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Athersys (ATHX), Research Note, Jason Kolbert, National Securities

Athersys (NASDAQ:ATHX) raised capital last week, gross proceeds of $13.1M, selling 4.3M shares with 0.3 warrants per share at a strike of $3.55. 

National Securities (NYSE:NS) estimate ATHX’s current share count at approximately 23.5M shares.

  • Raising the runway well into 2013 depending on what new clinical programs are initiated;
  • The next 2 years are critically important for ATHX and the cell therapy space;
  • JK believes allogeneic companies like Athersys and Pluristem (NASDAQ:PSTI) who also just raised capital, demonstrate that the allogeneic approach is safe;
  • Proof of concept can be realized in a clinically short time frame.

Is There really an Advantage to Autologous Therapy? 

  • JK is not as sure as he once was. His recent experiences with Pluristem (PSTI) and ATHX have demonstrated to him that cell source and cell ageing are real factors in the robustness of the final product;
  • He believes that both MultiStem (ATHX) and PLC Cells (PSTI) create a platform by which  a multitude of clinical programs could begin;
  • The challenge will be to find robust products versus ASTM’s TRC’s;
  • Since the efficacy in CLI is likely driven by a Paracrine effect (and not the longer term survival of the cells), engraftment is not a factor;
  • The additional penalties associated with the wait time for autologous processing and the manufacturing variability and cell source (age) issues indicate to me that an allogeneic therapy likely has significant and multiple advantages versus an autologous one, in this type of indication.

The Bottom Line: MultiStem has demonstrated regenerative capabilities in several early studies to date, including acute myocardial infarction (AMI), graft versus host disease (GvHD), and a recent spinal cord injury (NYSE:SCI) study. JK is encouraged by the early insight into a potential mechanism of action of MAPCs, promoting regeneration by shifting to an M2 activation state, reducing the release of pro-inflammatory cytokines, such as MMP-9.

ATHX is trading at $2.67, up $0.06 (2.30%) at the open on 2/1/11.

Valuation Effect: ATHX’s MultiStem could be administered to other types of neurological injury, such as ischemic stroke and traumatic brain injury, exhibiting therapeutic benefits. He see ATHX as a strategically under-valued asset given the quality of the multi-stem platform and its extensive pre-clinical science. This, coupled with recent Phase 1 (AMI) safety data, could allow ATHX to leverage MultiStem into multiple P2 trials programs in 2011 that could result in a sharp rise in valuation.