Stem cell developer Athersys (NASDAQ:ATHX) has secured $9 million in a private placement with an unidentified investor.
Cleveland-based Athersys said it would issue about 4.3 million shares of common stock and an equal number of warrants to purchase common shares at a price of $2.07. The warrants are exercisable for five years, according to a statement from the company.
Athersys’ shares were trading down about 10 percent to $1.75 late Friday morning.
The company said it would use the proceeds from the private placement for “ongoing business development and clinical efforts, and for general corporate purposes.”
In November, Athersys entered into a similar private placement with Aspire Capital, but it was for up to $20 million. Another placement in January 2011 yielded $13 million for the company.
“Shareholder dilution is just kind of a reality for an early stage biotech,” Lauren Migliore, an equities analyst with Morningstar in Chicago, said at the time.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“Management has been careful to keep expenses low, but lack of revenue and cash flow requires them to tap into equity markets until Athersys can become profitable,” she added.
Athersys’ MultiStem technology is an off-the-shelf stem cell treatment derived from the bone marrow of adults or other nonembryonic sources. The technology has shown promise in reducing inflammation, protecting damaged tissue and forming new blood vessels.
Athersys is investigating MultiStem for several applications, including heart attack, inflammatory bowel disease, stroke and blood diseases.
Athersys is unlikely to get any products to market until 2015 or 2016.
[Photo from flickr user Alex E. Proimos]
