Athersys, Inc. (ATHX)

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Athersys, Inc. (ATHX)

Q2 2008 Earnings Call Transcript

August 6, 2008 4:30 pm ET


Lisa Wilson – IR, In-Site Communications

Gil Van Bokkelen – Chairman and CEO

B.J. Lehmann – President and COO


Leland Gershell – Cowen and Company

Adam Cutler – Canaccord Adams

Matthew Osborne – Lazard Capital Markets

William Tanner – Leerink Swann & Co.



Good afternoon. My name is Vanessa and I will be your conference operator today. At this time, I would like to welcome everyone to the Athersys second quarter 2008 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator instructions)

I would now like to turn the call over to Ms. Lisa Wilson, Investor Relations for Athersys. Please go ahead, ma'am.

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. You should have a copy of the press release issued at the close of market. If you have not received it, please call Libby Abelt at 212-759-5665 and it will be sent to you immediately.

Gil Van Bokkelen, Chairman and Chief Executive Officer, and B.J. Lehmann, President and Chief Operating Officer of Athersys will host today’s call.

The call is expected to last about 45 minutes and maybe accessed through the company's Web site at A replay will be available after this call's completion by dialing 800-642-1687 in the U.S. and Canada and 706-645-9291 from abroad, and entering access code 56419772.

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 the forward-looking statements as a result of various important factors including those discussed in the company's Form 10-Q, 10-K and other public SEC filing.

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

With that I would like to turn the call over to B.J. Lehmann. B.J.?

B.J. Lehmann

Thanks, Lisa. Good afternoon and welcome to the Athersys second quarter 2008 earnings conference call. I'm B.J. Lehmann, President and Chief Operating Officer of Athersys. I will review our financial results for the quarter-ended June 30, 2008, and then I will turn it over to Gil Van Bokkelen for a corporate update.

In the second quarter of 2008, revenues increased to $776,000 compared to $723,000 for the same period in 2007. Our revenues are comprised in license fees and grant revenue. License fees increased by $140,000 in the second quarter compared to the same period of 2007 as a result of activity related to our collaboration agreement with Bristol-Myers Squibb.

Grant revenue decreased $87,000 in the same period due to a decrease in reimbursable expenditures during the period.

Our research and development expenses for the second quarter 2008 decreased to $3.7 million from $5 million for the same period last year. This $1.3 million decrease results from a $1.8 million decrease in stock compensation expense, and $412,000 decrease in other expenses as offset by $909,000 increase in clinical and preclinical development costs.

The increase in clinical and preclinical costs in the second quarter of 2008 relates to the preparations for the Phase II clinical trial of ATHX-105 which we plan to initiate over the next couple of months and to Phase I clinical trials and MultiStem for AMI and GVHD.

Overall, expenses for our clinical and preclinical programs total $1.5 million in the second quarter and are reflected net of $269,000 reimbursement from Angiotech Pharmaceuticals related to our MultiStem Acute Myocardial Infarction collaboration. We expect the expenses associated with our clinical programs to increase for 2008 as we initiate our ATHX-105 Phase II clinical trial and conduct our MultiStem clinical studies.

General and administrative expenses decreased to $1.4 million in the second quarter 2008 compared to $3.5 million in the second quarter 2007, primarily as a result of decreases in stock compensation expense, other expenses and personnel and facility costs.

Other income decreased to $17,000 in the second quarter 2008 compared to $1.5 million in the second quarter 2007, reflecting other income from the sale of non-core assets in the second quarter of 2007.

Interest income increased to $286,000 in the second quarter of 2008 compared to $175,000 in the second quarter 2007, due to the increase in our average cash and investment balances. We expect interest income to decline over the remaining quarters of 2008 due to overall declining interest rates, and lower cash balances as we continue our investments in clinical and preclinical activities.

Interest expense decreased to $31,000 for the second quarter of the year from $710,000 for the comparable period in 2007 which reflects interest expense associated with the senior loan and for the second quarter of 2007 interest expense associated with subordinated convertible promissory notes converted in June 2007.

During the second quarter this year we completed repayment of a senior loan. Overall, our net loss was $4.1 million in the second quarter 2008, compared with $7.1 million in the second quarter of 2007.

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