Athersys, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the AtherSys fourth quarter and full year 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 in your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ms. Karen Hennedy, Director of Corporate Communications and Investor Relations. Thank you. Please go ahead.

Thank you, Rob, and good afternoon, everyone. As Rob mentioned, I'm Karen Hennedy, Director of Corporate Communications and 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 athersys.com. B.J. Lehman, our President, Chief Operating Officer, and Interim CEO, is here to provide us with a corporate update, and Ivor McLeod, Chief Financial Officer, will be providing our financial update. A webcast of the audio will be available three hours after the call's conclusion on our website under the Events section. The access information for the replay is also in today's press release. Any remarks that we 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 our Forms 10-Q, 10-K, and other public SEC filings. We anticipate that subsequent events and developments may cause our outlook to change. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. For the benefit of those who may be listening to the replay, this call was held and recorded on March 25th of 2021. Since then, we may have made announcements related to the topics discussed, so please reference our most recent press releases and SEC filings. Now, with that, I'd like to turn the call over to B.J. Lehman. B.J.?

Thanks, Karen. I am B.J. Lehman, President and Chief Operating Officer of Atrisys, and I'm serving as interim CEO of the company. In addition to Ivor and Karen, I am joined today by John Harrington, our Chief Scientific Officer. In a departure from our past practice, I will start with an update of the business and operations of the company. Igor will then share information about the company's finances, and this will be followed by a brief question and answer period. Our intention today will be to focus less on a description of the opportunities ahead of us and more on the key aspects of our business and operations. 2020 and early 2021 have brought opportunities and challenges. For example, in 2020, we seized an opening provided by the COVID pandemic to accelerate the development of our multi-stem treatment for acute respiratory distress syndrome. But the COVID pandemic also created challenges such as maintaining continuity in our R&D efforts, enrolling patients in some of our clinical trials in the face of clinical site shutdowns and slowdowns, and like other companies, navigating through potential material and product supply disruptions. As most of you know, we also resolve favorably recent legal matters, and with the establishment of a cooperation agreement, this has set the stage for constructive progress together with our partner Helios in the advancement of the multi-STEM therapy in Japan. And recently, We have continued to pursue our mission and successfully maintain focus on our critical objectives as we have gone through leadership change at the company. The balance of 2021 will be an important period for the company. We expect to see top line results from the Japan treasure study, giving us our first look at late stage clinical trial data for the multi-stem treatment of ischemic stroke. We also expect to achieve proof of principle with respect to our large-scale manufacturing processes to enable us to effectively serve large markets such as ischemic stroke and other critical care areas with our cell therapy product candidate. Favorable clinical trial results and viable large-scale manufacturing processes would be expected to provide the foundation for us to put in place as we look ahead the enablers of successful commercialization, such as commercial operations, commercial manufacturing capacity, and distribution, among other things, as we await results from our own pivotal trial activity. Some of these things we will do ourselves through hiring and investment, and other things we will establish through smart partnerships. Now, turning to our priorities. Our scientific objective and company vision remain constant. Scientifically, our objective is to develop innovative cell therapies that provide substantial benefits to patients who face severe debilitation and loss of function, material erosion to quality of life, and risk to survival as a result of a serious condition or trauma. As for our company vision, we intend to build a global leader in regenerative medicine and cell therapy with the ability to innovate and develop cell therapies, manufacture the product to serve our targeted markets, and distribute and commercialize the products in markets internationally. Clearly, the key to our success will be the further demonstration and pivotal studies of substantial therapeutic impact from our therapies. We've developed what we believe is an exciting portfolio of therapeutic programs, The ischemic stroke program, as our lead program, has particular importance given the nature of the therapeutic opportunity and potential for clinical results in the near term. We look forward later this year to the results from Helios' TREASURE study. We believe these results will provide important insights about what to expect from our larger and better powered pivotal MASTERS II study, and positive results could set the stage for Helios' application to the Japanese authorities for registration. Our priorities this year are focused on several key areas having substantial expected impact on sustained value creation for the company. First, we will remain focused on advancing our clinical programs, particularly in continuing to progress enrollment of our Master's II study. In addition, we intend to work closely with our partner, Helios, to prepare for applications to the PMDA for potential approval of multi-stem therapy for ARDS and stroke, assuming successful trial readouts, and then to help prepare for commercialization. Second, we will concentrate on preparing for commercial product manufacturing by further developing and refining our bioreactor-based processes for commercial-scale manufacturing and planning the build-out and establishment of third-party and internal manufacturing capacity for this purpose, and taking the first step of a staged process to put this capacity in place. The pace of our build-out and investment will depend on the nature and timing of our clinical trial results and our interactions with the regulators about the transition to large-scale bioreactor-based manufacturing. And third, we will continue our planning and preparations for commercialization, assuming successful trial results and applications for marketing approval. For example, we will continue to work with outside experts to evaluate the market access and reimbursement dynamics that will be important to our product, its uptake, and our commercial success. Of note, we recently received World Health Organization approval of our non-proprietary product name, NB-MestroCell. NB-MestroCell reflects the International Non-Proprietary Name Convention and includes as the prefix INVI, which represents innovation, which we believe is a core characteristic of our multi-stem cell product. We have also made progress with our proprietary product name, which ultimately will be subject to regulatory approval. Over the course of the year, we intend to continue to build, in a staged manner, our commercialization enabling capabilities, including adding experienced commercial leadership to the AFTRSIS team. Our plan in subsequent calls over the course of the year would be to dive in a little deeper and update you on progress in these key 2021 priority areas. Turning to clinical development, as you are aware, we have three of our own clinical studies underway. The Master's II study, evaluating multi-stem for moderate to moderate severe ischemic stroke. Micobia, initially designed for multi-stem treatment of COVID-induced ARDS patients. And Matrix, focused on the treatment of trauma patients with multi-stem therapy. As our lead program, the Master's II study is a priority for us. 2020 was a challenging year for the study. COVID affected many of our sites, causing some existing sites to shut down for periods and others to reduce their operational intensity. To some extent, it further constrained our ability to open new sites. These factors contributed, together with some delays in product release, to disappointing enrollment through the year and helped break the strong enrollment momentum we had at the beginning of 2020. Thankfully, it appears that the COVID impact on trial operations may be abating in the first half of this year and will allow us to rebuild momentum and expand our site network. As we look forward, risks to progress include lingering COVID impact and possible product supply constraints should current clinical manufacturing be affected by any raw material supply or performance-related issues. Taking this into account, we are not expecting to complete enrollment until 2022. As we noted, we expect that Helios will disclose the 90-day results from its TREASURE study later this year. The TREASURE study, though with less power than the MASTERS II trial, and with a different primary endpoint, is similar to the MASTERS II study. As a result, we believe the TREASURE results will provide important insights about expectations for our MASTERS II study, including our primary endpoint, the MRS shift analysis at day 90 post-stroke, which is a secondary endpoint in the TREASURE study. As for our MCOVIA study, we continue to make steady progress as we prepare by design for bioreact-based product to be integrated into the study. However, several factors are causing us to reconsider our strategy in the arts area. First, the arrival of vaccines and the development of other therapies in developed countries raises questions about the sustainability of a business and therapeutic product opportunity focused solely on COVID-induced arts. Second, the COVID focus has limited us from concentrating on the more general arts population for which we have promising clinical data. Third, changes in the standard of care for COVID-induced ARDS patients have changed treatment practices and shifted the patient population in the study to greater severity than when we started. As a result, we have taken steps to expand the target population in our study to include any pathogen-induced ARDS subjects. We will carefully monitor progress in the study and may consider further adjustments to the study design as we deem necessary. We remain bullish on the potential of multi-stem cell therapy to benefit ARTS patients and look forward to continuing development based on available information with a more measured pace and posture. Based on the rapidly developing COVID environment and a potential for further modifications to the trial, we currently would not expect this study to complete enrollment until after the MASRS 2 study. Briefly, with respect to our Matrix trauma clinical study, our first patient was enrolled into the study last December. We continue to work with our partners, the University of Texas Health Science Center, and the Memorial Hermann Texas Medical Center to advance enrollment in the study. In terms of business development, we are active. We have had and continue to have discussions and negotiations about the licensing of the multi-STEM product in various indications and geographies. A particular focus, as we have noted previously, has been Europe, but our discussions have not been limited to just Europe. We are focused on establishing a partnership with a company that offers the right combination of value-creating commercialization capabilities and fit, and deal structure and terms, including overall value. It is clear from our discussions that the more our lead program is de-risked, the greater the pool of attractive partners and the better the deal structure and deal terms would be. As a result, the closer we get to important data readouts, such as the treasure study data, the more consideration we will give to the impact of the readout on our partnership strategy. Put another way, We do not feel compelled to complete a deal before we have clinical data. It is more important for us to do the right deal with the right partner. In a moment, I'll turn it over to Ivor to speak about our financial results, but before I pass the baton, I'd like to make a few closing comments. First, we believe we have the resources to achieve the important objectives we have immediately ahead of us. Further, we have the ability to stage our investments in accordance with important milestones, such as clinical trial readouts or partnerships. Second, we believe deeply in the strength and distinctiveness of our science and technology and the potential to help millions of patients. Finally, that we know there are risks ahead of us and possibly unknown risk, as we saw last year with COVID, We believe we are well positioned to advance materially the multi-STEM franchise over the course of the year. Ivor?