Athersys Inc., the Cleveland-based regenerative medicine company, plans to cut its workforce by as much as 70% in a restructuring aimed at reducing costs and making it an attractive investment for potential financial or strategic partners.
Athersys has been developing its MultiStem adult stem cell therapy since 1994 and is in late-stage clinical trials with its Japanese partner, Healios K.K., to commercialize the therapy to treat ischemic stroke patients in Japan.
Three of the company's top executives will leave by the end of June to slow the cash burn of the company, which does not yet have a commercial product, Athersys said in a statement late Thursday afternoon.
William "B.J." Lehmann, president, chief operating officer and co-founder, left Athersys on May 31.
John Harrington, executive vice president and chief scientific officer, and Ivor Macleod, chief financial officer, will leave the company on June 30, the company said.
Athersys will take one-time charges of $3.5 million for severance and employee termination costs, the company said in a regulatory filing.
Daniel Camardo, the pharmaceuticals and biotech leader hired as CEO of Athersys in January, recognized the people who are leaving or have left the company to help it survive.
Many of these people, "for a majority of their career, have invested in MultiStem and advancing Athersys to a place where we'll be building on from today forward," Camardo said at the end of a conference call with securities analysts.
"I want to acknowledge their dedication and commitment as we have to make these difficult decisions," Camardo said.
Despite the job losses and cost-cutting, Athersys leaders "remain excited by the potential of MultiStem to benefit patients in stroke as well as other critical care areas," Camardo said. "I'm confident that our revised strategy and focus, executed by the remaining committed team, puts us on the right path for future opportunities."
Athersys also is raising additional capital to strengthen its balance sheet and complete its U.S. clinical trial for using MultiStem to help stroke patients. The company listed $21.8 million of cash and cash equivalents as of March 31.
In mid-May, Athersys struck a stock purchase agreement to sell up to $100 million of its common shares over the next two years to Aspire Capital, according to a regulatory filing.
Shares of Athersys (Nasdaq: ATHX) were down nearly 11% to 20 cents in after-market trading on Thursday. The company made its restructuring announcement after the market closed for the day.
In April, Camardo confirmed that his company's leaders were working to address a delisting warning from the Nasdaq Stock Market about its stock trading for less than $1 for more than a month.
