Shares of Athersys Inc. lost more than half their value in early trading on Wednesday after the Cleveland regenerative medicine company said it had priced a public stock offering at a significant discount.
Athersys shares (Nasdaq: ATHX) were down nearly 55% to 58 cents at 11 a.m. on Wednesday.
After the stock market closed on Monday, Athersys said it intended to sell common stock and warrants in a public offering to raise operating capital as it pursues licensing and other business development opportunities for its proprietary technology.
On Tuesday, Athersys shares (Nasdaq: ATHX) fell more than 43% to $1.28 from $2.26.
The stock price fall accelerated on Wednesday morning after Athersys said it had priced its stock at $1.10 per share — a 14% discount to its stock price on Tuesday and a 51% discount to its Monday stock price — in the offering.
Athersys said on Wednesday it has raised $5.5 million before expenses so far from the sale of stock in the offering, which is expected to close on Thursday.
At the same time, the company said it has sold warrants to sell about 10 million shares of its common stock at $1.10 a share. If fully exercised, the warrants would generate about $10 million, before expenses.
For months, Athersys has been restructuring its operations — cutting 70% of its workforce, including top executives and co-founders, for instance — and trying to raise cash to complete the testing and commercialization of its adult stem cell therapy, MultiStem.
Trouble is, Athersys had accounts payable of $26.8 million on Nov. 4, of which more than 80% was owed to its primary contract manufacturer, according to a regulatory filing.
But the company had cash and cash equivalents on that date of $9.8 million.
"We are actively working with our primary contract manufacturer to reach an agreement to address the outstanding accounts payable and continue our partnership going forward," Athersys said in the filing.
An agreement with the contract manufacturer might require Athersys to issue "a convertible promissory note in exchange for a substantial reduction in the outstanding accounts payable," the company said in its filing.
Presumably, the promissory note would be convertible to Athersys common stock.
"If we are unable to reach agreement with our primary contract manufacturer or other vendors, it is possible that we would need to cease operations," the company said in its filing.
Emails to two Athersys representatives were not returned prior to the publication of this story.
