Athersys Inc. has lost its $100 million equity purchase agreement with Aspire Capital Fund LLC, dealing a financial blow to the Cleveland-based regenerative medicine startup.
Aspire Capital, the biotechnology investment fund in Chicago, had the right to terminate the purchase agreement after Athersys laid off three top executives — William "B.J." Lehmann, president and COO; John Harrington, executive vice president and chief scientific officer; and Ivor Macleod, CFO — Athersys said in a regulatory filing.
On June 2, Athersys said it would 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.
"As we execute on our transformation plan, which includes reducing expenses across several areas, we will continue to explore financing options that we believe are in the best interest of our shareholders," CEO Daniel Camardo said in a Friday statement.
In the statement, Camardo also thanked Aspire Capital, with which Athersys has had an equity purchase agreement since 2011.
"We will provide a more detailed business update at our upcoming annual stockholder meeting on July 28," said Camardo, who has assumed the duties of principal financial officer and principal accounting officer while Athersys searches for a permanent CFO, the company said in the regulatory filing.
Athersys has delayed its annual meeting by more than a month to have time to add a shareholder proposal authorizing the company's board to effect a reverse stock split of its shares.
The reverse split would combine the company's shares "at a ratio within a range of 1:15 to 1:30," Athersys said in its revised proxy statement.
The reverse split would help Athersys meet the $1 minimum share price required for listing by the Nasdaq Stock Market, which notified the company of its noncompliance in March.
In addition, the reverse split could "facilitate higher levels of institutional stock ownership" and "better enable the company to restructure itself and to raise funds to finance its planned operations," Athersys said in its proxy statement.
Athersys also is offering shareholders a different slate of directors for election at their annual meeting because of the executive layoffs and a reduction in the size of the board to save money.
Of note is the board resignation of Dr. Hardy TS Kagimoto, president and CEO of Healios KK, the Japanese biotech company that has partnered with Athersys on the clinical trials and commercialization of its MultiStem adult stem cell therapy for ischemic stroke patients in Japan.
In February 2021, Athersys settled a corporate governance dispute with Kagimoto, who at the time owned 8.3% of the outstanding shares of the Cleveland company and was appointed a director in 2018.
Kagimoto's stake in Athersys has since fallen to 6.5% of its outstanding shares, according to the company's proxy statement.
Shares of Athersys (Nasdaq: ATHX) were down 1.85% to 25.4 cents in late-morning trading on Friday.
Athersys shares lost two-thirds of their value in May after the company announced clinical trial results that disappointed some investors.
