Athersys Management Discusses Q2 2012 Results - Earnings Call Transcript

Athersys (ATHX)

Q2 2012 Earnings Call

August 13, 2012 4:30 pm ET

Executives

Lisa Wilson

William Lehmann - President, Chief Operating Officer and Secretary

Gil Van Bokkelen - Co-Founder, Chairman and Chief Executive Officer

Analysts

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

Stephen G. Brozak - WBB Securities, LLC, Research Division

Jason Kolbert - Maxim Group LLC, Research Division

Greg Chodaczek - First Analysis Securities Corporation, Research Division

Presentation

Operator

Good afternoon, my name is Sharon, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Athersys Second Quarter 2012 Financial Results Conference Call. [Operator Instructions] Lisa Wilson, Head of Investor Relations for Athersys, you may begin your conference.

Lisa Wilson

Thank you, and good afternoon, everyone. I'm Lisa Wilson of In-Site Communications, Investor Relations for Athersys. Thank you for joining today's call. If you do not have a copy of the press release issued at the close of market, it is available on the Athersys website at www.athersys.com or you may call Libby Abelt in my office at (212) 759-5665 to receive it by email.

Gil Van Bokkelen, Chairman and Chief Executive Officer; and BJ Lehmann, President and Chief Operating Officer of Athersys, will host today's call. The call is expected to last approximately 45 minutes and may also be accessed through our website. A replay will be available 2 hours after the call's completion, and access information for the replay is available in today's press release.

Any remarks that Athersys may make about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as the result of various important factors, including those discussed in the company's Form 10-Q, 10-K and other public SEC filings.

Athersys anticipates that subsequent events and developments may cause its outlook to change, and while the company may elect to update these forward-looking statements at some point in the future, the company specifically disclaims any obligation to do so.

For the benefit of those who may be listening to the replay, this call was held and recorded on August 13, 2012. Since then, Athersys may have made announcements related to the topics discussed, so please refer to the company's most recent press release and SEC filings.

With that, I would like to turn the call over to BJ Lehmann. BJ?

William Lehmann

Good afternoon, and welcome, everyone. I'm BJ Lehmann, President and Chief Operating Officer at Athersys. This afternoon, I will briefly go through our financial results for the quarter ended June 30, 2012, and then I'll turn the call over to Gil Van Bokkelen for a corporate update, followed by a question-and-answer period.

For the second quarter of 2012, we recorded revenues of approximately $2.7 million compared to $2.4 million for the same period in 2011. The increase reflects higher contract revenues from Pfizer and RTI Biologics and also an increase in grant revenue over the prior year period. Absent any new collaborations, our contract revenues are expected to decrease in the second half of 2012 and would represent manufacturing service revenue under our Pfizer collaboration and potential milestone payments from RTI and BMS.

Our research and development expenses for the second quarter were $5 million compared to $4.4 million for the same period last year. The increase is primarily due to higher costs related to our MultiStem clinical trials, including contract research organization and clinical manufacturing costs.

We currently have 2 ongoing Phase II clinical trials: one in collaboration with our partner, Pfizer, where MultiStem is administered to treat patients with ulcerative colitis; and the second, in which MultiStem is used to treat patients who have suffered an ischemic stroke. These costs increases were partially offset by lower patent legal fee expense, sponsored research cost and other research and development expenses.

Our annual research and development expenses are not expected to increase significantly through 2012 as compared to 2011, unless we elect to fund advancement of additional clinical programs with proceeds from business development and/or additional financing activities.

General and administrative expenses for the second quarter of 2012 decreased to $1.2 million from $1.4 million in the second quarter last year. The decrease resulted primarily from lower legal and professional fees and other general and administrative costs. We expect our general and administrative expenses to continue at similar levels for the rest of this year.

We had other expense of $100,000 for the 3 months ended June 30, 2012, compared to other income of $200,000 for the prior year period, primarily due to fluctuations in the valuation of our warrant liabilities. As a result, our net loss was $3.7 million or $0.13 per share in the second quarter of 2012 compared to $3.2 million or $0.14 per share in the second quarter of 2011.

For the 3 months ended June 30, 2012, we used net cash of $5 million in our operating activities as compared to $4 million in the prior year period.

At June 30, 2012, we had $10.9 million in cash and cash equivalents. Absent any new business development deals or fundraising, we would expect to be able to fund operations through most of the first quarter of 2013.

That said, we expect to add to our capital base during the second half of this year through our business development activities and fundraising, where we deem it to be appropriate, to better position us to complete proof of concept studies in our most advanced clinical programs and continue development in other important areas.

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