Good afternoon. Thank you for attending today's Athersys Investor Conference Call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Karen Hunady with Athersys. Please go ahead.
Thank you, Hannah, and good afternoon, everyone. I'm Karen Hunady, 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. A webcast of the audio will be available two 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 June 2nd, 2022. Since then, we may have made announcements related to the topics discussed, so please reference our most recent press releases and SEC filings. I will now turn the call over to our Chief Executive Officer, Dan Camardo. Dan?
Thank you, Karen, and good afternoon or good evening to everyone. Earlier today, we announced several important changes that will enable us to continue our mission of becoming a leader in cell therapy and regenerative medicine. I wanna emphasize that I sincerely believe that MultiStem has proven to be a breakthrough in regenerative medicine, and we have the prospect of helping patients suffering from some of the world's most difficult to treat diseases with significant unmet medical needs such as stroke, acute respiratory distress syndrome, and trauma . I am committed to this mission, and we will be doing everything necessary to succeed in bringing this therapy to patients and building value for our shareholders. I am also well aware that investor reaction to recent announcements, including the release of top-line TREASURE results, has been negative.
I will explain in a few moments why I am confident that we have a clear path forward with MultiStem for potential approval to treat patients for stroke, ARDS, and possibly trauma. First, I would like to provide some color on the organizational and other cost-saving initiatives announced earlier today and why we are implementing them. We are taking difficult and decisive actions intended to reduce our cost structure and streamline our organization with the goal of improving our financial condition and enabling us to focus on the critical priorities necessary to achieve regulatory approvals and bring MultiStem to market. The actions we are taking now will help us to substantially reduce our prospective quarterly spend from recent levels. These actions include reducing our staff by 70% as well as eliminating or deprioritizing non-personnel related spend across several non-critical areas.
We believe that a substantially reduced cost structure is one of the factors that will make us more attractive to both financial and strategic investors. As part of this restructuring, three of our senior executive officers will be leaving Athersys. Dr. John Harrington, Co-founder, Executive Vice President and Chief Scientific Officer, and Ivor MacLeod, Chief Financial Officer, will leave the company on June 30th of this year. While on May 31st, B.J. Lehmann , our President and Chief Operating Officer, left Athersys. All of these departures are on amicable and cooperative terms. Before discussing the plans for going forward, our going forward leadership team, I would like to make some comments to preempt inevitable speculation regarding the departure of these three exiting senior executives and other employees.
When multiple members of senior management depart shortly following a significant decline in a company's stock, there could be a tendency to interpret that these actions were a form of scapegoating or a validation of concerns. This is not the case here. These executives, as well as the other employees who will be departing as a result of these actions, were instrumental in many of the underappreciated successes that we will be building on going forward. While I do not mean to suggest that everything was done perfectly in the past, I do want to acknowledge the tremendous innovation and contributions of these executives and our many loyal employees who through their efforts have given us a cell therapy platform with significant potential to help patients who suffer from these debilitating diseases. I would like to thank these individuals for their contributions and dedication.
Our revised leadership team is made up of deeply experienced and well-qualified individuals who will play an instrumental role in designing and executing our plans to advance MultiStem to gain regulatory approval and ultimately achieve commercialization. This diverse leadership team includes Dr. Robert Mays, a Co-founder and our Vice President of Regenerative Medicine and Head of our Neuroscience programs. Dr. Eric Jenkins, who's the Senior Medical Director and Head of our Clinical Operations. Maia Hansen, who's our Senior Vice President and Head of Operations and Supply Chain. James Glover, who's the Senior Vice President of Commercial Manufacturing. Dr. Manal Morsy, who's the Senior Vice President and Head of our Global Regulatory Affairs. Rakesh Ramachandran, who's our Vice President and Head of Information Technology and Communications, and Alison O'Sullivan, who's the Senior Director of Human Resources.
Now I would like to discuss why I'm excited about the prospects for MultiStem and why I'm personally committed to help bring this important therapy to market to help patients and build shareholder value. I fully recognize and accept the challenging work we have ahead of us to achieve this goal, especially when our stock now trades more than 90% below where it traded two years ago and about 70% below where it traded just before the release of the TREASURE results only three weeks ago. A key driver of our recent stock price decline is the reaction to the TREASURE trial missing its primary endpoint of excellent outcome at 90 days, which I'd like to clarify. First, I want to be clear on the big picture on the TREASURE trial and data readout.
To the best of our knowledge, the TREASURE trial with 206 patients was the largest double-blind, placebo-controlled cell therapy trial ever conducted for stroke in Japan and worldwide. The totality of the data gives us a lot to be excited about in the treatment of stroke, and I'm not alone in this widely held view. We will be organizing a conference call later this month with several stroke experts and key opinion leaders who will share their views on the significance of the TREASURE data, as well as MASTERS-1 and the conclusions that can be reasonably reached. I understand the negative market reaction following the release of the top-line TREASURE results since in almost every drug trial, investors tend to focus on whether the drug met the primary endpoint in a statistically significant manner.
That is often a main indicator of whether a drug can be approved under a standard regulatory review and be a candidate for commercialization. However, keep in mind that the TREASURE trial has a Sakigake designation, which provides a different level of review and engagement with PMDA, including eligibility for a conditional approval review pathway. The primary endpoint for the TREASURE trial was excellent outcome at 90 days, and all elements of this composite score needed to be met in a statistically significant way. It is important to recognize that the NIHSS score is not a relative measure of improvement following the onset of stroke, but instead it is an absolute measurement of a patient's neurological deficit, and there is no way of knowing whether or not a patient was at the target level of 0 or 1 prior to the onset of the stroke.
With a higher age population, it is quite likely that patients would fall outside of the 0 to 1 range prior to the onset of stroke for other reasons, and there was no plausible way for a therapy to bring them back to that level. Alternatively, TREASURE showed statistically significant data for global recovery at 365 days. This measure takes into account improvements observed in neurological deficits from baseline and is an important indicator of efficacy. There are several reasons why we believe that the achievement of global recovery is an important takeaway from the TREASURE trial. Consider just a few key points. The main objective in treating a stroke patient is to help them recover in a meaningful way. The TREASURE trial demonstrated that MultiStem succeeds in helping patients recover.
In fact, across a broad range of attributes, the TREASURE trial demonstrated in a statistically significant way that MultiStem is helping patients recover versus placebo, including improvement in disability and ability to conduct daily living activities without assistance. Now, the difference between requiring 24 hour living assistance and being able to live independently is highly meaningful to patients and their families. Also, the median age of the TREASURE patient population was 78 years old or 15 years older than the MASTERS-1 patient population. Expecting an NIHSS score of 0 or 1 to achieve excellent outcome may not, in hindsight, be realistic. Furthermore, the TREASURE trial confirmed the findings of several prior studies with MultiStem that is well-tolerated and with observed adverse events comparable between placebo and MultiStem groups.
In addition, we very recently received a more complete TREASURE data set from Healios that includes biomarker data and other important information that will be fully analyzed and shared with medical experts, regulators, and investors in the coming weeks. I would also like to reemphasize the importance of this therapy for the healthcare system, society, and the economy. Stroke afflicts millions of patients worldwide every year, costs the healthcare and related industries many billions of dollars every year, and leaves a tremendous burden on patients' families. We hope to help those patients and families and are committed to doing so. I would now like to make some comments regarding MultiStem treatment for ARDS.
Last summer, Healios completed the ONE-BRIDGE study, which was a 30-patient unblinded trial that demonstrated a meaningful reduction in the number of days a patient remains on a ventilator over a 28-day period and also demonstrated a reduction in mortality rate for these patients, respectively. We are currently working closely with Healios to meet PMDA's requirements, and those discussions are ongoing. Based on the data we have generated both at Athersys and Healios and subsequent analyses, we believe MultiStem has compelling potential to benefit this critically ill patient population. I would also like to make a brief mention of the trial we currently have ongoing for trauma with our collaborators at the University of Texas Health Science Center at Houston and McGovern Medical School in Houston.
This trial is primarily being funded by the U.S. Department of Defense through MTEC, and we will continue to support this program at a minimal cost to Athersys. We are hopeful that MultiStem will also show meaningful benefits in treating major trauma victims. Over the years, we have invested significant dollars into research and development and accumulated extensive scientific evidence, both preclinical and clinical, to support MultiStem's unique mechanism of action, tolerability, and therapeutic effect. We remain confident and committed to realizing the full potential of MultiStem as an off-the-shelf allogeneic cell therapy to treat difficult critical care conditions such as ischemic stroke, ARDS and trauma. This is why I'm here and committed to building Athersys into a leader in regenerative medicine that will help patients suffering from a range of debilitating diseases while also building shareholder value.
In order to achieve that vision, we need to be focused and disciplined. The cost cutting and organizational changes we announced today are important steps in strengthening the company so that we will be in a better position to attract financial and strategic partners and execute on our plans to seek regulatory approvals and deliver this important and valuable therapy to patients. In the room with me today are Ivor MacLeod, our Chief Financial Officer, Dr. Willie Mays, Vice President of Regenerative Medicine and Head of Neuroscience Programs, and Dr. Eric Jenkins, our Senior Medical Director and Head of Clinical Operations, who are available to answer questions on our MultiStem trials and the recent TREASURE trial data. With that, we will open it up to any questions coming from our analysts.
Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. The first question is from the line of Jason Kolbert with Dawson James. Please proceed.
Hi, guys.
Hi, Jason.
I can appreciate the level of, you know, pain. Hi, how are you? I can appreciate the level of pain, you know, that's associated with this call, and I'm sorry to hear that. You know, I hope it all works out in the end. With that said, the critical issue the company faces now is gonna be cash, right? A cash crisis. Can you give us some idea of kinda how the burn rate is gonna change and, you know, what you're gonna do to kinda get through the next. Well, you must be running on fumes now. How are you gonna manage?
Yep. Ivor.
Yes. Jason, thanks for the question. The wholesale restructuring that we have just announced, plus the other things that we're considering, is going to reduce our forward burn fairly substantially. I can't give you the exact numbers, and I also can't disclose our current cash balance, but we are not running on fumes, let me assure you. With regard to.
Okay.
Oh, sorry. Did you have a follow-up? I'm sorry.
No, no. Go ahead. I'm sorry to interrupt. With regard to.
No, no problem. One of the things that was in the press release that Dan didn't go into too much detail is we are continuing to progress our discussions with potential partners for MultiStem, which of course could provide capital. We're also continuing our discussions concerning just alternative financing vehicles. Then as you know, we still have the equity lines with Aspire, which we could tap into if we wanted to, but clearly are not doing so at today's levels.
The other thing I'd add, Jason, is, you know, these actions are the beginning of other actions that we're looking at taking as well to extend our runway in the near term. What we're really looking for on the financing side is, you know, that might come through a partner like Ivor said or other financing options to get us through really the next year to where we expect the completion of the MASTERS-2 trial and data readout.
Good. How about Healios? I mean, they have an investment in Athersys, and they certainly have an investment in seeing the company, you know, successfully commercialize MultiStem in the U.S. as well as their own trials in Japan. Is there any room to lean on them if you need them?
Yeah. We're in discussions on a regular basis with Healios, and obviously we're looking to partner with them to continue the path for approval on stroke, and also develop ARDS in Japan. They're aware of some of the cuts that we're making, and so we are partnering with them closely. We don't have any kind of additional financial commitment or anything like that that I can speak of right now. There is a milestone at the end of June for $3 million that we would expect to receive from Healios, which is tied more to manufacturing progress. Just know that we're in active conversations with Healios and continue to partner with them in exploring all options going forward.
Okay, thanks, guys. I really appreciate it. Looking forward to kind of better days with you. Thanks.
Thank you Jason. Appreciate your support. Thank you.
Thank you, Mr. Kolbert. The next question is from the line of Greg Harrison with Bank of America. Please proceed.
Hi. Good afternoon. Thanks for taking the question. What areas of the company are going to experience the largest reductions here, and how would you say that or how would you describe the impact of these cuts to your ability to execute on your clinical trials?
Yeah, great question. From what I can tell you, we have spent a significant amount over the years, especially on research, and those are some of the areas that aren't necessarily tied to our clinical trials that we're looking at first. We also have a team over in Belgium that works on animal health, that is something that we're gonna be looking to find a potential partner for to build on the work that they've done. Those are, you know, those are some obvious areas where we're really trying to cut back on non-critical spend that isn't tied to advancing our clinical programs, first with MASTERS-2 and stroke, but then followed closely by our ARDS program, and then, as we mentioned, with trauma.
Those are just a few examples of where we're looking at those types of reductions that has been part of our historical burn rate.
Got it. What can you do from this point to get to a data event that you could finance on the back of whether that's accelerating enrollment in MASTERS-2 or in an interim look at MACOVIA or something to get you to some data quicker than your current or your prior plan at least? Are you able to give any updates on enrollment in either of those trials?
You know, there really isn't anything from a trial standpoint that I think we would, you know, an early readout or anything like that we would be looking at. We are and have been taking actions to accelerate MASTERS-2 enrollment, which has included opening new sites in different parts of the world, as well as here in the United States. That is progressing along, I think at a better trend than what we had been seeing previously. We're also working closely with Healios, as we mentioned, on, you know, their path forward with stroke and also still in negotiations with PMDA about ARDS.
You know, from a clinical trial standpoint, those are probably our earliest, you know, markers that we can speak of that might be some type of a positive impact in the marketplace. We do hope that once we secure financing and once we also identify an appropriate partner, that those are other, you know, catalysts that will get investors excited about the path we have ahead.
Got it. That's helpful. Thanks again for taking the question.
Thanks, Greg.
Thanks, Greg.
Thank you, Mr. Harrison. The next question is from the line of Gil Blum with Needham & Company. Please proceed.
Good afternoon, everyone.
Hi, Gil.
Thanks for taking our question. Maybe a bit of a follow-on here. Is there any way that you might be able to leverage your relationship with Healios more broadly on your U.S. operations, maybe some sort of structured deal that I'm not aware of or anything of that sort? Thank you.
Yeah, no. Good question, Gil. Yes, you know, we're in discussions with Healios on a number of different fronts. I would say that the relationship, and again, I've been here a little over three months, but the relationship is probably as clear and as cooperative as it has ever been. Healios fully understands the situation that we're in. They also understand where we're having to make some sacrifices and cut back in order to reduce our spend rate. We are in ongoing conversations, and Healios is one of those key partners that we're talking to. Nothing that we can speak to today, but they are aware of the cuts that we're making.
It's actually some of the cuts has been in consultation with Healios just to make sure that we're not doing anything that would interrupt their opportunity to advance in Japan.
All right. I appreciate the color. Thank you.
Thanks, Gil.
Thank you, Mr. Blum. The next question is from the line of David Hoang with SMBC Nikko. Please proceed.
Hi. Thanks for taking the question. So first one, I just wanted to inquire about. I know you're not giving specific cash position or cash burn guidance. Can you maybe just talk directionally in terms of, will the reduction in force is that gonna be fully phased in by the start of the next quarter? And then should we expect any, you know, one-time type payments that may be related to the reduction, whether, you know, severance pay or things of that nature?
Yeah, go ahead, Ivor MacLeod.
Yeah, David. Thanks for the question. The plan currently is to actually complete by the end of this month. With regard to one-time charges, we did actually disclose in our 8-K that the approximate cost is about $4 million, but this, of course, will be realized over time.
Right. I think that's over 12 months or so. The only exception to ending at the end of June is the folks that we have in Belgium that are on a little bit of a different time schedule. They have been given notice, and in that time period that we have, we're gonna be looking to identify a partner that may be more deeply suited for animal health.
Great. That's helpful. I just had a question on in terms of manufacturing and your work there. I know you've you know you've been making progress there in terms of scaling up to you know 3-D bioreactors and larger scale production. Will that work in manufacturing be impacted by these personnel changes?
You know, we've tried to preserve a lot of the work that's been done to this point and work that still needs to be done in the near term. As you know, we're working with a contract manufacturer who's been a great partner, and we continue to work with them on the investment that's going to be made going forward. That's also in partnership with manufacturing that Healios might need as well. We don't expect it to interrupt the manufacturing needs, at least they're not in the near term in the next couple years.
Okay. Thanks for taking the question.
Thanks, David.
Thank you, Mr. Hoang. The next question is from the line of Steve Brozak with WBB Securities. Please proceed.
Steve.
Mr. Brozak, your line is open. Thank you, Mr. Brozak. There are no additional questions waiting at this time, so I will turn the conference over to Dan Camardo for closing remarks.
Yeah, thanks. Sorry, I think we lost Steve, but we'll follow up, Steve, with you on a follow-up call when convenient. First, I wanna just acknowledge the changes that we announced today and recognize the folks that have put a lot of time and of many folks that for a majority of their career have invested in MultiStem and advancing, you know, Athersys to a place that we'll be building on from today forward. I just want to acknowledge their commitment and dedication as we have to make these difficult decisions.
The team and the core team that is gonna be moving forward is committed and passionate about continuing the journey with MultiStem, and we feel like, in this new structure and in a new kind of a new spending framework that it'll provide us some runway to be able to get to the next step. All of our attention will really be on MASTERS-2, as well as maintaining support on our ARDS trial as well as trauma. We'll have a lot more to report. We'll be as transparent as we can be going forward, keeping everybody informed of progress, as we go.
Again, just wanna recognize the commitment from many of the folks here that have been on the journey with us, as well as the patience of a lot of longtime investors that I know still remain committed to the journey that we have in front of us in bringing MultiStem to market and helping patients. Thank you very much, and we'll be in touch again soon with more information regarding an upcoming key opinion leader call, which will happen in the month of June. Thank you.
That concludes today's Athersys Investor Conference Call. Thank you for your participation. You may now disconnect .