Q2 2022 Athersys Inc Earnings Call
Clinical programs, starting with our primary focus masters to our pivotal phase III clinical study in ischemic stroke.
Second I'll review, how the restructuring process results in a leaner more agile actresses and how it provides a roadmap for deploying our wealth of preclinical data to heightened molten multistem potential that could drive new opportunities through our business development strategy that delivers derisked accretive shareholder value.
And third I'll provide an update on our company's financial position and capital strategy.
We will then conclude with a question and answer session that will include questions. We received during our annual shareholder meeting back on July 28.
Let me start with our active clinical trials.
Our clinical focus is now on masters to our ongoing pivotal phase III trial in ischemic stroke.
As you May recall Masters two is a randomized double blind placebo controlled clinical trial enrolling up to 300 patients across leading stroke centers in the U S and internationally.
I'm happy to report that enrollment has picked up in the last two quarters.
This is encouraging momentum that's been being driven primarily from news of the treasure study results in Japan increased levels of engagement with participating stroke centers and the addition of new trial sites that we have been activating since the beginning of the year, such as in Australia, Taiwan, and keystrokes stroke centers across Europe .
We have increased our engagement with all sites and we are working to better understand and address barriers that some side seven countered with patient enrollment sell lab collaboration and staff training.
In addition, we are happy to announce the contract manufacturer has been working with has completed production and the lull investigational product necessary to complete masters two under the current clinical protocol.
We are currently in the process of discussing the release of remaining product with our contract manufacturer.
And while we are encouraged by this progress. We also wanted to be more transparent on the expected completion window for enrollment.
Previously we stated that Q1 2023 was our target for full enrollment.
We are no longer focused on that date for a few reasons.
First we are being extremely prudent with our operational expenses and cost structure, which requires us to take a more measured approach to adding new sites and stroke center engagement.
Second we're in the process of analyzing the recent treasure data to determine whether we should make any changes to the protocol matches too in trial design and enhance the probability of success.
Importantly, any potential changes we are contemplating will not affect patients already enrolled in masters two.
And once our analyses have been completed we may engage in dialogue with regulators if necessary.
And lastly, our long term goal is to achieve a successful trial outcome with Multistem and we are currently in a critical window of time to consider revising protocols, especially with the complete treasure data set in hand.
These decisions aren't made hastily so we're taking time now to conduct a deeper analysis.
We look forward to providing more accurate timeline as we conclude these analyses and consider potential trial modifications with regulatory agencies.
As we re prioritize our efforts on Masters two let me address our work in acute respiratory distress syndrome or ours.
Based on the significance of the condition and our prior work with must Ards trial. There was interest in partnering with BARDA on our phase III trial in response to Covid or other pathogen induced ards.
However, given our financial situation and prioritize focused on ischemic stroke, we plan to suspend enrollment prior to administering the new bioreactor produced product until we can strengthen development plans through a partnership or alternative funding source.
This was a difficult decision because of the results we observed with must ards trial and significant unmet medical need associated with ours, but it was a necessary choice to prioritize spending.
Since we completed the initial cohort of administering Multistem cell factory product that was focused on safety and dosing. So spending the trial at this point makes sense. Since the next cohort was moving to administration of Multistem product produced using the bio reactive process.
As we explore alternative options to restart this trial, we will provide timely updates.
Finally, turning to our trauma program I'd like to share an enrollment update on the matrix. One study, which is a phase II study with the University of Texas Health Science Center at Houston, one of the busiest level one trauma centers in the United States.
Matrix, one is evaluating multistem for the early treatment and prevention of complications after severe traumatic injury.
The first cohort of this study utilizes multistem produced from our cell factory process.
And that the first cohort was completed successfully focused on demonstrating safety.
The second cohort has started with the new bioreactor produced product and I'm happy to report we have successfully started to enroll patients with the Multistem bioreactor product.
The dosing used in this trial is similar to the dosing used in our ischemic stroke trial, which is $1 2 billion cells delivered delivered in a single dose intravenously.
We believe multistem holds great potential to benefit accident victims battlefield casualties and others suffering from traumatic injuries.
By improving recovery survival and quality of life.
As a reminder, this trial is funded by grants, enabling the partnership with UT health and clinical development to proceed at a minimal minimal cost to offices.
As we advanced Multistem were making fundamental changes to how we run the business, including how we set business strategy define and execute on priorities and gate and engaged with investors and partners.
We're being clear eyed on what really matters for success, making sound decisions in communicating transparently, while operating with a bias that favors action.
While it was a very tough decision to reduce our headcount by 70%. We have completed this process in the U S and have notified impacted regenesis employees in Belgium.
In accordance with local requirements.
We also took significant steps to reshape our leadership team and board of directors in order to be more focused agile unaffected.
We're taking this opportunity to reshape our culture bring in select skills and create new ways for high potential leaders to step into new roles.
We have engaged incur a consulting group and welcome Casey Rosato as the company's interim Chief Financial Officer.
Casey has more than 18 years of financial operational and leadership experience, while specializing in financial and operational turnarounds.
Casey has proven to be an ideal fit for our situation has already made significant contributions to our transformation in just two short weeks.
Yeah.
Now since I joined after six months ago are learning more about Multistem is unique and compelling properties. My conviction has become even stronger on the potential we have with multistem.
What attracted me most addresses was the extensive preclinical and clinical research the company had completed to support Multistem as a platform.
Specifically, our multi potent adult progenitor cells or Massey therapy provides us with a highly attractive platform with significant growth potential across different inflammatory diseases.
As well as neurological and immune disorders.
As part of our transformation efforts, we undertook a comprehensive review of preclinical and clinical research completed to date to identify the highest priority indications for example, where we may achieve a best in class profile and where we believe we can effectively address significant unmet medical needs.
On Monday August 29th Dr. Robert <unk> and Dr. Sarah Bush will be hosting a comprehensive webinar on our preclinical and clinical research titled Rebalancing the immune system, the multistem cellular platform for treating disease and injury.
We encourage everyone to register for the webcast using the link in our August 8th news releases.
Although our primary focus is on completing the masters two trial Multistem versatility remains an attractive platform for potential partners at all stages of development and our research review aims to shine a brighter spotlight on those potential opportunities.
Now earlier this week, we announced the results of our radiation countermeasure study conducted by the Armed forces Radiobiology Research Institute, which is a research Institute within the Department of Defense and this research is a great example of Multistem platform potential.
That study showed IV administration of Multistem provided benefit in an animal model of acute radiation syndrome or <unk>.
The results demonstrated increased survival in treated animals resulted in a higher body weight and surviving animals and positive trends in recovery.
The Hema toe poetic system, representing another positive step in our broader development strategy to address severe critical care injuries and diseases.
In addition to working with the armed forces Radiobiology team. We've also completed pilot work on RF and collaboration with the National Institute of allergy and infectious diseases over the past several years with an initial focus.
<unk> stem cell transplant, and graft versus host disease or gvhd.
This exploratory work included a completed clinical study demonstrating that multistem treatment has the potential to improve survival and neutrophil and platelet recovery and reduce gvhd in stem cell transplant transplant patients.
This is just one example of how we are committed to exploring potential clinical indications for Multistem, where our therapies may achieve a best in class profile and help patients that suffer from serious diseases with few effective and safe treatment options beyond <unk> in gvhd of the many indications we've done preclinical REIT.
Search there is compelling data, suggesting that multistem could play a role in treating alzheimers disease, multiple sclerosis, epilepsy, Parkinson's disease spinal cord injury hypocrisy and ischemia.
We are continuing to seek strategic partnership opportunities that deliver the most shareholder value through advancing our multi platform and it offers the potential to provide non dilutive funding.
The focus of our business development conversations is twofold first regional licensing opportunities on ischemic stroke, and other indications and second pursuing a longer term global partnership.
We continue to collaborate with our current partner Helios in Japan and have been taking steps to strengthen our relationship as both companies recognized the significant opportunity multistem has in helping patients.
As such we continue to support Helios with their ongoing discussions with Japanese regulators.
And as progress into our decisions are made regarding their art and stroke trials, we will communicate the details.
As I've mentioned, we have completed production through our third party manufacturer for sufficient clinical product to support our current trials.
We are in discussions with our contract manufacturer to release, the remaining cell factory clinical product needed to complete masters two.
We've also produced enough bioreactor clinical product to support the matrix, one trial and any additional phase one or two trials should we decide to pursue them independently or with a partner.
Because we have sufficient supply for our current clinical priorities and in light of our commitment to be prudent with resources. We have suspended further multistem manufacturing with our contract manufacturer.
We continue to be highly encouraged by the progress made to date and longer term potential for commercial manufacturing based on our proprietary technologies that are patent protected more efficient and scalable.
Our unique manufacturing processes have required substantial investment over the year.
Leading to significant intellectual property and valuable trade secrets secrets that we feel put us in a position of industry leadership.
We'll be sharing more information about our unique scaling and production processes going forward at industry conferences and trade journals.
We're also taking other actions to reduce or eliminate manufacturing related costs, such as consolidating our real estate footprint.
We have engaged an agency to sublet or find alternative options for our 214000 square foot store facility, which can be used as a distribution center for laboratories or manufacturing.
Now before I turn to financial results I'd like to summarize the key changes in our management approach.
We substantially reduced our cost structure across multiple aspects of the company, making us more attractive to both financial and strategic investors. We've committed to reshaping the executive leadership team with the best possible talent, bringing experienced in therapeutics and platform technologies from development through to commercial.
Second we are prioritizing our clinical focus on masters, two while spending less strategic strategic work that utilizes precious resources and distract us from our top priority.
Third we are pursuing our business development strategy focused on securing a regional license partner for ischemic stroke as well as the larger global partnership for other Multistem indications. These partnerships will bring non dilutive funding and a complementary capabilities across our clinical regulatory commercial and manufacturing functions.
And fourth we're focused on transparency and communicating our priorities goals and progress and expect to be held accountable for performance.
Going to be upfront about choices and decisions and decisions with our partners and investors.
Now through the restructuring process, we've come out much leaner, but we required capital to continue operating and we're looking at multiple opportunities.
We are actively expanding our options to raise capital and are looking at thoughtful equity driven approaches in parallel with our pursuit of non dilutive options, all with an eye on shareholder value and our strategic vision.
Now, let me turn to our financial results.
Revenues for the second quarter were negative $1 $5 million related to our performance obligation to Helios compared with no revenues in the second quarter of 2021.
Research and development expenses increased to $20 9 million for the second quarter of 2022.
From $17 7 million for the same period in 2021, due primarily to higher development manufacturing and restructuring costs.
General and administrative expenses were $5 2 million for the second quarter of 2022 up from $4 2 million for the comparable period in 2021.
Our cash balance at the end of June was $13 4 million and accounts payable was $23 $8 million.
In less than two months, we've made substantial progress in reducing our operating burn rate, while working with suppliers on payables and other obligations, but as stated previously we will need to raise cash to support ongoing operations.
I want to thank you for your attention and with that overview I'm now going to answer several questions that we received during the annual shareholder meeting conducted back on July 28.
One of the questions we received orders related to the Masters two trial.
We received numerous questions on the progress of the trial, how we're moving forward and in relation to treasurer potential trial design changes.
I'd like to ask Dr. <unk> to provide some additional color on how this study has been progressing.
Thanks, Dan I appreciate it and appreciate everybody for calling in.
As Dan mentioned earlier, the Masters two trial as our primary clinical priority.
And we continue to be excited about the positive response from the medical community all of our principal investigators and the Masters two trial.
Following the release of the treasure study readout.
The subsequent key opinion leader stroke neurology panel that we hosted.
Back in.
In general a lot of excitement throughout our principal investigators and the trial sites.
And.
I've been participating and continue to participate in grand rounds at several of our sites. They've asked me to come out to continue the momentum at the clinical sites as a function of the <unk>.
<unk>.
As a matter of fact, one of the clinical sites.
That has enrolled a lot of patients post today Masters two best practices call.
We're up over 40 participants across the Masters two investigator network called in to learn how to enroll as many patients as possible based on the success of it.
The site that hosted the call.
We've continued to expand the network of active trial sites and.
And creating including key stroke centers in multiple geographies throughout the world, including Germany, The United Kingdom, Taiwan and Australia.
And as we bring more sites on and we have the increased enthusiasm we recognize we've doubled the average number of patients enrolled on a monthly basis in 2022 compared to the other years that trial has been open and we've also enrolled more subjects in the second quarter of 2022 and during any other quarter.
But the trial has been running so we see the momentum we see the enthusiasm and right now our focus in the clinical ops team is to continue to drive that enthusiasm at all clinical sites.
Dan also mentioned, we're in the process of analyzing the treasure data and working with our team of statisticians and scientists sphere to look at the treasure data go back to the Masters, one data and evaluate whether we should make any changes to the masters two trial design.
To enhance the probability of success. So again I just wanted to state that there is a significant opportunity for patients here and what we want to do is we want to make sure that if we have a powerful therapeutic like multistem for treatment of a serious unmet medical need like stroke.
We want to ensure that we're running a trial that is set up for long term success and eventual regulatory approval. So after work done doing our analysis.
We may engage the regulators with.
Protocol amendments that we believe would help us reach this endpoint.
And finally I just wanted to comment about.
Theres been a lot of people that have asked questions relating to when can we share the full treasury dataset.
And the way this happened when you're a publicly traded company is you have to count on the academic researchers the academic neurologists in this case too.
Present, the data at a scientific meeting and at which point then there is a follow up where you have a publication that is published in a medical journal. So Helios was recently announced that they will be giving or presenting.
A more complete dataset at the World stroke conference in Singapore in late October .
So that'll be the next time I believe it will be a full data dump.
And as aside we've been asked to present at that at that conference as well so.
We'll see what happens here in October .
I believe that will be all for me right now thanks, Dan. Thank you I appreciate that.
We've received another question on the restructuring and financing plans can you provide more detail on assets in the near term financing strategy, what avenues of capital raising are you considering and how long does the cash current cash runway takes us. So this is.
Obviously been something that we've been talking about and have now disclosed our cash balance we have Ben.
Focusing most of our effort on evaluating the different capital raising options that that would be most attractive to our situation. While at the same time working hard on reducing our expenses and that has that has been kind of the balance that we have been walking obviously.
We wanted to get to this point of our second quarter earnings disclosure and so all of those options. We feel are still in front of us and we'll be looking to try to address our cash balance.
To get us out at least through the near term one of the things that I'm looking at is timing and potential for other options of non diluted non dilutive funding and so it has been a bit of a balancing act.
Before taking any action, but rest assured that we are considering every avenue to address are our lower cash balance and keep in mind that.
Aspire terminated the equity line that we had in place.
Back in July I believe it was in <unk>.
You'll be looking at more traditional capital raising options in the near future.
And let me also to invite.
Casey was out of comments since we specifically went out.
Somebody to step in and and an interim CFO overall cases, it's Ben.
A much needed and appreciated member of the leadership team and the two weeks that she's been on board Okay.
Thank you Dan.
And.
Dan just mentioned it.
Ken.
A little over a week since joining teams still trying to get.
Arms around everything, but what I can say.
That the organization has quickly implemented their restructuring plan and the initiatives that are behind it.
<unk> launched in June and that we are evaluating EVAR.
Every operating cost him out there, making sure that we are.
Being really looking at everything with with Kenai.
And as part of that we have been in communication with our suppliers that are key to our success as we look forward.
Okay.
Our business.
As Dan also described it as part of that it's essential that we explore all our financing options that are going to be available to us.
So thank you.
I Wonder if we're getting tens team in short order and I look forward to working with you guys. Thank you Casey.
Let me ask a third question around following the financial strategy of funding were to be secured this quarter do you expect to resume the suspended mccovey, a trial or manufacturing of additional multistem product.
Would the company focused on restarting programs or finding new avenues for building value.
So.
First of all on <unk>, we feel like we.
An appropriate decision based upon where the Mccovey trial was.
And we will be looking for partners to advance that trial into the next phase or next cohort.
Whether that's through.
Our partnership or exploring what type of partnership we might be able to achieve with the government or any other potential financial options, but without that funding right. Now it is not something that we would be putting money behind because our focus will be on masters two for ischemic stroke as it relates to manufacturing this is <unk>.
Probably one of the most meaningful changes to our business that we have made and I will say, we're extremely happy with the partnership that we have with our third party contract manufacturer. They have been excellent to work with we have been successful together at producing multistem in the cell factory.
Our process as well as now a bioreactor process that is four by 40 leader, which is the clinical product that was approved by the FDA to be used in the mccovey a trial as well as the matrix trial. So we've been very pleased with the.
The relationship that we have with our third party manufacturer and for that reason it does not make sense for us to invest at this point in our own manufacturing capabilities and that's one of the reasons that we announced the.
The process of looking for sublet of the Stow facility because that is an expensive to build out towards a commercial level.
<unk> is an expensive journey and we would not want to do that until we had either secured long term financing or found a global strategic partner. So hopefully that's clear as a change for <unk> going forward.
I think on some of the other programs.
Our position will be not necessarily funding it ourselves, but as we've stated that we'd be looking for partnerships, particularly in some of the other disease areas that Dr. <unk> and Dr. Bush youre going to be reviewing on August 28, So hopefully that answers the question related to the Covia.
Manufacturing and potential to restart other progress.
So one last question that we received and then we can open it up to our analysts for Q&A is I did get several questions about reaching out to Dan Gilbert who is the owner of the Cleveland Cavalier and we understand Mr. Gilbert had a stroke and and is recovering from a stroke and we have made.
Fast to reach outflow and we will continue to try to make contact with them as of Tonight. We have not we have not spoken and we have not made concept, but it is something that we're looking to try to.
Tried to reach out to Mr. Gilbert and see what opportunities there might be two to either having him involved in what we're doing for ischemic stroke with atlas's or even just to understand his story and the challenges that he has been overcoming since he suffered a stroke. So I wanted to answer that question as well.
Okay. So I want to thank really all shareholders that submitted those questions during our annual shareholder meeting and now I'll turn the call back to our operator for additional Q&A.
As a reminder, if you would like to ask a question press star one on your telephone keypad.
Again to ask a question press star one well pause for just a moment to compile the Q&A roster.
Your first question is from the line of Greg Harrison Bank of America.
Good afternoon. This is Mary Kate on for Greg. Thanks for taking our question, maybe when deciding on how to prioritize resources wasn't necessarily tip. The scales in favor of stroke, which is missed the primary endpoint in two studies versus <unk>, where there are two positive studies.
Thank you I appreciate it I appreciate the question.
What I would say is that we feel like we have significant data on stroke right between Masters. One these chain treasurer of the size of the trials and really the totality of the data which is what we've been we've been trying to communicate the treasure data results were announced.
<unk>.
It did not meet its primary endpoint of excellent I'll come at 90 days. However, there are significant data that we feel demonstrates multistem is benefit compared to placebo across series.
Series of other measures that were all pre specified and would be very valuable for stroke patients and so that's really one of the main reasons why we have decided that focusing on masters. Two is a phase III trial and based on where we were in our progress with Masters two.
As well as on the Covia for instance, there was just a natural <unk>.
Suspension points that made sense before we transition into the newer bioreactor products. So hopefully hopefully that makes sense and trust me. These are difficult decisions, we would like to be.
Supporting a lot of.
Trials for Multistem in different diseases, but I think thats one of the biggest changes that we're making is where you're really going to be smart with how we are using our resources and these are the type of decisions that we estimate.
Thank you.
At this time there are no further questions I will now hand, the call back over to the presenters for any closing remarks.
Okay. Thank you very much for those questions and the ones we received from the shareholder meeting.
I Trust, we've shared our enthusiasm for the future. It addresses the multistem platform and a roadmap for success, which is a bit different than maybe what was happening prior to the last two months.
We look forward to speaking with everyone again on August 29 for our research review webinar.
And again, when we report third quarter results and as <unk>.
As we continue to execute on our plan, we will obviously keep everyone informed of our progress.
I want to thank everyone for their loyal support of Athens says as we've gone through these changes I feel we're in heading in the right direction. We have some immediate challenges in front of us as we try to square up our balance sheet and look to conduct some type of financing or identified partners, but we are working hard.
We will share progress.
We achieve.
Our goal. So thank you very much for listening to the call and I hope everyone has a nice evening.
This concludes today's call. Thank you for joining you may now disconnect your lines.
[music].
Yeah.