If all goes as hoped, Athersys will launch its first live-cell critical care drug in a couple of years, and if it does, it might have a leg up on the competition. Unlike large drug companies, with their pre-pandemic legions of salespeople calling on doctors, the small biopharma could take a post-pandemic approach that pairs virtual presentations with a small team to field doctors’ questions.

“Companies are struggling to come up with a new go-to-market model,” said Ivor Macleod, CFO of Athersys. “The advantage we have is, we’re going to develop a model in [a post-pandemic] environment and we don’t have a huge field force.”

Athersys is in late-stage trials with a therapy that it hopes will provide efficient and effective treatment for critical-care patients who've had an ischemic stroke or acute respiratory distress syndrome (ARDS), a potentially deadly COVID-19 indicator. 

The company takes a novel approach to its therapy. It uses live bone marrow cells from healthy donors, reproduces them by the millions, and freezes them. Doctors thaw the cells, dilute them in a bag of saline, and administer them to the patient intravenously. The single-dose procedure takes less than an hour. What’s more, it can be administered to anybody; unlike other bone-marrow therapies, it’s not limited to a one-for-one match.

"It’s like type O blood," Macleod said. "It's the same dose for everybody. A lot of great economies downstream."

Commercialization challenges

Macleod joined Athersys in January, the latest move in a 30-year career in which he served as CFO of research and development for some of the biggest names in pharmaceuticals, including Roche and Merck, among other finance leadership roles. 

In April, he managed a capital raise that netted the company $54 million to help finance its trials and operations for the next year or two. 

'We're a sensible company," he said. "We spend money wisely. We pay attention to our burn rate."

The capital raise was an eye-opener, he said. Rather than travel over several weeks, everything was done over the phone and by webcast. 

"This was incredible," he said. "We used Bank of America, and Merrill Lynch as the lead book runner. We developed a relationship with them over the phone and met all of their individuals, which is unique in itself. Due diligence was done over a weekend. In this COVID situation, Saturday and Sunday are really no different than Monday or Tuesday."

The pitches to investors went equally well, he said. "Virtually, the idea of regional vs. national made no difference," he said. "You could just line these things up, and as many people from the potential investor that wanted to attend could. It was just highly efficient and completed within three days."

The conversion rate from the webcasts was close to 80%, Macleod said. "Would it have been more successful or less successful if it was in person? That's something we'll never know," he said. "I know what we accomplished."

A more virtual future

Without a doubt, at least some portion of capital raises will continue to be done virtually once COVID passes, Macleod said. But some aspects will likely remain in-person. “What’s missing [in a virtual setting] is the informal bumping into people in the corridor,” he said.

Virtual meetings could play a big part in the company's commercialization strategy. That strategy will be worked out over the next six months or so, but it's unlikely to include a large army of sales people knocking on doctors' doors. 

"Doctors really don't want to see you in person," he said. "They're getting more used to doing things virtually. So, while we'll grow into that, our competitors, some of these bigger companies, are going to have to seriously reconsider their model."

Comfortably capitalized

The capital raise in April was a key piece of keeping the company operating until it goes to market with its first product, optimistically in about two years. 

Its other revenue sources are limited; it has a partnership with a Japanese pharmaceutical company, Healios, to which it's licensed its two lead indications. Under that arrangement, it received a down payment of funds and periodic progress payments going forward. As its trials meet certain milestones, it can get additional payments.

It's also hoping to win some federal money for its ARDS indication. After the pandemic hit, the company met with the Biomedical Advanced Research and Development Authority (BARDA), a branch of the Department of Health and Human Services, which was interested in its therapy's ARDS application to COVID. Should the grant get approved, it would give the company money for a COVID-specific ARDS study it's working on and help it scale up manufacturing once the drug’s approved. 

"I’m fairly comfortable with where we sit," he said. "On the basis of our capital raise, we're in good shape for at least a year, and we've got a number of opportunities in the coming months to raise more funds."

Preparing for commercialization

The company has started thinking about its strategy for when its first therapy is approved by the Food and Drug Administration. Both its stroke and ARDS indications have fast-track designation, which will help the company move quickly once trials are completed.

But COVID-19 remains a wildcard. It can't conduct any trials in Europe because of the travel ban and, in the U.S., the priority that hospitals are putting on acute COVID treatment is limiting the number of centers it can use. "Some [trials] are continuing to go on; some have completely shut down," he said.    

The company uses contract manufacturers around the world to produce the drug, but it's hoping to bring that process to the United States and, ideally, to do the manufacturing in-house. "Our preference would be to do it ourselves," he said.

For the finance team, the next six months are critical. Macleod is handing off more work to his team, but, at some point, he'll have to bring in people with expertise the company hasn't needed yet.

"We need a commercial finance group," he said. "We'll need people who do sales forecasting. We'll need people to handle pricing, reimbursement, contracts, financial analysis. We have no analytics group to speak of. Once you get into the commercial space, that's really the engine of how you go about the business. So, there's a lot to do."

The good thing is, he said, he's able to build on a core team able to handle everything he's thrown at it. "The accounting is rock solid," he said. "They're very energetic and work well together. My past experience has been coaching the best out of people, getting teams to work together. I've had none of these issues with this group."

That will help now that the company, after 25 years as a research operation, nears its efforts' payoff point.