On May 05, 2016 Athersys, Inc. (Nasdaq:ATHX) reported its financial results for the three months ended March 31, 2016 (Press release, Athersys, MAY 5, 2016, View Source [SID:1234511972]).

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Highlights of the first quarter of 2016 and recent events include:

Announced positive one-year follow-up results from the Phase 2 study of MultiStem cell therapy to treat ischemic stroke – demonstrating progressive improvements and significantly higher rate of excellent outcomes at one year for MultiStem-treated patients – with greater benefits for patients receiving MultiStem treatment within 36 hours of the stroke;
Established collaboration with HEALIOS K.K. ("Healios") to develop MultiStem cell therapy for stroke in Japan, which included an upfront payment of $15 million, additional potential milestone payments aggregating up to $225 million, double-digit royalties on product sales and an option for Healios to expand the collaboration to include acute respiratory distress syndrome ("ARDS") and another indication with a $10 million expansion payment and additional associated milestone payments and royalties;
Advanced preparations for next stroke trials, including working with Healios to reach agreement with the Japanese Pharmaceuticals and Medical Devices Agency ("PMDA") on study design to potentially clear the way for a Japanese investigational new drug ("J-IND") filing and subsequent trial launch, and engaging with other regulators about requirements for the Company’s planned international stroke study;
Continued enrollment of Phase 2a study evaluating administration of MultiStem therapy to ARDS patients, and Phase 2 acute myocardial infarction ("AMI") study, evaluating and taking measures to accelerate enrollment;
Recorded revenues of $15.5 million for quarter ended March 31, 2016, reflecting the recognition of the $15.0 million license fee payment from Healios, and net income of $4.8 million; and
Ended the quarter with $30.4 million in cash and cash equivalents.
"We remain very excited about our ischemic stroke program," stated Dr. Gil Van Bokkelen, Chairman & CEO at Athersys. "As we have presented at several conferences, we have seen that MultiStem treatment has the potential to help ischemic stroke victims, especially those who can be treated within 36 hours following the stroke. We were especially pleased with the one-year follow-up results, which showed continued and significant functional improvement with MultiStem treatment. As a result, we are moving forward diligently with clinical development in Japan with our partner Healios, and with planning for a corresponding study in the United States and Europe, focused on MultiStem treatment within 36 hours of the stroke.

"Our partnership with Healios is off to a strong start," continued Dr. Van Bokkelen. "Building from our previous engagement with the PMDA and with our support, Healios has reached general agreement with the PMDA about trial design and requirements. Healios is preparing its J-IND filing and planning for the subsequent launch of its planned study, and we are engaged in manufacturing to support their clinical product requirements. Based on discussions with the PMDA, we believe that a successful trial in Japan could make contingent, or even full, approval possible, utilizing Japan’s progressive regulations for the development and approval of regenerative medicine products.

"We are also fully engaged in planning and preparing for an international ischemic stroke study focused in the United States and several European countries. Upcoming discussions with the U.S. Food and Drug Administration and other regulators will help us refine and finalize the trial design and complete trial preparations," noted Dr. Van Bokkelen.

"We are also enrolling our two grant-supported Phase 2 trials, in AMI and ARDS, although progress has been slower than we have anticipated," commented Dr. Van Bokkelen. "We have undertaken a number of actions to accelerate enrollment, including adding clinical sites. We believe that MultiStem cell therapy is well-suited to treat these acute conditions based on our preclinical and clinical experience to date, and we are motivated to move these studies forward expeditiously.

"We continue to focus on other important areas, including actively exploring partnering opportunities around multiple programs. Finally, we have a substantial effort underway in manufacturing and process development focused, first, on supplying our planned clinical studies, and second, on advancing our manufacturing platform and related capabilities to support high-volume, low-cost production important to commercialization," concluded Dr. Van Bokkelen.

First Quarter Results

For the three months ended March 31, 2016, total revenues were $15.5 million compared to $0.7 million in the same period in 2015, reflecting the recognition of $15.0 million in contract revenue from our Healios collaboration in the first quarter of 2016. Grant revenue was $0.3 million less in the first quarter of 2016 compared to the same period in 2015, and grant revenues may fluctuate from period to period based on the timing of grant-related activities and the award and expiration of new grants.

Research and development expenses increased to $6.7 million in the 2016 first quarter from $5.7 million in the 2015 first quarter, primarily due to increased clinical and preclinical development costs, including process development activities to support manufacturing. General and administrative expenses were relatively consistent at $2.0 million and $1.9 million for the three months ended March 31, 2016 and 2015, respectively.

We recognized net income for the three months ended March 31, 2016 of $4.8 million compared to net loss of $12.5 million for the same period in 2015. The $17.2 million net variance includes the impact of the $15.0 million Healios license revenue, the $0.3 million decrease in grant revenues, the $1.1 million increase in combined R&D and G&A expenses, a $3.4 million decrease in non-cash expense from the change in the fair value of our warrant liabilities, and a $0.2 million increase in net other income. Cash provided in operating activities was $7.3 million during the 2016 first quarter (reflecting $14.8 million of cash received from Healios), compared to $1.1 million in the 2015 first quarter (including $8.0 million of cash received from our former collaborator, Chugai Pharmaceutical Co., Ltd). As of March 31, 2016, we had $30.4 million in cash and cash equivalents, compared to $23.0 million at December 31, 2015.