Shares of Cleveland-based Athersys, Inc. are plunging Friday after the company announced a strategic restructuring that will result in the slashing of 70% of its workforce.
Shares of Cleveland-based Athersys, Inc. are plunging Friday after the company announced a strategic restructuring that will result in the slashing of 70% of its workforce.
Athersys undertook the restructuring to reduce costs in order to prioritize its MultiStem programs, it said in an announcement. Athersys said the job reductions, the majority of which are expected to be completed by the end of this month, will enable the company to reduce its cost structure and “become more attractive to both financial and strategic partners.”
Not only is the company culling a majority of its workforce but Athersys said changes are also being made to its leadership team. On May 31, President and Chief Operating Officer William (B.J.) Lehmann departed the company. At the end of this month, Chief Scientific Officer John Harrington and Chief Financial Officer Ivor Macleod will also be leaving Athersys.
Dan Camardo, chief executive officer of Athersys, called the restructuring and workforce adjustments “difficult” but noted that it will ultimately help streamline the company so it can focus on its clinical programs and future growth.
“We remain excited by the potential of MultiStem to benefit patients in stroke as well as other critical care areas. I’m confident that our revised strategy and focus, executed by the remaining committed team, puts us on the right path for future opportunities. We are deeply grateful to the employees who are leaving Athersys for their commitment, hard work and many contributions,” Camardo said in a statement.
The announcement comes weeks after the company revealed a trial conducted by its development partner Healios failed to hit endpoints. The study was assessing Athersys’ MultiStem cell therapy (invimestrocel) in patients with moderate to moderate-severe ischemic stroke. Data from the TREASURE study showed that the drug failed to achieve statistical significance based on the primary endpoint of Excellent Outcome at 90 days.
MultiStem cell therapy, an “off-the-shelf” stem cell product candidate, has shown the potential to promote tissue repair and healing. In the MASTERS-1 study, MultiStem posted positive results, which led to the launch of the MASTERS-2 study that will assess the Athersys asset in patients who have suffered moderate to moderate-severe ischemic stroke, the most common form of stroke, which is caused by a blockage of blood flow in the brain.
Despite the failures of the Healios-led program in Japan, the companies noted some positives from the TREASURE trial, including a 27.9% global recovery for MultiStem, compared to 15.7% in the placebo group. Also, the Barthel Index score was at 35.6% compared to 22.5% for control. Both of those measurements are seen as promising signs of functional independence and positive outcomes.
Athersys noted that even with the reduced costs from its massive round of layoffs, the company remains in need of additional financial support to fully enroll the MASTERS-2 study and carry it through to completion. Athersys said it is in talks with potential partners.
Although the TREASURE study missed the mark, Athersys remains committed to partnering with Healios to advance its ischemic stroke and acute respiratory distress syndrome programs.
