10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-33876

Athersys, Inc.

(Exact name of registrant as specified in its charter)

Delaware	20-4864095
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3201 Carnegie Avenue, Cleveland, Ohio	44115-2634
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (216) 431-9900

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	ATHX	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer	☐	Accelerated filer	x
Non-accelerated filer	☐	Smaller reporting company	x
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

The number of outstanding shares of the registrant’s common stock, $0.001 par value, as of August 2, 2019 was 152,677,751.

ATHERSYS, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	21
ITEM 4.	Controls and Procedures	21
PART II. OTHER INFORMATION
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
ITEM 6.	Exhibits	23
SIGNATURES

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements.

Athersys, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

	June 30, 2019			December 31, 2018
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	44,237		$	51,059
Accounts receivable	80			262
Accounts receivable from Healios	1,778			1,108
Unbilled accounts receivable from Healios	1,130			3,620
Prepaid expenses and other	849			1,791
Total current assets	48,074			57,840
Equipment, net	3,062			3,002
Deposits and other	2,111			888
Total assets	$	53,247		$	61,730
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	10,527		$	9,163
Accrued compensation and related benefits	814			1,901
Accrued clinical trial related costs	2,469			1,276
Accrued expenses and other	869			461
Deposit from Healios	—			2,000
Deferred revenue - Healios	2			674
Total current liabilities	14,681			15,475
Advance from Healios	5,042			3,139
Other long-term liabilities	273			—
Stockholders’ equity:
Preferred stock, at stated value; 10,000,000 shares authorized, and no shares issued and outstanding at June 30, 2019 and December 31, 2018	—			—
Common stock, $0.001 par value; 300,000,000 shares authorized, and 151,777,751 and 144,292,739 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	152			144
Additional paid-in capital	428,785			416,014
Accumulated deficit	(395,686		)	(373,042		)
Total stockholders’ equity	33,251			43,116
Total liabilities and stockholders’ equity	$	53,247		$	61,730

See accompanying notes to unaudited condensed consolidated financial statements.

4

Athersys, Inc.

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(In thousands, except per share data)

(Unaudited)

	Three months ended June 30,					Six months ended June 30,
	2019			2018		2019			2018
Revenues
Contract revenue from Healios	$	4,193		$	18,755	$	5,634		$	19,103
Royalty and other contract revenue	—			591		—			992
Grant revenue	69			45		73			362
Total revenues	4,262			19,391		5,707			20,457
Costs and expenses
Research and development	11,139			10,093		22,554			18,943
General and administrative	2,867			2,382		5,973			5,038
Depreciation	157			191		341			376
Total costs and expenses	14,163			12,666		28,868			24,357
Gain from insurance proceeds	—			20		—			383
(Loss) income from operations	(9,901		)	6,745		(23,161		)	(3,517		)
Other income, net	213			188		517			295
Net (loss) income and comprehensive (loss) income	$	(9,688	)	$	6,933	$	(22,644	)	$	(3,222	)
Net (loss) income per share, basic	$	(0.06	)	$	0.05	$	(0.15	)	$	(0.02	)
Weighted average shares outstanding, basic	150,163			138,225		148,075			132,592
Net (loss) income per share, diluted	$	(0.06	)	$	0.05	$	(0.15	)	$	(0.02	)
Weighted average shares outstanding, diluted	150,163			139,375		148,075			132,592

See accompanying notes to unaudited condensed consolidated financial statements.

5

Athersys, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In Thousands, Except Share Amounts)

	Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Number of Shares	Stated Value		Number of Shares	Par Value
Balance at December 31, 2018	—	$	—	144,292,739	$	144	$	416,014		$	(373,042	)	$	43,116
Stock-based compensation	—	—		—	—		1,090			—			1,090
Issuance of common stock, net of issuance cost	—	—		3,825,000	4		5,603			—			5,607
Issuance of common stock under equity compensation plan	—	—		158,494	—		(69		)	—			(69		)
Net comprehensive loss	—	—		—	—		—			(12,956		)	(12,956		)
Balance at March 31, 2019	—	—		148,276,233	148		422,638			(385,998		)	36,788
Stock-based compensation	—	—		—	—		1,152			—			1,152
Issuance of common stock, net of issuance cost	—	—		3,350,000	4		5,102			—			5,106
Issuance of common stock under equity compensation plan	—	—		151,518	—		(107		)	—			(107		)
Net comprehensive loss	—	—		—	—		—			(9,688		)	(9,688		)
Balance at June 30, 2019	—	$	—	151,777,751	$	152	$	428,785		$	(395,686	)	$	33,251

	Preferred Stock			Common Stock			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Equity
	Number of Shares	Stated Value		Number of Shares	Par Value
Balance at December 31, 2017	—	$	—	122,077,453	$	122	$	373,884		$	(350,630	)	$	23,376
Stock-based compensation	—	—		—	—		813			—			813
Issuance of warrant to Healios at fair value	—	—		—	—		5,300			—			5,300
Issuance of common stock, net of issuance cost	—	—		3,750,000	4		5,412			—			5,416
Issuance of common stock to Healios, net of issuance costs	—	—		12,000,000	12		20,983			—			20,995
Issuance of common stock under equity compensation plan	—	—		131,092	—		(84		)	—			(84		)
Cumulative effect of accounting change	—	—		—	—		—			1,871			1,871
Net comprehensive loss	—	—		—	—		—			(10,155		)	(10,155		)
Balance at March 31, 2018	—	—		137,958,545	138		406,308			(358,914		)	47,532
Stock-based compensation	—	—		—	—		824			—			824
Issuance of common stock, net of issuance cost	—	—		500,000	1		1,214			—			1,215
Issuance of common stock to Healios, net of issuance costs	—	—		—	—		(149		)	—			(149		)
Issuance of common stock under equity compensation plan	—	—		125,128	—		(106		)	—			(106		)
Net comprehensive income	—	—		—	—		—			6,933			6,933
Balance at June 30, 2018	—	$	—	138,583,673	$	139	$	408,091		$	(351,981	)	$	56,249

See accompanying notes to unaudited condensed consolidated financial statements.

6

Athersys, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six months ended June 30,
	2019			2018
Operating activities
Net loss	$	(22,644	)	$	(3,222	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	341			376
Stock-based patent license and settlement expense	—			315
Stock-based compensation	2,242			1,637
Discount on revenue from issuance of warrant	—			1,080
Deferred revenue from prior period	—			(250		)
Changes in operating assets and liabilities:
Accounts receivable	182			41
Accounts receivable from Healios - billed and unbilled	1,820			(8,649		)
Prepaid expenses, deposits and other	677			(2,014		)
Accounts payable and accrued expenses	1,192			6,267
Deferred revenue - Healios	(672		)	1,402
Advances and deposits from Healios	(97		)	1,731
Net cash used in operating activities	(16,959		)	(1,286		)
Investing activities
Purchases of equipment	(400		)	(749		)
Net cash used in investing activities	(400		)	(749		)
Financing activities
Proceeds from issuance of common stock, net	10,713			5,416
Proceeds from issuance of common stock to Healios, net	—			20,847
Shares retained for withholding tax payments on stock-based awards	(176		)	(191		)
Net cash provided by financing activities	10,537			26,072
(Decrease) increase in cash and cash equivalents	(6,822		)	24,037
Cash and cash equivalents at beginning of the period	51,059			29,316
Cash and cash equivalents at end of the period	$	44,237		$	53,353

See accompanying notes to unaudited condensed consolidated financial statements.

7

Athersys, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Three- and Six- Month Periods Ended June 30, 2019 and 2018

1. Background and Basis of Presentation

Background: We are an international biotechnology company that is focused primarily in the field of regenerative medicine and operate in one business segment. Our operations consist of research and clinical-stage product development activities.

We have incurred losses since our inception in 1995 and had an accumulated deficit of $395.7 million at June 30, 2019. We will require additional capital to continue our research and development programs, including progressing our clinical product candidates to commercialization and preparing for commercial-scale manufacturing. At June 30, 2019, we had available cash and cash equivalents of $44.2 million. We believe that these funds, expected cash receipts primarily attributed to our collaboration with HEALIOS K.K. (“Healios”) and proceeds from our equity facility and our open market sale agreement are sufficient to meet our obligations as they come due at least for a period of twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. In the longer term, we will have to continue to generate additional capital to meet our needs through new and existing collaborations and related license fees and milestones, the sale of equity securities from time to time including through our equity facilities, grant-funding opportunities, deferring certain discretionary costs and staging certain development costs, as needed.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our critical accounting policies, estimates and assumptions are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this Quarterly Report on Form 10-Q.

2. Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract(“ASU 2018-15”). ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for the annual and interim periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the potential impact of adoption of this standard on our consolidated financial statements, and we do not intend to early adopt.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (“Topic 808”): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update (i) clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account and in those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation and disclosure requirements; (ii) add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative

8

arrangement or a part of the arrangement is within the scope of Topic 606; and (iii) require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of ASU 2018-18 are effective for years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of this clarifying guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), and subsequently issued additional guidance that modified ASU 2016-13. ASU 2016-13 and the subsequent modifications are identified as Accounting Standards Codification (“ASC”) 326. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. Early adoption is permitted. We are currently assessing the effect that ASC 326 will have on our financial position, results of operations and disclosures and monitoring the FASB's evaluation of potential deferment of the adoption date for smaller reporting companies.

3. Leases Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which requires lessees to record most leases with a term greater than 12 months on their balance sheets, but recognize expenses on their statement of operations in a manner similar to current accounting practice. Under the guidance, lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

We adopted Topic 842 effective January 1, 2019, using the modified retrospective transition option. The adoption of the standard resulted in the recording of ROU assets, primarily consisting of operating leases of facilities and minor equipment, and lease liabilities of $1.0 million as of the commencement date. The adoption did not have a material impact on our unaudited condensed consolidated statements of operations and comprehensive loss or cash flows related to existing leases. As a result, there was no cumulative-effect adjustment.

We elected certain practical expedients as part of the adoption, which allow us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease recognition exemption for all leases that qualify and will not recognize ROU assets or lease liabilities for those leases. Lastly, we elected to separate lease and non-lease components only for contract manufacturing assets based on an assessment of the contract terms. We did not separate lease and non-lease components for all other existing asset classes. Most leases do not contain an implicit discount rate, therefore we estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Our facilities leases contain one or more options to renew after the noncancellable term. The exercise of lease renewal options is not reasonably certain upon lease commencement and is at management's sole discretion. Our ROU assets are included within deposits and other in our unaudited condensed consolidated balance sheet at June 30, 2019. Associated lease liabilities are included in accrued expenses and other, and other long-term liabilities in our unaudited condensed consolidated balance sheet at June 30, 2019. Lease expense for lease payments is recognized on a straight-line basis over the lease term within loss from operations on the unaudited condensed consolidated statements of operations and comprehensive loss. Payments for certain lease agreements are adjusted annually for changes in an index or rate. We had no finance leases, residual value guarantees, restrictive covenants, subleases or sale leasebacks at June 30, 2019.

As of June 30, 2019, ROU assets and lease liabilities were each $0.7 million. The weighted-average remaining term for lease contracts was 1.8 years at June 30, 2019, with maturities ranging from 12 months to 56 months. The weighted-average discount rate was 5.3% at June 30, 2019. We paid $0.1 million and $0.2 million for operating leases included in the measurement of lease liabilities during the three and six month periods ended June 30, 2019, respectively.

Aside from facilities and minor equipment, we have various supply agreements with third-party manufacturers, which involve the lease of manufacturing facilities and equipment, as defined in Topic 842. We have elected to separate lease and non-lease components for these arrangements. These manufacturing agreements have variable lease payments, which typically become binding once certain manufacturing milestones are achieved, and as such, are not included in ROU assets and liabilities until such payments are no longer variable.

9

Lease Costs

The table below presents certain information related to the lease costs (in thousands) for operating leases as of June 30, 2019:

	Three months ended June 30, 2019		Six months ended June 30, 2019
Operating lease cost	$	122	$	242
Short-term lease cost	11		22
Variable lease cost(1)	52		157
Total lease cost	$	185	$	421

⁽¹⁾Includes lease components from our third-party manufacturing agreements.

Undiscounted Cash Flows

The following table summarizes future minimum lease payments (in thousands) for noncancellable operating leases as of June 30, 2019:

2019 (1)	$	246
2020	407
2021	101
2022	14
2023	12
Thereafter	2
Total minimum lease payments	782
Less: amount of lease payments representing interest	37
Present value of operating lease liabilities	$	745

⁽¹⁾ Excluding the six months ended June 30, 2019.

4. Net Loss per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of common stock outstanding during the period.

We have outstanding stock-based awards that are not used in the calculation of diluted net loss per share because to do so would be anti-dilutive. In connection with the purchase of shares of our common stock by Healios in March 2018, a warrant was issued to Healios (the “Healios Warrant”) to purchase up to 20,000,000 shares of common stock (the “Warrant Shares”), of which 16,000,000 Warrant Shares expired as of June 30, 2019 prior to being exercisable. The exercise price of Healios' 4,000,000 Warrant Shares is contractually stated to exceed the market price and is therefore anti-dilutive as of June 30, 2019. Refer to Note 7 for additional details.

The following instruments (in thousands) were excluded from the calculation of diluted net loss per share because their effects would be antidilutive:

	Three months ended June 30,		Six months ended June 30,
	2019	2018	2019	2018
Stock-based awards	16,791	5,939	16,791	12,847
Healios Warrant – see Note 7	4,000	20,000	4,000	20,000
Total	20,791	25,939	20,791	32,847

10

5. Collaborative Arrangements and Revenue Recognition

Healios Collaboration

In 2016, we entered into a licensing collaboration with Healios to develop and commercialize our cell therapy technologies for certain disease indications in Japan, among other things. The collaboration was expanded in June 2018 to include additional indications and licenses, with the core programs under development in Japan being ischemic stroke and acute respiratory distress syndrome (“ARDS”). We received nonrefundable license fee payments from Healios and are entitled to royalties on net sales. We also have the right to receive development and commercial milestone payments from Healios, subject to certain potential credits that have been negotiated from time-to-time associated with modifications to the arrangement.

Under the collaboration, Healios is responsible for the development and commercialization of the licensed products in the licensed territories, and we provide certain services to Healios for which we are paid. In 2017, our agreement for clinical product supply services was amended to clarify a cost-sharing arrangement associated with our supply of clinical material for Healios' stroke trial, and certain adjustments were made to potential milestone payments that Healios may owe us in the future. Also, in 2017, we entered into a technology transfer services agreement with Healios, pursuant to which Healios provides financial support to establish a contract manufacturer in Japan to manufacture product for Healios. Both clinical supply and technology transfer services to Healios are ongoing and are modified from time-to-time to include, for example, expanded indications and manufacturing-related services.

Healios Revenue Recognition

At the inception of the Healios arrangement and again each time that the arrangement is modified, all material performance obligations are identified, which currently include (i) licenses to our technology, (ii) product supply services, and (iii) services to transfer technology to a contract manufacturer on Healios’ behalf. It was determined that these performance obligations are separate and distinct within the context of the contract. We develop assumptions that require judgment to determine the standalone selling price in order to account for our collaborative agreements, as these assumptions typically include probabilities of obtaining marketing approval for the product candidates, estimated timing of commercialization, estimated future cash flows from potential product sales of our product candidates, estimating the cost and markup of providing product supply and technical services, and appropriate discount rates.

In order to determine the transaction price, in addition to the fixed payments, we estimate the amount of variable consideration utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract, and the estimates for variable consideration are reassessed each reporting period. We constrain, or reduce, the estimates of variable consideration if it is probable that a significant reversal of previously recognized revenue could occur throughout the life of the contract, and both the likelihood and magnitude of a potential reversal of revenue are taken into consideration.

At inception and upon each modification date, once the estimated transaction price is established, amounts are allocated to each separate performance obligation on a relative standalone selling price basis. These performance obligations include any remaining, undelivered elements at the time of modifications and any new elements from a modification to the arrangement if the conditions are not met for being treated as a separate agreement.

For performance obligations satisfied over time, we apply an appropriate method of measuring progress each reporting period and, if necessary, adjust the estimates of performance and the related revenue recognition. Our technology transfer services are satisfied over time, and we recognize revenue in proportion to the contractual services provided. For performance obligations satisfied at a point in time (i.e., product supply), we recognize revenue upon delivery, as defined.

The remaining transaction price for the performance obligations that were not yet delivered amounted to $1.5 million at June 30, 2019, which is expected to be recognized within one year as the goods and services are delivered. At June 30, 2019, the contract liability, included in Deferred revenue - Healios on the unaudited condensed consolidated balance sheets, is properly classified as a current liability since the rights to consideration are expected to be satisfied, in all material respects, within one year.

Deposit from Healios

In connection with the June 2018 expansion, Healios obtained an exclusive, time-limited right of first negotiation (“ROFN Period”) to enter into an option for a license to develop and commercialize certain MultiStem treatments in China. In December 2018, the ROFN Period was extended to June 30, 2019 in exchange for a $2.0 million nonrefundable payment from Healios, which was recorded as a deposit from Healios on the unaudited condensed consolidated balance sheet until June 2019, when the ROFN Period expired. In June 2019, this extension payment was included in the transaction price of the overall Healios

11

arrangement and was allocated to the performance obligations as of the related June 2018 expansion. As a result, $1.9 million of the extension payment was recognized as revenue in June 2019 and the remaining $0.1 million will be recognized as the remaining undelivered performance obligations are delivered.

Refer to Note 7 regarding the equity investment in us made by Healios in 2018 in connection with the June 2018 expansion.

Advance from Healios

In 2017, in connection with our amendment to the clinical supply agreement to clarify the cost-sharing arrangement, the proceeds from Healios that relate specifically to the cost-sharing arrangement may either (i) result in a reduction in the proceeds we receive from Healios upon the achievement of two potential milestones and an increase to a commercial milestone under the license agreement for stroke or (ii) be repaid to Healios at our election, as defined. The cost-sharing proceeds received are recognized in advance from Healios on the unaudited condensed consolidated balance sheet until the earlier of the milestones being achieved or such amounts being repaid to Healios at our election, at which time, the culmination of the earnings process will be complete and revenue will be recognized.

Disaggregation of Revenues

We recognize license-related amounts, including upfront payments, exclusivity fees, additional disease indication fees and milestones at a point in time when earned. Similarly, product supply revenue is recognized at a point in time, while service revenue (e.g., technology transfer) is recognized when earned over time. The following table presents our contract revenues disaggregated by timing of revenue recognition and excludes royalty revenue (in thousands):

	Three months ended June 30, 2019				Three months ended June 30, 2018
	Point in Time		Over Time		Point in Time		Over Time
Contract Revenue from Healios
License fee revenue	$	1,624	$	—	$	17,530	$	—
Product supply revenue	905		—		223		—
Service revenue	—		1,664		—		1,002
Other contract revenue	—		—		250		—
Total disaggregated revenues	$	2,529	$	1,664	$	18,003	$	1,002

	Six months ended June 30, 2019				Six months ended June 30, 2018
	Point in Time		Over Time		Point in Time		Over Time
Contract Revenue from Healios
License fee revenue	$	1,624	$	—	$	17,530	$	—
Product supply revenue	1,871		—		450		—
Service revenue	—		2,139		—		1,123
Other contract revenue	—		—		250		—
Total disaggregated revenues	$	3,495	$	2,139	$	18,230	$	1,123

6. Stock-based Compensation

The Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the “EICP”) authorizes an aggregate of approximately 18,500,000 shares of common stock for awards to employees, directors and consultants. The EICP was approved in June 2019 and replaced our prior long-term incentive plan. In the three-month period ended June 30, 2019, we granted 3,245,800 stock options and 1,350,150 restricted stock units to our employees and directors primarily in connection with our annual incentive programs. The EICP authorizes the issuance of stock-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock-based awards.

12

As of June 30, 2019, a total of 13,867,787 shares were available for issuance under our EICP, and stock-based awards to purchase 16,780,535 shares of common stock were outstanding under our current and former equity incentive plans. For the three-month periods ended June 30, 2019 and 2018, stock-based compensation expense was approximately $1.2 million and $0.8 million, respectively. At June 30, 2019, total unrecognized estimated compensation cost related to unvested stock-based awards was approximately $11.6 million which is expected to be recognized by the end of 2023 using the straight-line method.

7. Stockholders’ Equity

Equity Issuance—Healios

In March 2018, Healios purchased 12,000,000 shares of our common stock for $21.1 million, or approximately $1.76 per share, and the Healios Warrant to purchase up to an additional 20,000,000 shares. In connection with this investment, we entered into an Investor Rights Agreement that governs certain rights of Healios and us relating to Healios’ ownership of our common stock. As a result of Healios’ investment, Healios became a related party, and the transactions with Healios are separately identified within these financial statements as related party transactions.

At the time of the investment in March 2018, the 20,000,000 Warrant Shares would not become exercisable until the planned collaboration expansion was completed, which at that time included an option to commercialize in China. At the time of the June 2018 expansion, however, the parties had not reached agreement on the option so Athersys agreed to provide Healios with a right of first negotiation with respect to the option, and therefore, the parties bifurcated the Healios Warrant so that 4,000,000 Warrant Shares became exercisable with the June 2018 expansion and the remaining 16,000,000 Warrant Shares would only become exercisable if Healios agrees to execute an option for a license in China. As of June 30, 2019, the 16,000,000 contingent Warrant Shares expired according to their terms, since an option for a license in China was not executed.

The 4,000,000 Warrant Shares are exercisable at the greater of $1.76 and a defined reference price, which is generally 110% of the average closing price per share of our common stock for the ten previous trading days. The 4,000,000 Warrant Shares are subject to a general expiration date in September 2020, as defined, and an exercise cap triggered at Healios’ ownership of 19.9% of our common stock, and may be terminated by us under certain conditions.

The value of the Healios Warrant was considered as an element of compensation in the transaction price of the Healios collaboration expansion. We evaluated the various terms of the Healios Warrant and concluded that it was accounted for as an equity instrument at inception and $5.3 million was computed as the best estimate of the fair value of the Healios Warrant at the time of issuance in March 2018. The fair value was computed using a Monte Carlo simulation model that included probability-weighted estimates of potential milestone points in time that could impact the value of the Healios Warrant during its term. The fair value was recorded as additional paid-in capital in the first quarter of 2018, with the offset being included in other assets, which would be included as an element of compensation in the transaction price upon the consummation of the expansion that was planned at the time of the March 2018 investment.

Upon the modification of the Healios Warrant in June 2018 in connection with the expansion of the collaboration that included the bifurcation of the Healios Warrant due to the change related to China rights, we reassessed the fair value of the Healios Warrant immediately before and after the modification using the same valuation methodology, which resulted in no incremental fair value to be recorded. The value of the 4,000,000 tranche of Warrant Shares that became exercisable upon the June 2018 expansion of $1.1 million was recorded as a reduction to the revenue recognized for the delivered licenses in June 2018. However, since the June 2018 expansion agreements made the 16,000,000 Warrant Shares contingent on entering into an option for a license in China, we considered the ability to apply the $4.2 million value of such Warrant Shares as an element of compensation to be constrained. Therefore, the remaining $4.2 million asset was reversed against additional paid-in-capital.

Equity Purchase Agreement

We have had equity purchase agreements in place since 2011 with Aspire Capital Fund LLC (“Aspire Capital”) that provide us the ability to sell shares to Aspire Capital from time to time. The current agreement with Aspire Capital was entered into in February 2018 and includes Aspire Capital’s commitment to purchase up to an aggregate of $100.0 million of shares of our common stock over a three-year period. The terms of the 2018 equity facility are similar to the previous arrangements, and we issued 450,000 shares of our common stock to Aspire Capital as a commitment fee in February 2018 and filed a registration statement for the resale of 24,700,000 shares of common stock in connection with the new equity facility. Also in connection with this equity facility, in February 2018, Aspire Capital invested $1.0 million in us at $2.00 per share of common stock.

We sold 3,350,000 shares to Aspire Capital at an average price of $1.52 in the second quarter of 2019, generating proceeds of $5.1 million. We sold 7,175,000 shares to Aspire Capital at an average price of $1.49 per share during the six months ended June 30, 2019, generating proceeds of $10.7 million. We did not sell shares to Aspire Capital in the second quarter of 2018. We

13

sold 3,300,000 shares to Aspire Capital at an average price of $1.67 per share during the six months ended June 30, 2018, generating proceeds of $5.5 million.

Open Market Sale Agreement

In May 2019, we entered into an open market sale agreement with Jefferies LLC (“Jefferies”), as sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering price of up to $50.0 million. The shares will be offered and sold pursuant to our effective “shelf” registration on Form S-3 that is on file with the SEC. We did not sell any shares of our common stock under this agreement during the quarter ended June 30, 2019.

License Agreement and Settlement

In 2017, we entered into an agreement to settle longstanding intellectual property disagreements with a third party, paid $0.5 million and issued 1,000,000 shares of our common stock with a fair value of $2.3 million in 2017 and received a license to certain intellectual property. In 2018, we paid an additional $1.0 million and issued 500,000 shares of our common stock related to a patent issuance. There are no royalty, milestone or other payments due to the third party associated with the development and commercialization of our cell therapy products, and our payment obligations are concluded.

8. Income Taxes

We have United States (“U.S.”) federal net operating loss and research and development tax credit carryforwards, as well as state and city net operating loss carryforwards, which may be used to reduce future taxable income and tax liabilities. We also have foreign net operating loss and tax credit carryforwards, and the foreign net operating loss carryforwards do not expire. All of our deferred tax assets have been fully offset by a valuation allowance due to our cumulative losses. The carrying value of our deferred tax assets and liabilities is determined by the enacted U.S. corporate income tax rate. Consequently, any changes in the U.S. corporate income tax rate impacts the carrying value of our deferred tax assets and liabilities. Also, there are significant limitations on our ability to utilize our net operating loss and tax credit carryforwards under Section 382 of the Internal Revenue Code of 1986, as amended.

14

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion and analysis should be read in conjunction with our unaudited financial statements and notes thereto included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. Operating results are not necessarily indicative of results that may occur in future periods.

Overview and Recent Developments

We are an international biotechnology company that is focused primarily in the field of regenerative medicine. Our MultiStem^® cell therapy, a patented and proprietary allogeneic stem cell product, is our lead platform product and is currently in clinical development in several areas, the most advanced of which is an ongoing Phase 3 clinical trial for treatment of ischemic stroke. Our current clinical development programs are focused on treating neurological conditions, cardiovascular disease, inflammatory and immune disorders, certain pulmonary conditions and other conditions where the current standard of care is limited or inadequate for many patients, particularly in the critical care segment.

Current Programs

Our MultiStem cell therapy product development programs in the clinical development stage include the following:

•Ischemic Stroke: In 2018, we launched our pivotal Phase 3 clinical trial of MultiStem cell therapy for the treatment of ischemic stroke, referred to as MASTERS-2. We initiated the study with a small number of high-enrolling sites and are bringing on additional sites over time in line with clinical product supply and clinical operations objectives. Our MASTERS-2 clinical trial is a randomized, double-blind, placebo-controlled clinical trial designed to enroll in North America, Europe and certain other international locations, 300 patients who have suffered moderate to moderate-severe ischemic stroke. The MASTERS-2 study has received several regulatory distinctions including Special Protocol Assessment, or SPA, designation, Fast Track designation and Regenerative Medicine Advanced Therapy designation, which was established under the 21st Century Cures Legislation from the United States Food and Drug Administration, or FDA, as well as a Final Scientific Advice positive opinion from the European Medicines Agency, or EMA.

In addition, HEALIOS K.K., or Healios, has an ongoing clinical trial, TREASURE, evaluating the safety and efficacy of administration of MultiStem cell therapy for the treatment of ischemic stroke in Japan. TREASURE will be evaluated under the progressive framework for regenerative medicine therapies in Japan. Under the new framework, Healios' ischemic stroke program has been awarded the SAKIGAKE designation by the Pharmaceuticals and Medical Devices Agency, which is designed to expedite regulatory review and approval, and is analogous to Fast Track designation from the FDA.

We look forward to the completion of both the MASTERS-2 and TREASURE trials and using the accelerated pathways afforded to us by the regulators in the United States, Europe and Japan.

•Acute Respiratory Distress Syndrome, or ARDS: In January 2019, we announced summary results from our exploratory clinical study of the intravenous administration of MultiStem cell therapy to treat patients who are suffering from ARDS. The study results provide further confirmation of tolerability and a favorable safety profile associated with MultiStem treatment. Importantly, there were lower mortality and a greater number of ventilator-free and ICU-free days in the first month following diagnosis in the MultiStem-treated patient group compared to the placebo group. Furthermore, inflammatory markers/cytokines were lower in the MultiStem treatment group than the placebo group. We will continue to evaluate the data as the one-year follow-up period is completed for all patients in the trial and may present additional results after further analyses. Also, Healios initiated a clinical trial for patients with pneumonia-induced ARDS, which is referred to as the ONE-BRIDGE study, and the first patient was enrolled in this study in April 2019.

•Trauma: In 2018, we announced with University of Texas Health Science Center at Houston, or UTHealth, our plans to conduct a Phase 2 clinical trial evaluating MultiStem cell therapy for early treatment and prevention of complications after severe traumatic injury. This first-ever study of a cell therapy for treatment of a wide range of traumatic injuries is intended to be conducted at Memorial Hermann-Texas Medical Center, one of the busiest Level 1 trauma centers in the United States. The study has grant support from the Medical Technology Enterprise Consortium and the Memorial Hermann Foundation. We intend to provide the clinical product for the conduct of the trial, as well as regulatory and operational support. We and UTHealth are in the planning and preparation stage for this study.

15

•Acute Myocardial Infarction, or AMI: We are conducting a double-blind, sham-controlled Phase 2 clinical study in the United States for the administration of MultiStem cell therapy to patients that have suffered a heart attack. In a previously completed Phase 1 clinical study, the results demonstrated a favorable safety profile and encouraging signs of improvement in heart function among patients that exhibited severely compromised heart function prior to treatment. This data was published in a leading peer reviewed scientific journal, and one-year follow-up data suggested that the benefit observed was sustained over time. Enrollment in the Phase 2 clinical study has been a challenge due in part to changes in standard of care. Due to the substantial enrollment challenges and the difficulties in addressing them, we have elected to undertake an evaluation of the available data from the enrolled subjects before any further enrollment and to help us determine the best way forward.

•Hematopoietic Stem Cell, or HSC, Transplant Support / Prevention of Graft-versus-Host Disease, or GvHD: Currently, this program is staged for future registration-directed development, which depends on the success and impact of potential alternative therapies for treating the underlying conditions leading to transplant, as well as other business and financial considerations. Following our completed Phase 1 clinical study of the administration of MultiStem cell therapy to patients suffering from leukemia or certain other blood-borne cancers, in which patients undergo radiation therapy and then receive a HSC transplant, we were granted orphan drug designation by the FDA and the EMA for MultiStem treatment in the prevention of GvHD, and the MultiStem product was granted Fast Track designation by the FDA for prophylaxis therapy for GvHD following HSC transplantation. Subsequently, our registration study design received a positive Scientific Advice opinion from the EMA and a SPA designation from the FDA.

We are engaged in preclinical development and evaluation of MultiStem cell therapy in other indications for human health, and certain indications in the animal health field, and we conduct such work both through our own internal research efforts and through a broad global network of collaborators. We also engage in discussions with third parties about collaborating in the development of MultiStem cell therapy for various programs and may enter into one or more business partnerships to advance these programs over time. We may also elect to advance the development of certain programs independently.

While the MultiStem product platform continues to advance, we are engaged in process development initiatives intended to increase manufacturing scale, reduce production costs and enhance process controls and product quality, among other things. These initiatives are being conducted both internally and outsourced to select contractors, and the related investments are meant to enable us to meet potential commercial demand in the event of eventual regulatory approval. Until such time as we are able to manufacture products ourselves in accordance with good manufacturing practices, we will continue to rely on third-party manufacturers to make our MultiStem product for clinical trials and eventual commercial sales. These third parties may not deliver sufficient quantities of our MultiStem product, manufacture MultiStem product in accordance with specifications, or comply with applicable government regulations. From time to time, such third-party manufacturers, or their material suppliers, may experience production delays, stoppages or interruptions in supply, which may affect the initiation, execution and timing of completion of our and our partners' clinical trials or commercial activities.

In addition to our manufacturing efforts, in other areas we are stepping up our planning and preparations for the potential commercialization of our MultiStem product candidate. We are advancing our strategies for market access and reimbursement, working with third party experts to plan and undertake initiatives to position the product appropriately and effectively communicate to payors its value to them and patients. We are developing our go-to-market strategies, which could include third-party marketing partners in certain areas and the creation of a commercial sales force in other areas. We are also working with outside experts to develop proprietary solutions to the unique requirements related to the cell therapy supply chain and clinical site logistics. For example, we recently completed the prototype for a cryogenic system to securely store and dispense our product in hospital pharmacies. Our intention is to be prepared to enable commercialization as soon as reasonably possible following successful completion of pivotal studies, application and approval by regulators.

We have a collaboration with Healios that initially covered MultiStem cell therapy for ischemic stroke in Japan and the use of our technology for Healios’ organ bud program targeted to liver disease. In June 2018, the collaboration was expanded to include a license to our technologies for ARDS treatment and for additional indications for its organ bud technology, as well as certain other rights, including a license for the use of our MultiStem product to treat certain ophthalmological indications and a license to treat diseases of the liver, kidney, pancreas and intestinal tissue through administration of our products in combination with induced pluripotent stem cells, or iPSC-derived cells. We provide product supply and manufacturing technology transfer services to Healios, and in the event that we fail to perform our responsibilities to supply clinical trial product to Healios, then under certain circumstances, we may be required to grant Healios a license to make the product solely for use in its licensed fields and territories.

16

Financial

We have entered into a series of agreements with Healios, our collaborator in Japan and currently our largest stockholder. Under the collaboration that began in 2016, Healios is responsible for the development and commercialization of the MultiStem product for the licensed fields in the licensed territories, and we provide services to Healios for which we are compensated. Each license agreement with Healios has defined economic terms, and we may receive success-based milestone payments, some of which may be subject to credits. While there is no assurance that we will receive milestone proceeds under the Healios collaboration, any milestone payment we receive is non-refundable and non-creditable towards future royalties or any other payment due from Healios. Also, we are entitled to receive tiered royalties on net product sales, as defined in the license agreements.

In connection with an equity investment in us made by Healios in March 2018, Healios has a warrant to purchase 4,000,000 shares of our common stock at an exercise price equal to a reference price, as defined, but no less than $1.76 per share, and the warrants generally expire in September 2020. While we may generate proceeds from this warrant in the future, no warrants have been exercised as of June 30, 2019.

We have had equity purchase agreements in place since 2011 with Aspire Capital Fund LLC, or Aspire Capital, which have provided us the ability to sell shares to Aspire Capital from time to time. The current agreement was entered into in February 2018 and includes Aspire Capital's commitment to purchase up to an aggregate of $100.0 million of shares of common stock over a three-year period. The terms of the 2018 equity facility are similar to the previous arrangements, and we issued 450,000 shares of our common stock to Aspire Capital as a commitment fee in February 2018 and filed a registration statement for the resale of 24,700,000 shares of common stock in connection with the new equity facility. Also in connection with the new equity facility, Aspire Capital invested $1.0 million to purchase 500,000 shares of common stock at $2.00 per share. During the quarter ended June 30, 2019, we sold 3,350,000 shares of common stock to Aspire Capital at an average price of $1.52 per share. No sales to Aspire Capital were made in the quarter ended June 30, 2018.

On May 30, 2019, we entered into an open market sale agreement with Jefferies as sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering price of up to $50.0 million. The shares will be offered and sold pursuant to our effective “shelf” registration on Form S-3 that is on file with the Securities and Exchange Commission, or SEC. We did not sell any shares of our common stock under this agreement during the quarter ended June 30, 2019.

Results of Operations

Since our inception, our revenues have consisted of license fees, contract revenues, royalties and milestone payments from our collaborators, and grant proceeds. We have not derived revenue from our commercial sale of therapeutic products to date since we are in clinical development and we do not expect any further royalties from our collaboration with RTI Surgical, Inc., or RTI. Research and development expenses consist primarily of external clinical and preclinical study fees, manufacturing costs, salaries and related personnel costs, legal expenses resulting from intellectual property prosecution processes, facility costs, and laboratory supply and reagent costs. We expense research and development costs as they are incurred. We expect to continue to make significant investments in research and development to enhance our technologies, advance clinical trials of our product candidates, expand our regulatory affairs and product development capabilities, conduct preclinical studies of our product, manufacture our product candidates and prepare for potential commercialization of our MultiStem cell therapy product. General and administrative expenses consist primarily of salaries and related personnel costs, professional fees and other corporate expenses. We expect to continue to incur substantial losses through at least the next several years.

Three Months Ended June 30, 2019 and 2018

Revenues. Revenues were $4.3 million for the three months ended June 30, 2019 compared to $19.4 million for the three months ended June 30, 2018. Revenues from our collaboration with Healios were $4.2 million in the second quarter of 2019 compared to $18.8 million for the same period last year, which included the impact of the June 2018 collaboration expansion. Royalty revenue from RTI ceased late in 2018 upon its decision to discontinue distribution of the licensed product. Our revenues are generally derived from license fees, manufacturing-related activities for Healios, other contract revenue from our collaborations and grant revenue.

Research and Development Expenses. Research and development expenses increased to $11.1 million for the three months ended June 30, 2019 from $10.1 million for the comparable period in 2018. The $1.0 million net increase is associated with increases in clinical trial and manufacturing process development costs of $0.7 million, personnel costs of $0.4 million, internal research supplies of $0.3 million and stock compensation costs of $0.2 million, with such increases partially offset by a decrease in license fees of $0.6 million. Our clinical development, clinical manufacturing and manufacturing process

17

development expenses vary over time based on the timing and stage of clinical trials underway, manufacturing campaigns for trials and manufacturing process development projects, and we expect our annual 2019 clinical development costs to increase as compared to 2018. These variations in activity level may also impact our accounts payable, accrued expenses, prepaid expenses and deposits balances from period-to-period. Other than external expenses for our clinical and preclinical programs, we generally do not track our research expenses by project; rather, we track such expenses by the type of cost incurred.

General and Administrative Expenses. General and administrative expenses increased to $2.9 million for the three months ended June 30, 2019 compared to $2.4 million in the comparable period in 2018. The $0.5 million increase was primarily due to increased personnel costs, legal and professional fees, travel costs and stock compensation costs. We expect our annual 2019 general and administrative expenses to increase compared to 2018 mainly due to additional personnel costs.

Depreciation. Depreciation expense was consistent at $0.2 million for the three months ended June 30, 2019 and June 30, 2018, respectively. We expect that our annual depreciation will remain relatively consistent in 2019 compared to 2018.

Other Income, net. Other income, net, generally includes net foreign currency gains and losses, and net interest income and expense.

Six Months Ended June 30, 2019 and 2018

Revenues. Revenues were $5.7 million for the six months ended June 30, 2019 compared to $20.5 million in the six months ended June 30, 2018. Contract revenues from our collaboration with Healios decreased $13.5 million period-over-period as the prior year period included the impact of our collaboration expansion in June 2018.

Research and Development Expenses. Research and development expenses increased to $22.6 million for the six months ended June 30, 2019 from $18.9 million in the comparable period in 2018. The $3.7 million net increase is associated with increases in clinical and preclinical costs of $2.6 million, personnel costs of $0.8 million, research supplies of $0.3 million, stock compensation costs of $0.3 million and consulting costs of $0.3 million. These increases were partially offset by a decrease in license fees of $0.6 million. The increase in our clinical and preclinical expenses during the period is primarily a result of increased clinical product manufacturing costs, a portion of which are invoiced to Healios and process development activities to support large-scale manufacturing. Other than external expenses for our clinical and preclinical programs, we do not track our research expenses by project; rather, we track such expenses by the type of cost incurred.

General and Administrative Expenses. General and administrative expenses increased to $6.0 million for the six months ended June 30, 2019 from $5.0 million in the comparable period in 2018. The $1.0 million increase was due primarily to increases in stock compensation costs, legal and professional fees, consulting services and other outside services compared to the same period in 2018.

Depreciation. Depreciation expense of $0.3 million for the six months ended June 30, 2019 was slightly lower compared to $0.4 million for the comparable period in 2018.

Gain from Insurance Proceeds. In 2016, a flood caused damage to our primary facilities that required the reconstruction of certain laboratory space and was covered by insurance at replacement cost. In 2018, we received an additional $0.4 million of insurance proceeds.

Other Income, net. Other income, net, was $0.5 million for the six-month period ended June 30, 2019 and $0.3 million for the comparable 2018 period, and is typically comprised of interest income and expense, and foreign currency gains and losses.

Liquidity and Capital Resources

Our sources of liquidity include our cash balances. At June 30, 2019, we had $44.2 million in cash and cash equivalents. We have primarily financed our operations through business collaborations, grant funding and equity financings. We conduct all of our operations through our subsidiary, ABT Holding Company. Consequently, our ability to fund our operations depends on ABT Holding Company’s financial condition and its ability to make dividend payments or other cash distributions to us. There are no restrictions such as government regulations or material contractual arrangements that restrict the ability of ABT Holding Company to make dividend and other payments to us.

We incurred losses since inception of operations in 1995 and had an accumulated deficit of $395.7 million at June 30, 2019. Our losses have resulted principally from costs incurred in research and development, clinical and preclinical product development, acquisition and licensing costs, and general and administrative costs associated with our operations. We use all of

18

our sources of capital to develop our technologies, to discover and develop therapeutic product candidates, develop business collaborations and to acquire certain technologies and assets.

In the first quarter of 2019, we received the final $2.5 million quarterly installment payment in connection with the June 2018 expansion of our collaboration with Healios. We are also entitled to receive potential milestones payments, subject to certain credits, and royalties from Healios under our licensed programs. We also receive payments from Healios for clinical product supply and other manufacturing services. Certain proceeds from Healios may be used by Healios to offset milestone payments that may become due in the future.

In connection with an equity investment in us made by Healios in March 2018, Healios has a warrant to purchase 4,000,000 shares of our common stock at an exercise price equal to a reference price, as defined, but no less than $1.76 per share, and the warrants generally expire in September 2020. While we may generate proceeds from this warrant in the future, no warrants have been exercised as of June 30, 2019.

We have had an equity purchase arrangement in place with Aspire Capital since 2011, through two-to-three-year equity facilities, each with similar terms. The most current facility with Aspire Capital was entered into in February 2018 and includes Aspire Capital’s commitment to purchase up to an aggregate of $100.0 million of shares of our common stock over a three-year period that expires in February 2021, and an investment made through the purchase of 500,000 shares of our common stock (i.e., $1.0 million invested at $2.00 per share). During the quarter ended June 30, 2019, we sold 3,350,000 shares to Aspire Capital at an average price of $1.52 per share. We did not sell shares to Aspire Capital during the quarter ended June 30, 2018.

On May 30, 2019, we entered into an open market sale agreementwith Jefferies, as sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering price of up to $50.0 million. The shares will be offered and sold pursuant to our effective “shelf” registration on Form S-3 on file with the SEC.

We will require substantial additional funding in order to continue our research and product development programs, including clinical trials of our product candidates and process development and manufacturing projects, and to prepare for possible approval and commercial activities. At June 30, 2019, we had available cash and cash equivalents of $44.2 million, and we intend to meet our short-term liquidity needs with available cash. Over the longer term, we will continue to make use of available cash, but will have to continue to generate additional funding to meet our needs, through business development, collaborator achievement of milestones under our agreements, and grant-funding opportunities. Additionally, we may raise capital from time to time through our equity purchase agreement and open market sale agreement, subject to any volume and price limitations, and equity offerings and warrant exercises. We may also manage our cash by deferring certain discretionary costs and staging certain development costs to extend our operational runway, as needed. Over time, we may consider borrowing from financing institutions.

Our capital requirements over time depend on a number of factors, including progress in our clinical development programs, our clinical and preclinical pipeline of additional opportunities and their stage of development, additional external costs such as payments to contract research organizations and contract manufacturing organizations, additional personnel costs and the costs in filing and prosecuting patent applications and enforcing patent claims. Furthermore, delays in product supply for our and Healios’ clinical trials may impact the timing and cost of such studies. The availability of funds impacts our ability to advance multiple clinical programs concurrently, and any shortfall in funding could result in our having to delay or curtail research and development efforts. Further, these requirements may change at any time due to technological advances, business development activity or competition from other companies. We cannot assure you that adequate funding will be available to us or, if available, that it will be available on acceptable terms.

We expect to continue to incur substantial losses through at least the next several years and may incur losses in subsequent periods. The amount and timing of our future losses are highly uncertain. Our ability to achieve and thereafter sustain profitability will be dependent upon, among other things, successfully developing, commercializing and obtaining regulatory approval or clearances for our technologies and products resulting from these technologies.

19

Cash Flow Analysis

Net cash used in operating activities was $17.0 million for the six months ended June 30, 2019 compared to cash used of $1.3 million for the six months ended June 30, 2018. Net cash used in operating activities in the six months ended June 30, 2018 included the favorable impact of our collaboration expansion with Healios. Net cash used in operating activities may fluctuate significantly on a quarter-to-quarter basis, as it has over the past several years, primarily due to the receipt of fees from our collaborators and payment of specific clinical trial costs, such as clinical manufacturing campaigns, contract research organization costs and manufacturing process development projects. These variations in activity level may also impact our accounts payable, accrued expenses and prepaid expenses balances from period-to-period.

Net cash used by investing activities was $0.4 million and $0.7 million for the six months ended June 30, 2019 and 2018, respectively. The fluctuations over the periods were due to timing of equipment purchases primarily for our manufacturing process development activities. We expect that our capital equipment expenditures will remain relatively consistent between 2019 and 2018.

Financing activities provided cash of $10.5 million for the six months ended June 30, 2019 primarily from the issuance of common stock to Aspire Capital under our equity purchase agreement, net of shares retained for withholding tax payments on stock-based awards. Financing activities provided cash of $26.1 million for the six months ended June 30, 2018, which included a $21.1 million investment in us by Healios, as well as proceeds from the issuance of common stock to Aspire Capital under our equity purchase agreement, net of offering costs and shares retained for withholding tax payments on stock-based awards.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies and Management Estimates

The SEC defines critical accounting policies as those that are, in management’s view, important to the portrayal of our financial condition and results of operations and demanding of management’s judgment. Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates on experience and on various assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. A description of these accounting policies and estimates is included in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2018. There have been no material changes in our accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2018, except as it relates to the adoption of Accounting Standards Updates 2016-02, Leases, on January 1, 2019, for which our accounting policy is included in Note 3 to the condensed consolidated financial statements.

For additional information regarding our accounting policies, see Note B to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2018.

Cautionary Note on Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These forward-looking statements relate to, among other things, the expected timetable for development of our product candidates, our growth strategy, and our future financial performance, including our operations, economic performance, financial condition, prospects, and other future events. We have attempted to identify forward-looking statements by using such words as “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “should,” “suggest,” “will,” or other similar expressions. These forward-looking statements are only predictions and are largely based on our current expectations. These forward-looking statements appear in a number of places in this quarterly report.

In addition, a number of known and unknown risks, uncertainties, and other factors could affect the accuracy of these statements. Some of the more significant known risks that we face are the risks and uncertainties inherent in the process of discovering, developing, and commercializing products that are safe and effective for use as therapeutics, including the uncertainty regarding market acceptance of our product candidates and our ability to generate revenues. The following risks

20

and uncertainties may cause our actual results, levels of activity, performance, or achievements to differ materially from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements:

• our ability to raise capital to fund our operations;

• the timing and nature of results from MultiStem clinical trials, including the MASTERS-2 Phase 3 clinical trial and the Healios TREASURE and ONE-BRIDGE clinical trials in Japan;

• the possibility of delays in, adverse results of, and excessive costs of the development process;

• our ability to successfully initiate and complete clinical trials of our product candidates;

• the possibility of delays, work stoppages or interruptions in manufacturing by third parties or us, such as due to material supply constraints, contaminations, or regulatory issues, which could negatively impact our trials and the trials of our collaborators;

• uncertainty regarding market acceptance of our product candidates and our ability to generate revenues, including MultiStem cell therapy for the treatment of ischemic stroke, ARDS, AMI and trauma, and the prevention of GvHD and other disease indications;

• changes in external market factors;

• changes in our industry’s overall performance;

• changes in our business strategy;

• our ability to protect and defend our intellectual property and related business operations, including the successful prosecution of our patent applications and enforcement of our patent rights, and operate our business in an environment of rapid technology and intellectual property development;

• our possible inability to realize commercially valuable discoveries in our collaborations with pharmaceutical and other biotechnology companies;

• our ability to meet milestones and earn royalties under our collaboration agreements, including the success of our collaboration with Healios;

• our collaborators’ ability to continue to fulfill their obligations under the terms of our collaboration agreements and generate sales related to our technologies;

• the success of our efforts to enter into new strategic partnerships and advance our programs, including, without limitation, in North America, Europe and Japan;

• our possible inability to execute our strategy due to changes in our industry or the economy generally;

• changes in productivity and reliability of suppliers;

• the success of our competitors and the emergence of new competitors; and

• the risks mentioned elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2018 under Item 1A, “Risk Factors.”

Although we currently believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee our future results, levels of activity or performance. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. You are advised, however, to consult any further disclosures we make on related subjects in our reports on Forms 10-Q, 8-K and 10-K furnished to the SEC. You should understand that it is not possible to predict or identify all risk factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

There were no material changes in our exposure to market risk since the disclosure included in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2018.

Item 4.    Controls and Procedures.

Disclosure controls and procedures

Our management, under the supervision of and with the participation of our Chief Executive Officer and our Senior Vice President of Finance, has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(f)

21

and 15d-15(f) under the Securities Exchange Act of 1934, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon this evaluation, our Chief Executive Officer and Senior Vice President of Finance have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting

During the last fiscal quarter covered by this Quarterly Report on Form 10-Q, there has been no change in our internal control over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

During the quarter ended June 30, 2019, we sold an aggregate of 3,350,000 shares of common stock to Aspire Capital under our equity purchase agreement, generating aggregate proceeds of $5.1 million. Each issuance of these unregistered shares qualifies as an exempt transaction pursuant to Section 4(a)(2) of the Securities Act of 1933. Each issuance qualified for exemption under Section 4(a)(2) of the Securities Act of 1933 because none involved a public offering. Each offering was not a public offering due to the number of persons involved, the manner of the issuance and the number of securities issued. In addition, in each case Aspire Capital had the necessary investment intent.

22

Item 6.    Exhibits.

Exhibit No.	Description
10.1	Athersys, Inc. 2019 Equity and Incentive Compensation Plan (incorporated herein by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-8 (Registration No. 333-232075) filed with the SEC on June 12, 2019
10.2	Form of Incentive Stock Option Agreement pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan.
10.3	Form of Non-Qualified Stock Option Agreement pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan.
10.4	Form of Non-Qualified Stock Option Agreement (Directors) pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan.
10.5	Form of Restricted Stock Unit Agreement (Executives) pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan.
10.6	Form of Restricted Stock Unit Agreement (Non-Executive) pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan.
31.1	Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Laura K. Campbell, Senior Vice President of Finance, pursuant to SEC Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, and Laura Campbell, Senior Vice President of Finance, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section  906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ATHERSYS, INC.
Date: August 7, 2019	/s/ Gil Van Bokkelen
	Gil Van Bokkelen
	Chairman and Chief Executive Officer
	(principal executive officer authorized to sign on behalf of the registrant)

/s/ Laura K. Campbell

Laura K. Campbell

Senior Vice President of Finance

(principal financial and accounting officer authorized to sign on behalf of the registrant)

24

EX-10.2

EXHIBIT 10.2

ATHERSYS, INC.

EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT

This Employee Incentive Stock Option Agreement (“Agreement”) is made as of the [[GRANTDATE]] (the “Date of Grant”) by and between Athersys, Inc., a Delaware corporation (the “Company”), and [[FIRSTNAME]] [[LASTNAME]] (“Optionee”) with respect to the grant of an Incentive Stock Option by the Company to Optionee pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the "Plan").

1. Grant of Stock Option. Subject to and upon the terms, conditions, and restrictions set forth in this Agreement, the Company hereby grants to Optionee an Option Right (the “Option”) to purchase [[SHARESGRANTEDWORDS]] ([[SHARESGRANTED]]) Common Shares (the “Option Shares”). The Option may be exercised from time to time in accordance with the terms of this Agreement.

2. Type of Option. Except to the extent of the $100,000 limitation set forth in Section 422(d) of the Code, the Option is intended to be an Incentive Stock Option, and this Agreement shall be construed in a manner that will enable this Option to be so qualified. To the extent, if any, that the $100,000 limitation set forth in Section 422(d) of the Code is exceeded, the Option shall constitute two separate options with the first option covering the number of Common Shares up to the $100,000 limitation intended to be an Incentive Stock Option and the second option covering any excess Common Shares intended to be a nonqualified stock option.

3. Option Price. The Option Shares may be purchased pursuant to this Option at a price of [[GRANTPRICE]] per Common Share, subject to adjustment as hereinafter provided (the “Option Price”).

4. Term of Option/Agreement. The term of the Option shall commence on the Date of Grant and, unless earlier terminated in accordance with Section 7 hereof, shall terminate and expire automatically and without further notice ten (10) years from the Date of Grant.

5. Right to Exercise.

(a) Subject to Sections 5(b) and (c), Section 7 and Section 10 below, the Option will vest and become exercisable as provided in the attached Exhibit A, for so long as Optionee remains continuously employed with the Company or any Subsidiary. To the extent the Option is exercisable, it may be exercised in whole or in part. In no event shall Optionee be entitled to acquire a fraction of one Option Share pursuant to this Option. Optionee shall be entitled to the privileges of ownership, including dividends, only with respect to Option Shares purchased and delivered to Optionee upon the exercise of all or part of this Option.

(b) Notwithstanding Section 5(a) above, the Option shall become immediately exercisable in full, if at any time prior to the termination of the Option, a Change in Control shall occur.

1

(c) Notwithstanding Section 5(a) above, if the Optionee should die or become permanently disabled while in the employ of the Company or any Subsidiary, this Option shall immediately become exercisable in full and shall remain exercisable until terminated in accordance with Section 7 below. The Optionee shall be considered to have become permanently disabled if the Optionee’s employment terminates on account of the Optionee having become “permanently and totally disabled”, as defined in Section 22(e)(3) of the Code.

6. Notice of Exercise; Payment. To the extent then exercisable, the Option may be exercised in whole or in part by written notice to the Company stating the number of Option Shares for which the Option is being exercised and the intended manner of payment. The date of such notice shall be the exercise date. The Option Price shall be payable (a) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (b) by actual or constructive transfer to the Company of nonforfeitable, unrestricted Common Shares that have been owned by the Optionee for more than six (6) months prior to the date of exercise, (c) for exercises of Options that occur more than one (1) year following the Date of Grant, by transfer to the Company of shares or vested Options (including Options under this Agreement) for the purchase of Common Shares having a fair market value (net of the exercise price) at the time of exercise equal to the portion of the Option Price for which such transfer is made, or (d) by a combination of such methods of payment. The requirement of payment in cash shall be deemed satisfied if the Optionee shall have made arrangements satisfactory to the Company with a bank or a broker who is a member of the National Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of the shares being purchased so that the net proceeds of the sale transaction will at least equal the Option Price plus payment of any applicable withholding taxes and pursuant to which the bank or broker undertakes to deliver the full Option Price plus payment of any applicable withholding taxes to the Company on a date satisfactory to the Company, but not later than the date on which the sale transaction will settle in the ordinary course of business. As soon as practicable upon the Company’s receipt of Optionee’s notice of exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.

As a further condition precedent to the exercise of this Option in whole or in part, Optionee shall comply with all regulations and the requirements of any regulatory authority having control of, or supervision over, the issuance of the Common Shares and in connection therewith shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

7. Termination. This Option shall terminate on the earliest of the following dates:

(a) The date on which the Optionee ceases to be an employee of the Company or any Subsidiary, if the Optionee’s employment with the Company or a Subsidiary is terminated for Cause ("Cause" being defined as (i) the commission of an act of fraud, embezzlement, theft or other criminal act constituting a felony; or (ii) the material breach of any provision contained in a written non-competition, confidentiality or non-disclosure agreement between the Company or any of its Subsidiaries and Optionee);

(b) Three (3) months after the Optionee ceases to be an employee of the Company or a Subsidiary, unless the Optionee ceases to be such employee by reason of death, permanent and total disability, Retirement or termination for Cause;

(c) One (1) year after the death of the Optionee if the Optionee dies (i) while an employee of the Company or a Subsidiary (in which case the Option becomes immediately exercisable in full pursuant to Section 5(c) herein), (ii) within the three (3) month period following a termination without Cause or (iii) within the three (3) month period following Retirement;

2

(d) One (1) year after the permanent and total disability of the Optionee if the Optionee becomes permanently and totally disabled (as described in Section 5(c) above) while an employee of the Company or a Subsidiary (in which case the Option becomes immediately exercisable in full pursuant to Section 5(c) herein);

(e) Five (5) years after the date that the Optionee shall Retire. For this purpose, “Retire” (or similar terms) shall mean that Optionee terminates Optionee’s employment by reason of Optionee’s retirement entitling Optionee to early, normal or late retirement benefits under the provisions of any retirement plan of the Company or its Subsidiaries in which Optionee participates (or if no such plan exists, at or after age sixty-five (65)); and

(f) Ten (10) years from the Date of Grant.

8. Option Nontransferable. This Option is not transferable by the Optionee otherwise than by will or the laws of descent and distribution. In no event will any such award granted under this Agreement be transferred for value. This Option may be exercised, during the lifetime of the Optionee, only by Optionee, or in the event of Optionee’s legal incapacity, by Optionee’s guardian or legal representative acting on behalf of Optionee in a fiduciary capacity under state law or court supervision.

9. Compliance with Law. This Option shall not be exercisable if such exercise would involve a violation of any applicable federal, state or other securities law.

10. Adjustments. This Option and the Option Shares subject thereto, and the other terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 12 of the Plan.

11. Taxes and Withholding. To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by the Grantee or another person under this Agreement, the Grantee agrees that the Company will withhold any taxes required to be withheld by the Company under federal, state, local or foreign law from the Option Shares in an amount sufficient to satisfy the minimum statutory withholding amount permissible (unless the Committee takes action subsequent to the Date of Grant requiring such withholding amount to be paid by the Grantee in cash). The Option Shares so retained shall be credited against any such withholding requirement at the market value of such Common Shares on the date of such withholding. In no event will the market value of the Common Shares to be withheld pursuant to this Section 11 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld.

12. Mandatory Notice of Disqualifying Disposition. Without limiting any other provision hereof, Optionee hereby agrees that if Optionee disposes (whether by sale, exchange, gift or otherwise) of any of the Option Shares acquired pursuant to the exercise of any Incentive Stock Option memorialized by this Agreement within two (2) years of the Date of Grant or within one (1) year after the transfer of such share or shares to Optionee, Optionee shall notify the Company of such disposition in writing within thirty (30) days from the date of such disposition. Such written notice shall state the principal terms of such disposition and the type and amount of the consideration received for such share or shares by Optionee in connection therewith.

3

13. Continuous Employment. For purposes of this Agreement, the continuous employment of the Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and the Optionee shall not be deemed to have ceased to be an employee of the Company or Subsidiary, by reason of the (a) transfer of the Optionee’s employment among the Company and its Subsidiaries or (b) an approved leave of absence.

14. No Employment Contract. This Option is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. This Option and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Optionee any right to continue employment with the Company or any Subsidiary, as the case may be, or interfere in any way with the right of the Company or a Subsidiary to terminate the employment of the Optionee.

15. Information. Information about the Optionee and the Optionee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Optionee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Optionee’s country or elsewhere, including the United States of America. The Optionee consents to the processing of information relating to the Optionee and the Optionee’s participation in the Plan in any one or more of the ways referred to above.

16. Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. All terms used herein with initial capital letters and not otherwise defined herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of the Option hereunder.

17. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent.

18. Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

19. Successors and Assigns. Without limiting Section 8 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Optionee, and the successors and assigns of the Company.

20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

4

21. Governing Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

22. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: President, and any notice to Optionee shall be addressed to said Optionee at Optionee’s address on file with the Company at the time of such notice. Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid. Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

[Remainder of page left blank intentionally]

Executed in the name and on behalf of the Company at 3201 Carnegie Avenue,

Cleveland, Ohio, as of the [[GRANTDATE]].

ATHERSYS, INC.

___________________________________

Name: William Lehmann

Title: President and COO

The undersigned Optionee hereby accepts the Option evidenced by this Employee Incentive Stock Option Agreement on the terms and conditions set forth herein and in the Plan.

Dated: _____ __, 20_____________________________________

[[FIRSTNAME]] [[LASTNAME]]

* For grants accepted electronically by the Optionee, the acceptance date and electronic acceptance will be recorded as the official acceptance of the terms and conditions of this Employee Incentive Stock Option Agreement as of the date when the electronic acceptance has been made.

5

EXHIBIT A

Participant Name: [[FIRSTNAME]] [[LASTNAME]]

Option Shares Granted: [[SHARESGRANTED]]

Award Type: [[GRANTTYPE]]Award Price: [[GRANTPRICE]]

Award Date: [[GRANTDATE]]Expiration Date: [[GRANTEXPIRATIONDATE]]

VESTING SCHEDULE

[[ALLVESTSEGS]]

6

EX-10.3

EXHIBIT 10.3

ATHERSYS, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

This Nonqualified Stock Option Agreement (“Agreement”) is made as of ______ __, 20__ (the “Date of Grant”) by and between Athersys, Inc., a Delaware corporation (the “Company”), and _________ (“Optionee”) with respect to the grant of a nonqualified stock option by the Company to Optionee pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the "Plan").

1. Grant of Stock Option. Subject to and upon the terms, conditions, and restrictions set forth in this Agreement, the Company hereby grants to Optionee an Option Right (the “Option”) to purchase _____ Thousand, _______ Hundred and ________ (___,___) Common Shares (the “Option Shares”). The Option may be exercised from time to time in accordance with the terms of this Agreement.

2. Type of Option. The Option is intended to be a nonqualified stock option and shall not be treated as an Incentive Stock Option.

3. Option Price. The Option Shares may be purchased pursuant to this Option at a price of ____ Dollars and _____ Cents ($_____) per Common Share, subject to adjustment as hereinafter provided (the “Option Price”).

4. Term of Option/Agreement. The term of the Option shall commence on the Date of Grant and, unless earlier terminated in accordance with Section 7 hereof, shall terminate and expire automatically and without further notice ten (10) years from the Date of Grant.

5. Right to Exercise.

(a) Subject to Section 5(b) and (c), Section 7 and Section 10, the Option will vest and become exercisable as provided in the attached Exhibit A, for so long as Optionee remains continuously employed with the Company or any Subsidiary. To the extent the Option is exercisable, it may be exercised in whole or in part. In no event shall Optionee be entitled to acquire a fraction of one Option Share pursuant to this Option. Optionee shall be entitled to the privileges of ownership, including dividends, only with respect to Option Shares purchased and delivered to Optionee upon the exercise of all or part of this Option.

(b) Notwithstanding Section 5(a) above, the Option shall become immediately exercisable in full, if at any time prior to the termination of the Option, a Change in Control shall occur.

(c) Notwithstanding Section 5(a) above, if the Optionee should die or become permanently disabled while in the employ of the Company or any Subsidiary, this Option shall immediately become exercisable in full and shall remain exercisable until terminated in accordance with Section 7 below. The Optionee shall be considered to have become permanently disabled if the Optionee’s employment terminates on account of the Optionee having become “permanently and totally disabled”, as defined in Section 22(e)(3) of the Code.

6. Notice of Exercise; Payment. To the extent then exercisable, the Option may be exercised in whole or in part by written notice to the Company stating the number of Option Shares for which

1

the Option is being exercised and the intended manner of payment. The date of such notice shall be the exercise date. The Option Price shall be payable (a) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (b) by actual or constructive transfer to the Company of nonforfeitable, unrestricted Common Shares that have been owned by the Optionee for more than six (6) months prior to the date of exercise, (c) for exercises of Options that occur more than one (1) year following the Date of Grant, by transfer to the Company of shares or vested Options (including Options under this Agreement) for the purchase of Common Shares having a fair market value (net of the exercise price) at the time of exercise equal to the portion of the Option Price for which such transfer is made, or (d) by a combination of such methods of payment. The requirement of payment in cash shall be deemed satisfied if the Optionee shall have made arrangements satisfactory to the Company with a bank or a broker who is a member of the National Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of the shares being purchased so that the net proceeds of the sale transaction will at least equal the Option Price plus payment of any applicable withholding taxes and pursuant to which the bank or broker undertakes to deliver the full Option Price plus payment of any applicable withholding taxes to the Company on a date satisfactory to the Company, but not later than the date on which the sale transaction will settle in the ordinary course of business. As soon as practicable upon the Company’s receipt of Optionee’s notice of exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.

As a further condition precedent to the exercise of this Option in whole or in part, Optionee shall comply with all regulations and the requirements of any regulatory authority having control of, or supervision over, the issuance of the Common Shares and in connection therewith shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

7. Termination. This Option shall terminate on the earliest of the following dates:

(a) The date on which the Optionee ceases to be an employee of the Company or any Subsidiary, if the Optionee’s employment with the Company or a Subsidiary is terminated for Cause ("Cause" being defined as: (i) the commission of an act of fraud, embezzlement, theft or other criminal act constituting a felony; or (ii) the material breach of any provision contained in a written non-competition, confidentiality or non-disclosure agreement between the Company or any of its Subsidiaries and Optionee);

(b) Three (3) months after the Optionee ceases to be an employee of the Company or a Subsidiary, unless the Optionee ceases to be such employee by reason of death, permanent and total disability, Retirement or termination for Cause;

(c) One (1) year after the death of the Optionee if the Optionee dies (i) while an employee of the Company or a Subsidiary (in which case the Option becomes immediately exercisable in full pursuant to Section 5(c) herein), (ii) within the three (3) month period following a termination without Cause or (iii) within the three (3) month period following Retirement;

(d) One (1) year after the permanent and total disability of the Optionee if the Optionee becomes permanently and totally disabled (as described in Section 5(c) above) while an employee of the Company or a Subsidiary (in which case the Option becomes immediately exercisable in full pursuant to Section 5(c) herein);

(e) Five (5) years after the date that the Optionee shall Retire. For this purpose, “Retire” (or similar terms) shall mean that Optionee terminates Optionee’s employment by reason of

2

Optionee’s retirement entitling Optionee to early, normal or late retirement benefits under the provisions of any retirement plan of the Company or its Subsidiaries in which Optionee participates (or if no such plan exists, at or after age sixty-five (65)); and

(f) Ten (10) years from the Date of Grant.

8. Option Nontransferable. This Option is not transferable by the Optionee otherwise than by will or the laws of descent and distribution. In no event will any such award granted under this Agreement be transferred for value. This Option may be exercised, during the lifetime of the Optionee, only by Optionee, or in the event of Optionee’s legal incapacity, by Optionee’s guardian or legal representative acting on behalf of Optionee in a fiduciary capacity under state law or court supervision.

9. Compliance with Law. This Option shall not be exercisable if such exercise would involve a violation of any applicable federal, state or other securities law.

10. Adjustments. This Option and the Option Shares subject thereto, and the other terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 12 of the Plan.

11. Taxes and Withholding. To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by the Grantee or another person under this Agreement, the Grantee agrees that the Company will withhold any taxes required to be withheld by the Company under federal, state, local or foreign law from the Option Shares in an amount sufficient to satisfy the minimum statutory withholding amount permissible (unless the Committee takes action subsequent to the Date of Grant requiring such withholding amount to be paid by the Grantee in cash). The Option Shares so retained shall be credited against any such withholding requirement at the market value of such Common Shares on the date of such withholding. In no event will the market value of the Common Shares to be withheld pursuant to this Section 11 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld.

12. Continuous Employment. For purposes of this Agreement, the continuous employment of the Optionee with the Company or a Subsidiary shall not be deemed to have been interrupted, and the Optionee shall not be deemed to have ceased to be an employee of the Company or Subsidiary, by reason of the (a) transfer of the Optionee’s employment among the Company and its Subsidiaries or (b) an approved leave of absence.

13. No Employment Contract. This Option is a voluntary, discretionary award being made on a one-time basis and it does not constitute a commitment to make any future awards. This Option and any payments made hereunder will not be considered salary or other compensation for purposes of any severance pay or similar allowance, except as otherwise required by law. Nothing in this Agreement will give the Optionee any right to continue employment with the Company or any Subsidiary, as the case may be, or interfere in any way with the right of the Company or a Subsidiary to terminate the employment of the Optionee.

14. Information. Information about the Optionee and the Optionee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Optionee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such

3

persons are located within the Optionee’s country or elsewhere, including the United States of America. The Optionee consents to the processing of information relating to the Optionee and the Optionee’s participation in the Plan in any one or more of the ways referred to above.

15. Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. All terms used herein with initial capital letters and not otherwise defined herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of the Option hereunder.

16. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent.

17. Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

18. Successors and Assigns. Without limiting Section 8 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Optionee, and the successors and assigns of the Company.

19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

20. Governing Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

21. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: President, and any notice to Optionee shall be addressed to said Optionee at Optionee’s address on file with the Company at the time of such notice. Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid. Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

[Remainder of page left blank intentionally]

4

Executed in the name and on behalf of the Company, at 3201 Carnegie Avenue, Cleveland, Ohio, 44115, as of the __^th day of _____, 20__.

ATHERSYS, INC.

___________________________________

Name:

Title:

The undersigned Optionee hereby accepts the Option evidenced by this Nonqualified Stock Option Agreement on the terms and conditions set forth herein and in the Plan.

Dated: _____ __, 20_____________________________________

[Insert Name]

5

EXHIBIT A

Participant Name: [[FIRSTNAME]] [[LASTNAME]]

Option Shares Granted: [[SHARESGRANTED]]

Award Type: [[GRANTTYPE]]Award Price: [[GRANTPRICE]]

Award Date: [[GRANTDATE]]Expiration Date: [[GRANTEXPIRATIONDATE]]

VESTING SCHEDULE

[[ALLVESTSEGS]]

6

EX-10.4

EXHIBIT 10.4

ATHERSYS, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

This Nonqualified Stock Option Agreement (“Agreement”) is made as of __________ __, 20__ (the “Date of Grant”) by and between Athersys, Inc., a Delaware corporation (the “Company”) and __________ (“Optionee”) with respect to the grant of a nonqualified stock option by the Company to Optionee pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the "Plan").

1. Grant of Stock Option. Subject to and upon the terms, conditions, and restrictions set forth in this Agreement, the Company hereby grants to Optionee an Option Right (the “Option”) to purchase __________Thousand (___,000) Common Shares (the “Option Shares”). The Option may be exercised from time to time in accordance with the terms of this Agreement.

2. Type of Option. The Option is intended to be a nonqualified stock option and shall not be treated as an Incentive Stock Option.

3. Option Price. The Option Shares may be purchased pursuant to this Option at a price of __________ Dollars and __________ Cents ($__________) per Common Share, subject to adjustment as hereinafter provided (the “Option Price”).

4. Term of Option/Agreement. The term of the Option shall commence on the Date of Grant and, unless earlier terminated in accordance with Section 7 hereof, shall terminate and expire automatically and without further notice ten (10) years from the Date of Grant.

5. Right to Exercise. Subject to Section 7 and Section 10, the Option will vest and become exercisable as provided in the attached Exhibit A, for so long as Optionee continues to perform services for the Company or any Subsidiary. The Option may be exercised in whole or in part. In no event shall Optionee be entitled to acquire a fraction of one Option Share pursuant to this Option. Optionee shall be entitled to the privileges of ownership, including dividends, only with respect to Option Shares purchased and delivered to Optionee upon the exercise of all or part of this Option.

6. Notice of Exercise; Payment. To the extent then exercisable, the Option may be exercised in whole or in part by written notice to the Company stating the number of Option Shares for which the Option is being exercised and the intended manner of payment. The date of such notice shall be the exercise date. The Option Price shall be payable (a) in cash or by check acceptable to the Company or by wire transfer of immediately available funds, (b) by actual or constructive transfer to the Company of nonforfeitable, unrestricted Common Shares that have been owned by the Optionee for more than six (6) months prior to the date of exercise, (c) for exercises of Options that occur more than one (1) year following the Date of Grant, by transfer to the Company of shares or vested Options (including Options under this Agreement) for the purchase of Common Shares having a fair market value (net of the exercise price) at the time of exercise equal to the portion of the Option Price for which such transfer is made, or (d) by a combination of such methods of payment. The requirement of payment in cash shall be deemed satisfied if the Optionee shall have made arrangements satisfactory to the Company with a bank or a broker who is a member of the National Association of Securities Dealers, Inc. to sell on the exercise date a sufficient number of the shares being purchased so that the net proceeds of the sale transaction will

1

at least equal the Option Price plus payment of any applicable withholding taxes and pursuant to which the bank or broker undertakes to deliver the full Option Price plus payment of any applicable withholding taxes to the Company on a date satisfactory to the Company, but not later than the date on which the sale transaction will settle in the ordinary course of business. As soon as practicable upon the Company’s receipt of Optionee’s notice of exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.

As a further condition precedent to the exercise of this Option in whole or in part, Optionee shall comply with all regulations and the requirements of any regulatory authority having control of, or supervision over, the issuance of the Common Shares and in connection therewith shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

7. Termination. This Option shall terminate on the earlier of the following dates:

(a) Eighteen (18) months after the Optionee ceases to perform services for the Company or a Subsidiary; and

(b) Ten (10) years from the Date of Grant.

8. Option Nontransferable. This Option is not transferable by the Optionee otherwise than by will or the laws of descent and distribution. In no event will any such award granted under this Agreement be transferred for value. This Option may be exercised, during the lifetime of the Optionee, only by Optionee, or in the event of Optionee’s legal incapacity, by Optionee’s guardian or legal representative acting on behalf of Optionee in a fiduciary capacity under state law or court supervision.

9. Compliance with Law. This Option shall not be exercisable if such exercise would involve a violation of any applicable federal, state or other securities law.

10. Adjustments. This Option and the Option Shares subject thereto, and the other terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 12 of the Plan.

11. Taxes and Withholding. To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by the Optionee or another person under this Agreement, the Optionee agrees that the Company will withhold any taxes required to be withheld by the Company under federal, state, local or foreign law from the Option Shares in an amount sufficient to satisfy the minimum statutory withholding amount permissible (unless the Committee takes action subsequent to the Date of Grant requiring such withholding amount to be paid by the Optionee in cash). The Option Shares so retained shall be credited against any such withholding requirement at the market value of such Common Shares on the date of such withholding. In no event will the market value of the Common Shares to be withheld pursuant to this Section 11 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld.

12. Information. Information about the Optionee and the Optionee’s participation in the Plan may be collected, recorded and held, used and disclosed for any purpose related to the administration of the Plan. The Optionee understands that such processing of this information may need to be carried out by the Company and its Subsidiaries and by third party administrators whether such persons are located within the Optionee’s country or elsewhere, including the United States of

2

America. The Optionee consents to the processing of information relating to the Optionee and the Optionee’s participation in the Plan in any one or more of the ways referred to above.

13. Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. All terms used herein with initial capital letters and not otherwise defined herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of the Option hereunder.

14. Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Optionee under this Agreement without the Optionee’s consent.

15. Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

16. Successors and Assigns. Without limiting Section 8 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Optionee, and the successors and assigns of the Company.

17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

18. Governing Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws of the State of Delaware, without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

19. Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: President, and any notice to Optionee shall be addressed to said Optionee at Optionee’s address on file with the Company at the time of such notice. Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid. Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

[Remainder of page left blank intentionally]

3

Executed in the name and on behalf of the Company, at 3201 Carnegie Avenue, Cleveland, Ohio, 44115, as of the _____^th day of __________, 20__.

ATHERSYS, INC.

___________________________________

Name:

Title:

The undersigned Optionee hereby accepts the Option evidenced by this Nonqualified Stock Option Agreement on the terms and conditions set forth herein and in the Plan.

Dated: __________ ___, 20_____________________________________

[Insert Name]

4

EXHIBIT A

[Insert Name]

Vesting Date	Option Shares Vesting	Total Option Shares Vested	Price/Share
[last vesting date]	[underline]	[total shares]
	[total shares]

5

EX-10.5

EXHIBIT 10.5

ATHERSYS, INC.

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (“Agreement”) is made as of [[GRANTDATE]] (the “Date of Grant”) by and between Athersys, Inc., a Delaware corporation (the “Company”), and [[FIRSTNAME]] [[LASTNAME]] (“Grantee”) with respect to the grant of Restricted Stock Units by the Company to the Grantee pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the "Plan").

In consideration of the Grantee's acceptance of the terms and conditions of this Agreement, and subject to the terms of this Agreement and the Plan, the Company hereby makes the following grant of Restricted Stock Units to Grantee.

AGREEMENT:

1.Grant of Restricted Stock Units. The Company hereby grants to the Grantee the number of Restricted Stock Units that are shown on Exhibit A of this Agreement (the “Restricted Stock Units”) as the “Original Award.” Each Restricted Stock Unit shall represent the contingent right to receive one Common Share ("Share").

2.Restriction on Transfer. The Restricted Stock Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by the Grantee. Any purported transfer, encumbrance or other disposition of the Restricted Stock Units that is in violation of this Agreement shall be null and void, and the other party to such purported transaction shall not obtain any rights to or interest in the Restricted Stock Units.

3.Vesting. (a) The Restricted Stock Units will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof upon the occurrence of the dates and percentages as set forth on Exhibit A.

(b)Notwithstanding the provisions of Section 3(a), all of the Restricted Stock Units subject to this Agreement will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof upon any Change in Control that occurs while the Grantee is employed by or serving as a director or consultant of the Company or any Subsidiary.

(c)Notwithstanding the provisions of Section 3(a), all of the Restricted Stock Units subject to this Agreement will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof on the 30^th day following the date upon which the Grantee dies or becomes permanently disabled while employed by or serving as a director or consultant of the Company or a Subsidiary after the Date of Grant.

(d)Notwithstanding the provisions of Section 3(a), if the Grantee’s employment is involuntarily terminated by the Company other than for Cause prior to the time at which all Restricted Stock Units become nonforfeitable as provided in Section 3(a), all of the Restricted Stock Units subject to this Agreement will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof on the 30^th day following the date upon which the Grantee’s employment is involuntarily terminated by the Company without Cause. For this purpose, “Cause” shall mean: (i) the commission of an act of fraud, embezzlement, theft or other criminal act constituting a felony; (ii) the willful or wanton disregard of the

1

rules or policies of the Company or its affiliates that results in a material loss, damage or injury to the Company or its affiliates; (iii) the repeated failure of Grantee to perform duties consistent with Grantee’s position or to follow or comply with the reasonable directives of the Company’s or its affiliates’ Board of Directors (or applicable officer in the case of the Company’s foreign subsidiaries) or Grantee’s superiors after having been given notice thereof (e.g., the insubordination of Grantee); or (iv) the material breach of any provision contained in a written non-competition, confidentiality or non-disclosure agreement between the Company or any of its affiliates and Grantee. The determination of whether the Grantee’s employment is terminated by the Company other than for Cause shall be made by the Committee. In the event of a dispute between the Committee and the Grantee over the determination of whether the Grantee’s employment is terminated other than for Cause, the Company and the Grantee agree that such dispute will be finally decided by a panel of three arbitrators having expertise in employment compensation in an arbitration conducted pursuant to the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award of the arbitrators may be entered in any court having jurisdiction thereof. The Company and the Grantee each will appoint one arbitrator and the two appointed arbitrators will select a third arbitrator. Any arbitration hereunder will be conducted in Cleveland, Ohio.

4.Termination of Rights and Forfeiture of Shares. Except for Restricted Stock Units that have become nonforfeitable pursuant to Section 3, all of the Restricted Stock Units will be forfeited if the Grantee ceases to be an employee, consultant or director of the Company and its Subsidiaries at any time prior to the last nonforfeitable date set forth on Exhibit A.

5.Dividend, Voting and Other Rights. Grantee shall have no rights of ownership in the Shares underlying the Restricted Stock Units and shall have no right to vote such Shares until the date on which the Shares are transferred to Grantee pursuant to Section 6. Dividend equivalents representing any dividends that may be paid on the Shares underlying the Restricted Stock Units shall be automatically deferred and reinvested in additional Shares. Any additional Restricted Stock Units or Shares or other securities that the Grantee may become entitled to receive under the Plan pursuant to a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, separation or reorganization or any other change in the capital structure of the Company will be subject to the same restrictions as the Restricted Stock Units or the Shares underlying the Restricted Stock Units as of the Date of Grant.

6.Payment of Restricted Stock Units. To the extent that Restricted Stock Units become nonforfeitable pursuant to Section 3 above, Shares underlying such Restricted Stock Units shall be issued or transferred to Grantee no later than thirty (30) days after the date on which the Restricted Stock Units become nonforfeitable, except as otherwise provided in Section 11. Notwithstanding the foregoing, in the case of a Change in Control that occurs as a result of either a sale of the stock of the Company or a merger, settlement of Restricted Stock Units that become vested upon such Change in Control will be made in Shares, unless otherwise specified in the definitive agreement for such Change in Control.

7.Adjustments. The Restricted Stock Units and the Shares, and the terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 12 of the Plan.

8.Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal, state and other applicable securities laws; provided, however, notwithstanding any other provision of this Agreement, the Company will not be obligated to issue any Restricted Stock Units or Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

2

9.Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. All terms used herein with initial capital letters and not otherwise defined herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of Restricted Stock Units hereunder.

10.Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Grantee under this Agreement without the Grantee’s consent.

11.Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by the Grantee or another person under this Agreement, the Grantee agrees that the Company will withhold any taxes required to be withheld by the Company under federal, state, local or foreign law from the Shares in an amount sufficient to satisfy the minimum statutory withholding amount permissible (unless the Committee takes action subsequent to the Date of Grant requiring such withholding amount to be paid by the Grantee in cash). The Shares so retained shall be credited against any such withholding requirement at the market value of such Common Shares on the date of such withholding. In no event will the market value of the Common Shares to be withheld pursuant to this Section 11 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld.

12.Right to Terminate Relationship. No provision of this Agreement will limit in any way whatsoever any right that the Company or Stockholders may otherwise have to terminate the employment or directorship of the Grantee at any time.

13.Relation to Other Benefits. Any economic or other benefit to the Grantee under this Agreement will not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and will not affect the amount of any insurance coverage available to any beneficiary under any insurance plan covering employees or non-employee directors of the Company or a Subsidiary.

14.Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

15.Successors and Assigns. Without limiting Section 2 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

16.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

3

17.Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: President, and any notice to Grantee shall be addressed to said Grantee at Grantee’s address on file with the Company at the time of such notice. Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid. Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

18.Governing Law. This Agreement is made under, and will be construed in accordance with, the internal substantive laws of the State of Delaware without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

19.Compliance with or Exemption From Section 409A of the Code. To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) do not apply to Grantee. This Agreement and the Plan shall be administered in a manner consistent with this intent.

[Remainder of page left blank intentionally]

4

Executed in the name and on behalf of the Company, at 3201 Carnegie Avenue, Cleveland, Ohio, 44115, as of the [[GRANTDATE]].

ATHERSYS, INC.

___________________________________

Name:

Title:

The undersigned Grantee hereby accepts the Restricted Stock Units evidenced by this Restricted Stock Unit Agreement on the terms and conditions set forth herein and in the Plan.

Dated: [[GRANTDATE]]

[[FIRSTNAME]] [[LASTNAME]]

5

EXHIBIT A

Participant Name:[[FIRSTNAME]] [[LASTNAME]]

Restricted Stock Units Granted:[[RSUSGRANTED]]

Award Type:[[GRANTTYPE]]

Vesting Schedule:

[[ALLVESTSEGS]]

6

EX-10.6

EXHIBIT 10.6

ATHERSYS, INC.

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (“Agreement”) is made as of [[GRANTDATE]] (the “Date of Grant”) by and between Athersys, Inc., a Delaware corporation (the “Company”) and [[FIRSTNAME]] [[LASTNAME]] (“Grantee”) with respect to the grant of Restricted Stock Units by the Company to the Grantee pursuant to the Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the "Plan").

In consideration of the Grantee's acceptance of the terms and conditions of this Agreement, and subject to the terms of this Agreement and the Plan, the Company hereby makes the following grant of Restricted Stock Units to Grantee.

AGREEMENT:

1.Grant of Restricted Stock Units. The Company hereby grants to the Grantee the number of Restricted Stock Units that are shown on Exhibit A of this Agreement (the “Restricted Stock Units”) as the “Original Award.” Each Restricted Stock Unit shall represent the contingent right to receive one Common Share ("Share").

2.Restriction on Transfer. The Restricted Stock Units may not be transferred, sold, pledged, exchanged, assigned or otherwise encumbered or disposed of by the Grantee. Any purported transfer, encumbrance or other disposition of the Restricted Stock Units that is in violation of this Agreement shall be null and void, and the other party to such purported transaction shall not obtain any rights to or interest in the Restricted Stock Units.

3.Vesting. (a) The Restricted Stock Units will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof upon the occurrence of the dates and percentages as set forth on Exhibit A.

(b)Notwithstanding the provisions of Section 3(a), all of the Restricted Stock Units subject to this Agreement will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof upon any Change in Control that occurs while the Grantee is employed by or serving as a director of the Company or any Subsidiary.

(c)Notwithstanding the provisions of Section 3(a), all of the Restricted Stock Units subject to this Agreement will become nonforfeitable and payable to the Grantee pursuant to Section 6 hereof if the Grantee dies or becomes permanently disabled while employed by or serving as a director of the Company or a Subsidiary after the Date of Grant.

4.Termination of Rights and Forfeiture of Shares. Except for Restricted Stock Units that have become nonforfeitable pursuant to Section 3, all of the Restricted Stock Units will be forfeited if the Grantee ceases to be an employee or director of the Company and its Subsidiaries at any time prior to the last nonforfeitable date set forth on Exhibit A.

5.Dividend, Voting and Other Rights. Grantee shall have no rights of ownership in the Shares underlying the Restricted Stock Units and shall have no right to vote such Shares until the date on which the Shares are transferred to Grantee pursuant to Section 6. Dividend equivalents representing

1

any dividends that may be paid on the Shares underlying the Restricted Stock Units shall be automatically deferred and reinvested in additional Shares. Any additional Restricted Stock Units or Shares or other securities that the Grantee may become entitled to receive under the Plan pursuant to a stock dividend, stock split, combination of shares, recapitalization, merger, consolidation, separation or reorganization or any other change in the capital structure of the Company will be subject to the same restrictions as the Restricted Stock Units or the Shares underlying the Restricted Stock Units as of the Date of Grant.

6.Payment of Restricted Stock Units. To the extent that Restricted Stock Units become nonforfeitable pursuant to Section 3 above, Shares underlying such Restricted Stock Units shall be issued or transferred to Grantee no later than sixty (60) days after the date on which the Restricted Stock Units become nonforfeitable, except as otherwise provided in Section 11. Notwithstanding the foregoing, in the case of a Change in Control that occurs as a result of either a sale of the stock of the Company or a merger, settlement of Restricted Stock Units that become vested upon such Change in Control will be made in Shares, unless otherwise specified in the definitive agreement for such Change in Control.

7.Adjustments. The Restricted Stock Units and the Shares, and the terms and conditions of the grant evidenced by this Agreement, are subject to mandatory adjustment, including as provided in Section 12 of the Plan.

8.Compliance with Law. The Company shall make reasonable efforts to comply with all applicable federal, state and other applicable securities laws; provided, however, notwithstanding any other provision of this Agreement, the Company will not be obligated to issue any Restricted Stock Units or Shares pursuant to this Agreement if the issuance thereof would result in a violation of any such law.

9.Relation to Plan. This Agreement is subject to the terms and conditions of the Plan. In the event of any inconsistency between the provisions of this Agreement and the Plan, the Plan shall govern. All terms used herein with initial capital letters and not otherwise defined herein that are defined in the Plan shall have the meanings assigned to them in the Plan. The Board (or a committee of the Board) acting pursuant to the Plan, as constituted from time to time, shall, except as expressly provided otherwise herein, have the right to determine any questions which arise in connection with the grant of Restricted Stock Units hereunder.

10.Amendments. Any amendment to the Plan shall be deemed to be an amendment to this Agreement to the extent that the amendment is applicable hereto; provided, however, that no amendment shall materially adversely affect the rights of the Grantee under this Agreement without the Grantee’s consent.

11.Withholding Taxes. To the extent that the Company is required to withhold federal, state, local or foreign taxes or other amounts in connection with any payment made or benefit realized by the Grantee or another person under this Agreement, the Grantee agrees that the Company will withhold any taxes required to be withheld by the Company under federal, state, local or foreign law from the Shares in an amount sufficient to satisfy the minimum statutory withholding amount permissible. The Shares so retained shall be credited against any such withholding requirement at the market value of such Common Shares on the date of such withholding. In no event will the market value of the Common Shares to be withheld pursuant to this Section 11 to satisfy applicable withholding taxes exceed the maximum amount of taxes or other amounts that could be required to be withheld. Instead of requiring the Grantee to surrender Shares as described above, the Committee may, in its discretion, (a) require the Grantee to remit to the Company on the date on which the Restricted Stock Units vest cash in an amount sufficient to satisfy the minimum applicable required withholding taxes and social security contributions

2

related to such vesting, or (b) require the Company to deduct from his regular salary payroll cash, on a payroll date following the date on which the Restricted Stock Units vest, an amount sufficient to satisfy such obligations.

12.Right to Terminate Relationship. No provision of this Agreement will limit in any way whatsoever any right that the Company or Stockholders may otherwise have to terminate the employment or directorship of the Grantee at any time.

13.Relation to Other Benefits. Any economic or other benefit to the Grantee under this Agreement will not be taken into account in determining any benefits to which the Grantee may be entitled under any profit-sharing, retirement or other benefit or compensation plan maintained by the Company or a Subsidiary and will not affect the amount of any insurance coverage available to any beneficiary under any insurance plan covering employees or non-employee directors of the Company or a Subsidiary.

14.Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances shall not be affected, and the provisions so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

15.Successors and Assigns. Without limiting Section 2 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of the Grantee, and the successors and assigns of the Company.

16.Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.

17.Notices. Any notice to the Company provided for herein shall be in writing to the Company, marked Attention: President, and any notice to Grantee shall be addressed to said Grantee at Grantee’s address on file with the Company at the time of such notice. Except as otherwise provided herein, any written notice shall be deemed to be duly given if and when delivered personally or deposited in the United States mail, first class registered mail, postage and fees prepaid, and addressed as aforesaid. Any party may change the address to which notices are to be given hereunder by written notice to the other party as herein specified (provided that for this purpose any mailed notice shall be deemed given on the third business day following deposit of the same in the United States mail).

18.Governing Law. This Agreement is made under, and will be construed in accordance with, the internal substantive laws of the State of Delaware without giving effect to any principle of law that would result in the application of the law of any other jurisdiction.

19.Compliance with or Exemption From Section 409A of the Code. To the extent applicable, it is intended that this Agreement and the Plan comply with or be exempt from the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) do not apply to Grantee. This Agreement and the Plan shall be administered in a manner consistent with this intent.

[Remainder of page intentionally left blank]

3

Executed in the name and on behalf of the Company, at 3201 Carnegie Avenue, Cleveland, Ohio, 44115, as of the [[GRANTDATE]].

ATHERSYS, INC.

___________________________________

Name:

Title:

The undersigned Grantee hereby accepts the Restricted Stock Units evidenced by this Restricted Stock Unit Agreement on the terms and conditions set forth herein and in the Plan.

Dated: [[GRANTDATE]]

[[FIRSTNAME]] [[LASTNAME]]

4

EXHIBIT A

Participant Name:[[FIRSTNAME]] [[LASTNAME]]

Restricted Stock Units Granted:[[RSUSGRANTED]]

Award Type:[[GRANTTYPE]]

Vesting Schedule:

[[ALLVESTSEGS]]

5

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Gil Van Bokkelen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Athersys, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 7, 2019

/s/ Gil Van Bokkelen

Gil Van Bokkelen

Chief Executive Officer and

Chairman of the Board of Directors

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Laura K. Campbell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Athersys, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 7, 2019

/s/ Laura K. Campbell

Laura K. Campbell

Senior Vice President of Finance

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Athersys, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: August 7, 2019
	/s/ Gil Van Bokkelen
	Name: Gil Van Bokkelen
	Title: Chairman and Chief Executive Officer

/s/ Laura K. Campbell

Name: Laura K. Campbell

Title: Senior Vice President of Finance

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 02, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Entity Registrant Name	ATHERSYS, INC / NEW
Entity Central Index Key	0001368148
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		152,677,751

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 44,237	$ 51,059
Prepaid expenses and other	849	1,791
Total current assets	48,074	57,840
Equipment, net	3,062	3,002
Deposits and other	2,111	888
Total assets	53,247	61,730
Current liabilities:
Accounts payable	10,527	9,163
Accrued compensation and related benefits	814	1,901
Accrued clinical trial related costs	2,469	1,276
Accrued expenses and other	869	461
Total current liabilities	14,681	15,475
Other long-term liabilities	273	0
Stockholders’ equity:
Preferred stock, at stated value; 10,000,000 shares authorized, and no shares issued and outstanding at June 30, 2019 and December 31, 2018	0	0
Common stock, $0.001 par value; 300,000,000 shares authorized, and 151,777,751 and 144,292,739 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	152	144
Additional paid-in capital	428,785	416,014
Accumulated deficit	(395,686)	(373,042)
Total stockholders’ equity	33,251	43,116
Total liabilities and stockholders’ equity	53,247	61,730
Consolidated entity excluding, related party
Current assets:
Accounts receivable	80	262
Healios
Current assets:
Accounts receivable	1,778	1,108
Unbilled accounts receivable from Healios	1,130	3,620
Current liabilities:
Deposit from Healios	0	2,000
Deferred revenue	2	674
Advance from Healios	$ 5,042	$ 3,139

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	300,000,000	300,000,000
Common stock, shares issued (in shares)	151,777,751	144,292,739
Common stock, shares outstanding (in shares)	151,777,751	144,292,739

XML

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues
Revenues	$ 4,262	$ 19,391	$ 5,707	$ 20,457
Costs and expenses
Research and development	11,139	10,093	22,554	18,943
General and administrative	2,867	2,382	5,973	5,038
Depreciation	157	191	341	376
Total costs and expenses	14,163	12,666	28,868	24,357
Gain from insurance proceeds	0	20	0	383
(Loss) income from operations	(9,901)	6,745	(23,161)	(3,517)
Other income, net	213	188	517	295
Net (loss) income and comprehensive (loss) income	$ (9,688)	$ 6,933	$ (22,644)	$ (3,222)
Net (loss) income per share, basic (in dollars per share)	$ (0.06)	$ 0.05	$ (0.15)	$ (0.02)
Weighted average shares outstanding, basic (in shares)	150,163	138,225	148,075	132,592
Net (loss) income per share, diluted (in dollars per share)	$ (0.06)	$ 0.05	$ (0.15)	$ (0.02)
Weighted average shares outstanding, diluted (in shares)	150,163	139,375	148,075	132,592
Royalty and other contract revenue
Revenues
Revenues	$ 0	$ 591	$ 0	$ 992
Grant revenue
Revenues
Revenues	69	45	73	362
Healios | Contract revenue
Revenues
Revenues	$ 4,193	$ 18,755	$ 5,634	$ 19,103

XML

Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Consolidated entity excluding, related party	Consolidated entity excluding, related party Common Stock	Consolidated entity excluding, related party Additional Paid-in Capital	Healios	Healios Common Stock	Healios Additional Paid-in Capital
Preferred stock shares, beginning balance (in shares) at Dec. 31, 2017		0
Common stock, beginning balance (in shares) at Dec. 31, 2017			122,077,453
Beginning balance at Dec. 31, 2017	$ 23,376	$ 0	$ 122	$ 373,884	$ (350,630)
Stock-based compensation	813			813
Issuance of warrant to Healios at fair value	5,300			5,300
Issuance of common stock, net of issuance costs (in shares)							3,750,000			12,000,000
Issuance of common stock, net of issuance cost						$ 5,416	$ 4	$ 5,412	$ 20,995	$ 12	$ 20,983
Issuance of common stock under equity compensation plan (in shares)			131,092
Issuance of common stock under equity compensation plan	(84)			(84)
Cumulative effect of accounting change	1,871				1,871
Net comprehensive income (loss)	(10,155)				(10,155)
Preferred stock shares, ending balance (in shares) at Mar. 31, 2018		0
Common stock, ending balance (in shares) at Mar. 31, 2018			137,958,545
Ending balance at Mar. 31, 2018	47,532	$ 0	$ 138	406,308	(358,914)
Preferred stock shares, beginning balance (in shares) at Dec. 31, 2017		0
Common stock, beginning balance (in shares) at Dec. 31, 2017			122,077,453
Beginning balance at Dec. 31, 2017	23,376	$ 0	$ 122	373,884	(350,630)
Net comprehensive income (loss)	(3,222)
Preferred stock shares, ending balance (in shares) at Jun. 30, 2018		0
Common stock, ending balance (in shares) at Jun. 30, 2018			138,583,673
Ending balance at Jun. 30, 2018	56,249	$ 0	$ 139	408,091	(351,981)
Preferred stock shares, beginning balance (in shares) at Mar. 31, 2018		0
Common stock, beginning balance (in shares) at Mar. 31, 2018			137,958,545
Beginning balance at Mar. 31, 2018	47,532	$ 0	$ 138	406,308	(358,914)
Stock-based compensation	824			824
Issuance of common stock, net of issuance costs (in shares)							500,000
Issuance of common stock, net of issuance cost						1,215	$ 1	1,214	$ (149)		$ (149)
Issuance of common stock under equity compensation plan (in shares)			125,128
Issuance of common stock under equity compensation plan	(106)			(106)
Net comprehensive income (loss)	6,933				6,933
Preferred stock shares, ending balance (in shares) at Jun. 30, 2018		0
Common stock, ending balance (in shares) at Jun. 30, 2018			138,583,673
Ending balance at Jun. 30, 2018	$ 56,249	$ 0	$ 139	408,091	(351,981)
Preferred stock shares, beginning balance (in shares) at Dec. 31, 2018	0	0
Common stock, beginning balance (in shares) at Dec. 31, 2018	144,292,739		144,292,739
Beginning balance at Dec. 31, 2018	$ 43,116	$ 0	$ 144	416,014	(373,042)
Stock-based compensation	1,090			1,090
Issuance of common stock, net of issuance costs (in shares)							3,825,000
Issuance of common stock, net of issuance cost						5,607	$ 4	5,603
Issuance of common stock under equity compensation plan (in shares)			158,494
Issuance of common stock under equity compensation plan	(69)			(69)
Net comprehensive income (loss)	(12,956)				(12,956)
Preferred stock shares, ending balance (in shares) at Mar. 31, 2019		0
Common stock, ending balance (in shares) at Mar. 31, 2019			148,276,233
Ending balance at Mar. 31, 2019	$ 36,788	$ 0	$ 148	422,638	(385,998)
Preferred stock shares, beginning balance (in shares) at Dec. 31, 2018	0	0
Common stock, beginning balance (in shares) at Dec. 31, 2018	144,292,739		144,292,739
Beginning balance at Dec. 31, 2018	$ 43,116	$ 0	$ 144	416,014	(373,042)
Net comprehensive income (loss)	$ (22,644)
Preferred stock shares, ending balance (in shares) at Jun. 30, 2019	0	0
Common stock, ending balance (in shares) at Jun. 30, 2019	151,777,751		151,777,751
Ending balance at Jun. 30, 2019	$ 33,251	$ 0	$ 152	428,785	(395,686)
Preferred stock shares, beginning balance (in shares) at Mar. 31, 2019		0
Common stock, beginning balance (in shares) at Mar. 31, 2019			148,276,233
Beginning balance at Mar. 31, 2019	36,788	$ 0	$ 148	422,638	(385,998)
Stock-based compensation	1,152			1,152
Issuance of common stock, net of issuance costs (in shares)							3,350,000
Issuance of common stock, net of issuance cost						$ 5,106	$ 4	$ 5,102
Issuance of common stock under equity compensation plan (in shares)			151,518
Issuance of common stock under equity compensation plan	(107)			(107)
Net comprehensive income (loss)	$ (9,688)				(9,688)
Preferred stock shares, ending balance (in shares) at Jun. 30, 2019	0	0
Common stock, ending balance (in shares) at Jun. 30, 2019	151,777,751		151,777,751
Ending balance at Jun. 30, 2019	$ 33,251	$ 0	$ 152	$ 428,785	$ (395,686)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities
Net loss	$ (22,644)	$ (3,222)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	341	376
Stock-based patent license and settlement expense	0	315
Stock-based compensation	2,242	1,637
Discount on revenue from issuance of warrant	0	1,080
Deferred revenue from prior period	0	(250)
Changes in operating assets and liabilities:
Prepaid expenses, deposits and other	677	(2,014)
Accounts payable and accrued expenses	1,192	6,267
Net cash used in operating activities	(16,959)	(1,286)
Investing activities
Purchases of equipment	(400)	(749)
Net cash used in investing activities	(400)	(749)
Financing activities
Shares retained for withholding tax payments on stock-based awards	(176)	(191)
Net cash provided by financing activities	10,537	26,072
(Decrease) increase in cash and cash equivalents	(6,822)	24,037
Cash and cash equivalents at beginning of the period	51,059	29,316
Cash and cash equivalents at end of the period	44,237	53,353
Consolidated entity excluding, related party
Changes in operating assets and liabilities:
Accounts receivable	182	41
Financing activities
Proceeds from issuance of common stock, net	10,713	5,416
Healios
Changes in operating assets and liabilities:
Accounts receivable	1,820	(8,649)
Deferred revenue - Healios	(672)	1,402
Advances and deposits from Healios	(97)	1,731
Financing activities
Proceeds from issuance of common stock, net	$ 0	$ 20,847

XML

Background and Basis of Presentation

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

Background: We are an international biotechnology company that is focused primarily in the field of regenerative medicine and operate in one business segment. Our operations consist of research and clinical-stage product development activities.

We have incurred losses since our inception in 1995 and had an accumulated deficit of $395.7 million at June 30, 2019. We will require additional capital to continue our research and development programs, including progressing our clinical product candidates to commercialization and preparing for commercial-scale manufacturing. At June 30, 2019, we had available cash and cash equivalents of $44.2 million. We believe that these funds, expected cash receipts primarily attributed to our collaboration with HEALIOS K.K. (“Healios”) and proceeds from our equity facility and our open market sale agreement are sufficient to meet our obligations as they come due at least for a period of twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. In the longer term, we will have to continue to generate additional capital to meet our needs through new and existing collaborations and related license fees and milestones, the sale of equity securities from time to time including through our equity facilities, grant-funding opportunities, deferring certain discretionary costs and staging certain development costs, as needed.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of financial position and results of operations for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Our critical accounting policies, estimates and assumptions are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is included in this Quarterly Report on Form 10-Q.

XML

Recently Issued Accounting Standards

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract(“ASU 2018-15”). ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for the annual and interim periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the potential impact of adoption of this standard on our consolidated financial statements, and we do not intend to early adopt.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (“Topic 808”): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update (i) clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account and in those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation and disclosure requirements; (ii) add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606; and (iii) require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of ASU 2018-18 are effective for years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of this clarifying guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), and subsequently issued additional guidance that modified ASU 2016-13. ASU 2016-13 and the subsequent modifications are identified as Accounting Standards Codification (“ASC”) 326. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. Early adoption is permitted. We are currently assessing the effect that ASC 326 will have on our financial position, results of operations and disclosures and monitoring the FASB's evaluation of potential deferment of the adoption date for smaller reporting companies.

XML

Leases Adoption

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases Adoption

Leases Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which requires lessees to record most leases with a term greater than 12 months on their balance sheets, but recognize expenses on their statement of operations in a manner similar to current accounting practice. Under the guidance, lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

We adopted Topic 842 effective January 1, 2019, using the modified retrospective transition option. The adoption of the standard resulted in the recording of ROU assets, primarily consisting of operating leases of facilities and minor equipment, and lease liabilities of $1.0 million as of the commencement date. The adoption did not have a material impact on our unaudited condensed consolidated statements of operations and comprehensive loss or cash flows related to existing leases. As a result, there was no cumulative-effect adjustment.

We elected certain practical expedients as part of the adoption, which allow us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease recognition exemption for all leases that qualify and will not recognize ROU assets or lease liabilities for those leases. Lastly, we elected to separate lease and non-lease components only for contract manufacturing assets based on an assessment of the contract terms. We did not separate lease and non-lease components for all other existing asset classes. Most leases do not contain an implicit discount rate, therefore we estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Our facilities leases contain one or more options to renew after the noncancellable term. The exercise of lease renewal options is not reasonably certain upon lease commencement and is at management's sole discretion. Our ROU assets are included within deposits and other in our unaudited condensed consolidated balance sheet at June 30, 2019. Associated lease liabilities are included in accrued expenses and other, and other long-term liabilities in our unaudited condensed consolidated balance sheet at June 30, 2019. Lease expense for lease payments is recognized on a straight-line basis over the lease term within loss from operations on the unaudited condensed consolidated statements of operations and comprehensive loss. Payments for certain lease agreements are adjusted annually for changes in an index or rate. We had no finance leases, residual value guarantees, restrictive covenants, subleases or sale leasebacks at June 30, 2019.

As of June 30, 2019, ROU assets and lease liabilities were each $0.7 million. The weighted-average remaining term for lease contracts was 1.8 years at June 30, 2019, with maturities ranging from 12 months to 56 months. The weighted-average discount rate was 5.3% at June 30, 2019. We paid $0.1 million and $0.2 million for operating leases included in the measurement of lease liabilities during the three and six month periods ended June 30, 2019, respectively.

Aside from facilities and minor equipment, we have various supply agreements with third-party manufacturers, which involve the lease of manufacturing facilities and equipment, as defined in Topic 842. We have elected to separate lease and non-lease components for these arrangements. These manufacturing agreements have variable lease payments, which typically become binding once certain manufacturing milestones are achieved, and as such, are not included in ROU assets and liabilities until such payments are no longer variable.

Lease Costs

The table below presents certain information related to the lease costs (in thousands) for operating leases as of June 30, 2019:

	Three months ended June 30, 2019		Six months ended June 30, 2019
Operating lease cost	$	122	$	242
Short-term lease cost	11		22
Variable lease cost(1)	52		157
Total lease cost	$	185	$	421

⁽¹⁾Includes lease components from our third-party manufacturing agreements.

Undiscounted Cash Flows

The following table summarizes future minimum lease payments (in thousands) for noncancellable operating leases as of June 30, 2019:

2019 (1)	$	246
2020	407
2021	101
2022	14
2023	12
Thereafter	2
Total minimum lease payments	782
Less: amount of lease payments representing interest	37
Present value of operating lease liabilities	$	745

⁽¹⁾ Excluding the six months ended June 30, 2019.

XML

Net Loss per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Net Loss per Share

Net Loss per Share

Basic and diluted net loss per share have been computed using the weighted-average number of shares of common stock outstanding during the period.

We have outstanding stock-based awards that are not used in the calculation of diluted net loss per share because to do so would be anti-dilutive. In connection with the purchase of shares of our common stock by Healios in March 2018, a warrant was issued to Healios (the “Healios Warrant”) to purchase up to 20,000,000 shares of common stock (the “Warrant Shares”), of which 16,000,000 Warrant Shares expired as of June 30, 2019 prior to being exercisable. The exercise price of Healios' 4,000,000 Warrant Shares is contractually stated to exceed the market price and is therefore anti-dilutive as of June 30, 2019. Refer to Note 7 for additional details.

The following instruments (in thousands) were excluded from the calculation of diluted net loss per share because their effects would be antidilutive:

	Three months ended June 30,		Six months ended June 30,
	2019	2018	2019	2018
Stock-based awards	16,791	5,939	16,791	12,847
Healios Warrant – see Note 7	4,000	20,000	4,000	20,000
Total	20,791	25,939	20,791	32,847

XML

Collaborative Arrangements and Revenue Recognition

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaborative Arrangements and Revenue Recognition

Collaborative Arrangements and Revenue Recognition

Healios Collaboration

In 2016, we entered into a licensing collaboration with Healios to develop and commercialize our cell therapy technologies for certain disease indications in Japan, among other things. The collaboration was expanded in June 2018 to include additional indications and licenses, with the core programs under development in Japan being ischemic stroke and acute respiratory distress syndrome (“ARDS”). We received nonrefundable license fee payments from Healios and are entitled to royalties on net sales. We also have the right to receive development and commercial milestone payments from Healios, subject to certain potential credits that have been negotiated from time-to-time associated with modifications to the arrangement.

Under the collaboration, Healios is responsible for the development and commercialization of the licensed products in the licensed territories, and we provide certain services to Healios for which we are paid. In 2017, our agreement for clinical product supply services was amended to clarify a cost-sharing arrangement associated with our supply of clinical material for Healios' stroke trial, and certain adjustments were made to potential milestone payments that Healios may owe us in the future. Also, in 2017, we entered into a technology transfer services agreement with Healios, pursuant to which Healios provides financial support to establish a contract manufacturer in Japan to manufacture product for Healios. Both clinical supply and technology transfer services to Healios are ongoing and are modified from time-to-time to include, for example, expanded indications and manufacturing-related services.

Healios Revenue Recognition

At the inception of the Healios arrangement and again each time that the arrangement is modified, all material performance obligations are identified, which currently include (i) licenses to our technology, (ii) product supply services, and (iii) services to transfer technology to a contract manufacturer on Healios’ behalf. It was determined that these performance obligations are separate and distinct within the context of the contract. We develop assumptions that require judgment to determine the standalone selling price in order to account for our collaborative agreements, as these assumptions typically include probabilities of obtaining marketing approval for the product candidates, estimated timing of commercialization, estimated future cash flows from potential product sales of our product candidates, estimating the cost and markup of providing product supply and technical services, and appropriate discount rates.

In order to determine the transaction price, in addition to the fixed payments, we estimate the amount of variable consideration utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract, and the estimates for variable consideration are reassessed each reporting period. We constrain, or reduce, the estimates of variable consideration if it is probable that a significant reversal of previously recognized revenue could occur throughout the life of the contract, and both the likelihood and magnitude of a potential reversal of revenue are taken into consideration.

At inception and upon each modification date, once the estimated transaction price is established, amounts are allocated to each separate performance obligation on a relative standalone selling price basis. These performance obligations include any remaining, undelivered elements at the time of modifications and any new elements from a modification to the arrangement if the conditions are not met for being treated as a separate agreement.

For performance obligations satisfied over time, we apply an appropriate method of measuring progress each reporting period and, if necessary, adjust the estimates of performance and the related revenue recognition. Our technology transfer services are satisfied over time, and we recognize revenue in proportion to the contractual services provided. For performance obligations satisfied at a point in time (i.e., product supply), we recognize revenue upon delivery, as defined.

The remaining transaction price for the performance obligations that were not yet delivered amounted to $1.5 million at June 30, 2019, which is expected to be recognized within one year as the goods and services are delivered. At June 30, 2019, the contract liability, included in Deferred revenue - Healios on the unaudited condensed consolidated balance sheets, is properly classified as a current liability since the rights to consideration are expected to be satisfied, in all material respects, within one year.

Deposit from Healios

In connection with the June 2018 expansion, Healios obtained an exclusive, time-limited right of first negotiation (“ROFN Period”) to enter into an option for a license to develop and commercialize certain MultiStem treatments in China. In December 2018, the ROFN Period was extended to June 30, 2019 in exchange for a $2.0 million nonrefundable payment from Healios, which was recorded as a deposit from Healios on the unaudited condensed consolidated balance sheet until June 2019, when the ROFN Period expired. In June 2019, this extension payment was included in the transaction price of the overall Healios arrangement and was allocated to the performance obligations as of the related June 2018 expansion. As a result, $1.9 million of the extension payment was recognized as revenue in June 2019 and the remaining $0.1 million will be recognized as the remaining undelivered performance obligations are delivered.

Refer to Note 7 regarding the equity investment in us made by Healios in 2018 in connection with the June 2018 expansion.

Advance from Healios

In 2017, in connection with our amendment to the clinical supply agreement to clarify the cost-sharing arrangement, the proceeds from Healios that relate specifically to the cost-sharing arrangement may either (i) result in a reduction in the proceeds we receive from Healios upon the achievement of two potential milestones and an increase to a commercial milestone under the license agreement for stroke or (ii) be repaid to Healios at our election, as defined. The cost-sharing proceeds received are recognized in advance from Healios on the unaudited condensed consolidated balance sheet until the earlier of the milestones being achieved or such amounts being repaid to Healios at our election, at which time, the culmination of the earnings process will be complete and revenue will be recognized.

Disaggregation of Revenues

We recognize license-related amounts, including upfront payments, exclusivity fees, additional disease indication fees and milestones at a point in time when earned. Similarly, product supply revenue is recognized at a point in time, while service revenue (e.g., technology transfer) is recognized when earned over time. The following table presents our contract revenues disaggregated by timing of revenue recognition and excludes royalty revenue (in thousands):

	Three months ended June 30, 2019				Three months ended June 30, 2018
	Point in Time		Over Time		Point in Time		Over Time
Contract Revenue from Healios
License fee revenue	$	1,624	$	—	$	17,530	$	—
Product supply revenue	905		—		223		—
Service revenue	—		1,664		—		1,002
Other contract revenue	—		—		250		—
Total disaggregated revenues	$	2,529	$	1,664	$	18,003	$	1,002

	Six months ended June 30, 2019				Six months ended June 30, 2018
	Point in Time		Over Time		Point in Time		Over Time
Contract Revenue from Healios
License fee revenue	$	1,624	$	—	$	17,530	$	—
Product supply revenue	1,871		—		450		—
Service revenue	—		2,139		—		1,123
Other contract revenue	—		—		250		—
Total disaggregated revenues	$	3,495	$	2,139	$	18,230	$	1,123

XML

Stock-based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-based Compensation

The Athersys, Inc. 2019 Equity and Incentive Compensation Plan (the “EICP”) authorizes an aggregate of approximately 18,500,000 shares of common stock for awards to employees, directors and consultants. The EICP was approved in June 2019 and replaced our prior long-term incentive plan. In the three-month period ended June 30, 2019, we granted 3,245,800 stock options and 1,350,150 restricted stock units to our employees and directors primarily in connection with our annual incentive programs. The EICP authorizes the issuance of stock-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock-based awards.

As of June 30, 2019, a total of 13,867,787 shares were available for issuance under our EICP, and stock-based awards to purchase 16,780,535 shares of common stock were outstanding under our current and former equity incentive plans. For the three-month periods ended June 30, 2019 and 2018, stock-based compensation expense was approximately $1.2 million and $0.8 million, respectively. At June 30, 2019, total unrecognized estimated compensation cost related to unvested stock-based awards was approximately $11.6 million which is expected to be recognized by the end of 2023 using the straight-line method.

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Equity Issuance—Healios

In March 2018, Healios purchased 12,000,000 shares of our common stock for $21.1 million, or approximately $1.76 per share, and the Healios Warrant to purchase up to an additional 20,000,000 shares. In connection with this investment, we entered into an Investor Rights Agreement that governs certain rights of Healios and us relating to Healios’ ownership of our common stock. As a result of Healios’ investment, Healios became a related party, and the transactions with Healios are separately identified within these financial statements as related party transactions.

At the time of the investment in March 2018, the 20,000,000 Warrant Shares would not become exercisable until the planned collaboration expansion was completed, which at that time included an option to commercialize in China. At the time of the June 2018 expansion, however, the parties had not reached agreement on the option so Athersys agreed to provide Healios with a right of first negotiation with respect to the option, and therefore, the parties bifurcated the Healios Warrant so that 4,000,000 Warrant Shares became exercisable with the June 2018 expansion and the remaining 16,000,000 Warrant Shares would only become exercisable if Healios agrees to execute an option for a license in China. As of June 30, 2019, the 16,000,000 contingent Warrant Shares expired according to their terms, since an option for a license in China was not executed.

The 4,000,000 Warrant Shares are exercisable at the greater of $1.76 and a defined reference price, which is generally 110% of the average closing price per share of our common stock for the ten previous trading days. The 4,000,000 Warrant Shares are subject to a general expiration date in September 2020, as defined, and an exercise cap triggered at Healios’ ownership of 19.9% of our common stock, and may be terminated by us under certain conditions.

The value of the Healios Warrant was considered as an element of compensation in the transaction price of the Healios collaboration expansion. We evaluated the various terms of the Healios Warrant and concluded that it was accounted for as an equity instrument at inception and $5.3 million was computed as the best estimate of the fair value of the Healios Warrant at the time of issuance in March 2018. The fair value was computed using a Monte Carlo simulation model that included probability-weighted estimates of potential milestone points in time that could impact the value of the Healios Warrant during its term. The fair value was recorded as additional paid-in capital in the first quarter of 2018, with the offset being included in other assets, which would be included as an element of compensation in the transaction price upon the consummation of the expansion that was planned at the time of the March 2018 investment.

Upon the modification of the Healios Warrant in June 2018 in connection with the expansion of the collaboration that included the bifurcation of the Healios Warrant due to the change related to China rights, we reassessed the fair value of the Healios Warrant immediately before and after the modification using the same valuation methodology, which resulted in no incremental fair value to be recorded. The value of the 4,000,000 tranche of Warrant Shares that became exercisable upon the June 2018 expansion of $1.1 million was recorded as a reduction to the revenue recognized for the delivered licenses in June 2018. However, since the June 2018 expansion agreements made the 16,000,000 Warrant Shares contingent on entering into an option for a license in China, we considered the ability to apply the $4.2 million value of such Warrant Shares as an element of compensation to be constrained. Therefore, the remaining $4.2 million asset was reversed against additional paid-in-capital.

Equity Purchase Agreement

We have had equity purchase agreements in place since 2011 with Aspire Capital Fund LLC (“Aspire Capital”) that provide us the ability to sell shares to Aspire Capital from time to time. The current agreement with Aspire Capital was entered into in February 2018 and includes Aspire Capital’s commitment to purchase up to an aggregate of $100.0 million of shares of our common stock over a three-year period. The terms of the 2018 equity facility are similar to the previous arrangements, and we issued 450,000 shares of our common stock to Aspire Capital as a commitment fee in February 2018 and filed a registration statement for the resale of 24,700,000 shares of common stock in connection with the new equity facility. Also in connection with this equity facility, in February 2018, Aspire Capital invested $1.0 million in us at $2.00 per share of common stock.

We sold 3,350,000 shares to Aspire Capital at an average price of $1.52 in the second quarter of 2019, generating proceeds of $5.1 million. We sold 7,175,000 shares to Aspire Capital at an average price of $1.49 per share during the six months ended June 30, 2019, generating proceeds of $10.7 million. We did not sell shares to Aspire Capital in the second quarter of 2018. We sold 3,300,000 shares to Aspire Capital at an average price of $1.67 per share during the six months ended June 30, 2018, generating proceeds of $5.5 million.

Open Market Sale Agreement

In May 2019, we entered into an open market sale agreement with Jefferies LLC (“Jefferies”), as sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock having an aggregate offering price of up to $50.0 million. The shares will be offered and sold pursuant to our effective “shelf” registration on Form S-3 that is on file with the SEC. We did not sell any shares of our common stock under this agreement during the quarter ended June 30, 2019.

License Agreement and Settlement

In 2017, we entered into an agreement to settle longstanding intellectual property disagreements with a third party, paid $0.5 million and issued 1,000,000 shares of our common stock with a fair value of $2.3 million in 2017 and received a license to certain intellectual property. In 2018, we paid an additional $1.0 million and issued 500,000 shares of our common stock related to a patent issuance. There are no royalty, milestone or other payments due to the third party associated with the development and commercialization of our cell therapy products, and our payment obligations are concluded.

XML

Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

We have United States (“U.S.”) federal net operating loss and research and development tax credit carryforwards, as well as state and city net operating loss carryforwards, which may be used to reduce future taxable income and tax liabilities. We also have foreign net operating loss and tax credit carryforwards, and the foreign net operating loss carryforwards do not expire. All of our deferred tax assets have been fully offset by a valuation allowance due to our cumulative losses. The carrying value of our deferred tax assets and liabilities is determined by the enacted U.S. corporate income tax rate. Consequently, any changes in the U.S. corporate income tax rate impacts the carrying value of our deferred tax assets and liabilities. Also, there are significant limitations on our ability to utilize our net operating loss and tax credit carryforwards under Section 382 of the Internal Revenue Code of 1986, as amended.

XML

Recently Issued Accounting Standards (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Recently Issued Accounting Standards

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract(“ASU 2018-15”). ASU 2018-15 requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software and deferred over the noncancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The guidance is effective for the annual and interim periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the potential impact of adoption of this standard on our consolidated financial statements, and we do not intend to early adopt.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurements (“Topic 820”): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. Early adoption is permitted. We are currently assessing the effect that this ASU will have on our disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (“Topic 808”): Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this update (i) clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account and in those situations, all the guidance in Topic 606 should be applied, including recognition, measurement, presentation and disclosure requirements; (ii) add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606; and (iii) require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. The provisions of ASU 2018-18 are effective for years beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact of this clarifying guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), and subsequently issued additional guidance that modified ASU 2016-13. ASU 2016-13 and the subsequent modifications are identified as Accounting Standards Codification (“ASC”) 326. The standard requires an entity to change its accounting approach in determining impairment of certain financial instruments, including trade receivables, from an “incurred loss” to a “current expected credit loss” model. The standard will be effective for fiscal years beginning after December 15, 2019, including interim periods within such fiscal years. Early adoption is permitted. We are currently assessing the effect that ASC 326 will have on our financial position, results of operations and disclosures and monitoring the FASB's evaluation of potential deferment of the adoption date for smaller reporting companies.

Leases Adoption

In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which requires lessees to record most leases with a term greater than 12 months on their balance sheets, but recognize expenses on their statement of operations in a manner similar to current accounting practice. Under the guidance, lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use (“ROU”) asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The ROU asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

We adopted Topic 842 effective January 1, 2019, using the modified retrospective transition option. The adoption of the standard resulted in the recording of ROU assets, primarily consisting of operating leases of facilities and minor equipment, and lease liabilities of $1.0 million as of the commencement date. The adoption did not have a material impact on our unaudited condensed consolidated statements of operations and comprehensive loss or cash flows related to existing leases. As a result, there was no cumulative-effect adjustment.

We elected certain practical expedients as part of the adoption, which allow us to not reassess our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease recognition exemption for all leases that qualify and will not recognize ROU assets or lease liabilities for those leases. Lastly, we elected to separate lease and non-lease components only for contract manufacturing assets based on an assessment of the contract terms. We did not separate lease and non-lease components for all other existing asset classes. Most leases do not contain an implicit discount rate, therefore we estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Our facilities leases contain one or more options to renew after the noncancellable term. The exercise of lease renewal options is not reasonably certain upon lease commencement and is at management's sole discretion. Our ROU assets are included within deposits and other in our unaudited condensed consolidated balance sheet at June 30, 2019. Associated lease liabilities are included in accrued expenses and other, and other long-term liabilities in our unaudited condensed consolidated balance sheet at June 30, 2019. Lease expense for lease payments is recognized on a straight-line basis over the lease term within loss from operations on the unaudited condensed consolidated statements of operations and comprehensive loss. Payments for certain lease agreements are adjusted annually for changes in an index or rate. We had no finance leases, residual value guarantees, restrictive covenants, subleases or sale leasebacks at June 30, 2019.

As of June 30, 2019, ROU assets and lease liabilities were each $0.7 million. The weighted-average remaining term for lease contracts was 1.8 years at June 30, 2019, with maturities ranging from 12 months to 56 months. The weighted-average discount rate was 5.3% at June 30, 2019. We paid $0.1 million and $0.2 million for operating leases included in the measurement of lease liabilities during the three and six month periods ended June 30, 2019, respectively.

Aside from facilities and minor equipment, we have various supply agreements with third-party manufacturers, which involve the lease of manufacturing facilities and equipment, as defined in Topic 842. We have elected to separate lease and non-lease components for these arrangements. These manufacturing agreements have variable lease payments, which typically become binding once certain manufacturing milestones are achieved, and as such, are not included in ROU assets and liabilities until such payments are no longer variable.

XML

Leases Adoption (Tables)

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Components of Lease Costs

The table below presents certain information related to the lease costs (in thousands) for operating leases as of June 30, 2019:

	Three months ended June 30, 2019		Six months ended June 30, 2019
Operating lease cost	$	122	$	242
Short-term lease cost	11		22
Variable lease cost(1)	52		157
Total lease cost	$	185	$	421

⁽¹⁾Includes lease components from our third-party manufacturing agreements.

Future Minimum Lease Payments for Operating Leases

The following table summarizes future minimum lease payments (in thousands) for noncancellable operating leases as of June 30, 2019:

2019 (1)	$	246
2020	407
2021	101
2022	14
2023	12
Thereafter	2
Total minimum lease payments	782
Less: amount of lease payments representing interest	37
Present value of operating lease liabilities	$	745

⁽¹⁾ Excluding the six months ended June 30, 2019.

XML

Net Loss per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Instruments Excluded from Calculation of Diluted Net Loss Per Share

The following instruments (in thousands) were excluded from the calculation of diluted net loss per share because their effects would be antidilutive:

	Three months ended June 30,		Six months ended June 30,
	2019	2018	2019	2018
Stock-based awards	16,791	5,939	16,791	12,847
Healios Warrant – see Note 7	4,000	20,000	4,000	20,000
Total	20,791	25,939	20,791	32,847

XML

Collaborative Arrangements and Revenue Recognition Table (Tables)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Disaggregation of Revenue

The following table presents our contract revenues disaggregated by timing of revenue recognition and excludes royalty revenue (in thousands):

	Three months ended June 30, 2019				Three months ended June 30, 2018
	Point in Time		Over Time		Point in Time		Over Time
Contract Revenue from Healios
License fee revenue	$	1,624	$	—	$	17,530	$	—
Product supply revenue	905		—		223		—
Service revenue	—		1,664		—		1,002
Other contract revenue	—		—		250		—
Total disaggregated revenues	$	2,529	$	1,664	$	18,003	$	1,002

	Six months ended June 30, 2019				Six months ended June 30, 2018
	Point in Time		Over Time		Point in Time		Over Time
Contract Revenue from Healios
License fee revenue	$	1,624	$	—	$	17,530	$	—
Product supply revenue	1,871		—		450		—
Service revenue	—		2,139		—		1,123
Other contract revenue	—		—		250		—
Total disaggregated revenues	$	3,495	$	2,139	$	18,230	$	1,123

XML

Background and Basis of Presentation - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) Segment	Dec. 31, 2018 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of business segments | Segment	1
Accumulated deficit	$ 395,686	$ 373,042
Cash and cash equivalents	$ 44,237	$ 51,059

XML

Leases Adoption - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jan. 01, 2019
Lessee, Lease, Description [Line Items]
Right-of-use assets	$ 700	$ 700
Lease liabilities	$ 745	$ 745
Weighted average remaining lease term	1 year 9 months 26 days	1 year 9 months 26 days
Weighted average discount rate (percent)	5.30%	5.30%
Payment for operating leases	$ 100	$ 200
Minimum
Lessee, Lease, Description [Line Items]
Lease term	12 months	12 months
Maximum
Lessee, Lease, Description [Line Items]
Lease term	56 months	56 months
ASU 2016-02
Lessee, Lease, Description [Line Items]
Right-of-use assets			$ 1,000
Lease liabilities			$ 1,000

XML

Leases Adoption - Components of Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Leases [Abstract]
Operating lease cost	$ 122	$ 242
Short-term lease cost	11	22
Variable lease cost	52	157
Total lease cost	$ 185	$ 421

XML

Leases Adoption - Future Minimum Lease Payments for Operating Leases (Details) $ in Thousands	Jun. 30, 2019 USD ($)
Leases [Abstract]
2019	$ 246
2020	407
2021	101
2022	14
2023	12
Thereafter	2
Total minimum lease payments	782
Less: amount of lease payments representing interest	37
Present value of operating lease liabilities	$ 745

XML

Net Loss per Share - Additional Information (Details) - shares	1 Months Ended
	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Warrant exercisable (in shares)		4,000,000	4,000,000
Healios
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Warrants issued to purchase additional shares of common stock (in shares)	20,000,000
Expired warrants (in shares)		16,000,000

XML

Net Loss per Share - Instruments Excluded from Calculation of Diluted Net Loss Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	20,791	25,939	20,791	32,847
Stock-based awards
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	16,791	5,939	16,791	12,847
Healios | Healios Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	4,000	20,000	4,000	20,000

XML

Collaborative Arrangements and Revenue Recognition - Additional Information (Details) $ in Thousands	1 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Dec. 31, 2017 Milestone	Dec. 31, 2018 USD ($)
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Transaction price expected to be recognized	$ 1,500	$ 1,500
Deferred revenue recognized		0	$ 250
Healios License Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Transaction price expected to be recognized	100	$ 100
Deposit from Healios					$ 2,000
Deferred revenue recognized	$ 1,900
Regulatory and sales milestones | Healios License Agreement
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Number of future milestones achieved | Milestone				2

XML

Collaborative Arrangements and Revenue Recognition - Summary of Revenues Disaggregated by Recognition at Point in Time and Over Time (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Point in Time
Disaggregation of Revenue [Line Items]
Revenues	$ 2,529	$ 18,003	$ 3,495	$ 18,230
Point in Time | Other contract revenue
Disaggregation of Revenue [Line Items]
Revenues	0	250	0	250
Over Time
Disaggregation of Revenue [Line Items]
Revenues	1,664	1,002	2,139	1,123
Over Time | Other contract revenue
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Healios License Agreement | Point in Time | License fee revenue
Disaggregation of Revenue [Line Items]
Revenues	1,624	17,530	1,624	17,530
Healios License Agreement | Point in Time | Product supply revenue
Disaggregation of Revenue [Line Items]
Revenues	905	223	1,871	450
Healios License Agreement | Point in Time | Service revenue
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Healios License Agreement | Over Time | License fee revenue
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Healios License Agreement | Over Time | Product supply revenue
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Healios License Agreement | Over Time | Service revenue
Disaggregation of Revenue [Line Items]
Revenues	$ 1,664	$ 1,002	$ 2,139	$ 1,123

XML

Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized for equity incentive plan (in shares)	18,500,000
Stock options granted (in shares)	3,245,800
Shares available for issuance (in shares)	13,867,787
Shares of common stock outstanding (in shares)	16,780,535
Stock-based compensation expense	$ 1.2	$ 0.8
Estimated compensation cost of unvested restricted stock	$ 11.6
Restricted stock unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units granted (in shares)	1,350,150

XML

Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended				3 Months Ended	6 Months Ended		12 Months Ended
	May 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Feb. 28, 2018	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Class of Stock [Line Items]
Number of first warrant shares (in shares)		4,000,000			4,000,000	4,000,000	4,000,000
Warrants exercised, percentage of average closing price per share for ten business days		110.00%
Discount on revenue from issuance of warrant		$ 1,100				$ 0	$ 1,080
Payment to acquire intellectual property rights									$ 500
Additional shares issuable upon issuance of intellectual property rights (in shares)								500,000
Aspire Capital
Class of Stock [Line Items]
Equity purchase agreement, value				$ 100,000
Equity purchase agreement, term				3 years
Common stock issued as commitment fees (in shares)				450,000
Common stock registered for resale (in shares)				24,700,000
Net proceeds from sales of common stock				$ 1,000	$ 5,100	$ 10,700	$ 5,500
Sale of additional shares at an average price (in dollars per share)				$ 2.00
Aspire Capital | Common Stock
Class of Stock [Line Items]
Issuance of common stock, new issues (in shares)					3,350,000	7,175,000	3,300,000
Sale of additional shares at an average price (in dollars per share)					$ 1.52	$ 1.49	$ 1.67
Jefferies
Class of Stock [Line Items]
Open market sale agreement, value	$ 50,000
Healios
Class of Stock [Line Items]
Issuance of common stock, new issues (in shares)			12,000,000
Shares of common stock issued, value			$ 21,100
Common stock issued, price per share (in dollars per share)		$ 1.76	$ 1.76
Warrants issued to purchase additional shares of common stock (in shares)			20,000,000
Contingent warrant shares (in shares)		16,000,000					16,000,000
Expired warrants (in shares)					16,000,000	16,000,000
Maximum ownership percentage that Heallios is allowed to own						19.90%
Fair value of the warrant		$ 4,200	$ 5,300				$ 4,200
Accrued License Fees | Cash Obligation
Class of Stock [Line Items]
Payment to acquire intellectual property rights								$ 1,000
Intellectual Property
Class of Stock [Line Items]
Stock issued during period, shares, issued for intellectual property rights (in shares)									1,000,000
Stock issued during period, amount, issued for intellectual property rights									$ 2,300