Athersys, Inc.

Good evening. Thank you for attending today's Athercist Year-End 2021 Results Conference Call. My name is Celina and I will be your moderator. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, then please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Karen Honody with Athercist. Please go ahead.

Thank you, Alina, and good afternoon, everyone. I'm Karen Hannity, 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 and athersys.com. I'm pleased to introduce Dan Camardo, who started as our Chief Executive Officer on February 14th. I'm also here with BJ Lehman, our President and Chief Operating Officer, and Ivor McLeod, our Chief Financial Officer. 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 reported on March 15th of 2022. Since then, we may have made announcements related to the topics discussed, so please reference our most recent press releases and SEC filings. With pleasure, I'd like to introduce you all to the new CEO of Athercys, Dan Camardo. I'll turn it over to you now, Dan.

Thanks, Karen. I'm excited to be leading Athercys at such a pivotal time, as I believe we have the potential to be a global leader in cell therapy and regenerative medicine and effectively treat various diseases with significant unmet medical needs. I am also well aware of the challenges the company has faced over the years, and I'm prepared and eager to meet those challenges head-on while capitalizing on the opportunities ahead. Please allow me a minute to share some of the highlights of my background before joining AtherSys on February 14, 2022. I've come to AtherSys after more than 25 years in the pharmaceutical and biotech industry with experience of having delivered numerous successful therapies to markets. a privilege that brings with it dual satisfaction of both helping patients and creating shareholder value. I enjoy building effective teams, growing businesses, and launching innovative products, especially in disease areas that are difficult to treat or have few or no approved therapeutic options. Most recently, I was Executive Vice President and a member of the Executive Committee of Horizon Therapeutics, where I was part of an executive team that transformed a small specialty pharmaceutical company with a $2 billion market cap in 2015 into a global biotechnology leader with 11 in-market products and a market cap approaching $23 billion. During my six and a half year tenure, we developed exceptional commercial capabilities that enabled us to build a diverse and highly profitable portfolio of rare disease products and to grow the business by acquiring undervalued assets and repositioning them in the marketplace. I'm also proud of the high-performing, results-driven culture that we created, driven by our core values of transparency, collaboration, and accountability. My other significant commercial experience was at Astellas Pharma, where I spent 11 years, starting with the US market entry of Yamanuchi Pharma America in 2003. During my time with Astellas, I had a chance to participate in the commercial build-out of the company following a merger with Fujisawa and the launch of several innovative products. I played a leadership role in a number of successful co-promotion and licensing deals, most notably Vesecare for overactive bladder with GlaxoSmithKline and Xtandi for castration-resistant prostate cancer with Medivation. When I left Astellas in 2014, the company reported more than $3 billion in U.S. net And we had built a broad portfolio of specialty products in the areas of urology, oncology, immunology, and hospital care. Now, many people have asked me why I would be leaving my role at Horizon, where I was one of the top executives with responsibility for Horizon's successful and highly profitable inflammation and rare disease businesses. and give up the financial rewards that come along with scaling a business to a valuation of $23 billion to join Athersys, a company with a market capitalization of less than $200 million. First, let me say that I was not looking for a new job, nor to leave Horizon. But when the Athersys board reached out to me, I researched the company and quickly became intrigued. In particular, I saw a company with deep scientific expertise in stem cell biology and the passion and commitment demonstrated by the company's employees to bring multi-stem to market and help patients suffering from serious life-threatening diseases such as stroke, acute respiratory distress syndrome, and trauma. These diseases are not only difficult to treat, but can be devastating to individuals and families and result in significant healthcare costs. And although cell therapy has more recently become a growing area of interest in our industry, Athercys has been studying the effects of multi-stem and the scientific basis for its mechanism of action for more than 15 years. While all of this was interesting, I would not have taken the job unless I was satisfied with my own due diligence into the company. So let me share with you some of the due diligence that I completed before I agreed to accept the position as CEO of Athercys. First, I met with every member of the board of directors and asked pointed questions about the opportunities and challenges facing the company. Second, I met with every member of the senior management team to understand the internal capabilities as well as the company's future needs as it continues to work towards commercialization. Third, I reviewed all pre-clinical and clinical studies, especially Master's I in detail. Fourth, I studied the various research papers about the scientific basis for multi-stems mechanism of action, and I also spoke with several physicians who treat stroke and acute respiratory distress syndrome. And lastly, I spoke with several consultants in the gene and cell therapy space to better understand the manufacturing and regulatory challenges facing this evolving area of the industry. My due diligence not only confirmed my initial interest but got me excited about the prospects for Athercys with a new leader in place. I resigned from Horizon and accepted the job at Athercys in full recognition of the challenges the company had faced and with the conviction that we have a unique opportunity to become a leader in regenerative medicine, treat patients who've been suffering from these very difficult to treat diseases, and generate substantial shareholder value. Since joining the company on February 14th and learning more about MultiSTEM's unique properties, meeting the internal team, and better understanding the business opportunity, my conviction has become even stronger. Specifically, our branded multi-potent adult progenitor cells or MAPC therapy provides us with a highly attractive platform with significant growth potential across different inflammatory diseases as well as neurological and immune disorders. From the clinical trials already completed, more than 400 patients have received multi-step. Most importantly, the results of all those trials and analysis have consistently demonstrated safety and very good tolerability. And like more conventional drugs and biologics, the multi-stem product candidate is cleared from the body over time, which we believe may enhance the product safety relative to other types of stem cell therapy. There have been more than 80 scientific publications on MAPC, which is a distinctly different cell type from an MSC, or mesenchymal stem cell, and we hold more than 450 patents related to our technologies, providing us with IP protection in the US, Europe, Japan, and other areas. Over the last year, we have made significant investment and progress in our ability to manufacture and scale multi-stem in a predictable and efficient manner, which as many of you know can be a challenge with other stem cell therapies. In addition, I've been impressed with both the technical and executive teams at the company, which includes several new members who have started over the past year or so with proven experience in process development and manufacturing. Capabilities that will help further support commercialization plans for both Athersys and our Japanese partner Helios. As the new leader of Athersys, I know it's my responsibility to earn the trust of all key constituents, employees, shareholders, and commercial partners. My style is to be completely transparent and say it like it is. When I set expectations, they will be what I believe to be both ambitious and achievable, and we will all work as diligently as we can to meet or exceed those expectations. And with that in mind, I'd like to address expectations on the timing to complete Masters II enrollment. Over the last couple of years, this trial has experienced challenges in its clinical site initiations, as well as patient screening and enrollment due to the COVID-19 pandemic and supply disruptions, among other things. We've undertaken initiatives intended to accelerate new site openings in the US and abroad and increase patient enrollment at sites that are currently opening, including addressing site operational issues and local product supply constraints. These actions are intended to enable the company to finish enrollment of the Masters II study by the end of 2022 or as soon as possible thereafter. Another area I would like to address today is corporate partnering. I have a lot of experience in building healthy, mutually beneficial, and successful corporate partnerships. This is a particularly important element of the strategy for a developing biotech company. It is critical to structure these partnerships in accordance with the overall corporate strategy, align interests among the partners, and execute on a win-win formula for each company. It's fair to say that Athersys has had a mixed record so far with corporate partnerships, and we intend to fix that. I'm pleased to see that following the execution of the cooperation agreement in February 2021 and the comprehensive framework agreement in August of 2021, the relationship between Athersys and Helios has dramatically improved. In fact, I can report that both companies are working very closely together as true partners in a mutually supportive way on regulatory matters, manufacturing, and preparations for commercialization in Japan. I'm confident that we can build on this progress and continue to deepen our relationship to ensure a mutually beneficial partnership with Helios. We are approaching several important milestones with our Helios collaboration, including a potential regulatory filing for ARDS, the unblinding and release of the treasure trial results for stroke, and preparations for a potential commercial launch in Japan. AtherSys will be working closely with Helios every step of the way to assist and support success on every one of these important initiatives. And finally, I'd like to make some comments on the status of manufacturing. The first generation cell factory manufacturing process that the company has been using up to this point for clinical product has experienced various issues and delays over the years. With improvements to this process and FDA approval of our second generation bioreactor process, We believe that the company will have sufficient product and inventory to support all ongoing clinical trials by the end of second quarter. We intend to start building with Helios the initial product necessary for a potential commercial launch in Japan. And our intention is to transition over to the larger scale bioreactor production process, which can yield substantially greater volumes. to support the future potential growth in Japan, as well as the requirements for potential launch in the United States, Europe, and the rest of the world. The initial test runs with the large-scale bioreactor process have been successful, and we will be working to build out this production platform for larger commercial needs based on the timing and results of upcoming clinical and regulatory milestones. And now I'd like to turn it over to BJ Lehman, who will provide an update on our active Phase III program in stroke, as well as our Phase II-III clinical program in ARDS, and our Phase II trial in trauma. BJ?