Athersys - Continue the Discussion

Hey Twenty2 - Good thoughts.  here are some quick thoughts in response...

I think the way your concept can playout is by Dan striking a "first rights / exclusive negotiation rights" deal with a potential partner for - let's say - $10M upfront for a negotiating period of maybe 3 months.  During that period of time the potential partner gets the benefit of knowing Dan isn't talking to anyone else, and Athersys gets the benefit of being funded for several more months.  They could then use part of the $10M to do an interim-analysis if Athersys and the potential partner jointly decide to take that step.  The potential partner may want to take that step because it could be a major factor determining if they want to sign a larger/global deal after the 3-month exclusive negotiation period ends.  IMO, any partner will likely want to know this information before committing long-term as Masters-2 may require even more patients, time and therefore $$$ to get fully enrolled.  

Gil did something like the above previously.  As I recall, they got something like $10M for exclusive negotiating rights for some period of time.  I made Ellen/IR aware of that tactic several months ago.

IMO, something like the above being announced at any time is certainly possible.
Dan let the cash position dwindle to almost nothing, so it very well could be he had to wait for the March 21st meeting with the FDA to happen where he knew he would get the FDA's decisions at that meeting, and that would enable him to close some type of partnership shortly afterwards.

Having said all of that, IMO its equally likely - and perhaps more likely - that no partnership is close to being signed, and Dan had to have the results of the March 21st FDA meeting before a new "Healthcare investor" decides to participate in the next dilutive share offering.  Based on Dan's past guidance, he's probably looking for another $10M (approximately 3 months) of funding to bridge to getting a major partnership done.  I can see any potential investor wanting to hear results of the 3/21 FDA meeting before agreeing to provide $10M.

Dan's recent comment in the last conference call of "only doing a deal that makes sense for shareholders" (words to that effect), carries weight with me and has me thinking that partnership discussions haven't progressed to the final stages, so IMO a dilutive raise is just more likely.  Notes:  When looking at risks, need to look at 1) the probability of the risk occurring, and 2) the impacts if it does occur.  In this case, my view is that the probability of the risk (near term dilution) is at least 50%... probably higher.  The problem IMO is the impact which I view as severe, as any dilutive capital raise that needs to be done now could put another reverse split on the table.

GL all.  I hope Dan gets some type of near-term partnership done to address the immediate cash needs.  He's certainly capable of getting it done.

Full disclosure:  Given the current cash balance and risk of dilution (and the impact that risk would have) I have no current position in ATHX.  I plan to re-enter after I see at least 3 months of cash on the balance sheet.

Hey Twenty2 - Some thoughts below...

On timing of potential interim analysis - Nothing much to add here other than I have no idea when an interim analysis may happen.  From Helios' perspective, since their subset hypothesis is based on patients 64 and younger with more severe strokes, they'd most likely want to ensure they had enough patients with that criteria.  At this point, its hard to say when enough of those patients would be enrolled in Masters-2 AND be past the 365 day endpoint.  For those reasons, I think any interim analysis is probably a ways off... because imo its in Athersys' interests to help Helios get the therapy approved in Japan, so Athersys would most likely only want to conduct the interim analysis when they're confident the results will help Helios.

On my comments above regarding partnership perhaps being tied to completion of 3/21 meeting with FDA... for those that hold that view:  IMO the more days that pass without a partnership being announced makes it less likely.  Thinking is that if a partnership was indeed contingent on the results of the 3/21 meeting with FDA, one would have thought the partnership would have been announced very soon afterwards.

On the Amendment #3 discussion on Reddit:  I posted my thoughts on that thread.  Repeating some below where I think WST is over-looking a few things...
"Correct. TPA and MR patients need to be treated in first 4 and 6 hours respectively. My understanding is that if those therapies work the results are known pretty much immediately. So, if TPA and/or MR work, those patients would be screened out of Masters2 where treatment starts at 18 hours at the earliest.

Entire hypothesis of Multistem is that it can help patients that can NOT get to hospital within 4-6 hours after stroke where they can get TPA/MR, so trial protocol excludes those patients."

With the above near-term dilution risk now realized via the dilutive raise, I re=established my position (larger) in ATHX.

IMO, the additional money just raised is highly likely to be enough to bridge ATHX to the interim analysis that will be conducted on Masters-2, and hopefully a "first rights" cash-upfront payment from a partner.

Risk/reward profile much better now with approximately 3 months of cash on the balance sheet.

GL all.

Good news - Offering has officially closed.

I was a little concerned after NOT seeing a PR announcing the closing of the recent offering.
I wanted to confirm that Athersys had the needed cash to get to the IA readout.
Ellen from Athersys IR confirmed this morning that the offering has indeed closed.

See below from Ellen

"Hi Jim,

The previous offerings were private, so I believe that’s why we did multiple releases. This one was public.
This offering did close. Here are the disclosures related to it:"

d18rn0p25nwr6d.cloudfront.net/CIK-0001368148/eadee108-c15d-4fa0-8117-57d9b89fe761.pdf

www.athersys.com/investors/press-releases/press-release-details/2023/Athersys-Inc.-Announces-Pricing-of-3.5-Million-Public-Offering/default.aspx

Thanks jckrdu, but you pointed out the low volume. I guess that if they had tried to exercise even a small fraction of the huge amount of warrants they hold, it would have created selling pressure and driven the stock price down, and their potential profit would have been very small, much less than 50%.

The selling stockholders of Athersys (NASDAQ:ATHX) plan to offer and sell 15.36 million shares of the company as part of a secondary offering, the company disclosed in an SEC filing on Wednesday after the bell.
The company will not receive any of the proceeds from the sale by the selling stockholders of the common stock.
SEC filing.

Anyone knows what does this mean? Company will not receive any proceeds. But existing stock holder receive stock? Then why call it "Sell Shares?"

Thanks.

Thank you Imz.

I don't think that is farfetched at all. Seems like one of the likelier options.

Do you mind sharing what Dan's basis is? After R/S and everything, I have lost track. It seems like it probably has to be pretty high relative to current share price. I think his options were around $1 pre split if I remember correctly. So, we would need to sell for $25 or so to make any return on those presplit 10mm shares (off the top of my head).

Thanks in advance if you can shed some light there