Athersys Inc., the Cleveland biotechnology company, has awarded a stock option for 10 million shares to its new chief executive as an "inducement grant."
Companies often use inducement grants to hire top executives when they lack enough shares in their equity reserves to accommodate large grants, according to professional services firm Aon.
Daniel Camardo, who was appointed CEO of Athersys in January, can exercise his option to acquire the company's shares for 86 cents apiece. That was the price of the stock on Feb. 14, Camardo's first day of employment, Athersys said in a statement.
The option, which would be worth $8.6 million for Athersys, if fully exercised, has a 10-year term and vests in installments over time, the company said.
Athersys hired Camardo to replace founding CEO Gil van Bokkelen, who stepped down a year ago to make way for a leader who would complete the development, approval, launch and commercialization of MultiStem, the company's adult stem cell therapy.
Founded in 1995, Athersys still is considered an emerging growth company because its stem cell therapy has not yet been commercialized.
Prior to Athersys, Camardo was executive vice president, head of the rare disease and inflammation business units, and U.S. president at Horizon Therapeutics, the Irish biotech company.
Athersys shares (Nasdaq: ATHX) was down about 1.7% to 86 cents in noontime trading on Friday.
The shares have traded consistently under $1 since late December.
One of the reasons why the share price may be depressed is the company's latest equity purchase agreement with Aspire Capital in Chicago. Athersys has had such an agreement with Aspire Capital since 2011, according to a regulatory filing.
The June 2021 agreement includes a commitment by Aspire Capital to buy $100 million of newly issued Athersys shares by July 2024. Athersys registered 400 million shares in July to cover the potential sales to Aspire, according to the filing.
One of the risks of such an agreement is "substantial dilution to our existing stockholders," which "could cause the price of our common stock to decline," Athersys said in the filing.
Athersys shares lost 49% of their value last year. Compare that to the market return of 26.9%, as measured by the S&P 500 index.
