Is Athersys (NASDAQ:ATHX) still a buy? Print
By Patrick Crutcher   
Thursday, 02 September 2010 04:07

Athersys Inc.(NASDAQ:ATHX) has been on the rise the past few trading days, so subscribers need to be in the know. ATHX is one of the few biotechnology companies developing stem cell treatments that was not effected by a federal judge’s recent injunction against federal funding of human embryonic stem cell research, which the Obama administration is appealing.

This might not matter much to ATHX in the short-term, but if the ruling stands, then ATHX might benefit from it. This might be one of the major reasons for their recent movement.


They are developing MultiStem®, a patented and proprietary stem cell product for the treatment of multiple distinct disease indications. MultiStem is a biologic product that is manufactured from human stem cells obtained from adult bone marrow or other nonembryonic tissue sources. Stem cell research is notoriously very expensive, but fortunately ATHX has partnered with other companies in order to pay the bills, since they are a very early-stage development company.

Back in late-July, ATHX announced good Phase 1 interim results from their trial using MultiStem, to treat patients who suffer a heart attack (myocardial infarction). MultiStem was well-tolerated and had a favorable safety profile. More importantly,  each dose group showed improvement in heart function, compared to baseline and relative to the registry group. They noted that Dr. Marc Penn, M.D., Ph.D., co-principal investigator of this study, plans to present additional data and results and further discuss the study on September 22, 2010 in Washington, D.C. at the Symposium "Strategies for Cardiovascular Repair: Stem Cell Therapy and Beyond," at the Transvascular Cardiovascular Therapeutics Conference.


Just keep in mind these are interim results from a Phase 1 trial, that is not scheduled to be complete until early 2012. Try and keep things in perspective. They have a collaboration deal with Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI) for this indication which was signed in 2006. ATHX could have certainly gotten a better deal, since ANPI has their own problems to deal with now, including a struggle to stay listed on NASDAQ and $500M in long-term debt.


In late 2009, they signed a partnership with Pfizer Inc.(NASDAQ:PFE) to develop and commercialize MultiStem for the treatment of Inflammatory Bowel Disease, for which they received $6M upfront in cash as well as research funding and support during the initial phase of the collaboration. ATHX is also eligible to receive milestone payments of up to $105 million upon the successful achievement of certain development, regulatory and commercial milestones.


Am I buying the recent action? Nope. It could be a good trade, but I don’t believe the recent price movement is justified, given how early in the clinical development of MultiStem is and whether ATHX stands to benefit greatly from the recent stem cell funding ruling. ATHX has not made it clear how many grants are pending or could benefit from the ruling.

Additionally, ATHX is at least 5 years away from having a product even remotely close to being looked at by the FDA. Maybe after they have Phase 2 trials underway would I reconsider.  Also keep in mind that ATHX still has 20M share shelf that hasn’t been used yet. Investors are encouraged to look over the July 2010 investor presentation for ATHX at:  http://bit.ly/9qq8al


Disclosure: No positions





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