Healios, Athersys Announce Regenerative Medicine Partnership for Treatment of Stroke Using MultiStem Therapy

Healios K.K. and Athersys, Inc.

have announced a partnership and license agreement that will focus on the development and commercialization of novel cell therapy treatments, including MultiStem® for the treatment of ischemic stroke and potentially other indications, in Japan. The partnership involves MultiStem, a proprietary, patented off-the-shelf stem cell therapy being developed by Athersys, with an initial focus on treating ischemic stroke. Under the terms of the agreement, Healios will gain exclusive rights for the development of MultiStem for treating ischemic stroke in Japan. Healios will develop and commercialize the product in Japan, and Athersys will provide the manufactured product and support to Healios, while retaining all rights outside of Japan. In addition, Healios will obtain an exclusive option for development of two additional MultiStem clinical indications in Japan, including the treatment of Acute Respiratory Distress Syndrome ("ARDS"), which is currently in clinical development by Athersys in the United States ("U.S.") and the United Kingdom ("U.K."), and another indication in the orthopaedic area. Healios will also obtain an exclusive license to incorporate Athersys technology in the development and commercialization of its proprietary Healios "organ bud" technology, initially for transplantation to treat liver disease or dysfunction, which may be expanded upon exercise of the option. "Stroke represents a major problem, both in Japan and globally. Currently available treatments such as tPA and mechanical thrombectomy must be administered within the first several hours after the stroke occurs, limiting treatment to a small percentage of patients, and such interventions may also pose certain risks," observed Dr. Kiyohiro Houkin, Chairman and Professor of Neurosurgery of Hokkaido University Medical School, and President of Hokkaido University Hospital. "The recently conducted international clinical study by Athersys in the U.S. and the U.K. suggests that intravenous administration of MultiStem within 36 hours of the occurrence of a stroke is safe, well-tolerated, and is a beneficial and effective treatment. The off-the-shelf administration of the product could be a simple and universal approach for treating acute stroke patients. Furthermore, it could be administered to patients that do not arrive at the hospital in time to receive current standard of care, or alternatively could be administered in addition to tPA or mechanical reperfusion, potentially enhancing outcomes for patients that have suffered significant strokes. If efficacy is confirmed in additional studies, it is possible that this therapy could become the new standard of care for treating stroke," concluded Dr. Houkin. As part of the license, Athersys will receive an initial license fee of $15 million, as well as have the opportunity to earn milestone and royalty payments upon the successful accomplishment of specific development and commercialization objectives, including the achievement of certain sales milestones. Development and approval milestones for stroke could total $30 million, in addition to sales milestones that could reach $185 million based on successful commercialization and the achievement of substantial sales of an approved product for treating stroke in Japan. Athersys will also receive tiered, double-digit royalties increasing into the high teens on product sales and will be responsible for providing manufactured product to Healios, subject to receiving reimbursement under a manufacturing supply arrangement. Furthermore, if Healios elects to expand the partnership following the successful completion of Athersys' ongoing clinical trial in ARDS, Athersys will receive a license expansion fee of $10 million for the exclusive rights to two additional indications in Japan, with the corresponding potential for further milestones based on successful achievement of specific development and commercialization objectives. As part of the expanded alliance, Healios will also have the right to incorporate Athersys technology in other organ bud indications. Japan currently represents the second largest national market for prescription biopharmaceuticals in the world. The country is also experiencing a significant demographic shift that is resulting in a rapid and unprecedented expansion of the elderly population in Japan, which threatens to pose significant challenges for the national healthcare system over the next several decades. In order to help address the challenges posed by the potential increased demand for healthcare resources as a result of this expanding population, over the past two years policy-makers in Japan have revised the regulatory framework to focus on promoting the development of innovative new therapies that are demonstrated to be safe and that also provide promising signs of effectiveness. These recently implemented regulatory reforms, which are specifically designed to promote development of novel regenerative medicine therapies, are intended to speed the development of promising new medicines for patients where there is substantial unmet medical need. Athersys' proprietary cell therapy product, MultiStem, has been evaluated in a Phase 2 clinical study for ischemic stroke in the U.S. and U.K. and is also in clinical development in several other indication areas, including the treatment of ARDS, myocardial infarction, and for transplant support, including prevention of Graft versus Host Disease and liver transplant support. Athersys has begun preparations for clinical development in Japan, including engagement with the Pharmaceuticals and Medical Devices Agency in Japan ("PMDA"). Healios and Athersys have already met jointly with PMDA and plan to complete additional preparations for initiation of a clinical study in Japan for stroke, with commencement of the study expected in the second half of 2016.