preference and the future is to secure non dilutive financing for example through business partnerships, we have in place and actually line up to $100 million.

Which we can draw upon to the extent necessary.

I will now pass the call back to Vijay for the question and answer session.

<unk> digital.

Digital.

Okay, we'll take some questions.

That's a reminder to ask a question.

Great.

And the phone bill.

Good question.

We'll pause for just a moment I hope on the P&L.

Yeah. Thanks for question.

On the line Greg Heckman.

Both global and research your line.

Sure.

Good afternoon, and this is going on on for Greg.

2 questions from from US today can you have and update on the status of Mccovey on enrollment and are you seeing any impact from the increase and COVID-19 cases recently.

And second what what results are you looking for from the treasure trial too to increase confidence and your stroke program.

It's simple and statistical significance or is there something.

More nuance for details on how you are looking forward to really inform your view on program. Thanks.

Sure.

With respect to your first question on the Covia.

We continue to.

And enroll and and Mccovey study.

And it's moving forward, we have the number of dedicated sites focused on the study.

With respect to the impact of Covid, there's certainly more patients that are coming through the pipeline all the severity levels or not.

And a great with a lot of the breakthrough cases, and so forth.

And any event, though on the Cove is moving forward as you know and as we've discussed we've expanded the study to include patients outside of Covid, So and yen. What we are aspiring to do with that study is to have a good blend of COVID-19 induced <unk>.

Patients, but also.

<unk> patients debt.

And I have developed darts as a result, other pathogens and so forth and we're moving forward.

On that study, it's a relatively large study and with a couple of different groups. So.

This COVID-19.

The increase would.

Would be expected to have some impact it's hard to say, how durable that will be over time.

With respect to the treasure study as I was indicating in the comments.

We do believe that this study.

<unk> be pretty important for us in terms of learning about the potential impact.

And that we might expect to see and the Masters 2 study.

Naturally we would like to see statistical significance and the treasure study.

We believe the study is powered to show that.

As I noted there could be some differences and the patient populations, perhaps and average age and.

And the Japan stroke population thats, a bit higher than it is and the United States that gas and impact differences and standard of care and.

And we don't think thats going to change the.

Outcomes and it is.

Substantial way.

Because we've seen.

Benefit and those older patients and without significant without reperfusion therapy, and our Masters 1 study.

It's possible that even without significant and in fact, we would look to this that there are trends positive trends with respect to benefit <unk>.

Looking at outcomes like excellent outcome.

And the modified Rankin scale and the impact on that and patient treated versus placebo will be looking at those kind of metrics along with other secondary endpoints and clinical outcomes hospitalization and alike.

To give us.

Comfort with respect for the study.

Masters, 2 and how the outcomes would be so I think our general view is.

We don't necessarily need to see statistical significance from the treasure study.

We feel confident with respect and the study that we have designed the answers too has got 300 patients. So it's got even more power than the treasure study.

But what can we expect to see as a minimum as trends into the important primary and key secondary endpoints.

Which would on our mind kind of validate what we are trying to accomplish with masters 2 and be a very strong leading indicators on the potential outcome for that study.

Okay.

Thank you very much.

Thank you and again, if you would like last question. Please.

And I know it sounds cool.

Your next question.

And maybe walk from SMB Nicholas Your line is now open.

Good day.

Okay.

Thank you for vital for multilevel.

And lastly.

What.

And we'll be providing.

On line.

And so much day that Inc.

And just thinking.

And.

On the table and Goldman.

Yes.

And then Brian.

Thank you.

Yeah.

Could you have on them.

Net of language.

Thank you Danielle.

Okay.

Okay.

The second question I was on a say clear on I think with respect for the first question.

Maybe I'll address that and we can.

Come back for the second question I think the first question is focused on the types of support that we provide helios and moving forward on the regulatory and manufacturing fronts.

And okay, I can speak to that pretty directly.

As you can imagine we have a great deal of knowledge about our product.

We have.

Very deep knowledge and experience with respect to interactions with regulators and particular in Europe, and the United States turf many of the questions and issues that would come up on the normal processes, we've been involved and the Japanese regulatory processes with Helios and even before Helios.

So we have kind of deep perspective on the regulatory front and in addition.

Of course.

And we have been involved directly with the manufacturing of our products we've used outside cmo's.

With GMP capacity to manufacture a product and we're continuing to work with assets Gmos.

It is saying as we as we transition into bio and reactor and larger scale production. So we do have very deep expertise on those fronts.

And so in those areas with respect to <unk>.

Helios activity and.

And building for success in Japan.

And we'll do what we need to do to assist Helios and the regulatory discussion.

That is providing information that we have about the product.

Sure.

Outperforms and different studies.

And if it's providing consultation with respect to how to position it.

Data or arguments or respond to questions from the regulators and Japan, we will provide debt support and we have a great interest and that and we're highly motivated to do that because if helios and successful and moving forward through the regulatory process application and <unk>.

Ruble debt gets us closer to a return.

From the Japanese market for highly motivated to support debt on the manufacturing front and 1 of the key aspects of the renewed and improved partnership that we have is to enable <unk> to manufacture product for Japan.

And that allows us over time to focus our resources on some of the larger scale bioreactor manufacturing thats going to drive larger commercial opportunity and United States, and Europe, and ultimately supply product back on Japan.

And to do that.

Not only will <unk> be investing and some of that manufacturing, which is very beneficial to us.

But they need to be up to speed and and full control of the manufacturing activities and so we will provide CT tech transfer support as an example, consultation with respect to manufacturing processes et cetera to be sure that they are enabled to manage manufacturing with quad.

Suffice gmos and that they are doing the right things to maintain product performance quality and importantly, the intellectual property built into the technology.

So those 2 things will be key areas and support for us.

And in essence, while we're going to continue to support the activity and Japan, we get a lot of value for that.

And Helios is going to be taking on increasing responsibility with respect to certain aspects that we would otherwise.

Carrying a load on.

So that's the first question. So the second question I wasn't 100% clear on it sounded like you were asking for enrollment update.

<unk> you.

Do you mind repeating your question.

Ladies and gentlemen, Paul.

Paul.

And next income.

And you have any idea.

Thank you for that.

So I'm going to address what I think I heard I think I think you were asking about the updates on enrollment with respect on the Kobe and study or Masters 2 study.

Address those briefly.

Addressed I talked about Mccovey, and just a few minutes ago.

As we discussed in the past we have.

And study design and the Covid study Thats got multiple phases, and it's a rather large study.

Intended to allow us to develop efficacy data that could.

Become part of the application for approval.

And we're moving forward with the study and will take some time to run the study even with increases in Covid.

Incidents and the you'll.

States and Europe.

So we're going to continue to move that forward, we have been moving that.

Study forward at a measured pace largely for strategic reasons and that is there have been fairly significant changes and the standard of care and.

And and the patient population, particularly in the Covid patient population over the course of that study.

And we want to make sure that we understand where this debt is going to settle.

And with respect to this particular study and the patients so that when we get to the larger efficacy part of study a phase III type part of the study.

We are optimally set up the design and aligned for us too.

Demonstrate efficacy from treatment with Multistem and the average population. So that is moving forward at a measured pace at the moment, even though.

Covid has increases we've seen and the news.

And Masters 2 as I mentioned, we are.

Adding to enrollment.

On.

And we are poised to really cranked up and the second half of the year I think as we projected and.

Our last call that's still the plan.

And our next quarterly call, we'll be able to report back to you on our execution and progress on that front and we may even have some perspectives about how that translates into.

The future with respect.

Enrollment goals over time.

Completion of the study et cetera, but we need to add a little bit more data on their belt as we as we crank this thing up.

So hopefully that addresses your questions.

Yes.

Okay.

Well thanks.

Yes, just a couple of other points.

There've been a couple of questions that have been submitted by shareholders that I buy it for US here that we haven't addressed and my comments during the questions from the analysts and I thought I would focus on a couple of these topics briefly before we wrap up.

Number 1 we've got net at the host of questions from shareholders about the status of our CEO search we addressed this on our last call.

And I can say this we have on the CEO search committee of the board has seen some very very good candidates for the position we're.

We are in ongoing discussions with many of these candidates.

And we feel very confident.

Debt over time.

We'll be able to attract outstanding CEO, who can help lead us into commercialization and will take some time.

To get that done we want to find the right the right person.

To take on that leadership role and move the company forward in that direction. So that's ongoing and we have more specific information and to provide for our shareholders about progress on that front, we will provide debt.

Let's see we've addressed the COVID-19 resurgence which was.

Recurring theme.

There've been a number of questions about the details of the Helios agreements.

And we provided provided a little bit more detail our comments today.

And in Q has got more detail in there and I think as many of you know our standard the standard requirement practice for us.

And is to submit.

Material agreements such as these are as exhibits.

And our quarterly filings. So this was a third quarter event and so those agreements would be submitted as exhibits to those filings and November so that additional detail.

We will be available there.

And then we've had a number of questions and this will be the last kind of topic.

Dress and terms question, but there've been a number of questions from shareholders.

About partnership and.

The impact of this data and more generally and status of the discussions.

Some of that and the comments that I've already made.

But let me say this we've been in discussions with.

Parties interested and ours parties interested and stroke parties interested in critical care and more generally.

And folks that are interested and other indications we've been in discussions with potential partners that have global perspective or are for European focused.

The <unk> results from Helios will be considered a derisking event and so I think we will have some discussions on those.

Those.

The partnership.

Conversations were having and then ill focus more on <unk> as I said and my comments.

I think the stroke data from Treasurer will also be considered a derisking event and I think our general view is.

For the type of partnership we would want which would include stroke and ards and critical care more generally in Europe.

And that the risking inflammation is going to be important.

Pushing us forward to get the kind of partnership we want the right partner the right business deal.

And that we can we can be satisfied bringing back to the to our shareholders.

And is representing.

That's possible deal to allow us to create value and reach the most patients possible. So.

So, we're making progress and I do think these events and the success in Japan.

He is going to be helpful and those discussions and we will.

Keep you up to date.

As those things and Vance.

Okay with that we'd like to wrap up the call today and.

And thank all of you for participating.

And we really appreciate the support.

Questions.

You send our way we try to be as responsive as we can be even bit very very busy working with helios over the last weeks and couple of months.

So we may not have been as responsive as we might have been otherwise but.

We really appreciate your interest and your continued.

Investment in the company.

Working very hard to move the company forward, we have some very important events ahead of us and.

And we look forward to discussing the results.

And accomplishments over the next couple of quarters with you. So thank you again and have a good day.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

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