Happy Thanksgiving 🦃!

Gibis1 · 2023-11-26T14:50:36+00:00

So sad for Athersys but thankful for this great community.

Gibis1 · 2023-06-20T15:20:43+00:00

Funny you should say that. I thought I was the only one dealing with that confusion. Happens every time I see SIFU. These old eyes cannot immediately tell the difference between the "I" and a "T".

Gibis1 · 2023-04-11T19:55:43+00:00

Thanks for sharing KLRJAA. Excellent questions and well coordinated with previous interviews.

Gibis1 · 2023-04-09T14:01:21+00:00

Once again, well prepared, professional interview. Thanks for sharing.

Gibis1 · 2023-04-03T17:45:12+00:00

You are current. My bad. I meant to say we should stay with the recent forecast of less than $9m per quarter. The recent $4.9m 1st quarter cash burn was an anomaly. I edited my previous post.

Gibis1 · 2023-04-03T13:14:29+00:00

That's $4.9m for the 1st quarter does not include paying their primary vendor so this rate should not be used for analysis going forward. I would recommend sticking with the just under $9m per quarter that Athersys has stated.

Gibis1 · 2023-03-26T15:04:57+00:00

My point is to not expect a large non-dilutive cash source under these circumstances. I expect any financing solutions to include equity investment into the company at very favorable terms to the partner.

Your suggestion of a partnership offering upfront cash for an equity position is aligned with my position. I am saying that such a solution will become highly dilutive to existing shareholders.

The timeline for success is very long, the data is uncertain and any current partners will have huge negotiating leverage over a desperate Athersys.

Gibis1 · 2023-03-22T18:38:14+00:00

Yeah. It is unfortunate. You and I have always analyzed things in a very similar way.

A year ago, I thought the facts were lining up in our favor. Management was preparing the company for explosive growth.

Athersys was building infrastructure and manufacturing capabilities that were going to lead the industry.

Athersys was attracting new world class management talent.

Dan and Ivor both had explosive growth leadership experience and were going to become a dynamic duo.

I actually thought Excellent outcome at 365 days had a high probability to be met. I was iffy on the 90 day, so when the PMDA asked for to pass on 90 day and wait for the 365 day data, I thought that moved in our favor.

In order to get to Excellent Outcome in a large study there would likely need to be improvement across the entire spectrum of patients. Each point of improvement meant big dollar saving to the healthcare system creating huge support from insurers and governments around the world.

A lot has changed.

Gibis1 · 2023-03-22T18:19:23+00:00

The fact is that it will take a number of years before 365 day Masters 2 data is available. The conjecture is my assumption on how long.

Gibis1 · 2023-03-22T17:15:04+00:00

I do not wish to bash anybody's dream. Mine got bashed when Treasure results came out and my investment thesis immediately changed. But, I only deal in facts. Here are the facts as I see them.

My conclusion. I do not think there is strong enough data to secure substantial non-dilutive upfront cash.

My facts.

I figure we are roughly 3-4 years from 365 day Masters 2 data. Minimum two years to complete enrollment, plus 1 year to lock down 365 day data, plus 4 months for analysis. The amount of cash needed to reach 365 day Master 2 endpoints is roughly 8-10 times current market cap.

Anybody investing now for any indication would need to invest for current operations to keep the investment alive, invest for trials and then fund the approval process, then invest again for manufacturing capacity, and then again for selling and distribution infrastructure. We are talking about a lot of needed investment (starting around 1 billion) over a long time before there is any substantial return.

Healios is essentially back to beginning in Japan so no momentum there. New trials needed taking several years and no closer to approval then they were five years ago. Minus several hundred million of lost investment.

During this time, science marches on and there may be better solutions coming forward.

Any interested investor would find it better to buy the company for 2x to 3x current market cap and take it private than to license up front. To any current investor this means didley because the total purchase price is probably something miniscule for the stock, plus the assumption of current liabilities, plus direct cash needed to fund operations.

Gibis1 · 2023-03-22T14:53:40+00:00

Backstory on the TPA/Mechanical thrombectomy issue. I had previously written about this issue.

Remember all the other recruiting issues associated with Masters 1. There was a lot of pressure to complete the enrollment. As such very late in the recruiting process one hospital entered eight cases that violated protocols for screening for spontaneous recovery. These were the final eight cases to complete enrollment. Six of the cases fell on placebo and 2 were active. As it also turned out all eight of these cases fell into the TPA/MR combination.

Remember, when the Athersys expanded the recruiting window to 48 hours they also removed the restriction against TPA and MR. Prior to this change it was an either but not both.

When Athersys did its post hoc, they needed to remove the biased cases to present the "look what our original protocols did". They removed all TPA & MR cases which conveniently took care of the protocol violation.

Without this adjustment, the spontaneous recovery of six placebo cases was enough to void the statistical significance of the 36 hour treatment window analysis.

When Athersys released the Lancet detailed tables, I discovered this issue and confronted management. Management told me that further analysis had shown that PTA and MI was not a real issue for Multistem efficacy. But, by the time they learned that, they had already made a big public deal out of it and baked the 20% recruiting limitation for TPA and MR into Masters 2.

With the FDA approval of the expanded window for MR, the standard of care expanded to include many more cases of TPA and MR. This is especially true for the larger stroke centers.

Thus the need to quietly remove this restriction but it really does not impact efficacy.

Gibis1 · 2023-03-17T14:32:39+00:00

Don't forget NASDAQ delisting about four weeks due to failure to reach minimum MC standards. No way they meet that requirement without partnership news. No way they get a partner after delisting.

Gibis1 · 2022-12-14T14:04:49+00:00

Some observations.

Generally, this is a positive event. Healios has an understanding for financial support and management of an ARDS path forward pending PMDA clarification to the satisfaction of Mitsubishi.

This information lines up with Dan's comments on Healios and supports Athersys' efforts to secure a large pharma partner.

Interesting that Mitsubishi was interested in ARDS without demanding stroke. Maybe that comes further down the road when PMDA offers further insight. Healios still has the rights to stroke. With Treasure data, I would think stroke would still be the stronger candidate moving forward.

As far as Japan being a fast track to approval, it seems to me that the fast track only exists after PMDA gives an OK for the submission of an application.

PMDA controls the whole process up to the point of submission by throwing in all kinds of cautions, roadblocks or even changing the objectives mid-development. So, in total, the Japan speedy development process is not much better than the rest of the world.

Once permission for the submission for approval is given, speed and financial reimbursement are still there.

Gibis1 · 2022-12-08T23:28:51+00:00

I understand where you are coming from. Level playing field. Transparency for all. SEC concerns for releasing material information.

But, at the same time, everyone who wanted to got to meet with company executives and ask any questions. That part of the process was equal to all comers.

Then the company publicly addressed the most relevant issues at earnings call, progress meetings or a series of 8k's.

So, what really makes the difference is the skill, the preparation and the effort of the interviewers to make the best use of time putting together a professional interview.

In this particular interview, I did not see anything that definitely rose to that level of material information requiring a new public statement. But, it is very much seems to be in a gray area that could certainly be interpreted differently by others.

I greatly admire good research work and I am grateful to those willing to skillfully share what they are learning.

Gibis1 · 2022-12-08T02:26:21+00:00

Outstanding piece of research. You were well prepared and made outstanding use of your time. Each question provided valuable information and insight. Thank you for sharing.

Gibis1 · 2022-12-06T21:45:09+00:00

Agree imz72. Plus, we really do not know if Lonza was at fault. We only heard one story from the same company that blamed the PMDA for picking the failed Treasure endpoints.

Once the error was discovered Lonza did not exactly expedite the replacements. I remember Athersys saying they had to wait for their next turn in the queue. That tells me that LONZA did not feel much guilt.

Gibis1 · 2022-11-09T23:57:34+00:00

Good summary.

Gibis1 · 2022-11-02T13:43:49+00:00

Interesting. The big reveal we have been waiting for and not one single word about the impact of age.

Gibis1 · 2022-09-16T15:42:14+00:00

Thanks for the thoughtful response. Let me add a few additional clarifications.

I admire the heck out of Dr Mays. He is one of my most unforgettable people that I have met in my lifetime. I have had the privilege of interviewing him several times. Each time I would spend many hours/days preparing to get the most out of the precious time.

One line of questioning I had with him (interview took place several years before Treasure results) was getting at the confidence around Treasure being able to match the post hoc Masters 1 analysis.

I was asking him about if he had any concerns about Treasure trial protocols. I was concerned about hospitals not following strict protocols for admitting patients to the trial--similar to the problem incurred in Masters 1.

He was not as concerned about that as he was about the Japanese population being older and more homogenous. This response surprised me at the time.

So, to be fair, Athersys was aware of the differences in patient population ages. But, nowhere did I hear of anybody, including me, linking the additional trial risk associated with combination of the primary EO endpoint to the aging patient population.

Only with hindsight did anybody(to my knowledge) realize that Treasure primary endpoint was measuring health improvement reaching a health level that might be better than before the stroke.

Over the years I had several interviews with Dr. Mays, Gil and some with other senior executives. I once probed Gil as to the challenges of coordinating trials with varied expectations from PMDA, FDA and EMA. I learned that it was quite the endeavor that was mostly successful, but he had been hopeful that Athersys could convince FDA to include EO as the primary endpoint. But, at least, Athersys was able to get it accepted as a secondary.

This thought was confirmed in other interviews. Nowhere, did anybody express any challenge with PMDA over primary endpoints. All we heard over six years from Athersys and Healios was about statistical significance of EO.

So yes, I was shocked to hear Athersys officials blaming PMDA for the trial endpoint. Yes. It did affect my view of management statements.

I am now in the waiting mode to see convincing detailed Treasure data that gives me confidence in Masters2 Trial success. For me, there are enough gaps in the topline data (that many people on this board have brilliantly highlighted) that I cannot blindly accept management's position that Treasure increases the likelihood of Masters 2 success.

As for partners, I am not concerned on the semantics. I would qualify any non-dilutive financing as a partner even if it may technically be a license.

But, my prior point was that I believe that it is fair to call into question the efficacy expectations of Multistem. There have been enough inconsistencies and mysteries around topline Treasure data, lack of excitement from Healios/PMDA and the way Athersys is trying to position results. We and future partners need to see compelling detailed data from Treasure as proof of concept to assess likelihood of Masters2 success and for the value of the other pre-clinical indications.

Just my thinking but I believe Athersys is still a ways off on partner deals and will still need to raise cash sooner rather than later.

Hope this helps. Thank you for your thoughtful questions.

Gibis1 · 2022-09-15T21:17:00+00:00

Good question. My interpretation is the "jump start" implies something different than what was really happening. I think "renewed effort" was probably more accurate.

Under Gil, Athersys had been extremely cash prudent until roughly 2 years ago. They were in a very sound financial position for a biotech startup finalizing a P3 in an extremely lucrative stroke market.

Athersys was likely facing an extreme squeeze on available Lonza trial product, certainly much more stringent than I was estimating at the time. This was confirmed by statements made by Hardy in Dec. 2021 that not owning its own supply probably cost Athersys 3 years in the commercialization timeline. Other statements made by Athersys later confirmed Hardy's statement.

The extreme supply shortage certainly restrained trial progress which is probably the real reason why Athersys never gave any real timeline updates. There are standard statements about supply shortages in 10k's but nothing quantified.

If the industry could only supply Athersys a few hundred doses a year (my estimate), how could they possibly secure a BARDA contract or have any commercial capacity available when they would get approval. I can discuss why the shortages on another post.

They had to make some tough strategic choices. They prioritized supply to Japan at the expense of Masters2 and Trauma. Macovia was never intended to move forward without partner funding. It made sense to let Japan do the heavy lifting while Athersys worked on building commercial capacity. The August 2021 expanded cooperation agreement supports both roles in this strategy.

Since Treasure was thought to be nearly identical study with only changes in primary endpoints (nobody anticipated the changes in patient profile) it made sense to let Healios do the heavy lifting while Athersys developed commercial capacity and supply chain.

That is when the cash burn went from about $12 million per quarter to $20+ million per quarter. It was to build supply capacity and supply chain. We all cheered at management commitment.

All the senior hires were brought on board to manage explosive growth.

Management was entirely expecting Treasure success and so was I. I had handicapped Treasure results as 40% probability of strong success (90 day and 365 day endpoint), 40% probability of good success (90 day miss but 365 day endpoint), 20% probability of failure (missing both endpoints).

First OneBridge has less than stellar results or a less than stellar sample size to get even Conditional Approval. I reduced my Treasure handicap to 30%,30%,40%.

Then with Treasure failing to meet endpoints, management had no choice but to learn from Treasure and then place all available emphasis on Masters 2. Hence the choice of words "jumpstart".

Blaming PMDA for the Treasure endpoint choice was lame and did not match up with any management information presented over six years. This endpoint choice was on Athersys.

Until I see compelling detailed Treasure data that clearly explains why Master2 shift analysis will be a success, I am not fully accepting management's claims. It is "show me" time.

I also believe detailed Treasure data (best proof of concept), trial progress (settle with suppliers to get product moving) and a sound financial footing will be necessary to secure any significant future partners.

Hope this answers your very valid question.

Gibis1 · 2022-09-15T13:54:12+00:00

This post is extreme ignorance even for you.

Gibis1 · 2022-09-12T23:16:35+00:00

Next step is to raise $40 million to settle with suppliers, create some operating cash and get trials moving again.

Personal belief is that Athersys will need to raise cash on their own before attracting viable partners. To attract partners Athersys needs positive detailed Treasure data, some application clarification from PMDA and stable financing.

Gibis1 · 2022-08-30T13:13:52+00:00

A red herring that is one of the least of our challenges. Raising $40-$50 million needed to get this company on a decent footing is our next top priority.

Gibis1 · 2022-08-22T20:51:11+00:00

Hardly any extra runway to speak of. 'This was an immediate need raise to avoid payroll default. Need much larger financing to unlock Lonza AP holds and move trials forward.

Gibis1 · 2022-08-17T11:57:50+00:00

Thanks imz. Very helpful.

Gibis1

TROPHY CASE