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14-Mar-2018

Athersys and Healios Announce Binding Letter of Intent to Expand MultiStem® Collaboration

Athersys, Inc. (NASDAQ:ATHX) and HEALIOS K.K. ("Healios") announced today their intent to significantly expand their existing development and commercialization collaboration.  As part of this expansion, Healios is making an approximate $21 million equity investment at $1.76 per share, will deposit $10 million into escrow, and has entered into a letter of intent ("LOI") with Athersys to expand Healios' license to develop MultiStem┬« products for indications to include acute respiratory distress syndrome ("ARDS"), trauma in Japan and the use of MultiStem products in conjunction with organ bud technology and certain ophthalmological indications globally.  Healios will also obtain an exclusive option to a license to develop and commercialize MultiStem products for ischemic stroke, ARDS and trauma in China, and obtain certain other rights.  In exchange, Athersys would receive committed payments of $35 million, as well as additional payments, including milestones and royalties.  If Healios elects to exercise its option for a license in China, Healios would pay Athersys license fees, milestone payments and escalating royalties or profit-sharing for each indication.

In addition to its purchase of 12 million shares of common stock as part of its equity investment, Healios will receive a warrant that will give it the right, but not the obligation, to purchase additional shares of Athersys common stock up until September 1, 2020, subject to certain conditions and limitations, including a fixed exercise price with respect to certain of the warrant shares and a floating exercise price with respect to certain of the warrant shares that will be based on the greater of a minimum floor price and the-then current market price, as well as a cap on the total number of shares Healios may own during the term of the warrant of 19.9% of Athersys' outstanding common stock.  The warrant becomes exercisable if the collaboration expansion becomes effective. 

The parties will work under the terms of the LOI to execute the agreements necessary to expand the existing collaboration, which is expected to be completed by April 30, 2018.  As part of Healios' equity investment, Dr. Hardy Kagimoto, CEO of Healios, would be nominated for election to the Athersys Board of Directors at the next scheduled annual stockholders' meeting in June 2018. 

In conjunction with the execution of the LOI and in addition to the equity investment, under the binding portion of the LOI, Healios will fund $10 million into escrow.  That amount will be paid to Athersys as either (1) the initial portion of the $35 million in payments associated with the execution of the expansion agreements described above or (2) if such agreements described above are not executed on or before April 30, 2018, payment for expanding the scope of the current Japan license to include ARDS