Athersys, Inc. (NASDAQ:ATHX)

CAPS Rating: 3 out of 5

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Player Avatar btown819 (95.92) Submitted: 12/3/2010 9:29:43 PM : Outperform Start Price: $2.54 ATHX Score: -112.25

As of December 2010, Athersys is a speculative stock due to the small revenues, continued losses, and potential share dilution. With a market cap of under $50M, a share price of roughly $2.50 and 70K share per day trading volume, I think this one has been off of wall street's radar. On the other hand, I think Athersys is a small gem of a company that has lots of potential. Athersys has no debt, and roughly $15M in cash as of their last 10Q. Of most interest to me is their Multistem product. They have had success with their multistem product for acute myocardial infarction and for stroke in animal models, but no conclusive statistically valid testing has been done in humans yet. So far the results are limited (Phase I), but have been promising to date even though it is still in the early stages.

The multistem product is a biologic product manufactured from stem cells. It is somewhat unique in the stem cell area because it acts more like a drug in that it is administered through an IV or catheter and is flushed from the body naturally. The stem cells are derived from adult stem cells (i.e. bone marrow from a qualified donor) and does not involve embryonic stem cells. From one acceptable donor, Athersys is able to create hundreds of thousands of doses of the product. The product also has a shelf life of 4 years. The product does not require the use of immune suppressive drugs or tissue matching between donor and recipients and it has a consistent safety profile. Current applications of multistem are being pursued in the areas of inflammatory bowel disease (partnered with Pfizer), stroke and acute myocardial infarction (partnered with Angiotech). In AMI (i.e. heart attack), multistem is designed as a supplement to the current standard of care and not a replacement. Management has been effectively utilizing partnerships at both the university and commercial level to help with development from both a cost and capability standpoint while maintaining a reasonable cash burn rate to date. They have also been very conscious of working with the FDA to develop a strong safety profile for their product which may be leveraged in the future if they try to extend the application of the product to different areas and to allay any safety concerns the FDA may have. I think the current share price already prices in some future share dilution.

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