Athersys, Inc.

Good morning. My name is Devin and I will be your conference operator today. At this time, I would like to welcome everyone to the AtherSys third quarter 2022 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you would like to withdraw your question at any time, again, press star and then the number one on your telephone keypad. Corporate Communication and Investor of Relation to Ellen Gruley, you may begin your conference.

Good morning and welcome to Adversis' third quarter 2022 financial results and business update conference call. Please note that any remarks management 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 factors, including those discussed in our Forms 10-Q, 10-K, and other filings with the SEC. Also, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast. November 15, 2022. AtherSys undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law. With that, I would like to turn the call over to Dan Camardo, Chief Executive Officer of AtherSys. Dan, please go ahead. DAN CAMARO.

Thank you, Ellen, and welcome, everyone, to AtherSys' third quarter 2022 earnings call. Joining me on the call today are Maya Hansen, our Chief Operating Officer, Casey Rosado, our Interim Chief Financial Officer, and Dr. Robert Willie Mays, our Executive Vice President and Head of Regenerative Medicine and Neuroscience Programs. Since our second quarter earnings call, we've been hard at work executing on a plan to transform AtherSys and put the company on a path to success. I'd like to start out by affirming our confidence in the potential and opportunity we have in multi-STEM for treating ischemic stroke, acute respiratory distress syndrome, trauma, and several other serious diseases. During the third quarter, we made good progress across several areas, including addressing our balance sheet and operating expenses, growing enrollment of patients in our Master's II ischemic stroke trial, and pursuing discussions with potential business partners. Since we held a business update call last month, I'd like to focus our call today on our financial performance and highlight expectations for the fourth quarter. Since our second quarter earnings call announcement in August, we've taken significant actions to improve our financial situation by reducing our operating expenses, raising capital in the near term, and managing our liabilities. In mid August, we raised approximately $12 million in gross proceeds. Given other financing options and current market dynamics, that initial agreement provided immediate liquidity under attractive terms. We also just completed a follow-on equity financing, raising $5.5 million in gross proceeds. The equity raise we completed last week provides us with additional liquidity as we plan for the first quarter of 2023 and work towards achieving several near-term milestones. We fully realize that additional funds are required to bring multi-STEM to market, and we remain focused on our primary goal of completing the Master's II trial and achieve our other value-creating business and strategic objectives. Actions we've taken to address our operating expenses and liabilities have yielded meaningful savings and moved us toward a more managed and disciplined approach to supporting our priorities. To date, we've reduced expenses from approximately $7 million a month and growing down to approximately $3 million per month and decreasing, with a clear path to $2.5 million per month by the end of this year. This has been achieved by thoughtfully managing outstanding account payables in relationship with key vendors. Our largest liability remains with our CDMO and represents over 80% of our account payable balance. We continue to actively engage with this important vendor with the goal of reaching a settlement on our outstanding obligations and preserving our relationship for the long term. As a reminder, our contract manufacturer has completed production of investigational product necessary for us to complete Masters II under the current clinical protocol. They have also completed production of clinical product using a more efficient bioreactor process with sufficient inventory available to complete our Phase II trauma trial. We also have a few hundred doses of clinical bioreactor product that was approved for use in our ARDS Macovia trial, which we suspended. We intend to hold onto that product as we explore various business development options. Another action we've taken to reduce our operating expenses is the wind down of Regenesis, which is our animal health research unit in Belgium. We have notified staff of our intention to close this facility by the end of the year. We're exploring potential business partners for this program, which has demonstrated the benefit of multi-stem in a preclinical animal setting, targeting progressive diseases like canine osteoarthritis. As far as stabilizing our financial position, we are grateful to have received shareholder support to implement a reverse stock split to satisfy NASDAQ continued listing requirements. After discussing our options with NASDAQ on August 29th, we implemented a one for 25 reverse split. Among other benefits, this action was intended to bring our share price into a more attractive range. We've subsequently received a notice of noncompliance from NASDAQ on October 14th that our market valuation of common stock had fallen below $35 million for 30 consecutive days. And we have until April 12th, 2023 to regain compliance and avoid the possibility of delisting. As we presented our preclinical and clinical work during a research webinar and at industry conferences, such as meeting on the MESA, We are pursuing discussions with potential partners. Much of our preclinical research has been highlighted in various scientific publications, but was never offered or pursued from a business development perspective. Now, in addition to licensing opportunities for ischemic stroke, we're also looking at co-commercialization opportunities and ways to advance our pipeline. We've made significant investments over time to understand how multi-stem cells work, why they are unique, and how they can optimally be manufactured at scale, and we intend to work with partners to build on our experience. Although our efforts are resulting in conversations with new potential partners, it's too early to predict outcomes. In Japan, we continue to work with Helios as they hold meetings with PMDA and determine their next steps related to achieving commercial approval for multi-STEM in both ARDS and ischemic stroke. As part of our restructuring efforts and ongoing negotiations with our CDMO, we agreed to a license and tech transfer for certain manufacturing rights to Helios for producing product in Japan. This is a lengthy process that we've initiated with Helios while we continue to evaluate a path forward for multi-STEM approval in Japan. Turning now to our clinical work, our top priority remains achieving a successful outcome for Masters II And we are currently in a critical window of time to review potential protocol changes with FDA and EMA. We analyzed results from the MASTERS I and TREASURE trial to generate statistical models and align insights to reevaluate the MASTERS II trial design with the goal of enhancing the prospect of a timely outcome focused on the most appropriate targets. This month we will be meeting with key opinion leaders, regulatory experts, and statisticians to review the data and determine what, if any, protocol changes should be made. Once we receive input from these experts, we will then consult with the FDA and the EMA on any potential recommendations to modify the Master's II trial design and be in a better position to communicate an expected enrollment completion date. In the meantime, we continue to actively engage clinical trial sites and work toward growing patient enrollment. As we look ahead for the remainder of Q4, we are clear on our priorities. Number one, we continue to enroll patients in our Master's II trial. Number two, we engage with key opinion leaders and other industry experts on the totality of data we now have available to us with the recent treasure trial results. and evaluate our options to then discuss with regulatory agencies. Number three is to advance our business development discussions with the intention of seeking strategic partnerships that will work with us to advance multi-STEM on a regional or global level. And number four, we will continue to manage our balance sheet actively and responsibly for long-term success. Coming off our recent financing, we will continue to raise our presence with institutional investors and we look forward to participating in an Alliance Global Partner Biotech Conference at the end of this month. We will also be meeting with investors in person during the JPMorgan Healthcare Conference in San Francisco in early January. I'd now like to turn the call over to Casey Rosado to discuss the quarter's financial results.