Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended June 30, 2010
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission file number: 001-33876
Athersys, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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20-4864095 |
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.) |
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3201 Carnegie Avenue, Cleveland, Ohio
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44115-2634 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (216) 431-9900
Former name, former address and former fiscal year, if changed since last report: Not Applicable
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days: Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act): Yes o No þ
The number of outstanding shares of the registrants common stock, $0.001 par value, as of July 30,
2010 was 18,929,333.
ATHERSYS INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Athersys,
Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
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June 30, |
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December 31, |
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2010 |
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2009 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
2,427 |
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$ |
11,167 |
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Available-for-sale securities |
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9,596 |
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10,135 |
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Accounts receivable |
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267 |
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352 |
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Receivable from Angiotech |
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145 |
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229 |
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Investment interest receivable |
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108 |
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93 |
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Prepaid expenses and other |
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187 |
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173 |
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Total current assets |
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12,730 |
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22,149 |
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Available-for-sale securities |
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8,080 |
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5,080 |
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Equipment, net |
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1,027 |
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849 |
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Deposits and other |
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207 |
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253 |
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Total assets |
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$ |
22,044 |
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$ |
28,331 |
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Liabilities and stockholders equity |
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Current liabilities: |
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Accounts payable |
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$ |
938 |
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$ |
1,128 |
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Accrued compensation and related benefits |
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337 |
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667 |
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Accrued clinical trial costs |
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148 |
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83 |
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Accrued expenses and other |
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923 |
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857 |
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Deferred revenue |
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3,038 |
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3,123 |
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Total current liabilities |
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5,384 |
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5,858 |
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Deferred revenue |
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2,316 |
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3,516 |
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Stockholders equity: |
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Preferred stock, at stated value; 10,000,000
shares authorized, and no shares issued and
outstanding at June 30, 2010 and December
31, 2009 |
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Common stock, $0.001 par value; 100,000,000
shares authorized, and 18,929,333 shares
issued and outstanding at June 30, 2010 and
December 31, 2009 |
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19 |
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19 |
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Additional paid-in capital |
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213,748 |
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212,704 |
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Accumulated other comprehensive income |
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52 |
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71 |
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Accumulated deficit |
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(199,475 |
) |
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(193,837 |
) |
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Total stockholders equity |
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14,344 |
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18,957 |
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Total liabilities and stockholders equity |
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$ |
22,044 |
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$ |
28,331 |
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See accompanying notes to unaudited condensed consolidated financial statements.
1
Athersys, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
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Three months ended |
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Six months ended |
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June 30, |
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June 30, |
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2010 |
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2009 |
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2010 |
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2009 |
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Revenues |
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Contract revenue |
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$ |
1,519 |
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$ |
281 |
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$ |
2,914 |
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$ |
469 |
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Grant revenue |
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352 |
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155 |
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697 |
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337 |
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Total revenues |
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1,871 |
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436 |
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3,611 |
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806 |
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Costs and expenses |
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Research and development |
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3,405 |
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2,553 |
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6,227 |
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5,164 |
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General and administrative |
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1,483 |
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1,287 |
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2,920 |
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2,739 |
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Depreciation |
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70 |
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57 |
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145 |
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117 |
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Total costs and expenses |
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4,958 |
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3,897 |
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9,292 |
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8,020 |
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Loss from operations |
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(3,087 |
) |
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(3,461 |
) |
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(5,681 |
) |
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(7,214 |
) |
Interest income and other |
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10 |
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114 |
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43 |
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242 |
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Net loss |
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$ |
(3,077 |
) |
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$ |
(3,347 |
) |
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$ |
(5,638 |
) |
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$ |
(6,972 |
) |
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Basic and diluted net loss per share |
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$ |
(0.16 |
) |
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$ |
(0.18 |
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$ |
(0.30 |
) |
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$ |
(0.37 |
) |
Weighted average shares
outstanding, basic and diluted |
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18,929,333 |
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18,927,988 |
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18,929,333 |
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18,927,988 |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
Athersys, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Six months ended |
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June 30, |
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2010 |
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2009 |
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Operating activities |
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Net loss |
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$ |
(5,638 |
) |
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$ |
(6,972 |
) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
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Depreciation |
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145 |
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117 |
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Stock-based compensation |
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1,044 |
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1,005 |
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Amortization of premium on
available-for-sale securities
and other |
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147 |
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90 |
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Changes in operating assets and
liabilities: |
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Accounts receivable |
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85 |
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99 |
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Receivable from Angiotech |
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84 |
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105 |
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Prepaid expenses and other assets |
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(29 |
) |
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(137 |
) |
Accounts payable and accrued
expenses |
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(389 |
) |
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(459 |
) |
Deferred revenue |
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(1,285 |
) |
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(58 |
) |
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Net cash used in operating activities |
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(5,836 |
) |
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(6,210 |
) |
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Investing activities |
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Purchase of available-for-sale securities |
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(8,081 |
) |
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(7,634 |
) |
Maturities of available-for-sale securities |
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5,500 |
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10,800 |
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Proceeds from sale of fixed assets |
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20 |
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Purchases of equipment |
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(323 |
) |
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(49 |
) |
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Net cash (used in) provided by investing
activities |
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(2,904 |
) |
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3,137 |
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Financing activities |
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Decrease in cash and cash equivalents |
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(8,740 |
) |
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(3,073 |
) |
Cash and cash equivalents at beginning of the
period |
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11,167 |
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12,552 |
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Cash and cash equivalents at end of the period |
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$ |
2,427 |
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$ |
9,479 |
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See accompanying notes to unaudited condensed consolidated financial statements.
3
Athersys, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Three and Six-Month Periods Ended June 30, 2010 and 2009
1. Background and Basis of Presentation
We are a biopharmaceutical company engaged in the discovery and development of therapeutic products
in one business segment. Our operations consist primarily of research and product development
activities.
The accompanying unaudited condensed consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in our Annual Report
on Form 10-K for the year ended December 31, 2009. The accompanying financial statements have been
prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim
financial information and Article 10 of Regulation S-X. Accordingly, since they are interim
statements, the accompanying financial statements do not include all of the information and notes
required by GAAP for complete financial statements. The accompanying financial statements reflect
all adjustments, consisting of normal recurring adjustments, that are, in the opinion of
management, necessary for a fair presentation of financial position and results of operations for
the interim periods presented. Interim results are not necessarily indicative of results for a
full year.
The preparation of financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Our critical accounting policies, estimates and assumptions are described in
Managements Discussion and Analysis of Financial Condition and Results of Operations, which is
included below in this Quarterly Report on Form 10-Q.
Certain prior year amounts have been reclassified to conform with current year presentations.
2. Recently Issued Accounting Standards
In September 2009, Accounting Standards Codification (ASC) 605-25, Multiple-Element Arrangements,
was updated (Accounting Standards Update (ASU) No. 2009-13) related to revenue recognition for
arrangements with multiple elements. The revised guidance provides for two
significant changes to the existing guidance, the first relates to the determination of when the
individual deliverables included in a multiple-element arrangement may be treated as separate units
of accounting, which will likely result in the requirement to separate more deliverables within an
arrangement leading to less revenue deferral. The second change modifies the manner in which the
transaction consideration is allocated across the separately identified deliverables. Together,
these changes are likely to result in earlier recognition of revenue for multiple-element
arrangements than under previous guidance. The new guidance also significantly expands the
disclosures required for multiple-element revenue arrangements. The new guidance is effective for
fiscal years beginning on or after June 15, 2010, and early adoption is permitted provided that the
new guidance is retroactively applied to the beginning of the year of adoption. We have not yet
evaluated the potential effect of the future adoption of this new guidance.
In March 2010, ASC 605-28, Milestone Method of Revenue Recognition, was amended (ASU No. 2009-13)
related to the ratification of the application of the proportional performance model of revenue
recognition when applied to milestones in research and development arrangements. Accordingly, the
consensus states that an entity can make an accounting policy election to recognize a payment that
is contingent upon the achievement of a substantive milestone in its entirety in the period in
which the
milestone is achieved. The new guidance is effective for fiscal years beginning on or after June
15, 2010, and may be applied prospectively or retrospectively. Early adoption is permitted
provided that the new guidance is retrospectively applied to the beginning of the year of adoption.
We do not expect this new guidance to have a material effect on our financial statements upon
adoption.
4
3. Net Loss per Share
Basic and diluted net loss per share has been computed using the weighted-average number of shares
of common stock outstanding during the period. We have outstanding options and warrants that are
not used in the calculation of diluted net loss per share because to do so would be antidilutive.
The following instruments were excluded from the calculation of diluted net loss per share because
their effects would be antidilutive:
1) |
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Outstanding stock options to purchase 4,124,262 shares of common stock for both the three-
and six-month periods ended June 30, 2010 and 3,866,149 shares of common stock for both the
three- and six-month periods ended June 30, 2009; and |
2) |
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Warrants to purchase 5,125,496 shares of common stock for each of the three- and six-month
periods ended June 30, 2010 and 2009. |
4. Comprehensive Loss
All components of comprehensive loss, including net loss, are reported in the financial statements
in the period in which they are recognized. Comprehensive loss is defined as the change in equity
during a period from transactions and other events and circumstances from non-owner sources.
Below is a reconciliation, in thousands, of net loss to comprehensive loss for all periods
presented.
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Three months ended June 30, |
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Six months ended June 30, |
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2010 |
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2009 |
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2010 |
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2009 |
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Net loss |
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$ |
(3,077 |
) |
|
$ |
(3,347 |
) |
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$ |
(5,638 |
) |
|
$ |
(6,972 |
) |
Unrealized (loss)
gain on
available-for-sale
securities |
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(6 |
) |
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61 |
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(19 |
) |
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8 |
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Comprehensive loss |
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$ |
(3,083 |
) |
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$ |
(3,286 |
) |
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$ |
(5,657 |
) |
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$ |
(6,964 |
) |
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5. Fair Value of Financial Instruments
Our available-for-sale securities include U.S. government obligations and corporate debt
securities. As of June 30, 2010, approximately 86% of our investments were in U.S. government
obligations, including government-backed agencies.
The inputs used to measure fair value are classified into the following hierarchy:
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Level 1
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Unadjusted quoted prices in active markets for identical assets or liabilities. |
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Level 2
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Unadjusted quoted prices in active markets for similar assets or liabilities,
or unadjusted quoted prices for identical or similar assets or liabilities in
markets that are not active, or inputs other than quoted prices that are
observable for the asset or liability. |
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Level 3
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Unobservable inputs for the asset or liability. |
5
The following table provides a summary of the fair values of our assets and liabilities measured at
fair value on a recurring basis as of June 30, 2010 (in thousands):
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Fair Value Measurements at June 30, 2010 Using |
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Quoted Prices in Active |
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Significant Other |
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Balance as of |
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Markets for Identical |
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Observable Inputs |
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Significant Unobservable |
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Description |
|
June 30, 2010 |
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Assets (Level 1) |
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(Level 2) |
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Inputs (Level 3) |
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Available-for-sale
securities |
|
$ |
17,676 |
|
|
$ |
17,676 |
|
|
$ |
|
|
|
$ |
|
|
Fair value is based upon quoted market prices in active markets. We had no level 2 or level 3
assets at June 30, 2010. We review and reassess the fair value hierarchy classifications on a
quarterly basis. Changes from one quarter to the next related to the observability of inputs to a
fair value measurement may result in a reclassification between hierarchy levels.
The following is a summary of available-for-sale securities (in thousands) at June 30, 2010 and
December 31, 2009, respectively:
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Gross |
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Gross |
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Estimated |
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Amortized |
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Unrealized |
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Unrealized |
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Fair |
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Cost |
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Losses |
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Gains |
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Value |
|
June 30, 2010: |
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U.S. government
obligations, which
included
government-backed
agencies |
|
$ |
15,083 |
|
|
$ |
|
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|
$ |
37 |
|
|
$ |
15,120 |
|
Corporate debt securities |
|
|
2,541 |
|
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|
15 |
|
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|
2,556 |
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$ |
17,624 |
|
|
$ |
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|
$ |
52 |
|
|
$ |
17,676 |
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|
December 31, 2009: |
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U.S. government
obligations, which
included
government-backed
agencies |
|
$ |
12,613 |
|
|
$ |
(12 |
) |
|
$ |
52 |
|
|
$ |
12,653 |
|
Corporate debt securities |
|
|
2,531 |
|
|
|
|
|
|
|
31 |
|
|
|
2,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
15,144 |
|
|
$ |
(12 |
) |
|
$ |
83 |
|
|
$ |
15,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We had no realized gains or losses on the sale of available-for-sale securities for any of the
periods presented. Unrealized gains and losses on our available-for-sale securities are excluded
from earnings and are reported as a separate component of stockholders equity within accumulated
other comprehensive income until realized. When available-for-sale securities are sold in the
future, the cost of the securities will be specifically identified and used to determine any
realized gain or loss. The net unrealized gain on available-for-sale securities was $52,000 and
$71,000 as of June 30, 2010 and December 31, 2009, respectively.
6
The amortized cost of and estimated fair value of available-for-sale securities at June 30, 2010 by
contractual maturity are shown below (in thousands). Actual maturities may differ from contractual
maturities because the issuers of the securities may have the right to repay the obligations
without prepayment penalties. Although the investments are available-for-sale, it is our intention
to hold the investments classified as long-term for more than a year from June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
|
|
Amortized |
|
|
Estimated |
|
|
|
Cost |
|
|
Fair Value |
|
Due in one year or less |
|
$ |
9,562 |
|
|
$ |
9,596 |
|
Due after one year through two years |
|
|
8,062 |
|
|
|
8,080 |
|
|
|
|
|
|
|
|
|
|
$ |
17,624 |
|
|
$ |
17,676 |
|
|
|
|
|
|
|
|
6. Collaborative Arrangements and Revenue Recognition
Collaborative Arrangements
Collaborative arrangements that involve cost or future profit sharing are reviewed to determine the
nature of the arrangement and the nature of the collaborative parties businesses. The
arrangements are also reviewed to determine if one party has sole or primary responsibility for an
activity, or whether the parties have shared responsibility for the activity. If responsibility
for an activity is shared and there is no principal party, then the related costs of that activity
are recognized by us on a net basis in the statement of operations (e.g., total cost, less
reimbursement from collaborator). If we are deemed to be the principal party for an activity, then
the costs and revenues associated with that activity are recognized on a gross basis in the
statement of operations. The accounting may be susceptible to change if the nature of a
collaborators business changes. Currently, our only collaboration accounted for on a net basis is
our cost-sharing collaboration with Angiotech Pharmaceuticals, Inc. (Angiotech), since the
responsibilities under this collaboration are shared with no principal party.
Revenue Recognition
Our license and collaboration agreements may contain multiple elements,
including license and technology access fees, research and development funding,
manufacturing revenue, cost-sharing, milestones and royalties. The deliverables
under such an arrangement are evaluated under ASC 605-25, Multiple-Element
Arrangements, (which originated primarily from the guidance in EITF 00-21) to
assess whether they have standalone value and objective and reliable evidence
of fair value, and if so, are accounted for as a single unit. We then
recognize revenue for each unit based on the culmination of the earnings
process under ASC 605-S25 (issued as SAB Topic 13) and our estimated
performance period for the single units of accounting based on the specific
terms of each collaborative agreement. We subsequently adjust the estimated
performance periods, if appropriate, on a prospective basis based upon
available facts and circumstances. Future changes in estimates of the
performance period may materially impact the timing of future revenue
recognized. Amounts received prior to satisfying the revenue recognition
criteria for contract revenues are recorded as deferred revenue in the
accompanying balance sheets. Reimbursement amounts (other than those accounted
for using collaboration accounting) paid to us are recorded on a gross basis in
the statements of operations as contract revenues. We entered into a
collaboration agreement with Pfizer Inc. (Pfizer) in December 2009 that
contains multiple elements and deliverables, as described below.
Also included in contract revenue are license fees received from Bristol-Myers Squibb, which are
specifically set forth in the license and collaboration agreement as amounts due to us based on our
completion of certain tasks (e.g., delivery and acceptance of a cell line) and development
milestones (e.g., clinical trial phases), and as such, are not based on estimates that are
susceptible to change. Such amounts are invoiced and recorded as revenue as tasks are completed
and as milestones are achieved.
Similarly, grant revenue consists of funding under cost reimbursement programs primarily from
federal and state sources for qualified research and development activities performed by us, and
as such, are not based on estimates that are susceptible to change. Such amounts are invoiced
(unless prepaid) and recorded as revenue as tasks are completed.
7
Angiotech
In our co-development collaboration with Angiotech, we bear all preclinical costs and the parties
jointly fund clinical development activity. We have primary responsibility for preclinical and
early clinical development and clinical manufacturing, and Angiotech will take the lead on pivotal
and later clinical trials and commercialization. The parties will share net profits from the future
sale of approved products and we may receive equity investments and cash payments based on the
successful achievement of specified clinical development and commercialization milestones.
We continue to jointly fund clinical development activities with Angiotech in accordance with our
co-development collaboration, and $145,000 was due from Angiotech as of June 30, 2010. Our
clinical costs for the three months ended June 30, 2010 and 2009 are reflected net of Angiotechs
cost-sharing amount of $145,000 and $129,000, respectively.
Pfizer
In December 2009, we entered into a collaboration with Pfizer to develop and
commercialize MultiStem to treat inflammatory bowel disease (IBD) for the
worldwide market. Under the terms of the agreement, we received an up-front
license and technology access payment of $6.0 million from Pfizer and receive
research funding and support. In addition, we are also eligible to receive
milestone payments upon the successful achievement of certain development,
regulatory and commercial milestones, for which we evaluated the nature of the
events triggering these contingent payments and concluded that these events
constituted substantive milestones that will be recognized as revenue in the
period in which the underlying triggering event occurs.
Pfizer will pay us for manufacturing product for clinical development and
commercialization purposes. Pfizer will have responsibility for development,
regulatory and commercialization and will pay us tiered royalties on worldwide
commercial sales of MultiStem IBD products. Alternatively, in lieu of
royalties and certain commercialization milestones, we may elect to co-develop
with Pfizer and the parties will share development and commercialization
expenses and profits/losses on an agreed basis beginning at phase III clinical
development.
We evaluated the facts and circumstances of the agreement to determine whether
the Pfizer agreement has obligations constituting deliverables and concluded
that it has multiple deliverables, including deliverables relating to the grant
of a license and access to our technology, performance of research and
development services and performance of certain manufacturing services, and
concluded that these deliverables should be combined into a single unit of
accounting. We recognize the license and technology access fee and research and
development funding ratably on a straight-line basis over the estimated
performance period, which began in December 2009 and is estimated to be
completed in 2012, and recognize manufacturing revenue when services are
performed. Prepaid license and technology access fee and prepaid research and
development funding are recorded as deferred revenue and are amortized on a
straight-line basis over the research period.
7. Stock-based Compensation
Our equity incentive plans authorize an aggregate of 4,500,000 shares of common stock for awards to
employees, directors and consultants. These incentive plans authorize the issuance of equity-based
compensation in the form of stock options, stock appreciation rights, restricted stock, restricted
stock units, performance shares and units, and other stock-based awards to qualified employees,
directors and consultants.
8
As of June 30, 2010, a total of 376,813 shares were available for issuance under our equity
compensation plans and options to purchase 4,124,262 shares of common stock were outstanding
(which includes options to purchase 1,075 shares of common stock related to our old option plans
prior to our merger in June 2007). For the three-month periods ended June 30, 2010 and 2009,
stock-based compensation expense was approximately $594,000 and $492,000, respectively. At June
30, 2010, total unrecognized estimated compensation cost related to unvested stock options was
approximately $732,000, which is expected to be recognized by the end of 2013 using the
straight-line method.
8. Warrants
As of June 30, 2010, we had the following outstanding warrants to purchase shares of common stock:
|
|
|
|
|
|
Number of underlying shares |
|
Exercise Price |
|
Expiration |
|
|
|
|
|
|
4,976,470 |
|
$ |
6.00 |
|
June 8, 2012 |
149,026 |
|
$ |
5.00
|
|
June 8, 2014 |
|
|
|
|
|
|
5,125,496 |
|
|
|
|
|
|
|
|
|
|
|
9. Income Taxes
We have net operating loss and research and development tax credit carryforwards that may be used
to reduce future taxable income and tax liabilities. Our deferred tax assets have been fully offset
by a valuation allowance due to our cumulative losses.
9
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
This discussion and analysis should be read in conjunction with our financial statements and notes
thereto included in this Quarterly Report on Form 10-Q and the audited financial statement and
notes thereto included in our Annual Report on
Form 10-K for the year ended December 31, 2009.
Operating results are not necessarily indicative of results that may occur in future periods.
Overview and Recent Developments
We are a biopharmaceutical company engaged in the discovery and development of therapeutic product
candidates designed to extend and enhance the quality of human life. Through the application of our
proprietary technologies, we have established a pipeline of therapeutic product development
programs in multiple disease areas. Our current product development portfolio includes
MultiStem®, a patented and proprietary stem cell product that we are developing as a
treatment for multiple disease indications, and is currently being evaluated in clinical trials.
In addition, we are developing novel pharmaceuticals to treat indications such as obesity and for
certain cognitive, attention and wakefulness disorders.
Current Programs
In 2008, we advanced two MultiStem programs into clinical development, initiating phase I studies
in cardiovascular disease (treating patients that have suffered an acute myocardial infarction, or
AMI) and in oncology treatment support (administering MultiStem to leukemia or lymphoma patients
who are receiving a traditional bone marrow or hematopoietic stem cell transplant to reduce the
risk or severity of graft-versus-host disease, or GvHD). We are conducting the AMI clinical trial
with our partner Angiotech Pharmaceuticals, Inc., and we completed phase I enrollment in the first
quarter of 2010. On July 28, 2010, we announced positive results of the phase I clinical trial,
based on four months of post-treatment patient data, which demonstrate that MultiStem was well
tolerated at all dose levels and also suggest improvement in heart function in treated patients.
With Angiotech, we will continue to evaluate the phase I results and intend to begin planning for a
subsequent clinical study, which we currently anticipate will be initiated in 2011. In our GvHD
trial, we have completed dosing in the first four of six dosing cohorts in the single dose arm of
the study. In the first quarter of 2010, we received authorization from the independent safety
committee to commence the multi-dose arm of the GvHD trial and are currently dosing patients.
In addition to these two MultiStem clinical studies, we have authorization from the Food and Drug
Administration, or FDA, to initiate a third clinical study administering MultiStem to patients for
the treatment of ischemic stroke, a leading cause of death and disability. In 2009, we took a
cautious approach to initiating this clinical study in light of the volatile and uncertain capital
markets. While we continue our preparations to initiate this phase I trial, we also have been
furthering our research efforts designed to deepen our understanding of the ways in which MultiStem
promotes healing and repair in the wake of an ischemic stroke or other neurological injury.
In December 2009, we entered into a collaboration agreement with Pfizer Inc. to develop and
commercialize MultiStem for the treatment of inflammatory bowel disease, or IBD, for the worldwide
market. We are currently planning and preparing for a phase I clinical study in IBD and plan to
initiate the study as soon as possible after regulatory approval.
We are also independently developing novel orally active pharmaceutical products for the treatment
of obesity and for certain cognitive, attention and wakefulness disorders. We are actively
evaluating these compounds, as we seek to identify candidates to advance further into development
while we pursue collaboration partners who could work with us to develop these promising candidate
compounds.
10
Financial
We have incurred losses since inception of operations in 1995 and had an accumulated deficit of
$199 million at June 30, 2010. Our losses have resulted principally from costs incurred in
research and development, clinical and preclinical product development, acquisition and licensing
costs, and general and administrative costs associated with our operations. We have used the
financing proceeds from private equity and debt offerings and other sources of capital to develop
our technologies, to discover and develop therapeutic product candidates and to acquire certain
technologies and assets. We have also built drug development capabilities that have enabled us to
advance product candidates into clinical trials. We have established strategic collaborations that
have provided revenues and capabilities to help further advance our product candidates, and we have
also built a substantial portfolio of intellectual property.
Results of Operations
Since our inception, our revenues have consisted of contract revenues and milestone payments from
our collaborators, and grant proceeds, primarily from federal and state grants. We have derived no
revenue on the sale of FDA-approved products to date. Research and development expenses consist
primarily of external clinical and preclinical study fees, manufacturing costs, salaries and
related personnel costs, legal expenses resulting from intellectual property application processes,
facility costs, and laboratory supply and reagent costs. We expense research and development costs
as they are incurred. We expect to continue to make significant investments in research and
development to enhance our technologies, advance clinical trials of our product candidates, expand
our regulatory affairs and product development capabilities, conduct preclinical studies of our
product and manufacture our product candidates. General and administrative expenses consist
primarily of salaries and related personnel costs, professional fees and other corporate expenses.
We expect to continue to incur substantial losses through at least the next several years.
The following tables set forth our revenues and expenses for the periods indicated and amounts
are stated in thousands.
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Contract revenue |
|
$ |
1,519 |
|
|
$ |
281 |
|
|
$ |
2,914 |
|
|
$ |
469 |
|
Grant revenue |
|
|
352 |
|
|
|
155 |
|
|
|
697 |
|
|
|
337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,871 |
|
|
$ |
436 |
|
|
$ |
3,611 |
|
|
$ |
806 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
Research and development expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
Type of expense |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Personnel costs |
|
$ |
1,014 |
|
|
$ |
842 |
|
|
$ |
1,966 |
|
|
$ |
1,665 |
|
Research supplies |
|
|
324 |
|
|
|
237 |
|
|
|
586 |
|
|
|
490 |
|
Facilities |
|
|
203 |
|
|
|
196 |
|
|
|
422 |
|
|
|
404 |
|
Clinical and preclinical development costs |
|
|
836 |
|
|
|
150 |
|
|
|
1,314 |
|
|
|
659 |
|
Sponsored research |
|
|
256 |
|
|
|
203 |
|
|
|
461 |
|
|
|
333 |
|
Patent legal fees |
|
|
312 |
|
|
|
393 |
|
|
|
613 |
|
|
|
660 |
|
Other |
|
|
222 |
|
|
|
333 |
|
|
|
474 |
|
|
|
540 |
|
Stock-based compensation |
|
|
238 |
|
|
|
199 |
|
|
|
391 |
|
|
|
413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
3,405 |
|
|
$ |
2,553 |
|
|
$ |
6,227 |
|
|
$ |
5,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
June 30, |
|
|
June 30, |
|
Type of expense |
|
2010 |
|
|
2009 |
|
|
2010 |
|
|
2009 |
|
Personnel costs |
|
$ |
496 |
|
|
$ |
486 |
|
|
$ |
976 |
|
|
$ |
985 |
|
Facilities |
|
|
68 |
|
|
|
73 |
|
|
|
135 |
|
|
|
155 |
|
Legal and professional fees |
|
|
191 |
|
|
|
153 |
|
|
|
473 |
|
|
|
476 |
|
Other |
|
|
372 |
|
|
|
282 |
|
|
|
683 |
|
|
|
531 |
|
Stock-based compensation |
|
|
356 |
|
|
|
293 |
|
|
|
653 |
|
|
|
592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,483 |
|
|
$ |
1,287 |
|
|
$ |
2,920 |
|
|
$ |
2,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2010 and 2009
Revenues. Revenues increased to $1.9 million for the three months ended June 30, 2010 from
$436,000 in the comparable period in 2009. Contract revenue increased $1.2 million for the three
months ended June 30, 2010 compared to the three months ended June 30, 2009 primarily as a result
of our collaboration with Pfizer that we entered into in December 2009. We expect our contract
revenues related to the Pfizer collaboration in the next few years to reflect the amortization of
the $6 million up-front license fee over the estimated performance period, research and development
funding, and the performance of manufacturing services. Grant revenue increased $197,000 for the
three months ended June 30, 2010 compared to the three months ended June 30, 2009 primarily due to
new grants that started late in 2009. Our grant revenues could fluctuate from period to period
based on the timing of grant-related activities and the award of new grants.
12
Research and Development Expenses. Research and development expenses increased to $3.4 million for
the three months ended June 30, 2010 from $2.6 million in the comparable period in 2009. The
increase of $852,000 related primarily to an increase in clinical and preclinical development costs
of $686,000, an increase in personnel costs of $172,000, an increase in research supplies of
$87,000, an increase in sponsored research of $53,000 and an increase in stock compensation expense
of $39,000 for the three months ended June 30, 2010 from the comparable period in 2009. These
increases were partially offset by a decrease in other research and development expenses of
$111,000 and a decrease in
patent legal fee expense of $81,000 for the three months ended June 30, 2010 from the comparable
period in 2009. The increase in clinical and preclinical development costs for the three months
ended June 30, 2010 related primarily to manufacturing costs associated with our MultiStem clinical
trials and an increase in our GvHD clinical trial expenses as a result of increased enrollment and
other costs. The increase in personnel costs related to the addition of personnel in support of our
preclinical and clinical programs and regulatory affairs. Sponsored research costs increased
primarily due to an increase in grant-funded programs that require collaboration with certain
academic research institutions. The decrease in other research and development expenses for the
three month period related primarily to reduced outsourced research services. Patent legal fees
vary from period to period while we further develop and maintain our portfolio of patent
applications. Our clinical costs for the three months ended June 30, 2010 and 2009 are reflected
net of Angiotechs cost-sharing amount of $145,000 and $129,000, respectively. We expect our
research and development expenses for the remainder of 2010 to continue to be higher than the
comparable period in 2009, though this impact will be largely offset by increased revenues. Other
than external expenses for our clinical and preclinical programs, we do not track our research
expenses by project; rather, we track such expenses by the type of cost incurred.
General and Administrative Expenses. General and administrative expenses remained relatively
consistent at $1.5 million for the three months ended June 30, 2010 compared to $1.3 million for
the three months ended June 30, 2009. We expect our general and administrative expenses to
continue at similar levels for the remainder of 2010.
Depreciation. Depreciation expense increased to $70,000 for the three months ended June 30,
2010 from $57,000 in the comparable period in 2009. The increase in depreciation expense was due to
depreciation on capital purchases made in 2009 and 2010.
Interest Income and Other. Interest income represents interest income earned on our cash and
available-for-sale securities and other income includes foreign currency gains and losses, if any,
related to our activities in Europe and certain contracts denominated in foreign currencies.
Interest income and other decreased to $10,000 for the three months ended June 30, 2010 from
$114,000 for the comparable period in 2009 due to the decline in our investment balances as they
are used to fund our operations and foreign currency losses. Due to low interest rates and
declining cash balances as a result of our ongoing and planned clinical and preclinical
development, we expect our interest income for the remainder of 2010 to continue to be less than
2009 absent any new financings or business transactions.
Six Months Ended June 30, 2010 and 2009
Revenues. Revenues increased to $3.6 million for the six months ended June 30, 2010 from $806,000
in the comparable period in 2009. Contract revenue increased $2.4 million for the six months ended
June 30, 2010 compared to the six months ended June 30, 2009 primarily as a result of our
collaboration with Pfizer that we entered into in December 2009. We expect our contract revenues
related to the Pfizer collaboration in the next few years to reflect the amortization of the $6
million up-front license fee over the estimated performance period, research and development
funding, and the performance of manufacturing services. Grant revenue increased $360,000 for the
six months ended June 30, 2010 compared to the six months ended June 30, 2009 primarily due to new
grants that started late in 2009. Our grant revenues could fluctuate from period to period based
on the timing of grant-related activities and the award of new grants.
13
Research and Development Expenses. Research and development expenses increased to $6.2 million for
the six months ended June 30, 2010 from $5.2 million in the comparable period in 2009. The
increase of approximately $1 million related primarily to an increase in clinical and preclinical
development costs of $655,000, an increase in personnel costs of $301,000, an increase in sponsored
research of $128,000 and an increase in research supplies of $96,000 for the six months ended June
30, 2010 from the comparable period in 2009. These increases were partially offset by a decrease
in other research and development expenses of $66,000 and a decrease in patent legal fee expense of
$47,000 for
the six months ended June 30, 2010 from the comparable period in 2009. The increase in clinical and
preclinical development costs for the six months ended June 30, 2010 related primarily to
manufacturing costs associated with our MultiStem clinical trials and an increase in our GvHD
clinical trial expenses as a result of increased enrollment and other costs. The increase in
personnel costs related to the addition of personnel in support of our preclinical and clinical
programs and regulatory affairs. Sponsored research costs increased primarily due to an increase in
grant-funded programs that require collaboration with certain academic research institutions. Our
clinical costs for the six months ended June 30, 2010 and 2009 are reflected net of Angiotechs
cost-sharing amount of $389,000 and $438,000, respectively. We expect our research and development
expenses for the remainder of 2010 to continue to be higher than the comparable period in 2009,
though this impact will be largely offset by increased revenues. Other than external expenses for
our clinical and preclinical programs, we do not track our research expenses by project; rather, we
track such expenses by the type of cost incurred.
General and Administrative Expenses. General and administrative expenses remained relatively
consistent at $2.9 million for the six months ended June 30, 2010 compared to $2.7 million for the
six months ended June 30, 2009. We expect our general and administrative expenses to continue at
similar levels for the remainder of 2010.
Depreciation. Depreciation expense increased to $145,000 for the six months ended June 30,
2010 from $117,000 in the comparable period in 2009. The increase in depreciation expense was due
to depreciation on capital purchases made in 2009 and 2010.
Interest Income and Other. Interest income represents interest income earned on our cash and
available-for-sale securities and other income includes foreign currency gains and losses, if any,
related to our activities in Europe and certain contracts denominated in foreign currencies.
Interest income and other decreased to $43,000 for the six months ended June 30, 2010 from $242,000
for the comparable period in 2009 due to the decline in our investment balances as they are used to
fund our operations and foreign currency losses. Due to low interest rates and declining cash
balances as a result of our ongoing and planned clinical and preclinical development, we expect our
interest income for the remainder of 2010 to continue to be less than 2009 absent any new
financings or business transactions.
Liquidity and Capital Resources
Our sources of liquidity include our cash balances and available-for-sale securities. At June 30,
2010, we had $2.4 million in cash and cash equivalents and $17.7 million in available-for-sale
securities. We have primarily financed our operations through private equity and debt financings
that have resulted in aggregate cumulative proceeds of approximately $200 million.
In December 2009, we entered into a collaboration agreement with Pfizer to develop and
commercialize MultiStem for the treatment of IBD for the worldwide market. Under the terms of the
agreement, we received an up-front cash payment of $6 million from Pfizer and will receive research
funding and support. In addition, we are also eligible to receive milestone payments of up to $105
million upon the successful achievement of certain development, regulatory and commercial
milestones, though there can be no assurance that we will achieve any milestones. Pfizer will pay
us for manufacturing product for clinical development and commercialization purposes. Pfizer will
have responsibility for development, regulatory and commercialization and will pay us tiered
royalties on worldwide commercial sales of MultiStem IBD products. Alternatively, in lieu of
royalties and certain commercialization milestones, we may elect to co-develop with Pfizer and the
parties will share development and commercialization expenses and profits/losses on an agreed basis
beginning at phase III clinical development.
14
In connection with our MultiStem collaboration with Angiotech, upon the successful achievement of
specified clinical development and commercialization milestones, we may also receive up to
$3.75 million of additional equity investments and $63.75 million of aggregate cash payments,
though there can be no assurance that we will achieve any milestones. Under the terms of the
collaboration, the parties are jointly funding clinical development activity, whereby preclinical
costs are borne solely by us, costs for phase I and phase II clinical trials are borne 50% by us
and 50% by Angiotech, costs for the first phase III clinical trial will be borne 33% by us and 67%
by Angiotech, and costs for any phase III clinical trials subsequent to the first phase III
clinical trial will be borne 25% by us and 75% by Angiotech. We have lead responsibility for
preclinical and early clinical development and manufacturing of the MultiStem product, and
Angiotech has lead responsibility for later clinical trials and commercialization. Upon product
commercialization, we will receive nearly half of the net profits from the sale of any jointly
developed, approved products.
Our collaboration agreement with Bristol-Myers Squibb, which was initially established in 2001, is
now in its final phase since the requirement for Bristol-Myers Squibb to nominate new targets ended
in 2009, and we anticipate that Bristol-Myers Squibbs demand for new targets will be substantially
reduced or cease altogether. We intend to continue to prepare and deliver validated drug targets
as needed by Bristol-Myers Squibb for use in its drug discovery efforts. We will remain entitled
to receive license fees for targets that were delivered to Bristol-Myers Squibb over the course of
the collaboration, as well as milestone payments and royalties on compounds developed by
Bristol-Myers Squibb using our technology, though there can be no assurance that we will achieve
any milestones or royalties.
Our available-for-sale securities typically include U.S. government obligations, commercial paper
and corporate debt securities. As of June 30, 2010, approximately 86% of our investments were in
U.S. government obligations, including government-backed agencies. We have been investing
conservatively due to the ongoing economic conditions and have prioritized liquidity and the
preservation of principal in lieu of potentially higher returns. As a result, we have experienced
no losses on the principal of our investments and have held our investments until maturity. Also,
although these unfavorable market and economic conditions have resulted in a decrease to our market
capitalization, there has been no impairment to the value of our assets. Our fixed assets are used
for internal research and development and, therefore, are not impacted by these external factors.
We will require substantial additional funding in order to continue our research and product
development programs, including preclinical testing and clinical trials of our product candidates.
We expect to have available cash to fund our operations through 2011 based on our current business
and operational plans. Our funding requirements may change at any time due to technological
advances or competition from other companies. Our future capital requirements will also depend on
numerous other factors, including scientific progress in our research and development programs,
additional personnel costs, progress in preclinical testing and clinical trials, the time and cost
related to proposed regulatory approvals, if any, and the costs in filing and prosecuting patent
applications and enforcing patent claims. We cannot assure you that adequate funding will be
available to us or, if available, that it will be available on acceptable terms. Any shortfall in
funding could result in our having to curtail research and development efforts.
We expect to continue to incur substantial losses through at least the next several years and may
incur losses in subsequent periods. The amount and timing of our future losses are highly
uncertain. Our ability to achieve and thereafter sustain profitability will be dependent upon,
among other things, successfully developing, commercializing and obtaining regulatory approval or
clearances for our technologies and products resulting from these technologies.
Net cash used in operating activities was $5.8 million for the six months ended June 30, 2010 and
$6.2 million for the six months ended June 30, 2009, and represented the use of cash in funding
preclinical and clinical product development activities.
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Net cash used in investing activities was $2.9 million for the six months ended June 30, 2010 and
net cash provided by investing activities was $3.1 million for the six months ended June 30, 2009.
The
fluctuations from period to period were due to the timing of purchases and maturity dates of
investments and the purchase of equipment. Cash used for purchases of equipment was $323,000 and
$49,000 for the second quarter of 2010 and 2009, respectively.
Investors in the equity offering in June 2007 received five-year warrants to purchase an aggregate
of 3,250,000 shares of common stock with an exercise price of $6.00 per share. The exercise of such
warrants could provide us with cash proceeds. No warrants have been exercised as of June 30, 2010.
Our senior loan was repaid in full in 2008. The senior lenders retain a right to receive a
milestone payment of $2.25 million upon the occurrence of certain events as follows: (1) the entire
amount upon (a) the merger with or into another entity where our stockholders do not hold at least
a majority of the voting power of the surviving entity, (b) the sale of all or substantially all
of our assets, or (c) our liquidation or dissolution; or (2) a portion of the amount from proceeds
of equity financings not tied to specific research and development activities that are part of a
research or development collaboration, in which case, the senior lenders will receive an amount
equal to 10% of proceeds above $5.0 million in cumulative gross proceeds until the milestone amount
is paid in full. The milestone payment is payable in cash, except that if the milestone event is
(2) above, we may elect to pay 75% of the milestone in shares of common stock at the per-share
offering price. No milestone events have occurred as of June 30, 2010. The senior lenders also
received warrants to purchase 149,026 shares of common stock with an exercise price of $5.00 upon
the closing of our equity offering in June 2007. The exercise of such warrants could provide us
with cash proceeds. No warrants were exercised as of June 30, 2010.
We have no off-balance sheet arrangements.
Critical Accounting Policies and Management Estimates
The SEC defines critical accounting policies as those that are, in managements view, important to
the portrayal of our financial condition and results of operations and demanding of managements
judgment. Our discussion and analysis of financial condition and results of operations are based on
our consolidated financial statements, which have been prepared in accordance with U.S. generally
accepted accounting principles, or GAAP. The preparation of these financial statements requires us
to make estimates on experience and on various assumptions that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from those estimates. A description of these accounting policies and estimates is included
in Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
in our Annual Report on Form 10-K for the year ended December 31, 2009. There have been no material
changes in our accounting polices and estimates as described in our Annual Report. For additional
information regarding our accounting policies, see Note B to the Consolidated Financial Statements
in our Annual Report on Form 10-K for the year ended December 31, 2009.
Recently Issued Accounting Standards
In September 2009, Accounting Standards Codification, or ASC, 605-25, Multiple-Element
Arrangements, was updated (Accounting Standards Update, or ASU, No. 2009-13) related to revenue
recognition for arrangements with multiple elements. The revised guidance provides for two
significant changes to the existing guidance, the first relates to the determination of when the
individual deliverables included in a multiple-element arrangement may be treated as separate units
of accounting, which will likely result in the requirement to separate more deliverables within an
arrangement leading to less revenue deferral. The second change modifies the manner in which the
transaction consideration is allocated across the separately identified deliverables. Together,
these changes are likely to result in earlier recognition of revenue for multiple-element
arrangements than under previous guidance. The new guidance also significantly expands the
disclosures required for multiple-element revenue
arrangements. The new guidance is effective for fiscal years beginning on or after June 15, 2010,
and early adoption is permitted provided that the new guidance is retroactively applied to the
beginning of the year of adoption. We have not yet evaluated the potential effect of the future
adoption of this new guidance.
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In March 2010, ASC 605-28, Milestone Method of Revenue Recognition, was amended (ASU No. 2009-13)
related to the ratification of the application of the proportional performance model of revenue
recognition when applied to milestones in research and development arrangements. Accordingly, the
consensus states that an entity can make an accounting policy election to recognize a payment that
is contingent upon the achievement of a substantive milestone in its entirety in the period in
which the milestone is achieved. The new guidance is effective for fiscal years beginning on or
after June 15, 2010, and may be applied prospectively or retrospectively. Early adoption is
permitted provided that the new guidance is retrospectively applied to the beginning of the year of
adoption. We do not expect this new guidance to have a material effect on our financial statements
upon adoption.
Cautionary Note on Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These
forward-looking statements relate to, among other things, the expected timetable for development of
our product candidates, our growth strategy, and our future financial performance, including our
operations, economic performance, financial condition, prospects, and other future events. We have
attempted to identify forward-looking statements by using such words as anticipates, believes,
can, continue, could, estimates, expects, intends, may, plans, potential,
should, will, or other similar expressions. These forward-looking statements are only
predictions and are largely based on our current expectations. These forward-looking statements
appear in a number of places in this Quarterly Report on Form 10-Q.
In addition, a number of known and unknown risks, uncertainties, and other factors could affect the
accuracy of these statements. Some of the more significant known risks that we face are the risks
and uncertainties inherent in the process of discovering, developing, and commercializing products
that are safe and effective for use as human therapeutics, including the uncertainty regarding
market acceptance of our product candidates and our ability to generate revenues. These risks may
cause our actual results, levels of activity, performance, or achievements to differ materially
from any future results, levels of activity, performance, or achievements expressed or implied by
these forward-looking statements.
Other important factors to consider in evaluating our forward-looking statements include:
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the possibility of delays in, adverse results of and excessive costs of the
development process; |
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changes in external market factors; |
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changes in our industrys overall performance; |
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changes in our business strategy; |
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our ability to protect our intellectual property portfolio; |
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our possible inability to realize commercially valuable discoveries in our
collaborations with pharmaceutical and other biotechnology companies; |
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our ability to meet milestones under our collaboration agreements; |
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our possible inability to execute our strategy due to changes in our industry or the
economy generally; |
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changes in productivity and reliability of suppliers; |
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the success of our competitors and the emergence of new competitors; and |
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our ability to successfully initiate and complete a phase II study of MultiStem for
acute myocardial infarction. |
Although we currently believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee our future results, levels of activity or performance. We
undertake no obligation to publicly update forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by law. You are advised, however, to
consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and
10-K furnished to the SEC. You should understand that it is not possible to predict or identify
all risk factors. Consequently, you should not consider any such list to be a complete set of all
potential risks or uncertainties.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
Our exposure to interest rate risk is related to our investment portfolio and our borrowings. Fixed
rate investments and borrowings may have their fair market value adversely impacted from changes in
interest rates. Due in part to these factors, our future investment income may fall short of
expectations. Further, we may suffer losses in investment principal if we are forced to sell
securities that have declined in market value due to changes in interest rates. We invest our
excess cash primarily in debt instruments of the U.S. government and its agencies, commercial paper
and corporate debt securities. As of June 30, 2010, approximately 86% of our investments were in
U.S. government obligations, including government-backed agencies. We have been investing
conservatively due to the current economic conditions and have prioritized liquidity and the
preservation of principal in lieu of potentially higher returns. As a result, we have experienced
no losses on the principal of our investments.
We enter into loan arrangements with financial institutions when needed and when available to us.
At June 30, 2010, we had no borrowings outstanding.
Item 4. Controls and Procedures.
Disclosure controls and procedures
Our management, under the supervision of and with the participation of our Chief Executive Officer
and our Vice President, Finance, has evaluated the effectiveness of our disclosure controls and
procedures, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934,
as of the end of the period covered by this quarterly report on Form 10-Q. Based upon this
evaluation, our Chief Executive Officer and Vice President, Finance have concluded that, as of the
end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and
procedures were effective.
Changes in internal control over financial reporting
During the second quarter of 2010, there has been no change in our internal control over financial
reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)
that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
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PART II. OTHER INFORMATION
Item 6. Exhibits.
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Exhibit No. |
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Description |
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31.1 |
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Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer,
pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
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31.2 |
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Certification of Laura K. Campbell, Vice President, Finance, pursuant to SEC
Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
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32.1 |
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Certification of Gil Van Bokkelen, Chairman and Chief
Executive Officer, and Laura Campbell, Vice President, Finance, pursuant to 18 U.S.C.
Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ATHERSYS, INC.
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Date: August 9, 2010 |
/s/ Gil Van Bokkelen
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Gil Van Bokkelen |
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Chairman and Chief Executive Officer
(principal executive officer authorized to sign on
behalf of the registrant) |
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/s/ Laura K. Campbell
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Laura K. Campbell |
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Vice President, Finance
(principal financial and accounting officer
authorized to sign on behalf of the registrant) |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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31.1 |
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Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer,
pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
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31.2 |
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Certification of Laura K. Campbell, Vice President, Finance, pursuant to SEC
Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
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32.1 |
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Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, and
Laura Campbell, Vice President, Finance, pursuant to 18 U.S.C. Section 1350, adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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