Shares of Athersys Inc. fell precipitously on Tuesday after the Cleveland regenerative medicine company said it could file for bankruptcy protection if it can't "enter into a strategic transaction or obtain adequate financing" in the near term.
Though the company announced both positive and negative developments on Tuesday, the possibility of a bankruptcy filing won out on Wall Street Tuesday, sending Athersys shares (Nasdaq: ATHX) down more than 50% to less than 15 cents in early afternoon trading.
Athersys said it intends to continue exploring available strategic options, but a bankruptcy filing would enable the company to "conduct an orderly wind-down of operations." In the meantime, the company is streamlining its operations to preserve its capital and cash resources.
Athersys has been working since 1994 to develop its MultiStem off-the-shelf adult stem cell therapy to treat some stroke, acute respiratory distress syndrome (ARDS) and traumatic injury patients.
On Tuesday, Athersys said it has paused enrollment in a pivotal clinical trial for using MultiStem to treat ischemic stroke patients after an independent data safety monitoring board concluded that the study's 300-patient target was too few to achieve its primary objective.
"I'd like to thank the many patients, clinicians and vendors that have supported this pivotal phase 3 trial since its start in 2018," Dan Camardo, CEO of Athersys, said in a statement.
"We're disappointed with the results of the unblinded interim analysis indicating a large sample size adjustment would be required to achieve our primary endpoint," said Camardo, who took over as CEO in January 2022. "We intend to conduct further analysis to better understand these results."
Athersys licenses MultiStem in Japan
Athersys also said Tuesday that has tentatively agreed to license MultiStem for development and commercialization in Japan with its longtime partner Healios K.K. The agreement would give Healios global rights to develop and commercialize MultiStem to treat acute respiratory distress syndrome (ARDS).
Under the terms of a memorandum of understanding (MOU) with Healios K.K., a longtime Japanese development partner, Athersys would receive between $1.5 million and $4.5 million in near-term payments with up to $150 million in potential development and sales milestones and additional royalties in the future.
Athersys also expects to receive revenue from the sale of existing clinical doses of MultiStem, which were manufactured with the company's 3D bioreactor process earlier this year.
"The new MOU we’ve signed with Healios for ARDS provides the company near-term capital and the potential for meaningful milestone payments as we continue to pursue various strategic solutions," Camardo said.
Last week, Athersys agreed to license its Multipotent Adult Progenitor Cell (MAPC) technology for non-human mammal applications in the United States to Kentucky animal biotechnology company Ardent Animal Health. Athersys said it expects to receive an initial licensing fee, milestone payments and "double-digit royalties on commercial sales" in exchange for granting Ardent an exclusive license.
Several challenges, including dwindling cash, loss of a $100 million equity purchase agreement, struggles with meeting Nasdaq listing requirements for its stock and some disappointing clinical study results from Japanese development partner Healios have threatened the company's existence over the last 18 months.
During that time, Athersys has searched for partners to license or co-commercialize its technology as a step toward solving its serious cash shortage.
