Athersys Annual Report 2009

FY2009 Annual Report · Athersys
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Athersys.com

ATHERSYS
ANNUAL REPORT

a b c

3201 Carnegie Avenue

Cleveland, OH 44115-2634

Strategic
Collaborations…

Dynamic
Efficiencies…

Emerging
Best-In-Class
Therapeutics…

Highlights

Directors and Corporate Ofﬁcers

Shareholder Information

Athersys is a clinical

stage biopharmaceutical

company with a growing

pipeline of potential

best-in-class therapeutics

that are designed to

treat signiﬁcant and

life-threatening diseases.

The Company’s lead

programs are in the areas

of cardiovascular disease;

bone marrow transplant

support; neurological

disease, including stroke;

obesity; and central nervous

system disorders, including

those involving attention,

cognition and wakefulness.

Athersys’ strategic

approach builds on internal

and external knowledge

to identify and develop

highly differentiated

products with best-in-class

potential, as well as

enable the Company to

limit development risks

and costs.

Entered global collaborative agreement with
Pﬁzer to develop and market MultiStem®
(a patented, adult-derived “off-the-shelf”
stem cell product platform in development
for multiple disease indications), for the
treatment of inﬂammatory bowel disease (IBD)

Completed patient enrollment in Phase I
clinical trial of MultiStem in acute myocardial
infarction (AMI)

Completed the ﬁrst two dose groups of study
for transplant support in leukemia and related
types of cancer, and are now enrolling patients
in the third dosing group. In addition, we have
initiated the multi-dose administration study

Developed a high quality portfolio of
compounds for obesity which demonstrate
strong activity at the 5HT2c receptor
but exhibit no physiologically-relevant agonist
activity at either the 5HT2b or 5HT2a receptors

Key United States and European patent
issuances enhance MultiStem intellectual
property estate

Revenues of $2.2 million and a net loss of
$15.4 million for the year ended
December 31, 2009

Year-end capital position of $26.4 million in
cash, cash equivalents and available-for-sale
securities expected to support planned
operations through 2011

Management

Board of Directors

Corporate Headquarters

Athersys, Inc.

Gil Van Bokkelen, Ph.D.

Gil Van Bokkelen, Ph.D.

3201 Carnegie Ave.

Chairman and CEO

Chairman and CEO

Cleveland, OH 44115-2634

John J. Harrington, Ph.D.

John J. Harrington

Phone: (216) 431-9900

Fax: (216) 361-9495

Executive Vice President and

Executive Vice President and

www.Athersys.com

Chief Scientific Officer

Chief Scientific Officer

Stock Listing

William (B.J.) Lehmann Jr., J.D.

George M. Milne, Ph.D.

The Company’s common stock

President and

Retired, former President of

trades on the NASDAQ Capital

Chief Operating Officer

Worldwide Strategic and

Market under the symbol “ATHX”

Operations Management

Robert J. Deans, Ph.D.

Senior Vice President,

Regenerative Medicine

and Executive Vice President

Transfer Agent & Registrar

of Global Research and

Computershare

Development of Pfizer Inc.

250 Royall Street

Laura K. Campbell, C.P.A.

William C. Mulligan

Vice President, Finance

Managing Partner,

Independent Auditors

Canton, MA 02021

Primus Venture Partners

Ernst & Young

Suite 1300

Michael B. Sheffery, Ph.D.

925 Euclid Avenue

General Partner,

OrbiMed Advisors

Jordan S. Davis

Managing Partner,

Radius Ventures

Floyd D. Loop, M.D.

Cleveland, OH 44115

Legal Counsel

Jones Day

North Point

901 Lakeside Avenue

Cleveland, OH 44114

Retired, former CEO and

Investor Relations

Chairman of the Board

of Govenors of the

Lisa Wilson

President

Cleveland Clinic Foundation

In-Site Communications

Lorin J. Randall

Financial Consultant

211 E 70th St, 30G

New York, NY 10021

Media Relations

Keri Mattox

Sr. Vice President

Pure Communications, Inc.

634 West Cliveden Street

Philadelphia, PA 19119

Dear Shareholders,

2009 marked a transformative year
for Athersys on a number of fronts.

We made signiﬁcant progress in multiple areas, including
the continued clinical advancement of MultiStem®, our
patented and proprietary stem cell product that we are
developing for multiple disease indications. Importantly,
in December 2009, we entered into a world-wide
collaborative agreement with Pﬁzer Inc. to develop and
commercialize MultiStem for the treatment of inﬂamma-
tory bowel disease, or IBD, which is a condition that
aﬀects more than two million individuals in the United
States, Japan and ﬁve core European markets. Pﬁzer’s
decision to work with Athersys provides further evidence
of the compelling potential of MultiStem in the ﬁeld
of clinical regenerative medicine. We also
continued to advance MultiStem in two
Phase I clinical trials involving administra-
tion of MultiStem for cardiovascular disease
and transplant support. We have also made
progress in our ongoing preparations for
initiation of a third Phase I clinical trial involving stroke.
Finally, our discovery eﬀorts involving novel pharmaceuti-
cals for the treatment of obesity, as well as certain cognitive

1

A collaboration of complementary
technology, capabilities and skills

• $6 million initial payment

• $ 105 million in potential

to ATHX

• Committed R&D funding
to support work at ATHX

• Dedicated research
support at Pﬁzer
Regenerative Medicine

• Pﬁzer responsible for
clinical development

milestone payments

• Tiered royalty payments,

or

• ATHX ability to elect
co-development and
proﬁt share beginning
at Phase III

and attention disorders, such as narcolepsy
and other forms of excessive daytime sleepi-
ness, made meaningful headway. We ended
the year with a strong balance sheet, includ-
ing more than $26 million in cash, cash
equivalents and available-for-sale securities.
Given our current business and operational
plans, we believe our cash resources will be
suﬃcient to fund operations through 2011.

As part of our collaboration with Pﬁzer,
we received an up-front cash payment of
$6 million and we will receive research
funding and additional support during the
initial phase of the collaboration. We are
also eligible to receive milestone payments
of up to $105 million upon the successful

achievement of certain development,
regulatory and commercial milestones.
These payments apply only to the IBD
indication, and we retain ﬂexibility with
regard to the potential for future collabora-
tion on other applications of MultiStem.
Under the terms of the collaboration,
Pﬁzer will have the primary responsibility
for development, regulatory approval and
commercialization and will pay us tiered
royalties on worldwide commercial sales
of MultiStem IBD products. Alternatively,
in lieu of royalties and certain commercial-
ization milestones, we may elect to
co-develop with Pﬁzer prior to beginning
the Phase III clinical development pro-
gram. In that event, both companies will

2

share development and commercialization
expenses, as well as proﬁts from approved
products on an agreed upon basis.

Our work is well

underway and we

expect to make

signiﬁcant progress

with Pﬁzer toward

our mutual objective

of advancing the IBD

program into clinical

development.

Currently, we are working closely with
Pﬁzer to complete the planning and
additional preparatory work prior to sub-
mitting an Investigational New Drug
application, or IND, and moving the IBD
program into clini-
cal development.
Both companies
share common
perspectives about
the discovery and
development of
new medicines and
an interest in test-
ing and developing
MultiStem for
IBD in a systematic
and rigorous man-
ner. Our work is
well underway

and we expect to make signiﬁcant progress
with Pﬁzer toward achieving our shared
objective of advancing the IBD program
into clinical development.

We also made signiﬁcant progress with our
other MultiStem development programs.
Starting in 2008, we advanced two
MultiStem programs into clinical develop-
ment, initiating Phase I safety studies in
cardiovascular disease for treating patients
that have suﬀered an acute myocardial
infarction, or AMI, and in oncology treat-
ment support, administering MultiStem to
leukemia or lymphoma patients who are

receiving a traditional bone marrow
or hematopoietic stem cell, or HSC,
transplant. The objective of this clinical
program is to demonstrate the safety pro-
ﬁle of MultiStem in a therapeutic modality
intended to reduce the risk or severity of
graft vs. host disease, or GvHD, while
also potentially addressing other complica-
tions commonly associated with radiation
conditioning regimens, such as compro-
mised gastrointestinal function. Both
of these safety studies were initiated based
on extensive preclinical work in which
MultiStem displayed a strong and
consistent safety proﬁle and eﬃcacy in
relevant animal models.

During the ﬁrst quarter of 2010, we
successfully completed patient enrollment
for the AMI Phase I trial. Looking for-
ward, we will complete the one-month and
four-month patient follow-up visits and
expect to announce top-line results with
our partner, Angiotech Pharmaceuticals,
Inc., during the middle of this year. The
primary endpoint for the Phase I AMI trial
is evaluating safety, although we will also
be monitoring secondary endpoints that
involve assessment of cardiovascular func-
tion, such as ejection fraction and other
measures. We intend to utilize the Phase I
results, combined with information
from our extensive development eﬀorts,
to design a robust Phase II eﬃcacy trial.

In our Phase I trial involving the adminis-
tration of MultiStem to leukemia patients
and related types of cancer, we have two
treatment arms. The ﬁrst arm is a dose

3

escalation study that involves administra-
tion of a single dose of MultiStem shortly
after the initial HSC transplant and
involves evaluation of three separate dose
levels. We have now successfully completed
dosing patients at the ﬁrst two dosing
levels and are currently dosing patients at
the third dose level. The second arm of

In contrast to single

agent therapeutics,

our preclinical

data suggests that

MultiStem can provide

multiple therapeutic

beneﬁts in the context

of a stroke… and

that the treatment

window may be

substantially longer

than conventional

therapies can achieve.

the study involves
administration of
MultiStem at
weekly intervals for
up to a month fol-
lowing the initial
HSC transplant.
In the ﬁrst quarter
of 2010, we
received authoriza-
tion from the
independent safety
committee to
commence the
multi-dose study
and we have
initiated this arm
and are currently
dosing patients.
The primary end-
point for this

Phase I trial is safety, such as monitoring
for acute infusional toxicity. We are also
evaluating multiple secondary endpoints,
such as monitoring for incidence and
severity of GvHD, transplant engraftment,
infection and other parameters. Our 2010
goals for this program are to complete
enrollment for the single dose administra-
tion arm and to enroll approximately
half the patients in the multi-dose arm.

4

In addition to our other two MultiStem
clinical studies, in December 2008, we
were granted authorization by the FDA
to initiate a third clinical study adminis-
tering MultiStem to patients for the
treatment of ischemic stroke, a leading
cause of death and disability. In contrast
to single agent therapeutics, our pre-
clinical data suggests that MultiStem can
provide multiple therapeutic beneﬁts in
the context of a stroke or other neurological
injury and that the treatment window
may be substantially longer than conven-
tional therapies can achieve. The Phase I
safety study authorized by the FDA is
a double-blind, placebo-controlled study
that allows for administration of
MultiStem to patients 48 to 60 hours
after an ischemic stroke has occurred. A
treatment window that extends from the
time the stroke ﬁrst occurred out to 48
to 60 hours afterward would represent a
meaningful improvement over the
current standard of care. Current treat-
ment involves administration of the
thrombolytic therapy tissue plasminogen
activator, or tPA, but is limited to dosing
within three hours of the occurrence
of the stroke. As a practical matter, this
means that the vast majority of stroke
patients do not receive treatment with
tPA – as only a very small percentage
reach a physician in time. By potentially
extending the treatment window for
patients and clinicians, and developing a
therapy that has the potential to address
multiple forms of damage that occur
in the wake of a stroke, we may be able
to have a profound impact in this area.

The MultiStem Production Advantage

Material
isolated
from a
single
qualiﬁed
donor

Commercial Scalability

Millions

of clinical doses.

MultiStem is administered
like type-O blood, and may
be administered without
tissue matching or immune
suppressing drugs.

In 2009, we took a cautious approach to
initiating this clinical study in light of the
volatile and uncertain capital markets.
However, while we continued our prepara-
tions to initiate the Phase I trial, we also
advanced our research eﬀorts designed to
deepen our understanding of the ways in
which MultiStem promotes healing and
repair in the wake of an ischemic stroke or
other neurological injury. In March 2010,
at the 8th Annual World Congress on
Trauma, Shock, Inﬂammation and Sepsis
in Munich, representatives from Athersys,
together with key third party collaborators,
presented research that further demonstrat-
ed how MultiStem, when administered
in various neurological injury models,
including ischemic stroke, neonatal hypox-
ic ischemia or spinal cord injury, can
signiﬁcantly modulate gene expression
and dynamically regulate multiple cell
types and biological pathways that play
important roles in controlling damage
and inﬂammation following neurological
injury. If ongoing and future trials

demonstrate both safety and eﬃcacy,
we believe that MultiStem would have a
substantial eﬀect on the standard of care
for ischemic stroke and could improve
the quality of life for many patients,
while also creating substantial value for
the Company and our shareholders.

In addition to our MultiStem programs,
we continue to advance preclinical
development of pharmaceutical candidates
for the treatment of obesity and certain
neurological conditions. In the obesity
area, we are developing compounds that
selectively stimulate the 5HT2c serotonin
receptor in the brain, which is known
to play an important role in regulating
appetite. These compounds, known as
5HT2c agonists, are designed to reduce
appetite and therefore, food intake in order
to achieve meaningful weight loss over
time. The mechanism of action is exten-
sively validated in humans through drugs,
such as fenﬂuramine and dexfenﬂuramine,
and more recently with a novel 5HT2c

5

agonist, Lorcaserin. Unfortunately, fenﬂu-
ramine and dexfenﬂuramine also activate
the 5HT2b receptor, which is now
known to cause cardiovascular toxicity.
Furthermore, limited selectively at the
5HT2a receptor results in undesirable
side eﬀects, such as nausea and dizziness.
Evidence now clearly demonstrates that
while potency for the 5HT2c receptor
oﬀers the potential to achieve meaningful
weight loss, compound selectivity at both
the 5HT2b and 5HT2a receptors is also
necessary to achieve safety and tolerability,
as well as maximize eﬃcacy.

During this past year, we continued to
reﬁne our obesity development program
and have created a high-quality portfolio
of potent compounds that oﬀer excellent
selectivity at the
5HT2c receptor,
yet exhibit no
physiologically
relevant agonist
activity at either
the 5HT2b or
5HT2a receptors.
We believe
this represents a
substantial achieve-
ment and that

We believe this

represents a substantial

achievement and

that these compounds

have the potential

to be “best-in-class”

clinical candidates.

these compounds have the potential to be
“best-in-class” clinical candidates. We are
actively evaluating those compounds, as
we seek to identify candidates to advance
further into development.

We are also developing novel, orally active
pharmaceutical products for the treatment

6

of certain central nervous system disorders,
including those aﬀecting cognition, atten-
tion or wakefulness. This includes a range
of indications, such as narcolepsy, excessive
daytime sleepiness, chronic fatigue, atten-
tion deﬁcit disorders, schizophrenia or
certain diseases aﬀecting memory. These
preclinical programs are focused on the
development of potent, selective histamine
H3 receptor antagonist or inverse agonist
compounds that act by elevating levels of
neurotransmitters in the sleep and cognitive
centers of the brain and stimulating neuro-
logical tone. This results in an enhanced
state of wakefulness and cognition, without
causing hyperactivity, excessive “rebound”
sleepiness or addiction. We have built a
portfolio of highly potent, selective hista-
mine H3 antagonists and inverse agonists
that exhibit outstanding potency and selec-
tivity, as well as half lives suitable for once
per day dosing and a strong safety proﬁle,
and are pursuing collaboration partners
who could work with us to develop these
promising candidate compounds.

We remain excited about the progress
we continue to make across all of our
programs and look forward to the further
advancement of our clinical trials and
preclinical programs. In order to accelerate
and improve our clinical and preclinical
programs, we have pursued in parallel two
collaboration strategies. First, we have
engaged in a number of research collabora-
tions with outstanding investigators across
various disciplines and disease areas
from leading research institutions in the
United States and in Europe. We are

excited by the advances being made in
many of these collaborations and look
forward to publications, scientiﬁc presenta-
tions and announcements by, and with,

…we have engaged

in a number of

collaborations with

outstanding

investigators across

various disciplines

and disease areas

in work that is being

conducted at

leading institutions

both here in the

United States and

in Europe.

our collaborators
that highlight
the progress.

Second, we have
actively evaluated a
number of partner-
ing opportunities
with companies
that understand
the potential of our
development
programs. The
collaborative agree-
ments with Pﬁzer
and Angiotech
have resulted from
these eﬀorts. We
continue to explore
partnering oppor-
tunities with other

companies that possess complementary
capabilities, signiﬁcant resources and a
desire to develop therapies with “best-in-
class” potential.

In addition to the development and collab-
oration eﬀorts discussed above, I also want
to highlight some of our recent intellectual
property achievements. In February 2010,
Athersys was awarded two broad patents,
one in the United States and the other
in Europe, for non-embryonic pluripotent
stem cells. These patents are especially
important to Athersys as they extend the

coverage of composition, isolation, diﬀer-
entiation and scalable manufacturing of
non-embryonic stem cells that are at the
core of our technology and product portfo-
lio. Today, Athersys has a broad IP portfolio
including 14 granted patents and more
than 120 global patent applications for our
stem cell technologies and MultiStem prod-
uct platform. We intend to further grow
this intellectual property estate over time.

In closing, we are encouraged by the
results we have achieved and look forward
to the continued progress of our trials and
business development eﬀorts. We believe
that each of our programs oﬀers the oppor-
tunity to develop “best-in-class” therapeutic
products with the potential to establish
safer and more eﬀective therapies to treat
patients suﬀering from a broad range of
diseases. We are committed to achieving
that goal and believe that in doing so
we will be able to create substantial value
for our shareholders.

We appreciate our shareholders’
continued support and conﬁdence as we
pursue our goals. We especially want
to thank our employees and network of
collaborators, whose contributions and
commitment are deeply appreciated
and gratefully acknowledged.

Sincerely,

Gil Van Bokkelen
Chairman and Chief Executive Oﬃcer

7

Programs in Development

MultiStem

MultiStem is a patented and proprietary non-
embryonic stem cell therapy in clinical development
that we believe could have broad potential in the
ﬁeld of clinical regenerative medicine. MultiStem
consists of a special class of human stem cells that
have the ability to express a range of therapeutically
relevant proteins and other factors to promote
healing and tissue repair, as well as to form multiple
cell types. Unlike traditional bone marrow
transplantation or hematopoetic stem cell therapy,
which requires a tissue-matched donor for each
patient, MultiStem may be administered like type-O
blood, without tissue matching or administration
of drugs that suppress the immune system.
Furthermore, cells obtained from one healthy donor
may be used to treat a large number of patients.
MultiStem is produced by isolating cells from a
healthy qualiﬁed donor that are then processed and
expanded on a large scale and tested extensively
for product consistency and safety. MultiStem may

be stored in frozen form for a period of several years
or more and subsequently thawed when needed for
use in the treatment of patients. Unlike traditional
bone marrow, cells obtained from a single donor
may be used to produce banks yielding hundreds of
thousands to millions of clinical doses of MultiStem
– an amount far greater than other stem cell types
can achieve.

It is now widely appreciated that certain cells can
promote healing in a variety of ways, such as
replacing damaged or injured tissue, or through the
production of proteins or other factors that stimulate
or enhance the body’s natural tissue repair processes.
Factors expressed by MultiStem have demonstrated
the potential to promote healing and tissue repair
in several ways, including: (1) the reduction of
inﬂammation that occurs following an acute injury or
where there is excessive immune system activity;
(2) the protection of damaged or injured tissue in the
wake of trauma or ischemic injury; (3) the formation

Successful completion
of enrollment for
AMI Phase I Study;
completing one
month and four month
patient follow up

Inﬂammatory
Bowel Disease
affects more than

2 million

individuals in U.S.,
Japan and core
European markets

8

14 granted patents,
approximately 120
applications in global
prosecution

Scanning electron
micrograph of
hematopoietic stem
cells isolated from
human bone marrow

of new blood vessels in regions of tissue damage; or (4)
through other mechanisms. Importantly, MultiStem
exhibits a drug-like proﬁle, acting primarily through
the production of factors that regulate the immune
system, protecting damaged or injured cells and
enhancing tissue repair. Most or all of the MultiStem
cells are then cleared from the body typically over a
period of days to weeks. In addition, when MultiStem
is administered intravenously, the cells have the ability
to home to sites of damage, restore balance to the
immune system, reduce inﬂammation, and promote
healing and tissue repair in other ways.

We believe that MultiStem represents a signiﬁcant
advancement in the ﬁeld of stem cell therapy and
could have broad clinical application. We have
established a network of collaborations with leading
research and clinical institutions across the United
States and Europe, and together we are systematically
exploring the safety and eﬀectiveness of MultiStem
in multiple disease areas. Potential applications of
MultiStem include the treatment of cardiovascular

disease (such as acute myocardial infarction,
congestive heart failure and peripheral vascular
disease), ischemic stroke and other forms of
neurological injury (such as traumatic brain injury),
autoimmune disease (such as inﬂammatory bowel
disease, multiple sclerosis and other types of immune
system dysfunction), transplant support (such as
in leukemia or myelodysplasia patients receiving
bone marrow or hematopoietic stem cell transplants),
and other conditions.

Despite the breadth of potential applications, we
maintain a focused approach in our development
eﬀorts and have implemented strategic partnerships
and a network of collaborations to help us achieve
our goals. Through our partnerships with Pﬁzer,
Angiotech and a growing network of leading research
and clinical institutions across the United States
and Europe, we are committed to advancing our
programs in an eﬃcient and timely manner.

5 sec

30 sec

60 sec

865,000
heart attacks
annually in the U.S.

Acute Myocardial
Infarction remains a
major area of need for
improved therapies

Local (catheter)
delivery of MultiStem,
shown above, following
heart attack may
reduce inﬂammation
related damage
and promotes
revascularization

Fast and
Efﬁcient:
Normal blood ﬂow
after catheter removal

9

Pharmaceutical
Programs

Obesity is a substantial contributing factor to a
range of diseases that represent the major causes of
death and disability in the developed world today.
Individuals that are clinically obese have elevated
rates of cardiovascular disease, stroke, certain
types of cancer and diabetes. The Center for Disease
Control estimates that nearly two-thirds of all
Americans are overweight, and there has been a
similar dramatic rise in the rate of obesity in Europe
and Asia. We are engaged in preclinical development
of novel pharmaceutical treatments for obesity,
which are compounds designed to act by stimulating
a key receptor in the brain that regulates appetite
and therefore, food intake – the 5HT2c receptor.
The role of this receptor in regulating appetite is
well understood in both animal models and humans,
and is extensively validated clinically. Since the
establishment of the program, our primary goal has

been to develop an orally administered pill that
reduces appetite by stimulating the 5HT2c receptor,
but that does not stimulate: (1) the 5HT2b receptor,
which is known to cause cardiovascular toxicity; (2) the
5HT2a receptor, which is known to cause dizziness,
nausea and headaches; or (3) other receptors that could
cause adverse side eﬀects. Our commitment to this
area has enabled us to achieve some signiﬁcant goals –
importantly, we have now demonstrated the ability to
develop novel compounds that are very potent at the
5HT2c receptor, but which are highly selective and
do not exhibit physiologically meaningful activity at
either 5HT2b or 5HT2a receptors. We believe that
the potency and selectivity proﬁle displayed by these
candidate compounds will result in better eﬃcacy and
a cleaner safety proﬁle in clinical trials, as well as a
more convenient dosing schedule than other 5HT2c
agonist compounds. By achieving our goal of
developing potent, selective compounds, we believe
that we will be able to develop a “best-in-class”

a b c

5HT2c (serotonin)
receptor agonists
suppress appetite and
cause weight loss.
Molecular model of
serotonin shown above

10

Obesity is a major
contributing factor
to cardiovascular
disease, stroke,
diabetes and cancer

Primary objective

achieved:

Development of highly
potent compounds
with no physiologically-
relevant agonist activity
at 5HT2a or 5HT2b

drug to assist patients in treating obesity and achieve
a healthier lifestyle.

Conditions that aﬀect cognition, attention and
wakefulness also represent a signiﬁcant clinical need.
Certain conditions involve sudden onset sleepiness,
like narcolepsy, or chronic or persistent fatigue,
such as that experienced by patients with Parkinson’s
disease or undergoing cancer treatment. In other
situations, individuals with attention or cognitive
disorders may suﬀer from an inability to focus, solve
problems, process information, communicate, and
may have memory impairment. We are developing
non-stimulant, non-addictive, orally-administered
drug candidates for the treatment of conditions
related to sudden onset or persistent daytime
sleepiness or fatigue, as well as to promote cognitive
abilities in patients that experience attention or
cognitive deﬁcits. These candidate compounds block
the H3 receptor that regulates levels of histamine
and other neurotransmitters in certain areas of the
brain that play a direct role in regulating sleep and

cognitive function. Our histamine H3 receptor
antagonists represent a new class of drugs that could
have an improved eﬃcacy and safety proﬁle relative
to existing drugs used for the treatment of narcolepsy,
related sleep disorders and conditions that aﬀect
cognitive ability, attention or wakefulness. In animal
models, H3 receptor antagonists have been shown to
increase histamine release in the brain and improve
wakefulness, attention and learning. In preclinical
studies conducted at independent labs, we have tested
some of our more advanced compounds in well
validated rodent sleep models. During these studies,
our compounds signiﬁcantly enhanced wakefulness
without causing hyperactivity and appear to be free
of certain liabilities that we believe will limit the
development of competing programs. We intend to
continue the study of H3 antagonist compounds for
potential applications in treating conditions aﬀecting
cognition, attention and wakefulness.

H3 Receptor Antagonists/
Inverse Agonists result
in elevated levels of
histamine (shown above)
in certain regions of the
brain directly affecting
cognitive tone

Compounds
improve
cognition
and at higher
levels enhance
wakefulness

May also have
relevance in other
indications such
as obesity and
neuropathic pain,
illustrated above

11

Development Status of Key Programs

During 2009, we continued to advance our clinical
and preclinical MultiStem programs, including Phase I
clinical trials in cardiovascular disease for treating
patients that have suﬀered an AMI, and in oncology
treatment support, administering MultiStem to
leukemia or lymphoma patients who are at risk of incur-
ring GvHD after receiving a traditional bone marrow
or HSC transplant. During the ﬁrst quarter of 2010,
we completed patient enrollment in the AMI Phase I
trial, and are now treating patients in both the single and
multiple dose arms of the GvHD Phase I trial.

treatment of patients with IBD is being developed in
conjunction with Pﬁzer, and the teams are currently
focused on the planning and preparatory work prior
to submitting an IND. In addition to our MultiStem
programs, we are developing pharmaceuticals for
the treatment of obesity and certain neurological
conditions aﬀecting attention, cognition and wakeful-
ness. Through the application of our proprietary
technologies, we have established a pipeline of highly
diﬀerentiated therapeutic candidates that we believe
have “best-in-class” potential.

We also continued our preparations for the ischemic
stroke Phase I trial, which was authorized by the FDA,
and furthered our research eﬀorts to deepen our under-
standing of the ways in which MultiStem promotes
healing in the wake of an ischemic stroke or other
neurological injury. Our MutiStem program for the

This chart presents a snapshot, as of the ﬁrst quarter
2010, of drug development programs at Athersys.
We will continue to identify opportunities to develop
drug therapies that we believe are innovative and
oﬀer signiﬁcant beneﬁt to patients, as well as create
value for our shareholders.

Disc o very

Pre clinical

D / C T A

IN

P h ase I

P h ase II

P h ase III

A / B L A

D

N

MultiStem AMI

MultiStem BM Transplant

MultiStem Stroke

MultiStem IBD

H3 Antagonist Program

5HT2c

12

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
WASHINGTON, D.C. 20549 

FORM 10-K 

(Mark one) 
(cid:2) 

(cid:3) 

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

For the fiscal year ended December 31, 2009

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) 

(State or other jurisdiction of incorporation or organization)

Delaware 

20-4864095 
(I.R.S. Employer Identification No.) 

3201 Carnegie Avenue, Cleveland, Ohio
(Address of principal executive offices)

44115-2634 
(Zip Code) 

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

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

Title of each class 

Common Stock, par value $.001 per share

Name of each exchange on which registered
NASDAQ Stock Market LLC 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 
Yes (cid:3) No (cid:2) 

Securities registered pursuant to Section 12(g) of the Act: None 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. 
Yes (cid:3) No (cid:2) 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 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 (cid:2) No (cid:3) 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of 
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:2) 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be 
submitted and posted 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 and post such files). 
Yes (cid:3) No (cid:3) 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of 
“accelerated filer,” large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 
Accelerated filer (cid:3)
Large accelerated filer (cid:3) 

Smaller Reporting Company (cid:2)

Non-accelerated filer (cid:3)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). 
Yes (cid:3) No (cid:2) 

The aggregate market value at June 30, 2009, the last day of the registrant’s most recently completed second quarter, of shares of the registrant’s common stock (based 
upon the closing price per share of $0.88 of such stock as quoted on the NASDAQ Capital Market on such date) held by non-affiliates of the registrant was 
approximately $11.4 million. 

The registrant had 18,929,333 shares of common stock outstanding on March 11, 2010. 

Documents Incorporated By Reference.  

Part III of this Annual Report on Form 10-K incorporates by reference certain information from the registrant’s definitive Proxy Statement with respect to the 2010 
Annual Meeting of Stockholders. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TABLE OF CONTENTS 

PART I

Item 1. Business ......................................................................................................................................................

Item 1A. Risk Factors .............................................................................................................................................

Item 1B. Unresolved Staff Comments ....................................................................................................................

Item 2. Properties ....................................................................................................................................................

Item 3. Legal Proceedings ......................................................................................................................................

Item 3A. Executive Officers of the Registrant........................................................................................................

Item 4. Reserved .....................................................................................................................................................

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities ..............................................................................................................................................................

Item 6. Selected Financial Data ..............................................................................................................................

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations......................

Item 7A. Quantitative and Qualitative Disclosures About Market Risk .................................................................

Item 8. Financial Statements and Supplementary Data ..........................................................................................

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures ....................

Item 9A(T). Controls and Procedures .....................................................................................................................

Item 9B. Other Information ....................................................................................................................................

PART III

Item 10. Directors, Executive Officers and Corporate Governance .......................................................................

Item 11. Executive Compensation ..........................................................................................................................

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related  

Stockholder Matters ..............................................................................................................................................

Item 13. Certain Relationships and Related Transactions, and Director Independence..........................................

Item 14. Principal Accountant Fees and Services ...................................................................................................

3

16

30

30

30

30

31

32

33

34

45

45

64

64

64

64

65

65

65

65

Item 15. Exhibits and Financial Statement Schedules ............................................................................................

66

PART IV

- 2 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART I 

ITEM 1. BUSINESS.  

We are a biopharmaceutical company engaged in the discovery and development of therapeutic product candidates 
designed to extend and enhance the quality of human life. Through the application of our proprietary technologies, 
we have established a pipeline of therapeutic product development programs in multiple disease areas. We are 
committed to developing therapeutic products that we believe have best-in-class potential, meaning therapeutic 
candidates that have the potential to be safer, more effective products than the current standard of care or other 
products in development, and that may have other advantages, such as superior scalability or ease of administration. 
Our current product development portfolio consists of MultiStem®, a patented and proprietary stem cell product that 
we are developing as a treatment for multiple disease indications and that is currently being evaluated in two 
ongoing clinical trials, and has been authorized for use in a third clinical trial. In addition, we are developing novel 
pharmaceuticals to treat indications such as obesity, certain cognitive and attention disorders, and narcolepsy or 
other forms of excessive daytime sleepiness. 

Recent Developments 

In December 2009, we entered into a collaboration agreement with Pfizer Inc., or Pfizer, to develop and 
commercialize MutiStem for the treatment of inflammatory bowel disease, or IBD, for the worldwide market. Under 
the terms of the agreement, we received an up-front cash payment of $6 million from Pfizer and will receive 
research funding and support during the initial phase of the collaboration. In addition, we are also eligible to receive 
milestone payments of up to $105 million upon the successful achievement of certain development, regulatory and 
commercial milestones. We will be responsible for manufacturing and Pfizer will pay us for manufacturing product 
for clinical development and commercialization purposes. Pfizer will have responsibility for development, 
regulatory and commercialization and will pay us tiered royalties on worldwide commercial sales of MultiStem IBD 
products. Alternatively, in lieu of royalties and certain commercialization milestones, we may elect to co-develop 
with Pfizer and the parties will share development and commercialization expenses and profits/losses on an agreed 
basis beginning at phase III clinical development. 

Business Strategy 

Our principal business objective is to discover, develop and commercialize novel therapeutic products for disease 
indications that represent significant areas of clinical need and commercial opportunity. The key elements of our 
strategy are outlined below. 

•  Efficiently develop product candidates in established areas of significant clinical need. We will continue to 
develop certain product candidates leveraging others’ prior clinical efforts and validation while we focus on 
development of best-in-class product candidates with differentiated profiles. Our intention is to develop our 
products for ultimate commercialization by us, our partners or licensees after they have received approval 
from the U.S. Food and Drug Administration, or FDA, and/or other regulatory agencies. 

•  Apply our proprietary technologies toward the rapid identification, validation, and development of 

therapeutic product candidates. We will continue to use our proprietary technologies to identify and validate 
therapeutic product candidates. We believe our technologies, including MultiStem and RAGE (Random 
Activation of Gene Expression), provide us with a competitive advantage in drug discovery and product 
development by allowing us to move products quickly from the discovery phase into clinical trials. We will 
select candidates for internal development based on several factors, including the required regulatory 
approval pathway and the potential market into which the product may be sold, and our ability to feasibly 
fund development activities through commercialization and marketing of the approved product. 

•  Enter into licensing or co-development arrangements for certain product candidates. We intend to license 
certain of our product candidates to, or co-develop them with, qualified collaborators to broaden and 
accelerate our product development and commercialization efforts. We anticipate that this strategy will help 
us to enhance our return on product candidates for which we enter into collaborations through the receipt of a 
mix of license fees, milestone payments, and profit sharing or royalties. Certain partnerships may include 
strategic equity investments. 

- 3 - 

 
 
 
 
 
 
 
 
 
 
•  Continue to expand our intellectual property portfolio. Our intellectual property is important to our business 
and we take significant steps to protect its value. We have an ongoing research and development effort, both 
through internal activities and through collaborative research activities with others, which aims to develop 
new intellectual property and enables us to file patent applications that cover new applications of our existing 
technologies or product candidates, including MultiStem. 

•  Out-license non-core applications of our technologies. Certain elements of our technologies, such as their 
application toward the development of novel diagnostics or their use for the analysis, characterization or 
production of certain types of therapeutic product candidates such as biogenerics or biosimilars, may not be 
relevant to the key elements of our corporate strategy. We believe these applications may have significant 
potential value, however, and may provide capital to us that can be applied to our other development efforts. 
Where appropriate, we may seek to license non-core applications of our technologies to others to realize this 
value. 

Our Current Programs 

By applying our proprietary cell therapy platform, MultiStem, we have established therapeutic product development 
programs in the areas of cardiovascular disease, hematopoietic stem cell, or HSC, transplant support and ischemic 
stroke, and are developing a program to treat IBD with our partner, Pfizer. We advanced our first two MultiStem 
programs into clinical development in 2008 and completed phase I enrollment in our cardiovascular trial in the first 
quarter of 2010. In 2010, we intend to further advance our HSC transplant support phase I study in both the U.S. and 
Europe, while we prepare for phase I clinical studies in ischemic stroke and IBD and for a potential phase II clinical 
study of MultiStem for acute myocardial infarction. In addition, by applying our core technologies and capabilities, 
we have established drug development programs in the areas of obesity and central nervous system disorders 
involving cognition, attention and wakefulness. 

Regenerative Medicine Programs 

MultiStem — A Novel Allogeneic Approach to Stem Cell Therapy and Regenerative Medicine 

We are developing a proprietary nonembryonic, allogeneic stem cell product candidate, MultiStem, that we believe 
has potential utility for treating a broad range of diseases and could have widespread application in the field of 
clinical regenerative medicine. Unlike traditional bone marrow transplants or other stem cell therapies, MultiStem 
may be manufactured on a large scale (with hundreds of thousands to millions of doses obtained from a single 
healthy donor), and may be administered without tissue matching or the need for immune suppression, analogous to 
type O blood. Potential applications of MultiStem include the treatment of cardiovascular disease, cancer treatment 
related transplant support, certain neurological conditions, autoimmune disease and other conditions. We initiated 
phase I clinical trials in the areas of acute myocardial infarction, or AMI, and HSC transplant support in 2008 and 
have received FDA authorization to initiate a phase I clinical trial in the area of ischemic stroke. We believe that 
MultiStem represents a significant advancement in the field of stem cell therapy and could have broad clinical 
application. 

MultiStem is a patented biologic product that is manufactured from human stem cells obtained from adult bone 
marrow. The product consists of a special class of human stem cells that have the ability to express a range of 
therapeutically relevant proteins and other factors, as well as form multiple cell types. Factors expressed by 
MultiStem have the potential to deliver a therapeutic benefit in several ways, such as the reduction of inflammation, 
regulation of immune system function, protection of damaged or injured tissue, the formation of new blood vessels 
in regions of ischemic injury and augmenting tissue repair and healing in other ways. These cells exhibit a drug-like 
profile in that they act primarily through the production of factors that regulate the immune system, protect damaged 
or injured cells, promote tissue repair and healing and most or all of the cells are cleared from the body over time. 

The therapeutic benefit of bone marrow transplantation has been recognized for decades, and its clinical use has 
grown since Congress passed the National Organ Transplant Act in 1984 and the National Marrow Donor Registry 
was established in 1990. However, widespread bone marrow or stem cell transplantation has yet to become a reality. 
Some of the limitations that have prevented broader clinical application of bone marrow or stem cell transplantation 

- 4 - 

 
 
 
 
 
 
 
 
 
 
include the requirement for tissue matching between donor and recipient, the typical need for one donor for each 
patient (a reflection of the inability to expand cells in a controlled and reproducible manner), frequent use of 
immune suppressive drugs to avoid rejection or immune system complications, the inability to efficiently produce 
significant quantities of stem cells, and a range of potential safety issues. 

A stem cell therapy that has the potential to address the challenges mentioned above could represent a breakthrough 
in the field of regenerative medicine, since it could greatly expand the clinical application of stem cell therapy or 
other forms of regenerative medicine. In 2003, we acquired technology originally developed at the University of 
Minnesota related to a novel stem cell, the Multipotent Adult Progenitor Cell, or MAPC, which may be isolated 
from adult bone marrow as well as other nonembryonic tissues. Over the past several years, we have further 
developed this technology and the manufacturing of these cells for use in ongoing clinical trials. Our current product 
platform is referred to as MultiStem. During several years of preclinical work, MultiStem has demonstrated the 
potential to address the fundamental limitations observed with traditional bone marrow or hematopoietic stem cell 
transplants. 

We believe that MultiStem represents a potential best-in-class stem cell therapy because it exhibits each of the 
following characteristics based on research and development to date: 

•  Broad plasticity and multiple potential mechanisms of action. MultiStem cells have a demonstrated ability in 
animal models to form a range of cell types and appear to be able to deliver therapeutic benefit through 
multiple mechanisms, such as producing factors that protect tissues against damage and inflammation, as 
well as enhancing or playing a direct role in revascularization or tissue regeneration. 

•  Large scale production. Unlike conventional stem cells, such as blood-forming or hematopoietic stem cells, 
MultiStem cells may be produced on a large scale, processed, and cryogenically preserved, and then used 
clinically in a rapid and efficient manner. Material obtained from a single donor may be used to produce 
hundreds of thousands or millions of individual doses, representing a yield far greater than other stem cells 
have been able to achieve. 

•  “Off-the-shelf” utility. Unlike traditional bone marrow or hematopoietic stem cell transplants that require 

extensive genetic matching between donor and recipient, MultiStem is administered without tissue matching 
or the requirement for immune suppressive drugs. MultiStem is administered as a cryogenically preserved 
allogeneic product, meaning that these cells are not genetically matched between donor and recipient. This 
feature, combined with the ability to establish large MultiStem banks, could make it practical for clinicians to 
efficiently deliver stem cell therapy to a large number of patients. 

•  Safety. Other stem cell types, such as embryonic stem cells, can pose serious safety risks, such as the 

formation of tumors or ectopic tissue. In contrast, MultiStem cells have an outstanding safety profile that has 
been compiled over several years of preclinical study in a range of animal models by a variety of 
investigators. 

At each step of the MultiStem production process, cells are analyzed and qualified according to pre-established 
criteria to ensure that a consistent, well characterized product candidate is produced. Cells are harvested from a pre-
qualified donor and then expanded to form a Master Cell Bank from which we produce clinical grade material. In 
March 2007, we and our manufacturing partner, Lonza Walkersville, Inc., announced the successful establishment of 
a Master Cell Bank produced under Good Manufacturing Practices, or GMP, and the production of clinical grade 
material for our initial clinical trials. In multiple animal models, MultiStem has been shown to be non-immunogenic, 
and is administered without the genetic matching that is typically required for conventional bone marrow or stem 
cell transplantation. 

MultiStem allows us to pursue multiple high value commercial opportunities from a single product platform, 
because, based upon work that we and independent collaborators have conducted over the past several years, we 
believe that MultiStem has the potential to treat a range of distinct disease indications, including ischemic injury and 
cardiovascular disease, certain neurological diseases, autoimmune disease, transplant support (including in oncology 
patients), and a range of orphan disease indications. As a result, we expect to be able to efficiently add clinical 
indications as we further expand the scope of potential applications for MultiStem, enabling us to reduce costs and 
shorten development timelines in comparison to traditional single-use preclinical studies. 

- 5 - 

 
 
 
 
 
 
 
 
 
 
Working with independent investigators, we have conducted preclinical studies in relevant animal models designed 
to evaluate safety and potential therapeutic benefit in various disease indications. Based on the results of these and 
other studies, we have submitted and the FDA has authorized three investigational new drug applications, or INDs, 
involving administration of MultiStem in phase I clinical trials in treating distinct disease conditions to date. We 
advanced two MultiStem programs into clinical development in 2008, initiating phase I clinical trials in 
cardiovascular disease (treating patients that have suffered an acute myocardial infarction) and in oncology 
treatment support (administering MultiStem to leukemia or lymphoma patients who are receiving a traditional bone 
marrow or HSC transplant to reduce the risk or severity of graft versus host disease, or GVHD). We are conducting 
the acute myocardial infarction clinical trial with our partner Angiotech Pharmaceuticals, Inc., or Angiotech, and we 
completed phase I enrollment in the first quarter of 2010. 

MultiStem for Heart Attack, HSC Transplant Support in Treatment of Hematologic Malignancies & Stroke 

Working with independent investigators at a number of leading institutions, such as the University of Minnesota, the 
Cleveland Clinic, the National Institutes of Health, the Medical College of Georgia, the University of Oregon Health 
Sciences Center and the Katholieke Universiteit Leuven, we have studied MultiStem in a range of in vitro and 
animal models that reflect various types of human disease or injury, such as myocardial infarction, stroke, brain 
damage due to restricted blood flow in newborns, vascular disease, and bone marrow transplant support/GVHD. In 
addition, we are exploring, or intend to explore, the potential application of MultiStem in the treatment of a range of 
other conditions such as certain blood or immune deficiencies and various autoimmune diseases. 

As stated above, we have consistently observed that MultiStem is safe and effective in animal models. As a result, 
we have advanced MultiStem to clinical development stage in three areas: treatment of damage caused by 
myocardial infarction; support in the hematologic malignancy setting to reduce certain complications associated 
with traditional bone marrow or HSC transplantation; and treatment for stroke caused by a blockage of blood flow in 
the brain. We may expand to other clinical indication areas as results warrant and resources permit. 

Heart Attack 

In our current phase I clinical trial, we are exploring the use of MultiStem as a treatment for damage caused by 
myocardial infarction, or heart attack. Myocardial infarction is one of the leading causes of death and disability in 
the United States. Myocardial infarction is caused by the blockage of one or more arteries that supply blood to the 
heart. Such blockages can be caused, for example, by the rupture of an atherosclerotic plaque deposit. According to 
the American Heart Association 2010 Statistical Update, there were approximately 935,000 cases of myocardial 
infarction that occurred in the United States in 2006 and approximately 8.5 million individuals living in the United 
States that had previously suffered a heart attack. In addition, there were more than 831,000 deaths that occurred 
from various forms of cardiovascular disease, including 567,000 individuals that died as a result of a myocardial 
infarction or congestive heart failure. A variety of risk factors are associated with an elevated risk of myocardial 
infarction or atherosclerosis, including age, high blood pressure, smoking, sedentary lifestyle and genetics. While 
advances in the diagnosis, prevention and treatment of heart disease have had a positive impact, there is clearly 
room for improvement — myocardial infarction remains a leading cause of death and disability in the United States 
and the rest of the world. 

MultiStem has been studied in validated animal models of AMI, including at both the Cleveland Clinic and the 
University of Minnesota. Investigators demonstrated that the administration of allogeneic MultiStem into the hearts 
of animals damaged by experimentally induced heart attacks resulted in significant functional improvement in 
cardiac output and other functional parameters compared with animals that received placebo or no treatment. 
Furthermore, the administration of immunosuppressive drug was not required and provided no additional benefit in 
this study, and supports the concept of using MultiStem as an allogeneic product. 

Working with a qualified contract research organization, we completed additional preclinical studies in established 
pig models of acute myocardial infarction using catheter delivery and examining various factors such as the route 
and method of MultiStem administration, dose ranging, and timing of treatment. In 2008, we initiated a multicenter 
phase I clinical trial in this indication, and during the first quarter of 2010, we completed enrollment. We are 
working with leading cardiovascular treatment clinical sites and experts in the area of cardiovascular disease to 
complete this phase I clinical trial. 

- 6 - 

 
 
 
 
 
 
 
 
 
We are developing MultiStem for this indication in conjunction with our partner, Angiotech. We entered into a 
product co-development collaboration with Angiotech in May 2006, for the potential application of MultiStem in 
multiple cardiovascular indications including myocardial infarction, peripheral vascular disease and certain other 
indications. 

HSC Transplant Support in Hematologic Malignancy 

Another area of focus is the use of MultiStem as adjunctive treatment for HSC/bone marrow transplant used as 
therapy in hematologic malignancy. For many types of cancer, such as leukemia or other blood-borne cancers, 
treatment typically involves radiation therapy or chemotherapy, alone or in combination. Such treatment can 
substantially deplete the cells of the blood and immune system, by reducing the number of stem cells in the bone 
marrow from which they arise. The more intense the radiation treatment or chemotherapy, the more severe the 
resulting depletion is of the bone marrow, blood, and immune system. Other tissues may also be affected, such as 
cells in the digestive tract and in the pulmonary system. The result may be severe anemia, immunodeficiency, 
significant reduction in digestive capacity, and other problems that may result in significant disability or death. 

One strategy for treating the depletion of bone marrow is to perform a peripheral blood stem cell transplant or a 
bone marrow transplant. This approach may augment the patient’s ability to form new blood and immune cells and 
provide a significant survival advantage. However, finding a closely matched donor is frequently difficult or even 
impossible. Even when such a donor is found, in many cases there are immunological complications, such as 
GVHD, which may result in serious disability or death. 

Working with leading experts in the stem cell and bone marrow transplantation field, we have studied MultiStem in 
animal models of radiation therapy and GVHD. In multiple animal models, MultiStem has been shown to be non-
immunogenic, even when administered without the genetic matching that is typically required for conventional bone 
marrow or stem cell transplantation. Furthermore, in animal model systems testing immune reactivity of T-cells 
against unrelated donor tissue, MultiStem has been shown to suppress the T-cell-mediated immune responses that 
are an important factor in causing GVHD. MultiStem-treated animals also displayed a significant increase in 
survival relative to controls. As a result, we believe that the administration of MultiStem in conjunction with or 
following standard HSC transplantation may have the potential to reduce the incidence or severity of complications 
and may enhance gastrointestinal function which is frequently compromised as a result of radiation treatment or 
chemotherapy. 

In 2008, we initiated a phase I clinical trial to examine the safety and tolerability of MultiStem in patients receiving 
a bone marrow or hematopoietic stem cell transplant related to their treatment for hematologic malignancy. The trial 
is an open label, multicenter trial that involves leading experts in the field of bone marrow transplantation. 

Stroke 

A third focus of our regenerative medicine program is the use of MultiStem for the treatment of neurological injury 
as a result of ischemic stroke, which accounts for approximately 85% of all strokes. Recent progress toward the 
development of safer and more effective treatments for ischemic stroke has been disappointing. Despite the fact that 
ischemic stroke is one of the leading causes of death and disability in the United States, affecting more than 700,000 
new patients annually according to the United States Centers for Disease Control and Prevention, or CDC, there has 
been little progress toward the development of treatments that improve the prognosis for stroke victims. The only 
FDA-approved drug currently available for ischemic stroke is the anti-clotting factor, tPA. According to current 
clinical guidelines, tPA must be administered to stroke patients within three hours after the occurrence of the 
ischemic stroke to remove the clot while minimizing potential risks, such as bleeding into the brain. Administration 
of tPA after this time frame is not recommended, since it can cause bleeding or even death. Given this limited 
therapeutic window, it is estimated that less than 5% of ischemic stroke victims currently receive treatment with tPA. 

In preclinical studies conducted by investigators, including at both the University of Minnesota and the Medical 
College of Georgia, significant functional improvements have been observed in rodents that have undergone an 
experimentally induced stroke, or that have incurred significant neurological damage as a result of neonatal hypoxic 
ischemia, and then received treatment with MultiStem. Through research conducted by collaborators at the Medical 
College of Georgia and presented at the annual American Academy of Neurology meeting in April 2006, we 

- 7 - 

 
 
 
 
 
 
 
 
 
observed that administration of MultiStem even one week after a surgically induced stroke results in substantial 
long-term therapeutic benefit, as evidenced by the improvement of treated animals compared with controls in a 
battery of tests examining mobility, strength, fine motor skills, and other aspects of neurological functional 
improvement. We believe that this benefit is achieved through several mechanisms, including reduction of 
inflammation and immune system modulation in the ischemic area and the protection and rescue of damaged or 
injured cells, including neuronal tissue. These results have been confirmed in subsequent studies that demonstrate 
MultiStem treatment is well tolerated, does not require immunosuppression, and results in a robust and durable 
therapeutic benefit even when administered one week after the initial stroke event. 

In 2008, we completed additional preclinical safety studies and submitted an IND for this application, which has 
been authorized by the FDA. The phase I safety clinical trial authorized by the FDA is a double blind, placebo 
controlled study that allows for administration of MultiStem to patients 48 to 60 hours after the ischemic stroke, 
which, if shown to be safe and effective, would represent a significant extension of the treatment window relative to 
existing standard of care. We have initiated planning and are continuing preparations for the commencement of the 
phase I study. 

IBD 

In December 2009, we entered into a collaboration agreement with Pfizer to develop and commercialize MutiStem 
for the treatment of IBD for the worldwide market. IBD is a group of inflammatory and autoimmune conditions that 
affect the colon and small intestine, typically resulting in severe abdominal pain, weight loss, vomiting and diarrhea. 
The most common forms of the disease include ulcerative colitis and crohn’s disease, which are estimated to affect 
more than two million people in the U.S., major European countries and Japan. Chronic IBD can be a severely 
debilitating condition, and advanced cases may require surgery to remove the affected region of the bowel, and may 
also require temporary or permanent colostomy or iliostomy. In many cases, surgery does not achieve a permanent 
cure, and patients suffer a return of the disease. We are currently planning and preparing for a phase I clinical study 
in the IBD area, and plan to initiate the study as soon as possible after regulatory approval. 

We believe that MultiStem could have broad potential to treat a range of conditions. In addition to the above 
programs, working with partners and collaborators, and as resources permit, we intend to explore the potential utility 
of MultiStem for treating a range of other conditions, including autoimmune diseases, other conditions that involve 
the immune system, and certain neurological conditions, especially those in which inflammation plays a role. We 
believe that MultiStem could have utility in treating multiple diseases, and as a result, has the potential to create 
significant value for our Company and our stockholders. 

Pharmaceutical Programs 

Obesity is a substantial contributing factor to a range of diseases that represent the major causes of death and 
disability in the developed world today. Individuals that are clinically obese have elevated rates of cardiovascular 
disease, stroke, certain types of cancer and diabetes. According to the CDC, the incidence of obesity in the United 
States has increased at an epidemic rate during the past 20 years. CDC now estimates that 66% of all Americans are 
overweight, including more than 30% that are considered clinically obese. The percentage of young people who are 
overweight has more than tripled since 1980. There has also been a dramatic rise in the rate of obesity in Europe and 
Asia. Despite the magnitude of this problem, current approaches to clinical obesity are largely ineffective, and we 
are aware of relatively few new therapeutic approaches in clinical development. 

We are developing novel pharmaceutical treatments for obesity, which are compounds designed to act by stimulating 
a key receptor in the brain that regulates appetite and food intake — the 5HT2c receptor. The role of this receptor in 
regulating food intake is well understood in both animal models and humans. In 1996, Wyeth Pharmaceuticals 
launched the anti-obesity drug Redux® (dexfenfluramine), a non-specific serotonin receptor agonist that was used 
with the stimulant phentermine in a combination commonly known as fen-phen. This diet drug combination gained 
rapid and widespread acceptance in the clinical marketplace and was shown to be highly effective at regulating 
appetite, reducing food intake, and causing weight loss. Unfortunately, in addition to stimulating the 5HT2c 
receptor, Redux also stimulated the 5HT2b receptor that is found in the heart. The activation of 5HT2b by Redux is 
believed to have caused significant cardiovascular problems in a number of patients and, as a result, Redux was 
withdrawn from the market in 1997. In 1996, doctors wrote 18 million monthly prescriptions for drugs constituting 
the fen/phen combination. In that same year, these drugs generated sales of greater than $400 million, serving as a 
benchmark for the substantial market opportunity for an effective drug to treat clinical obesity. 

- 8 - 

 
 
 
 
 
 
 
 
Since the withdrawal of Redux from the market, several groups have published research that implicates stimulation 
of the 5HT2b receptor as the underlying cause of the cardiovascular problems. These findings suggest that highly 
selective compounds that stimulate the 5HT2c receptor, but that do not appreciably stimulate the 5HT2b receptor, 
could be developed that maintain the desired appetite suppressive effects without the cardiovascular toxicity. 
Recently, Arena Pharmaceuticals developed a selective 5HT2c agonist, Lorcaserin, which exhibits significant 
selectivity for the 5HT2c receptor relative to the 5HT2b receptor. In a phase II clinical trial conducted by Arena 
Pharmaceuticals, Lorcaserin was demonstrated to reduce appetite and cause statistically significant weight loss in 
patients that were administered the drug for a period of three months, without causing any apparent cardiovascular 
effects. However, at higher doses the drug has been shown to cause dizziness, nausea and headaches, which may be 
a consequence of its apparently more limited selectivity for the 5HT2c receptor relative to another serotonin receptor 
expressed in the brain, the 5HT2a receptor. Arena Pharmaceuticals recently completed two phase III clinical trials 
designed to evaluate safety, including cardiovascular safety, and effectiveness at causing weight loss in patients that 
are administered Lorcaserin for a period of up to two years. The results of these studies demonstrated that there was 
no evidence of cardiovascular toxicity or other serious adverse events, however, only modest weight loss was seen. 
We believe the modest weight loss is a result of the inability to administer Lorcaserin at higher dose levels in order 
to achieve a greater therapeutic effect — a reflection of the limited compound selectivity at the 5HT2a receptor and 
the neurological side effects seen at higher dose levels. 

We initiated a drug development program focused on creating potent and selective compounds that stimulate the 
5HT2c receptor, but that avoid the 5HT2b receptor and other receptors, such as 5HT2a. Our specific goal has been 
to develop an orally administered pill that reduces appetite by stimulating the 5HT2c receptor, but that does not 
stimulate the 5HT2b receptor, the 5HT2a receptor, or other receptors that could cause adverse side effects. Based on 
extensive preclinical studies that we have conducted with compounds that we have developed, we have 
demonstrated the ability to develop highly potent and selective compounds that are potent and selective for the 
5HT2c receptor, and that lack activity at either 5HT2a or 5HT2b. We believe that the potency and selectivity profile 
displayed by compounds we are developing for the 5HT2c receptor relative to both the 5HT2b receptor and the 
5HT2a receptor will result in substantially better efficacy and a cleaner safety and tolerability profile in clinical 
trials, as well as a more convenient dosing schedule than other 5HT2c agonist programs. 

H3 Antagonists for the Treatment of Sleep Disorders and Certain Other Cognitive Disorders 

In addition to our other programs, we are independently developing novel, orally-active pharmaceuticals that are 
designed to enhance wakefulness and promote cognitive abilities in patients that experience attention or cognitive 
deficits. Individuals that suffer from narcolepsy or other conditions that result in excessive daytime sleepiness, or 
EDS, may experience persistent tiredness and lack of energy. Chronic fatigue may be experienced by patients with 
other disease conditions such as Parkinson’s or those undergoing treatment for cancer. As a result, such individuals 
may experience significant difficulty in performing certain tasks and may suffer an impaired quality of life. More 
than 100,000 individuals in the United States suffer from narcolepsy or EDS. Historically, narcoleptics were treated 
with amphetamines and related stimulants that had substantial side-effects, but more recently have been prescribed 
Provigil (Modafinil). This compound works by an unknown mechanism, but appears to be relatively free of the 
stimulant side-effects of amphetamines. In addition to its use for narcolepsy, Provigil is also approved for the 
treatment of shift work sleep disorder, or SWSD, and sleep apnea. Known side effects experienced by patients 
taking Provigil include anxiety, depression, rash, and rare occurrences of serious and potentially life threatening 
reactions including Stevens Johnson Syndrome, Toxic Epidermal Necrolysis, Erythema Multiforme, and multi-organ 
hypersensitivity. Sales of Provigil in 2008 were reported to be over $950 million. Although Provigil appears to be an 
improvement over previous narcolepsy drugs, certain safety concerns were raised by the FDA when Cephalon, Inc. 
attempted to gain approval of Modafinil for attention deficit-hyperactivity disorder, or ADHD, and the company 
subsequently abandoned efforts in this market. 

Individuals with attention or cognitive disorders may suffer from an inability to focus, solve problems, process 
information, communicate, and may have memory impairment. Attention and cognitive disorders include ADHD, 
Schizophrenia, Alzheimer’s disease and other forms of dementia. Reuters Business Insights estimates that in 2008 
nearly 25 million people suffered from ADHD in the seven major pharmaceutical markets (United States, France, 
Germany, Italy, Spain, United Kingdom and Japan). Research also shows that 60% of children with ADHD maintain 
the disorder into adulthood, and the condition afflicts predominantly boys. According to IMS Health, aggregate 
global sales of drugs for treatment of ADHD and narcolepsy were more than $5.7 billion in 2008, and most of these 
were psychostimulants (e.g. methylphenidate, amphetamine/dexamfetamine, modafinil) with side effects and abuse 
potential. Despite the limitations of these products, the market grew by more than 13% over the prior year. We 
believe there exists a significant market opportunity for safer and more effective treatments. 

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We are developing multiple classes of highly selective and potent compounds designed to block the H3 receptor and 
have established a program to develop non-stimulant, non-addictive, orally administered drugs for the treatment of 
narcolepsy or other conditions related to excessive daytime sleepiness. Our histamine H3 receptor antagonists 
represent a new class of drugs that could have an improved efficacy and safety profile relative to existing drugs used 
for the treatment of narcolepsy and related sleep disorders. The H3 receptor regulates levels of histamine and other 
neurotransmitters in certain areas of the brain that play a direct role in regulating sleep and cognitive function. The 
histamine H3 receptor antagonists being developed at Athersys represent a new class of drugs that could have an 
improved efficacy and safety profile relative to existing drugs used for the treatment of a range of conditions that 
affect cognitive ability, attention or wakefulness. In animal models, H3 receptor antagonists have been shown to 
increase histamine release in the brain and improve wakefulness, attention and learning. In preclinical studies 
conducted at independent labs, we have tested some of our more advanced compounds in well validated rodent sleep 
models. During these studies, compounds significantly enhanced wakefulness without causing hyperactivity. In 
comparison to Modafinil or caffeine, certain compounds appeared far more potent, achieving a comparable or better 
effect on wakefulness at substantially lower doses. In addition, these compounds did not appear to cause the 
excessive rebound sleepiness that is a characteristic of other agents used to promote wakefulness, such as 
amphetamines. 

We intend to continue the study of H3 antagonist compounds that we are developing for potential applications in 
treating narcolepsy, excessive daytime sleepiness, chronic fatigue associated with certain disease conditions such as 
Parkinson’s, certain attention or cognitive disorders, and other conditions. In addition, we intend to conduct 
additional pharmacology and safety testing of certain compounds we are developing, and are exploring potential 
partnering opportunities around this and other programs. 

Other Key Technologies 

In addition to our current product development programs, we developed our patented random activation of gene 
expression, or RAGE, technology that provides us with the ability to produce human cell lines that express specific, 
biologically well validated drug targets without relying upon cloned and isolated gene sequences. While our RAGE 
technology is not a product, it is a commercial technology that we have successfully applied for the benefit of our 
partners and that we have also used for our own internal drug development programs. Modern drug screening 
approaches typically require the physical isolation and structural modification of a gene of interest, an approach 
referred to as gene cloning, in order to create a cell line that expresses a drug target of interest. Researchers may then 
use the genetically modified cell line to identify pharmaceutical compounds that inhibit or stimulate the target of 
interest. The RAGE technology enables us to turn on or amplify the expression of a drug target without having to 
physically clone or isolate the gene. In effect, the technology works through the random insertion of tiny, proprietary 
genetic switches that randomly turn genes on without requiring their physical isolation, or any advance knowledge 
of their structure. This technology provides us with broad freedom to work with targets that may be otherwise 
unavailable as a result of intellectual property restrictions on the use of specific cloned and isolated genes. Over the 
past several years, we have produced cell lines that express drug targets in a range of disease areas such as metabolic 
disease, infectious disease, oncology, cardiovascular disease, inflammation, and central nervous system disorders. 
Many of these were produced for drug development programs at major pharmaceutical companies that we have 
collaborated with, such as our ongoing collaboration with Bristol-Myers Squibb, and some have been produced for 
our internal drug development programs. 

Collaborations and Partnerships 

Pfizer 

In the fourth quarter of 2009, we entered into a collaboration agreement with Pfizer to develop and commercialize 
MutiStem for the treatment of IBD for the worldwide market. Under the terms of the agreement, we received an up-
front cash payment of $6 million from Pfizer and will receive research funding and support during the initial phase 
of the collaboration. In addition, we are also eligible to receive milestone payments of up to $105 million upon the 
successful achievement of certain development, regulatory and commercial milestones, though there can be no 
assurance that we will achieve any milestones. We will be responsible for manufacturing and Pfizer will pay us for 
manufacturing product for clinical development and commercialization purposes. Pfizer will have responsibility for 

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development, regulatory and commercialization and will pay us tiered royalties on worldwide commercial sales of 
MultiStem IBD products. Alternatively, in lieu of royalties and certain commercialization milestones, we may elect 
to co-develop with Pfizer and the parties will share development and commercialization expenses and profits/losses 
on an agreed basis beginning at phase III clinical development. 

The Pfizer collaboration does not have a specific termination date, but will terminate upon the last to expire royalty 
term, unless terminated earlier by either party. Either party can terminate the agreement for an uncured material 
breach or default. Pfizer is permitted to terminate the agreement upon advance written notice to us if we sustain 
certain turnover levels for employees working on the program, if our license with the University of Minnesota is 
terminated, if we experience a specified change of control event, or in its sole discretion. We can terminate the 
agreement if a certain milestone event has not occurred by a defined period of time, or if we reasonably believe that 
Pfizer has failed to satisfy its obligations to progress the development of the program. Following termination of the 
agreement by us, all licenses granted to Pfizer to develop and commercialize MultiStem for IBD will terminate, 
other than certain more limited research licenses, and ownership of regulatory and clinical data will revert to us. 
Following termination of the agreement by Pfizer, the licenses granted to Pfizer will remain in effect according to 
their terms, unless the termination is due to our breach, employee turnover or termination of the license with 
University of Minnesota, in which case payments to us will be reduced from what was otherwise payable. Also, if 
Pfizer terminates in its sole discretion, then Pfizer retains its obligation to fund our research and development costs 
as set forth in the agreement. 

Angiotech 

In May 2006, we established a collaboration with Angiotech that is focused on co-developing MultiStem for the 
treatment of damage caused by myocardial infarction and peripheral vascular disease. In support of the 
collaboration, Angiotech invested $10.0 million in us and we may also receive up to $3.75 million of additional 
equity investments and $63.75 million of aggregate cash payments based upon the successful achievement of 
specified clinical development and commercialization milestones, though there can be no assurance that we will 
achieve any milestones. 

Under the terms of the collaboration, the parties are jointly funding clinical development activities, whereby 
preclinical costs are borne solely by Athersys, costs for phase I and phase II clinical trials are borne 50% by Athersys 
and 50% by Angiotech, costs for the first phase III clinical trial will be borne 33% by Athersys and 67% by 
Angiotech, and costs for any phase III clinical trials subsequent to the first phase III clinical trial will be borne 25% 
by Athersys and 75% by Angiotech. We have lead responsibility for preclinical and early clinical development and 
manufacturing of the MultiStem product, and Angiotech will take the lead on pivotal and later clinical trials and 
commercialization. We will receive nearly half of the net profits from the sale of any jointly developed, approved 
products. In addition, we will retain the commercial rights to MultiStem for all other therapeutic applications, 
including treatment of stroke, bone marrow transplantation and oncology support, blood and immune system 
disorders, autoimmune disease, and other indications that we may elect to pursue. 

The Angiotech collaboration does not have a specific termination date, but will terminate upon the earliest to occur 
of the following: 

• 

if at least one cell therapy product has obtained regulatory approval and we and Angiotech have shared 
profits with respect to sales of at least one cell therapy product, the date that there has been no sales for 12 
months of any cell therapy product that has been the subject of profit-sharing, unless a clinical development 
candidate is in at least a phase III clinical or later; and  

• 

the later of (1) the expiration date of the last-to-expire patent licensed to Angiotech, and (2) the 15-year 
anniversary, which would be May 2021. 

Neither we nor Angiotech may terminate the collaboration at will; however, either party may elect at certain points 
to not move forward with individual product development programs. If either party breaches its material obligations 
and fails to cure that breach within 60 days after notice from the non-breaching party, the non-breaching party may 
terminate the collaboration. Angiotech has a right to immediately terminate the collaboration upon certain 
bankruptcy events involving us. Angiotech also has the right to terminate the collaboration upon 120 days’ prior 

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notice if Angiotech, in its reasonable judgment, determines that: (1) a primary endpoint in a clinical trial within a 
clinical development plan has not been met; (2) the clinical efficacy and/or safety with respect to a clinical 
development candidate or a cell therapy product have not been demonstrated; (3) applicable regulatory requirements 
for cells, a clinical development candidate or a cell therapy product in one or more major markets shall have a 
material adverse impact on the ability to obtain regulatory approval for a cell therapy product in such markets; (4) 
our data regarding cells, a clinical development candidate or a cell therapy product were obtained, in whole or in 
part, through scientific fraud; or (5) a cell therapy product is not (or is not expected to be) commercially viable or 
profitable in at least one major market. 

Bristol-Myers Squibb 

In December 2000, we entered into a collaboration with Bristol-Myers Squibb to provide cell lines expressing well 
validated drug targets produced using our RAGE technology for compound screening and development. This initial 
collaboration was expanded in 2002 and again in 2006, and is now in its final phase as amended in 2009. Bristol-
Myers Squibb uses the cell lines in its internal drug development programs and, in exchange, we receive license fee 
and milestone payments and will be entitled to receive royalties on the sale of any approved products. Depending on 
the use of a cell line by Bristol-Myers Squibb and the progress of drug development programs benefiting from the 
use of such a cell line, we may receive as much as approximately $5.5 million per cell line in additional license fees 
and milestone payments, though we cannot assure you that any further milestones will be achieved or that we will 
receive any additional milestone payments. In September 2008, Bristol-Myers Squibb successfully advanced into 
phase II clinical development a drug candidate discovered using a target provided by us, thereby triggering a clinical 
development milestone payment to us. 

We intend to continue to prepare and deliver validated drug targets for use by Bristol-Myers Squibb in its drug 
discovery efforts until the collaboration objectives have been fulfilled. We will remain entitled to receive license fees 
for targets delivered to Bristol-Myers Squibb, as well as milestone payments and royalties on compounds developed 
by Bristol-Myers Squibb using our technology. Beyond 2009, we anticipate that Bristol-Myers Squibb’s demand for 
new targets will be substantially reduced or cease altogether. 

The Bristol-Myers Squibb collaboration does not have a specific termination date, but will terminate when Bristol-
Myers Squibb no longer has an obligation to pay us royalties, which obligation generally continues until the later of 
the expiration of the Bristol-Myers Squibb patent covering an approved product and ten years after commercial sales 
of that product began. Though we expect Bristol-Myers Squibb to file for and be issued patents for products 
developed under the collaboration, we are not aware of any patents issued to Bristol-Myers Squibb covering any 
potential products related to the collaboration. If either party breaches its material obligations and fails to cure that 
breach within 60 days after notice from the non-breaching party, the non-breaching party may terminate the 
collaboration. 

Competition 

We face significant competition with respect to the various dimensions of our business. With regard to our efforts to 
develop MultiStem as a novel stem cell therapy, currently, there are a number of companies that are actively 
developing stem cell products, which encompass a range of different cell types, including embryonic stem cells, 
umbilical cord stem cells, adult-derived stem cells, and processed bone marrow derived cells. 

Osiris is currently engaged in multiple phase II and phase III clinical trials involving Prochymal, an allogeneic stem 
cell product based on mesenchymal stem cells, or MSCs, that are obtained from healthy consenting donors, and are 
administered without tissue matching. However, in contrast to MultiStem, MSCs display limited expansion potential 
and more limited biological plasticity. In November 2008, Osiris announced a partnership in which Genzyme 
acquired development rights to Prochymal for certain markets outside the United States and Canada in exchange for 
$130 million in license fees, up to $1.25 billion in clinical and sales milestones, and royalties. Osiris retains 
commercial development rights to Prochymal for the United States and Canada. 

Other public companies are developing stem-related therapies, including Geron, Aastrom Biosciences, Stem Cells 
Inc., Viacell, Celgene, Advanced Cell Technology, CRYO-CELL International, Mesoblast Limited, Pluristem and 
Cytori Therapeutics. In addition, private companies, such as Cognate Therapeutics, Gamida Cell, Plureon, Cellerix 
and others, are also developing cell therapy related products or capabilities. Given the magnitude of the potential 
opportunity for stem cell therapy, we expect competition in this area to intensify in the coming years. 

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We also face competition in our efforts to develop compounds for the treatment of obesity. There are already 
approved therapeutic products on the market, such as Xenical (also known as Alli), which is marketed by Roche, and 
Meridia, which is marketed by Abbott Pharmaceuticals. However, both of these drugs have reported side effects that 
we believe have limited their adoption by patients and clinicians. For example, potential side effects associated with 
taking Xenical / Alli include cramping, intestinal discomfort, flatulence, diarrhea, and leakage of oily stool. Potential 
side effects associated with taking Meridia include increased blood pressure and heart rate, headache, dry mouth, 
constipation, and insomnia. Individuals with high blood pressure, heart disease, irregular heartbeat, or a history of 
stroke are also cautioned not to take Meridia. 

There are many other companies attempting to develop novel treatments for obesity, and a wide range of approaches 
are being taken. Some of these companies include large, multinational pharmaceutical companies such as Bristol-
Myers Squibb, Merck, Roche, Sanofi-Aventis, GlaxoSmithKline, Eli Lilly and others. There are also a variety of 
biotechnology companies developing treatments for obesity, including Arena Pharmaceuticals, Orexigen, Vivus, 
Neurosearch, Amgen, Regeneron, Nastech Pharmaceutical Company, Alizyme, Amylin Pharmaceuticals, Neurocrine 
Biosciences, Shionogi, Metabolic Pharmaceuticals, Kyorin Pharmaceutical, and others. It is likely that, given the 
magnitude of the market opportunity, many companies will continue to focus on the obesity area, and that 
competition will remain high. If we are successful at developing a 5HT2c agonist as a safe and effective treatment 
for obesity, it is likely that other companies will attempt to develop safer and more effective compounds in the same 
class, or will attempt to combine therapies in an effort to establish a safer and more effective therapeutic product. 

Finally, we face competition with respect to our ability to produce drug targets for our drug development programs. 
There are many companies with established intellectual property that seek to restrict or protect the use of specific 
drug targets, including Incyte, Millennium Pharmaceuticals, Human Genome Sciences, Lexicon Genetics, CuraGen, 
Exelixis, Myriad Genetics, Sangamo BioSciences, and others. 

We believe our most significant competitors are fully integrated pharmaceutical companies and more established 
biotechnology companies that have substantially greater financial, technical, sales, marketing, and human resources 
than we do. These companies may succeed in obtaining regulatory approval for competitive products more rapidly 
than we can for our products. In addition, our competitors may develop technologies and products that are cheaper, 
safer or more effective than those being developed by us or that would render our technology obsolete. Furthermore, 
some of these companies may feel threatened by our activities and attempt to delay or impede our efforts to develop 
our products or apply our technologies. 

Intellectual Property 

We rely on a combination of patent applications, patents, trademarks, and contractual provisions to protect our 
proprietary rights. We believe that to have a competitive advantage, we must develop and maintain the proprietary 
aspects of our technologies. Currently, we require our officers, employees, consultants, contractors, manufacturers, 
outside scientific collaborators and sponsored researchers, and other advisors to execute confidentiality agreements 
in connection with their employment, consulting, or advisory relationships with us, where appropriate. We also 
require our employees, consultants, and advisors who we expect to work on our products to agree to disclose and 
assign to us all inventions conceived during the work day, developed using our property, or which relate to our 
business. 

We have a broad patent estate with claims directed to compositions, methods of production, and methods of use of 
certain non-embryonic stem cells and related technologies. We acquired ownership of part of our stem cell 
technology and intellectual property as a result of our 2003 acquisition of a holding company, which held the rights 
to the technology originally discovered at the University of Minnesota. We also have an exclusive license to 
additional MAPC-related inventions (or in other words, improvements) developed by the University of Minnesota 
through May 2009, and under a collaborative research agreement with the Katholieke Universiteit Leuven, or KUL, 
we have an exclusive license to MAPC-related inventions developed at KUL using the MAPC technology or 
intellectual property or that result from sponsored research funded by us. We also own and license additional 
intellectual property develop by us and others. We have fourteen issued patents and more than 120 patent 
applications related to our stem cell technologies. Our current intellectual property estate, which may broaden over 
time, could provide coverage for our cell compositions, methods of use, manufacturing processes, and product 
candidates through as late as 2028. 

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We have established a broad intellectual property portfolio related to our key functional genomics technologies and 
product candidates. We have a broad patent estate with claims directed to compositions, methods of making, and 
methods of using our small molecule drug candidates. We have filed four patent applications with broad claims 
directed to ATHX-105, related compounds in the same chemical series from which ATHX-105 was derived, and 
back-up and second generation compounds from distinct chemical series. In our Histamine H3 program, we have 
filed four patent applications with broad claims directed to compounds from two distinct chemical series. All 
compounds described in these patent applications were discovered at Athersys. In addition, we currently have 
fourteen issued United States patents and various issued international patents relating to compositions and methods 
for the RAGE technology. These patents will expire in 2017. There are also several patent applications relating to 
human proteins and candidate drug targets that we have identified through the application of RAGE and our other 
technologies. The RAGE technology was developed by Dr. John Harrington and other Athersys scientists internally 
in the mid-1990s. 

We believe that we have broad freedom to use and commercially develop our technologies and product candidates. 
However, if successful, a patent infringement suit brought against us may force us or any of our collaborators or 
licensees to stop or delay developing, manufacturing, or selling potential products that are claimed to infringe a third 
party’s intellectual property, unless that party grants us rights to use its intellectual property. In such cases, we may 
be required to obtain licenses to patents or proprietary rights of others to continue to commercialize our products. 
However, we may not be able to obtain any licenses required under any patents or proprietary rights of third parties 
on acceptable terms, or at all. Even if we were able to obtain rights to the third party’s intellectual property, these 
rights may be non-exclusive, thereby giving our competitors access to the same intellectual property. Ultimately, we 
may be unable to commercialize some of our potential products or may have to cease some of our business 
operations as a result of patent infringement claims, which could severely harm our business. 

Research and Development 

Our research and development costs, which consist primarily of costs associated with external clinical trial costs, 
preclinical study fees, manufacturing costs, salaries and related personnel costs, legal expenses resulting from 
intellectual property application processes, and laboratory supply and reagent costs, were $11.9 million in 2009, 
$16.5 million in 2008, and $15.8 million in 2007. 

Government Regulation 

Any products we may develop and our research and development activities are subject to stringent government 
regulation in the United States by the FDA and, in many instances, by corresponding foreign and state regulatory 
agencies. The European Union, or EU, has vested centralized authority in the European Medicines Evaluation 
Agency and Committee on Proprietary Medicinal Products to standardize review and approval across EU member 
nations. 

These regulatory agencies enforce comprehensive statutes, regulations, and guidelines governing the drug 
development process. This process involves several steps. Initially, the company must generate preclinical data to 
show safety before human testing may be initiated. In the United States, the drug company must submit an IND to 
the FDA prior to securing authorization for human testing. The IND must contain adequate data on product 
candidate chemistry, toxicology and metabolism and, where appropriate, animal research testing to support initial 
safety. 

A CTA is the European equivalent of the U.S. IND. CTA requirements are issued by each competent authority within 
the European Union and are enacted by local laws and Directives. 

Any of our product candidates will require regulatory approval and compliance with regulations made by United 
States and foreign government agencies prior to commercialization in such countries. The process of obtaining FDA 
or foreign regulatory agency approval has historically been extremely costly and time consuming. The FDA 
regulates, among other things, the development, testing, manufacture, safety, efficacy, record keeping, labeling, 
storage, approval, advertising, promotion, sale, and distribution of biologics and new drugs. 

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The standard process required by the FDA before a pharmaceutical agent may be marketed in the United States 
includes: 

•  preclinical tests in animals that demonstrate a reasonable likelihood of safety and effectiveness in human 

patients; 

• 

submission to the FDA of an IND, which must become effective before clinical trials in humans can 
commence. If phase I clinical trials are to be conducted initially outside the United States, a different 
regulatory filing is required, depending on the location of the trial; 

•  adequate and well controlled human clinical trials to establish the safety and efficacy of the drug or biologic 

in the intended disease indication; 

• 

for drugs, submission of a New Drug Application, or NDA, or a Biologic License Application, or BLA, with 
the FDA; and 

•  FDA approval of the NDA or BLA before any commercial sale or shipment of the drug. 

Preclinical studies can take several years to complete, and there is no guarantee that an IND based on those studies 
will become effective to permit clinical trials to begin. Once clinical trials are initiated, they generally take five to 
seven years, or longer, to complete. After completion of clinical trials of a new drug or biologic product, FDA 
approval of the NDA or BLA must be obtained. This process requires substantial time and effort and there is no 
assurance that the FDA will accept the NDA or BLA for filing and, even if filed, that the FDA will grant approval. In 
the past, the FDA’s approval of an NDA or BLA has taken, on average, one to two years, but in some instances may 
take substantially longer. If questions regarding safety or efficacy arise, additional studies may be required, followed 
by a resubmission of the NDA or BLA. Review and approval of an NDA or BLA can take up to several years. 

In addition to obtaining FDA approval for each product, each drug manufacturing facility must be inspected and 
approved by the FDA. All manufacturing establishments are subject to inspections by the FDA and by other federal, 
state, and local agencies, and must comply with GMP requirements. We do not currently have any GMP 
manufacturing capabilities, and will rely on contract manufacturers to produce material for any clinical trials that we 
may conduct. 

We must also obtain regulatory approval in other countries in which we intend to market any drug. The requirements 
governing conduct of clinical trials, product licensing, pricing, and reimbursement vary widely from country to 
country. FDA approval does not ensure regulatory approval in other countries. The current approval process varies 
from country to country, and the time spent in gaining approval varies from that required for FDA approval. In some 
countries, the sale price of the drug must also be approved. The pricing review period often begins after market 
approval is granted. Even if a foreign regulatory authority approves a drug product, it may not approve satisfactory 
prices for the product. 

In addition to regulations enforced by the FDA, we are also subject to regulation under the Occupational Safety and 
Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and 
Recovery Act, and other present and potential future federal, state, or local regulations. Our research and 
development involves the controlled use of hazardous materials, chemicals, biological materials, and various 
radioactive compounds. Although we believe that our safety procedures for handling and disposing of such materials 
currently comply in all material respects with the standards prescribed by state and federal regulations, the risk of 
accidental contamination or injury from these materials cannot be completely eliminated. In the event of such an 
accident, we could be held liable for any damages that result and any such liability could exceed our available 
resources. 

Employees 

We believe that our success will be based on, among other things, the quality of our clinical programs, our ability to 
invent and develop superior and innovative technologies and products, and our ability to attract and retain capable 
management and other personnel. We have assembled a high quality team of scientists, clinical development 
managers, and executives with significant experience in the biotechnology and pharmaceutical industries. 

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As of December 31, 2009, we employed 37 full time equivalent employees, 15 with Ph.D. degrees. In addition to 
our employees, we also use the service and support of outside consultants and advisors. None of our employees is 
represented by a union, and we believe relationships with our employees are good. 

Available Information 

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments 
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are 
available free of charge on our website, www.athersys.com, as soon as reasonably practicable after they are filed 
with, or furnished to, the SEC. 

Merger and Name Change 

On June 8, 2007, Athersys, Inc., a Delaware corporation, merged with a wholly owned subsidiary of BTHC VI, Inc., 
a Delaware corporation. On August 31, 2007, Athersys, Inc. changed its name to ABT Holding Company, and 
BTHC VI, Inc. changed its name to Athersys, Inc. In this annual report, unless otherwise indicated or the context 
otherwise requires, all references to “we” or “us” are to Athersys, Inc., the Delaware corporation formerly known as 
BTHC VI, Inc., together with its wholly owned subsidiary, ABT Holding Company, the Delaware corporation 
formerly known as Athersys, Inc. Specific discussions or comments relating only to BTHC VI, Inc. prior to the 
merger described above reference “BTHC VI,” while those relating only to our subsidiary Athersys, Inc. prior to the 
merger reference “Athersys.” 

ITEM 1A. RISK FACTORS  

The statements in this section, as well as statements described elsewhere in this annual report, or in other SEC 
filings, describe risks that could materially and adversely affect our business, financial condition and results of 
operations and the trading price of our equity securities could decline. These risks are not the only risks that we face. 
Our business, financial condition and results of operations could also be affected by additional factors that are not 
presently known to us or that we currently consider to be immaterial to our operations. 

Risks Related To Our Business and Our Industry 

Athersys has incurred losses since inception and we expect to incur significant net losses in the foreseeable future 
and may never become profitable. 

Since Athersys’ inception in 1995, it has incurred significant losses and negative cash flows from operations. 
Athersys has incurred net losses of $19 million in 2007, $18 million in 2008 and $15 million in 2009. As of 
December 31, 2009, we had an accumulated deficit of $194 million, and anticipate incurring additional losses for at 
least the next several years. We expect to spend significant resources over the next several years to enhance our 
technologies and to fund research and development of our pipeline of potential products. To date, substantially all of 
Athersys’ revenue has been derived from corporate collaborations, license agreements and government grants. In 
order to achieve profitability, we must develop products and technologies that can be commercialized by us or 
through future collaborations. Our ability to generate revenues and become profitable will depend on our ability, 
alone or with potential collaborators, to timely, efficiently and successfully complete the development of our product 
candidates. We have never earned revenue from selling a product and we may never do so, as none of our product 
candidates have been approved for sale, since they are currently being tested yet in humans and animal studies. We 
cannot assure you that we will ever earn revenue or that we will ever become profitable. If we sustain losses over an 
extended period of time, we may be unable to continue our business. 

We will need substantial additional funding to develop our products and for our future operations. If we are 
unable to obtain the funds necessary to do so, we may be required to delay, scale back or eliminate our product 
development activities or may be unable to continue our business. 

The development of our product candidates will require a commitment of substantial funds to conduct the costly and 
time-consuming research, which may include preclinical and clinical testing, necessary to obtain regulatory 
approvals and bring our products to market. Net cash used in Athersys’ operations was $12 million in 2007, $16 

- 16 - 

 
 
 
 
 
 
 
 
 
 
 
 
million in 2008 and $5 million in 2009. We expect to have available cash to fund our operations through 2011 based 
on our current business and operational plans and assuming no new financings. Our future capital requirements will 
depend on many factors, including: 

• 

the progress and costs of our research and development programs, including our ability to develop our 
current portfolio of therapeutic products, or discover and develop new ones; 

•  our ability, or our partners ability and willingness, to advance partnered products or programs, and the speed 

in which they are advanced; 

• 

• 

• 

• 

the cost of prosecuting, defending and enforcing patent claims and other intellectual property rights; 

the progress, scope, costs, and results of our preclinical and clinical testing of any current or future 
pharmaceutical or MultiStem related products; 

the time and cost involved in obtaining regulatory approvals;  

the cost of manufacturing our product candidates;  

•  expenses related to complying with GMP of therapeutic product candidates; 

•  costs of financing the purchases of additional capital equipment and development technologies; 

•  competing technological and market developments;  

•  our ability to establish and maintain collaborative and other arrangements with third parties to assist in 

bringing our products to market and the cost of such arrangements; 

• 

the amount and timing of payments or equity investments that we receive from collaborators or changes in or 
terminations of future or existing collaboration and licensing arrangements and the timing and amount of 
expenses we incur to supporting these collaborations and license agreements; 

•  costs associated with the integration of any new operation, including costs relating to future mergers and 

acquisitions with companies that have complementary capabilities; 

•  expenses related to the establishment of sales and marketing capabilities for products awaiting approval or 

products that have been approved; 

• 

the level of our sales and marketing expenses; and  

•  our ability to introduce and sell new products.  

We cannot assure you that we will not need additional capital sooner than currently anticipated. We will need to 
raise substantial additional capital to fund our future operations. We cannot be certain that additional financing will 
be available on acceptable terms or at all, particularly in light of the current credit crisis. In recent years, it has been 
difficult for companies to raise capital due to a variety of factors, which may or may not continue. To the extent we 
raise additional capital through the sale of equity securities, the ownership position of our existing stockholders 
could be substantially diluted. If additional funds are raised through the issuance of preferred stock or debt 
securities, these securities are likely to have rights, preferences and privileges senior to our common stock. 
Fluctuating interest rates could also increase the costs of any debt financing we may obtain. 

Failure to successfully address ongoing liquidity requirements will have a material adverse effect on our business. If 
we are unable to obtain additional capital on acceptable terms when needed, we may be required to take actions that 
harm our business and our ability to achieve cash flow in the future, including possibly the surrender of our rights to 
some technologies or product opportunities, delaying our clinical trials or curtailing or ceasing operations. 

- 17 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We are heavily dependent on the successful development and commercialization of MultiStem, and if we 
encounter delays or difficulties in the development of this product candidate, our business would be harmed. 

We are heavily dependent upon the successful development of MultiStem for certain diseases and conditions 
involving acute or ischemic injury or immune system dysfunction. Our business could be materially harmed if we 
encounter difficulties in the development of this product candidate, such as: 

•  delays in the ability to manufacture the product in quantities or in a form that is suitable for any required 

preclinical studies or clinical trials; 

•  delays in the design, enrollment, implementation or completion of required preclinical studies and clinical 

trials; 

•  an inability to follow our current development strategy for obtaining regulatory approval from the FDA 

because of changes in the regulatory approval process; 

• 

• 

less than desired or complete lack of efficacy or safety in preclinical studies or clinical trials; and 

intellectual property constraints that prevent us from making, using, or commercializing the product 
candidate. 

The results seen in animal testing of our product candidates may not be replicated in humans. 

This annual report discusses the safety and efficacy seen in preclinical testing of our lead product candidates, 
including MultiStem, in animals, but we may not see positive results when our other product candidates undergo 
clinical testing in humans in the future. Preclinical studies and phase I clinical trials are not primarily designed to 
test the efficacy of a product candidate in humans, but rather to: 

• 

• 

• 

test short-term safety and tolerability;  

study the absorption, distribution, metabolism and elimination of the product candidate; 

study the biochemical and physiological effects of the product candidate and the mechanisms of the drug 
action and the relationship between drug levels and effect; and 

•  understand the product candidate’s side effects at various doses and schedules. 

Success in preclinical studies or completed clinical trials does not ensure that later studies or trials, including 
continuing non-clinical studies and large-scale clinical trials, will be successful nor does it necessarily predict future 
results. The rate of failure in drug development is quite high, and many companies in the biotechnology and 
pharmaceutical industries have suffered significant setbacks in advanced clinical trials, even after promising results 
in earlier trials. Product candidates may fail to show desired safety and efficacy in larger and more diverse patient 
populations in later stage clinical trials, despite having progressed through early stage trials. Negative or 
inconclusive results from any of our ongoing preclinical studies or clinical trials could result in delays, 
modifications, or abandonment of ongoing or future clinical trials and the termination of our development of a 
product candidate. Additionally, even if we are able to successfully complete pivotal phase III clinical trials, the 
FDA still may not approve our product candidates. 

Our product candidates are in an early stage of development and we currently have no therapeutic products 
approved for sale. If we are unable to develop, obtain regulatory approval or market any of our product 
candidates, our financial condition will be negatively affected, and we may have to curtail or cease our 
operations. 

We are in the early stage of product development, and we are dependent on the application of our technologies to 
discover or develop therapeutic product candidates. We currently do not sell any approved therapeutic products and 
do not expect to have any products commercially available for several years, if at all. You must evaluate us in light 

- 18 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of the uncertainties and complexities affecting an early stage biotechnology company. Our product candidates 
require additional research and development, preclinical testing, clinical testing and regulatory review and/or 
approvals or clearances before marketing. To date, no one to our knowledge has commercialized any therapeutic 
products using our technologies and we might never commercialize any product using our technologies and strategy. 

In addition, we may not succeed in developing new product candidates as an alternative to our existing portfolio of 
product candidates. If our current product candidates are delayed or fail, or we fail to successfully develop and 
commercialize new product candidates, our financial condition may be negatively affected, and we may have to 
curtail or cease our operations. 

We may not successfully maintain our existing collaborative and licensing arrangements, or establish new ones, 
which could adversely affect our ability to develop and commercialize our product candidates. 

A key element of our business strategy is to commercialize some of our product candidates through collaborations 
with other companies. Our strategy includes establishing collaborations and licensing agreements with one or more 
pharmaceutical, biotechnology or device companies, preferably after we have advanced product candidates through 
the initial stages of clinical development. However, we may not be able to establish or maintain such licensing and 
collaboration arrangements necessary to develop and commercialize our product candidates. Even if we are able to 
maintain or establish licensing or collaboration arrangements, these arrangements may not be on favorable terms and 
may contain provisions that will restrict our ability to develop, test and market our product candidates. Any failure to 
maintain or establish licensing or collaboration arrangements on favorable terms could adversely affect our business 
prospects, financial condition or ability to develop and commercialize our product candidates. 

Our agreements with our collaborators and licensees may have provisions that give rise to disputes regarding the 
rights and obligations of the parties. These and other possible disagreements could lead to termination of the 
agreement or delays in collaborative research, development, supply, or commercialization of certain product 
candidates, or could require or result in litigation or arbitration. Moreover, disagreements could arise with our 
collaborators over rights to intellectual property or our rights to share in any of the future revenues of products 
developed by our collaborators. These kinds of disagreements could result in costly and time-consuming litigation. 
Any such conflicts with our collaborators could reduce our ability to obtain future collaboration agreements and 
could have a negative impact on our relationship with existing collaborators. 

Currently, our material collaborations and licensing arrangements are our collaboration with Pfizer to develop and 
commercialize MultiStem for the treatment of IBD, our product co-development collaboration with Angiotech to 
jointly develop and ultimately market MultiStem for the treatment of damage caused by myocardial infarction and 
peripheral vascular disease, our collaboration agreement with Bristol-Myers Squibb pursuant to which we provide 
cell lines produced using our RAGE technology, and our license with the University of Minnesota pursuant to which 
we license certain aspects of the MultiStem technology. These arrangements do not have specific termination dates; 
rather, each arrangement terminates upon the occurrence of certain events. 

If our collaborators do not devote sufficient time and resources to successfully carry out their contracted duties or 
meet expected deadlines, we may not be able to advance our product candidates in a timely manner or at all. 

Our success depends on the performance by our collaborators of their responsibilities under our collaboration 
arrangements. Some potential collaborators may not perform their obligations in a timely fashion or in a manner 
satisfactory to us. Typically, we cannot control the amount of resources or time our collaborators may devote to our 
programs or potential products that may be developed in collaboration with us. We are currently involved in multiple 
research and development collaborations with academic and research institutions. These collaborators frequently 
depend on outside sources of funding to conduct or complete research and development, such as grants or other 
awards. In addition, our academic collaborators may depend on graduate students, medical students, or research 
assistants to conduct certain work, and such individuals may not be fully trained or experienced in certain areas, or 
they may elect to discontinue their participation in a particular research program, creating an inability to complete 
ongoing research in a timely and efficient manner. As a result of these uncertainties, we are unable to control the 
precise timing and execution of any experiments that may be conducted. 

- 19 - 

 
 
 
 
 
 
 
 
 
Additionally, our current or future corporate collaborators will retain the ability to pursue other research, product 
development or commercial opportunities that may be directly competitive with our programs. If these collaborators 
elect to prioritize or pursue other programs in lieu of ours, we may not be able to advance product development 
programs in an efficient or effective manner, if at all. If a collaborator is pursuing a competitive program and 
encounters unexpected financial or capability limitations, they may be motivated to reduce the priority placed on our 
programs or delay certain activities related to our programs or be unwilling to properly fund their share of the 
development expenses for our programs. Any of these developments could harm our product and technology 
development efforts, which could seriously harm our business. 

Under the terms of our collaboration agreement with Angiotech, either party may choose, following the completion 
of phase I trials, to opt-out of its obligation to fund further product development on a product-by-product basis, 
provided no clinical trials concerning such product candidate are currently ongoing. If Angiotech should decide to 
opt-out of funding the development of any of the product candidates for the covered indications, for any reason, we 
may be unable to fund the development on our own and could be forced to halt one or more MultiStem development 
programs. 

Even if we or our collaborators receive regulatory approval for our products, those products may never be 
commercially successful. 

Even if we develop pharmaceuticals or MultiStem related products that obtain the necessary regulatory approval, 
and we have access to the necessary manufacturing, sales, marketing and distribution capabilities that we need, our 
success depends to a significant degree upon the commercial success of those products. If these products fail to 
achieve or subsequently maintain market acceptance or commercial viability, our business would be significantly 
harmed because our future royalty revenue or other revenue would be dependent upon sales of these products. Many 
factors may affect the market acceptance and commercial success of any potential products that we may discover, 
including: 

•  health concerns, whether actual or perceived, or unfavorable publicity regarding our obesity drugs, stem cell 

products or those of our competitors; 

• 

• 

the timing of market entry as compared to competitive products;  

the rate of adoption of products by our collaborators and other companies in the industry; 

•  any product labeling that may be required by the FDA or other United States or foreign regulatory agencies 

for our products or competing or comparable products; 

•  convenience and ease of administration;  

•  pricing;  

•  perceived efficacy and side effects;  

•  marketing;  

•  availability of alternative treatments;  

• 

levels of reimbursement and insurance coverage; and  

•  activities by our competitors.  

We may experience delays in clinical trials and regulatory approval relating to our products that could adversely 
affect our financial results and our commercial prospects for our pharmaceutical or stem cell products. 

In addition to the regulatory requirements for our pharmaceutical programs, we will also require regulatory 
approvals for each distinct application of our stem cell product. In each case, we will be required to conduct clinical 
trials to demonstrate safety and efficacy of MultiStem, or various products that incorporate or use MultiStem. For 
product candidates that advance to clinical testing, we cannot be certain that we or a collaborator will successfully 
complete the clinical trials necessary to receive regulatory product approvals. This process is lengthy and expensive. 

- 20 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We intend to seek approval for our product candidates through the FDA approval process. To obtain regulatory 
approvals, we must, among other requirements, complete clinical trials showing that our products are safe and 
effective for a particular indication. Under the approval process, we must submit clinical and non-clinical data to 
demonstrate the medication is safe and effective. For example, we must be able to provide data and information, 
which may include extended pharmacology, toxicology, reproductive toxicology, bioavailability and genotoxicity 
studies to establish suitability for phase II or large scale phase III clinical trials. 

All of our product candidates are at an early stage of development. As these programs enter and progress through 
early stage clinical development, or complete additional non-clinical testing, an indication of a lack of safety or lack 
of efficacy may result in the early termination of an ongoing trial, or may cause us or any of our collaborators to 
forego further development of a particular product candidate or program. The FDA or other regulatory agencies may 
require extensive clinical trials or other testing prior to granting approval, which could be costly and time consuming 
to conduct. Any of these developments would hinder, and potentially prohibit, our ability to commercialize our 
product candidates. We cannot assure you that clinical trials will in fact demonstrate that our products are safe or 
effective. 

Additionally, we may not be able to find acceptable patients or may experience delays in enrolling patients for our 
currently planned or any future clinical trials. The FDA or we may suspend our clinical trials at any time if either 
believes that we are exposing the subjects participating in the trials to unacceptable health risks. The FDA or 
institutional review boards and/or institutional biosafety committees at the medical institutions and healthcare 
facilities where we seek to sponsor clinical trials may not permit a trial to proceed or may suspend any trial 
indefinitely if they find deficiencies in the conduct of the trials. 

Product development costs to us and our potential collaborators will increase if we have delays in testing or 
approvals or if we need to perform more or larger clinical trials than planned. We expect to continue to rely on third 
party clinical investigators at medical institutions and healthcare facilities to conduct our clinical trials, and, as a 
result, we may face additional delaying factors outside our control. Significant delays may adversely affect our 
financial results and the commercial prospects for our product candidates and delay our ability to become profitable. 

If our pharmaceutical product candidates do not successfully complete the clinical trial process, we will not be 
able to partner or market them. Even successful clinical trials may not result in a partnering transaction or a 
marketable product and may not be entirely indicative of a product’s safety or efficacy. 

Many factors, known and unknown, can adversely affect clinical trials and the ability to evaluate a product’s 
efficacy. During the course of treatment, patients can die or suffer other adverse events for reasons that may or may 
not be related to the proposed product being tested. Even if unrelated to our product, certain events can nevertheless 
adversely impact our clinical trials. As a result, our ability to ultimately develop and market the products and obtain 
revenues would suffer. 

Even promising results in preclinical studies and initial clinical trials do not ensure successful results in later clinical 
trials, which test broader human use of our products. Many companies in our industry have suffered significant 
setbacks in advanced clinical trials, despite promising results in earlier trials. Even successful clinical trials may not 
result in a marketable product or be indicative of the efficacy or safety of a product. Many factors or variables could 
affect the results of clinical trials and cause them to appear more promising than they may otherwise be. Product 
candidates that successfully complete clinical trials could ultimately be found to be unsafe or ineffective. 

In addition, our ability to complete clinical trials depends on many factors, including obtaining adequate clinical 
supplies and having a sufficient rate of patient recruitment. For example, patient recruitment is a function of many 
factors, including: 

• 

• 

• 

the size of the patient population;  

the proximity of patients to clinical sites;  

the eligibility criteria for the trial;  

- 21 - 

 
 
 
 
 
 
 
 
 
 
 
 
• 

• 

the perceptions of investigators and patients regarding safety; and  

the availability of other treatment options.  

Even if we obtain regulatory approval of any of our product candidates, the approved products may be subject to 
post-approval studies and will remain subject to ongoing regulatory requirements. If we fail to comply, or if 
concerns are identified in subsequent studies, our approval could be withdrawn and our product sales could be 
suspended. 

If we are successful at obtaining regulatory approval for MultiStem or any of our other product candidates, 
regulatory agencies in the United States and other countries where a product will be sold may require extensive 
additional clinical trials or post-approval clinical studies that are expensive and time consuming to conduct. In 
particular, therapeutic products administered for the treatment of persistent or chronic conditions, such as obesity, 
are likely to require extensive follow-up studies and close monitoring of patients after regulatory approval has been 
granted, for any signs of adverse effects that occur over a long period of time. These studies may be expensive and 
time consuming to conduct and may reveal side effects or other harmful effects in patients that use our therapeutic 
products after they are on the market, which may result in the limitation or withdrawal of our drugs from the market. 
Alternatively, we may not be able to conduct such additional trials, which might force us to abandon our efforts to 
develop or commercialize certain product candidates. Even if post-approval studies are not requested or required, 
after our products are approved and on the market, there might be safety issues that emerge over time that require a 
change in product labeling or that require withdrawal of the product from the market, which would cause our 
revenue to decline. 

Additionally, any products that we may successfully develop will be subject to ongoing regulatory requirements 
after they are approved. These requirements will govern the manufacturing, packaging, marketing, distribution, and 
use of our products. If we fail to comply with such regulatory requirements, approval for our products may be 
withdrawn, and product sales may be suspended. We may not be able to regain compliance, or we may only be able 
to regain compliance after a lengthy delay, significant expense, lost revenues and damage to our reputation. 

We may rely on third parties to manufacture our pharmaceutical product candidates and our MultiStem product 
candidate. There can be no guarantee that we can obtain sufficient and acceptable quantities of our 
pharmaceutical product candidates or of our MultiStem product candidate on acceptable terms, which may delay 
or impair our ability to develop, test and market such products. 

Our current business strategy relies on third parties to manufacture and produce our pharmaceutical product 
candidates and MultiStem product candidate in accordance with good manufacturing practices established by the 
FDA, or similar regulations in other countries. Our pharmaceutical product candidates or MultiStem product 
candidate may be in competition with other products or companies for access to these facilities and may be subject 
to delays in manufacture if third parties give other products greater priority than our product candidates. These third 
parties may not deliver sufficient quantities of our pharmaceutical or MultiStem product candidates, manufacture 
our pharmaceutical and MultiStem product candidates in accordance with specifications, or comply with applicable 
government regulations. Additionally, if the manufactured products fail to perform as specified, our business and 
reputation could be severely impacted. 

We expect to enter into additional manufacturing agreements for the production of product materials. If any 
manufacturing agreement is terminated or any third party collaborator experiences a significant problem that could 
result in a delay or interruption in the supply of product materials to us, there are very few contract manufacturers 
who currently have the capability to produce our pharmaceutical product candidates or MultiStem product on 
acceptable terms, or on a timely and cost-effective basis. We cannot assure you that manufacturers on whom we will 
depend will be able to successfully produce our pharmaceutical product candidates or MultiStem product on 
acceptable terms, or on a timely or cost-effective basis. We cannot assure you that manufacturers will be able to 
manufacture our products in accordance with our product specifications or will meet FDA or other requirements. We 
must have sufficient and acceptable quantities of our product materials to conduct our clinical trials and to market 
our product candidates, if and when such products have been approved by the FDA for marketing. If we are unable 
to obtain sufficient and acceptable quantities of our product material, we may be required to delay the clinical testing 
and marketing of our products. 

- 22 - 

 
 
 
 
 
 
 
 
If our contract manufacturers are not satisfying our needs and we decide not to establish our own manufacturing 
capabilities, it could be difficult and very expensive to change suppliers. Any change in the location of 
manufacturing would require FDA inspection and approval, which could interrupt the supply of products and may be 
time-consuming and expensive to obtain. If we are unable to identify alternative contract manufacturers that are 
qualified to produce our products, we may have to temporarily suspend the production of products, and would be 
unable to generate revenue from the sale of products. 

If we do not comply with applicable regulatory requirements in the manufacture and distribution of our product 
candidates, we may incur penalties that may inhibit our ability to commercialize our products and adversely affect 
our revenue. 

Our failure or the failure of our potential collaborators or third party manufacturers to comply with applicable FDA 
or other regulatory requirements including manufacturing, quality control, labeling, safety surveillance, promoting 
and reporting may result in criminal prosecution, civil penalties, recall or seizure of our products, total or partial 
suspension of production or an injunction, as well as other regulatory action against our product candidates or us. 
Discovery of previously unknown problems with a product, supplier, manufacturer or facility may result in 
restrictions on the sale of our products, including a withdrawal of such products from the market. The occurrence of 
any of these events would negatively impact our business and results of operations. 

If we are unable to create and maintain sales, marketing and distribution capabilities or enter into agreements 
with third parties to perform those functions, we will not be able to commercialize our product candidates. 

We currently have no sales, marketing or distribution capabilities. Therefore, to commercialize our product 
candidates, if and when such products have been approved and are ready for marketing, we expect to collaborate 
with third parties to perform these functions. We will either need to share the value generated from the sale of any 
products and/or pay a fee to the contract sales organization. If we establish any such relationships, we will be 
dependent upon the capabilities of our collaborators or contract service providers to effectively market, sell, and 
distribute our product. If they are ineffective at selling and distributing our product, or if they choose to emphasize 
other products over ours, we may not achieve the level of product sales revenues that we would like. If conflicts 
arise, we may not be able to resolve them easily or effectively, and we may suffer financially as a result. If we 
cannot rely on the sales, marketing and distribution capabilities of our collaborators or of contract service providers, 
we may be forced to establish our own capabilities. We have no experience in developing, training or managing a 
sales force and will incur substantial additional expenses if we decide to market any of our future products directly. 
Developing a marketing and sales force is also time consuming and could delay launch of our future products. In 
addition, we will compete with many companies that currently have extensive and well-funded marketing and sales 
operations. Our marketing and sales efforts may be unable to compete successfully against these companies. 

If we are unable to attract and retain key personnel and advisors, it may adversely affect our ability to obtain 
financing, pursue collaborations or develop our product candidates. 

We are highly dependent on our executive officers Gil Van Bokkelen, Ph.D., our Chief Executive Officer, as well as 
other executive and scientific officers, including William Lehmann, J.D., M.B.A., President and Chief Operating 
Officer, John Harrington, Ph.D., Chief Scientific Officer and Executive Vice President, Robert Deans, Ph.D., Senior 
Vice President, Regenerative Medicine, and Laura Campbell, CPA, Vice President of Finance, as well as other 
personnel. 

These individuals are integral to the development and integration of our technologies and to our present and future 
scientific collaborations, including managing the complex research processes and the product development and 
potential commercialization processes. Given their leadership, extensive technical, scientific and financial expertise 
and management and operational experience, these individuals would be difficult to replace. Consequently, the loss 
of services of one or more of these named individuals could result in product development delays or the failure of 
our collaborations with current and future collaborators, which, in turn, may hurt our ability to develop and 
commercialize products and generate revenues. 

- 23 - 

 
 
 
 
 
 
 
 
 
 
Our future success depends on our ability to attract, retain and motivate highly qualified management and scientific, 
development and commercial personnel and advisors. If we are unable to attract and retain key personnel and 
advisors, it may negatively affect our ability to successfully develop, test and commercialize our product candidates. 

Our ability to compete in the biopharmaceutical market may decline if we do not adequately protect our 
proprietary technologies. 

Our success depends in part on our ability to obtain and maintain intellectual property that protects our technologies 
and our pharmaceutical products. Patent positions may be highly uncertain and may involve complex legal and 
factual questions, including the ability to establish patentability of compounds and methods for using them for which 
we seek patent protection. We cannot predict the breadth of claims that will ultimately be allowed in our patent 
applications, if any, including those we have in-licensed or the extent to which we may enforce these claims against 
our competitors. We have filed multiple patent applications that seek to protect the composition of matter and 
method of use related to our small molecule programs. In addition, we are prosecuting numerous distinct patent 
families directed to composition, methods of production, and methods of use of MultiStem and related technologies. 
If we are unsuccessful in obtaining and maintaining these patents related to products and technologies, we may 
ultimately be unable to commercialize products that we are developing or may elect to develop in the future. 

The degree of future protection for our proprietary rights is therefore highly uncertain and we cannot assure you 
that: 

•  we were the first to file patent applications or to invent the subject matter claimed in patent applications 

relating to the technologies or product candidates upon which we rely; 

•  others will not independently develop similar or alternative technologies or duplicate any of our 

technologies; 

•  others did not publicly disclose our claimed technology before we conceived the subject matter included in 

any of our patent applications; 

•  any of our pending or future patent applications will result in issued patents; 

•  any of our patent applications will not result in interferences or disputes with third parties regarding priority 

of invention; 

•  any patents that may be issued to us, our collaborators or our licensors will provide a basis for commercially 
viable products or will provide us with any competitive advantages or will not be challenged by third parties; 

•  we will develop additional proprietary technologies that are patentable; 

• 

the patents of others will not have an adverse effect on our ability to do business; or 

•  new proprietary technologies from third parties, including existing licensors, will be available for licensing to 

us on reasonable commercial terms, if at all. 

In addition, patent law outside the United States is uncertain and in many countries intellectual property laws are 
undergoing review and revision. The laws of some countries do not protect intellectual property rights to the same 
extent as domestic laws. It may be necessary or useful for us to participate in opposition proceedings to determine 
the validity of our competitors’ patents or to defend the validity of any of our or our licensor’s future patents, which 
could result in substantial costs and would divert our efforts and attention from other aspects of our business. With 
respect to certain of our inventions, we have decided not to pursue patent protection outside the United States, both 
because we do not believe it is cost effective and because of confidentiality concerns. Accordingly, our international 
competitors could develop and receive foreign patent protection for gene sequences and functions for which we are 
seeking United States patent protection, enabling them to sell products that we have developed. 

- 24 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Technologies licensed to us by others, or in-licensed technologies, are important to our business. The scope of our 
rights under our licenses may be subject to dispute by our licensors or third parties. Our rights to use these 
technologies and to practice the inventions claimed in the licensed patents are subject to our licensors abiding by the 
terms of those licenses and not terminating them. In particular, we depend on certain technologies relating to our 
MultiStem technology licensed from the University of Minnesota, and the termination of this license could result in 
our loss of some of the rights that enable us to utilize this technology, and our ability to develop products based on 
MultiStem could be seriously hampered. 

In addition, we may in the future acquire rights to additional technologies by licensing such rights from existing 
licensors or from third parties. Such in-licenses may be costly. Also, we generally do not control the patent 
prosecution, maintenance or enforcement of in-licensed technologies. Accordingly, we are unable to exercise the 
same degree of control over this intellectual property as we do over our internally developed technologies. 
Moreover, some of our academic institution licensors, collaborators and scientific advisors have rights to publish 
data and information to which we have rights. If we cannot maintain the confidentiality of our technologies and 
other confidential information in connection with our collaborations, our ability to protect our proprietary 
information or obtain patent protection in the future may be impaired, which could have a significant adverse effect 
on our business, financial condition and results of operations. 

We may not have adequate protection for our unpatented proprietary information, which could adversely affect 
our competitive position. 

In addition to patents, we will substantially rely on trade secrets, know-how, continuing technological innovations 
and licensing opportunities to develop and maintain our competitive position. However, others may independently 
develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets 
or disclose our technology. To protect our trade secrets, we may enter into confidentiality agreements with 
employees, consultants and potential collaborators. However, these agreements may not provide meaningful 
protection of our trade secrets or adequate remedies in the event of unauthorized use or disclosure of such 
information. Likewise, our trade secrets or know-how may become known through other means or be independently 
discovered by our competitors. Any of these events could prevent us from developing or commercializing our 
product candidates. 

Disputes concerning the infringement or misappropriation of our proprietary rights or the proprietary rights of 
others could be time consuming and extremely costly and could delay our research and development efforts. 

Our commercial success, if any, will be significantly harmed if we infringe the patent rights of third parties or if we 
breach any license or other agreements that we have entered into with regard to our technology or business. 

We are aware of other companies and academic institutions that have been performing research in the areas of adult 
derived stem cells. In particular, other companies and academic institutions have announced that they have identified 
nonembryonic stem cells isolated from bone marrow or other tissues that have the ability to form a range of cell 
types, or display the property of pluripotency. To the extent any of these companies or academic institutions 
currently have, or obtain in the future, broad patent claims, such patents could block our ability to use various 
aspects of our discovery and development process and might prevent us from developing or commercializing newly 
discovered applications of our MultiStem technology, or otherwise conducting our business. In addition, it is 
possible that some of the pharmaceutical product candidates we are developing may not be patentable or may be 
covered by intellectual property of third parties. 

We are not currently a party to any litigation, interference, opposition, protest, reexamination or any other potentially 
adverse governmental, ex parte or inter-party proceeding with regard to our patent or trademark positions. However, 
the life sciences and other technology industries are characterized by extensive litigation regarding patents and other 
intellectual property rights. Many life sciences and other technology companies have employed intellectual property 
litigation as a way to gain a competitive advantage. If we become involved in litigation, interference proceedings, 
oppositions, reexamination, protest or other potentially adverse intellectual property proceedings as a result of 
alleged infringement by us of the rights of others or as a result of priority of invention disputes with third parties, we 
might have to spend significant amounts of money, time and effort defending our position and we may not be 
successful. In addition, any claims relating to the infringement of third-party proprietary rights or proprietary 

- 25 - 

 
 
 
 
 
 
 
 
determinations, even if not meritorious, could result in costly litigation, lengthy governmental proceedings, divert 
management’s attention and resources, or require us to enter into royalty or license agreements that are not 
advantageous to us. If we do not have the financial resources to support such litigation or appeals, we may forfeit or 
lose certain commercial rights. Even if we have the financial resources to continue such litigation or appeals, we 
may lose. In the event that we lose, we may be forced to pay very substantial damages; we may have to obtain costly 
license rights, which may not be available to us on acceptable terms, if at all; or we may be prohibited from selling 
products that are found to infringe the patent rights of others. 

Should any person have filed patent applications or obtained patents that claim inventions also claimed by us, we 
may have to participate in an interference proceeding declared by the relevant patent regulatory agency to determine 
priority of invention and, thus, the right to a patent for these inventions in the United States. Such a proceeding 
could result in substantial cost to us even if the outcome is favorable. Even if successful on priority grounds, an 
interference action may result in loss of claims based on patentability grounds raised in the interference action. 
Litigation, interference proceedings or other proceedings could divert management’s time and efforts. Even 
unsuccessful claims could result in significant legal fees and other expenses, diversion of management’s time and 
disruption in our business. Uncertainties resulting from initiation and continuation of any patent proceeding or 
related litigation could harm our ability to compete and could have a significant adverse effect on our business, 
financial condition and results of operations. 

An adverse ruling arising out of any intellectual property dispute, including an adverse decision as to the priority of 
our inventions, could undercut or invalidate our intellectual property position. An adverse ruling could also subject 
us to significant liability for damages, including possible treble damages, prevent us from using technologies or 
developing products, or require us to negotiate licenses to disputed rights from third parties. Although patent and 
intellectual property disputes in the technology area are often settled through licensing or similar arrangements, 
costs associated with these arrangements may be substantial and could include license fees and ongoing royalties. 
Furthermore, necessary licenses may not be available to us on satisfactory terms, if at all. Failure to obtain a license 
in such a case could have a significant adverse effect on our business, financial condition and results of operations. 

Many potential competitors, including those who have greater resources and experience than we do, may develop 
products or technologies that make ours obsolete or noncompetitive. 

We face significant competition with respect to our product candidates. With regard to our efforts to develop 
MultiStem as a novel stem cell therapy, currently, there are a number of companies that are actively developing stem 
cell products, which encompass a range of different cell types, including embryonic stem cells, adult-derived stem 
cells, and processed bone marrow derived cells. Our future success will depend on our ability to maintain a 
competitive position with respect to technological advances. Technological developments by others may result in 
our MultiStem product platform and technologies, as well as our pharmaceutical formulations, becoming obsolete. 

We are subject to significant competition from pharmaceutical, biotechnology and diagnostic companies, academic 
and research institutions, and government or other publicly funded agencies that are pursuing the development of 
therapeutic products and technologies that are substantially similar to our proposed therapeutic products and 
technologies, or that otherwise address the indications we are pursuing. Our most significant competitors include 
major pharmaceutical companies such as Pfizer, Bristol-Myers Squibb, Merck, Roche, Johnson & Johnson, Sanofi-
Aventis and GlaxoSmithKline as well as smaller biotechnology or biopharmaceutical companies such as Arena 
Pharmaceuticals, Orexigen, Celgene, Vivus, Osiris, Geron, Aastrom, Stem Cells Inc., and Cytori Therapeutics. Most 
of our current and potential competitors have substantially greater research and development capabilities and 
financial, scientific, regulatory, manufacturing, marketing, sales, human resources, and experience than we do. Many 
of our competitors have several therapeutic products that have already been developed, approved and successfully 
commercialized, or are in the process of obtaining regulatory approval for their therapeutic products in the United 
States and internationally. 

Many of these companies have substantially greater capital resources, research and development resources and 
experience, manufacturing capabilities, regulatory expertise, sales and marketing resources, established relationships 
with consumer products companies and production facilities. 

Universities and public and private research institutions are also potential competitors. While these organizations 
primarily have educational objectives, they may develop proprietary technologies related to stem cells or secure 
patent protection that we may need for the development of our technologies and products. We may attempt to license 
these proprietary technologies, but these licenses may not be available to us on acceptable terms, if at all. 

- 26 - 

 
 
 
 
 
 
 
 
Our competitors, either alone or with their collaborative partners, may succeed in developing technologies or 
products that are more effective, safer, more affordable or more easily commercialized than ours, and our 
competitors may obtain intellectual property protection or commercialize products sooner than we do. 
Developments by others may render our product candidates or our technologies obsolete. 

Our current product discovery and development collaborators are not prohibited from entering into research and 
development collaboration agreements with third parties in any product field. Our failure to compete effectively 
would have a significant adverse effect on our business, financial condition and results of operations. 

We will use hazardous and biological materials in our business. Any claims relating to improper handling, 
storage or disposal of these materials could be time consuming and costly. 

Our products and processes will involve the controlled storage, use and disposal of certain hazardous and biological 
materials and waste products. We and our suppliers and other collaborators are subject to federal, state and local 
regulations governing the use, manufacture, storage, handling and disposal of materials and waste products. Even if 
we and these suppliers and collaborators comply with the standards prescribed by law and regulation, the risk of 
accidental contamination or injury from hazardous materials cannot be completely eliminated. In the event of an 
accident, we could be held liable for any damages that result, and any liability could exceed the limits or fall outside 
the coverage of any insurance we may obtain and exceed our financial resources. We may not be able to maintain 
insurance on acceptable terms, or at all. We may incur significant costs to comply with current or future 
environmental laws and regulations. 

If we acquire products, technologies or other businesses, we will incur a variety of costs, may have integration 
difficulties and may experience numerous other risks that could adversely affect our business. 

To remain competitive, we may decide to acquire additional businesses, products and technologies. We currently 
have no commitments or agreements with respect to, and are not actively seeking, any material acquisitions. We 
have limited experience in identifying acquisition targets, successfully acquiring them and integrating them into our 
current infrastructure. We may not be able to successfully integrate any businesses, products, technologies or 
personnel that we might acquire in the future without a significant expenditure of operating, financial and 
management resources, if at all. In addition, future acquisitions could require significant capital infusions and could 
involve many risks, including, but not limited to the following: 

•  we may have to issue convertible debt or equity securities to complete an acquisition, which would dilute our 

stockholders and could adversely affect the market price of our common stock; 

•  an acquisition may negatively impact our results of operations because it may require us to incur large one-

time charges to earnings, amortize or write down amounts related to goodwill and other intangible assets, or 
incur or assume substantial debt or liabilities, or it may cause adverse tax consequences, substantial 
depreciation or deferred compensation charges; 

•  we may encounter difficulties in assimilating and integrating the business, technologies, products, personnel 

or operations of companies that we acquire; 

•  certain acquisitions may disrupt our relationship with existing collaborators who are competitive to the 

acquired business; 

•  acquisitions may require significant capital infusions and the acquired businesses, products or technologies 

may not generate sufficient revenue to offset acquisition costs; 

•  an acquisition may disrupt our ongoing business, divert resources, increase our expenses and distract our 

management; 

•  acquisitions may involve the entry into a geographic or business market in which we have little or no prior 

experience; and 

•  key personnel of an acquired company may decide not to work for us.  

- 27 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Any of the foregoing risks could have a significant adverse effect on our business, financial condition and results of 
operations. 

To the extent we enter markets outside of the United States, our business will be subject to political, economic, 
legal and social risks in those markets, which could adversely affect our business. 

There are significant regulatory and legal barriers in markets outside the United States that we must overcome to the 
extent we enter or attempt to enter markets in countries other than the United States. We will be subject to the 
burden of complying with a wide variety of national and local laws, including multiple and possibly overlapping and 
conflicting laws. We also may experience difficulties adapting to new cultures, business customs and legal systems. 
Any sales and operations outside the United States would be subject to political, economic and social uncertainties 
including, among others: 

•  changes and limits in import and export controls;  

• 

increases in custom duties and tariffs;  

•  changes in currency exchange rates;  

•  economic and political instability;  

•  changes in government regulations and laws;  

•  absence in some jurisdictions of effective laws to protect our intellectual property rights; and 

•  currency transfer and other restrictions and regulations that may limit our ability to sell certain products or 

repatriate profits to the United States. 

Any changes related to these and other factors could adversely affect our business to the extent we enter markets 
outside the United States. 

Foreign governments often impose strict price controls on approved products, which may adversely affect our 
future profitability in those countries, and the re-importation of drugs to the United States from foreign countries 
that impose price controls may adversely affect our future profitability. 

Frequently foreign governments impose strict price controls on newly approved therapeutic products. If we obtain 
regulatory approval to sell products in foreign countries, we may be unable to obtain a price that provides an 
adequate financial return on our investment. Furthermore, legislation in the United States may permit re-importation 
of drugs from foreign countries into the United States, including re-importation from foreign countries where the 
drugs are sold at lower prices than in the United States due to foreign government-mandated price controls. Such a 
practice, especially if it is conducted on a widespread basis, may significantly reduce our potential United States 
revenues from any drugs that we are able to develop. 

If we elect not to sell our products in foreign countries that impose government mandated price controls because 
we decide it is uneconomical to do so, a foreign government or patent office may attempt to terminate our 
intellectual property rights in that country, enabling competitors to make and sell our products. 

In some cases we may choose not to sell a product in a foreign country because it is uneconomical to do so under a 
system of government-imposed price controls, or because it could severely limit our profitability in the United States 
or other markets. In such cases, a foreign government or patent office may terminate any intellectual property rights 
we may obtain with respect to that product. Such a termination could enable competitors to produce and sell our 
product in that market. Furthermore, such products may be exported into the United States through legislation that 
authorizes the importation of drugs from outside the United States. In such an event, we may have to reduce our 
prices, or we may be unable to compete with low-cost providers of our drugs, and we could be financially harmed as 
a result. 

- 28 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We may encounter difficulties managing our growth, which could adversely affect our business. 

At various times we have experienced periods of rapid growth in our employee numbers as a result of a dramatic 
increase in activity in technology programs, genomics programs, collaborative research programs, discovery 
programs, and scope of operations. At other times, we have had to reduce staff in order to bring our expenses in line 
with our financial resources. Our success will also depend on the ability of our officers and key employees to 
continue to improve our operational capabilities and our management information and financial control systems, and 
to expand, train and manage our work force. 

We may be sued for product liability, which could adversely affect our business. 

Because our business strategy involves the development and sale by either us or our collaborators of commercial 
products, we may be sued for product liability. We may be held liable if any product we develop and commercialize, 
or any product our collaborators commercialize that incorporates any of our technology, causes injury or is found 
otherwise unsuitable during product testing, manufacturing, marketing, sale or consumer use. In addition, the safety 
studies we must perform and the regulatory approvals required to commercialize our pharmaceutical products, will 
not protect us from any such liability. 

We carry product liability insurance, as well as liability insurance for conducting clinical trials. Currently, we carry a 
$5 million per event, $5 million annual aggregate coverage for both our products liability policy and our clinical 
trials protection. We also intend to seek product liability insurance for any approved products that we may develop 
or acquire. However, in the event there are product liability claims against us, our insurance may be insufficient to 
cover the expense of defending against such claims, or may be insufficient to pay or settle such claims. Furthermore, 
we may be unable to obtain adequate product liability insurance coverage for commercial sales of any of our 
approved products. If such insurance is insufficient to protect us, our results of operations will suffer. If any product 
liability claim is made against us, our reputation and future sales will be damaged, even if we have adequate 
insurance coverage. 

The availability, manner, and amount of reimbursement for our product candidates from government and private 
payers are uncertain, and our inability to obtain adequate reimbursement for any products could severely limit 
our product sales. 

We expect that many of the patients who seek treatment with any of our products that are approved for marketing 
will be eligible for Medicare benefits. Other patients may be covered by private health plans. If we are unable to 
obtain or retain adequate levels of reimbursement from Medicare or from private health plans, our ability to sell our 
products will be severely limited. The application of existing Medicare regulations and interpretive coverage and 
payment determinations to newly approved products is uncertain and those regulations and interpretive 
determinations are subject to change. The Medicare Prescription Drug Improvement and Modernization Act, enacted 
in December 2003, provides for a change in reimbursement methodology that reduces the Medicare reimbursement 
rates for many drugs, which may adversely affect reimbursement for any products we may develop. Medicare 
regulations and interpretive determinations also may determine who may be reimbursed for certain services, and 
may limit the pool of patients our product candidates are being developed to serve. 

Federal, state and foreign governments continue to propose legislation designed to contain or reduce health care 
costs. Legislation and regulations affecting the pricing of products like our potential products may change further or 
be adopted before any of our potential products are approved for marketing. Cost control initiatives by governments 
or third-party payers could decrease the price that we receive for any one or all of our potential products or increase 
patient coinsurance to a level that make our products under development become unaffordable. In addition, 
government and private health plans persistently challenge the price and cost-effectiveness of therapeutic products. 
Accordingly, these third parties may ultimately not consider any or all of our products under development to be cost 
effective, which could result in products not being covered under their health plans or covered only at a lower price. 
Any of these initiatives or developments could prevent us from successfully marketing and selling any of our 
products that are approved for commercialization. 

- 29 - 

 
 
 
 
 
 
 
 
 
Public perception of ethical and social issues surrounding the use of adult-derived stem cell technology may limit 
or discourage the use of our technologies, which may reduce the demand for our therapeutic products and 
technologies and reduce our revenues. 

Our success will depend in part upon our ability to develop therapeutic products incorporating or discovered through 
our adult-derived stem cell technology. For social, ethical, or other reasons, governmental authorities in the United 
States and other countries may call for limits on, or regulation of the use of, adult-derived stem cell technologies. 
Although we do not use the more controversial stem cells derived from embryos or fetuses, claims that adult-derived 
stem cell technologies are ineffective, unethical or pose a danger to the environment may influence public attitudes. 
The subject of stem cell technologies in general has received negative publicity and aroused public debate in the 
United States and some other countries. Ethical and other concerns about our adult-derived stem cell technology 
could materially hurt the market acceptance of our therapeutic products and technologies, resulting in diminished 
sales and use of any products we are able to develop using adult-derived stem cells. 

ITEM 1B. UNRESOLVED STAFF COMMENTS  

Not applicable.  

ITEM 2. PROPERTIES  

Our principal offices are located at 3201 Carnegie Avenue in Cleveland, Ohio. We currently lease approximately 
53,000 square feet of space for our corporate offices and laboratories, with about 40,000 square feet of state-of-the-
art laboratory space. The lease currently expires in March 2011, and we have an option to extend the lease in annual 
increments through March 2013 at our current rent of $267,000 per year. Also, we currently lease office and 
laboratory space for our Belgian subsidiary. The lease expires December 2014 and the annual rent is subject to 
adjustments based on an inflationary index. 

ITEM 3. LEGAL PROCEEDINGS  

From time to time, we may become subject to various legal proceedings that are incidental to the ordinary conduct 
of our business. Currently, there are no such proceedings. 

ITEM 3A. EXECUTIVE OFFICERS OF THE REGISTRANT  

The information under this Item is furnished pursuant to Instruction 3 to Item 401(b) of Regulation S-K. 

There exists no arrangement or understanding between any executive officer and any other person pursuant to which 
such executive officer was elected. Each executive officer serves until his or her successor is elected and qualified. 

The following sets forth the name, age, current position and principal occupation and employment during the past 
five years of our executive officers. 

Gil Van Bokkelen, Ph.D.  
Age: 49 

Dr. Van Bokkelen has served as our Chief Executive Officer and Chairman since June 2007. Dr. Van Bokkelen co-
founded Athersys in October 1995 and served as Chief Executive Officer and Director since Athersys’ founding. 
Prior to May 2006, he also served as Athersys’ President. He has served as Chairman of Athersys’ board of directors 
since August 2000. Dr. Van Bokkelen is the current Chairman of the board of Governors for the Center for Stem 
Cells and Regenerative Medicine, and has served on a number of other boards, including the Biotechnology Industry 
Organization’s ECS board of directors (from 2001 to 2004, and from 2008 to present) and the Kent State University 
Board of Trustees from 2001 to 2004. He received his Ph.D. in Genetics from Stanford University, his B.A. in 
Economics from the University of California at Berkeley, and his B.A. in Molecular Biology from the University of 
California at Berkeley. 

- 30 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William (BJ) Lehmann, Jr., J.D.  
Age: 44 

Mr. Lehmann has served as our President and Chief Operating Officer since June 2007. Mr. Lehmann joined 
Athersys in September 2001 and was Athersys’ Executive Vice President of Corporate Development and Finance 
from August 2002 until May 2006, when he became Athersys’ President and Chief Operating Officer. From 1994 to 
2001, Mr. Lehmann was with McKinsey & Company, Inc., an international management consulting firm, where he 
worked extensively with new technology and service-based businesses in the firm’s Business Building practice. 
Prior to joining McKinsey, he worked at Wilson, Sonsini, Goodrich & Rosati, a Silicon Valley law firm, and worked 
with First Chicago Corporation, a financial institution. Mr. Lehmann received his J.D. from Stanford University, his 
M.B.A. from the University of Chicago, and his B.A. from the University of Notre Dame. 

John J. Harrington, Ph.D.  
Age: 42 

Dr. Harrington has served as our Chief Scientific Officer, Executive Vice President and Director since June 2007. 
Dr. Harrington co-founded Athersys in October 1995 and has served as Athersys’ Executive Vice President and 
Chief Scientific Officer and as Director since Athersys’ founding. Dr. Harrington led the development of the RAGE 
technology as well as its application for gene discovery, drug discovery and commercial protein production 
applications. He is a listed inventor on 20 issued or pending United States patents, has authored 20 scientific 
publications, and has received numerous awards for his work, including being named one of the top international 
young scientists by MIT Technology Review in 2002. Dr. Harrington has overseen the therapeutic product 
development programs at Athersys since their inception, and during his career he has also held positions at Amgen 
and Scripps Clinic. He received his Ph.D. in Cancer Biology from Stanford University and his B.A. in Biochemistry 
and Cell Biology from the University of California at San Diego. 

Robert J. Deans, Ph.D.  
Age: 58 

Dr. Deans has served as our Senior Vice President, Regenerative Medicine since June 2007. Dr. Deans has led 
Athersys’ regenerative medicine research and development activities since February 2003 and has served as Vice 
President of Regenerative Medicine since October 2003. He was named Senior Vice President of Regenerative 
Medicine in June 2006. Dr. Deans is highly regarded as an expert in stem cell therapeutics, with over fifteen years of 
experience in this field. From 2001 to 2003, Dr. Deans worked for early-stage biotechnology companies. Dr. Deans 
was formerly the Vice President of Research at Osiris Therapeutics, Inc., a biotechnology company, from 1998 to 
2001 and Director of Research and Development with the Immunotherapy Division of Baxter International, Inc., a 
global healthcare company, from 1992 to 1998. Dr. Deans was also previously on faculty at USC Medical School in 
Los Angeles, between 1981 and 1998, in the departments of Microbiology and Neurology at the Norris 
Comprehensive Cancer Center. Dr. Deans was an undergraduate at MIT, received his Ph.D. at the University of 
Michigan, and did his post-doctoral work at UCLA in Los Angeles. 

Laura K. Campbell, CPA  
Age: 46 

Ms. Campbell has served as our Vice President, Finance since June 2007. Ms. Campbell joined Athersys in January 
1998 as Controller and has served as Vice President of Finance since May 2006. Prior to joining Athersys, she was 
at Ernst & Young LLP, a public accounting firm, for 11 years, in the audit practice. During her tenure with Ernst & 
Young LLP, Ms. Campbell specialized in entrepreneurial services and the biotechnology industry sector and 
participated in several initial public offerings. Ms. Campbell received her B.S., with distinction, in Business 
Administration from The Ohio State University. 

ITEM 4. RESERVED  

- 31 - 

 
 
 
 
 
 
 
 
 
 
PART II 

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS 

AND ISSUER PURCHASES OF EQUITY SECURITIES 

Our common stock is traded on the NASDAQ Capital Market under the symbol “ATHX.” Set forth below are the 
high and low sale prices for our common stock on the NASDAQ Capital Market for the periods indicated. 

Year ended December 31, 2009: 
First Quarter ........................................................................................................................................   $  1.28 $ 0.45
Second Quarter ...................................................................................................................................   $  1.04 $ 0.75
Third Quarter ......................................................................................................................................   $  1.35 $ 0.78
Fourth Quarter ....................................................................................................................................   $  6.40 $ 0.97

  High

Low

Year ended December 31, 2008: 
First Quarter ........................................................................................................................................   $  5.00 $ 3.00
Second Quarter ...................................................................................................................................   $  4.23 $ 1.55
Third Quarter ......................................................................................................................................   $  4.00 $ 1.17
Fourth Quarter ....................................................................................................................................   $  1.88 $ 0.15

Holders 

As of February 28, 2010, the number of holders of record was approximately 910 of which one is Cede & Co., a 
nominee for The Depository Trust Company, or DTC. Shares of common stock that are held by financial institutions 
as nominees for beneficial owners are deposited into participant accounts at DTC, and are considered to be held of 
record by Cede & Co., as one stockholder. 

Dividend Policy 

All of our assets consist of the capital stock of ABT Holding Company. We would have to rely upon dividends and 
other payments from ABT Holding Company to generate the funds necessary to make dividend payments, if any, on 
our common stock. ABT Holding Company, however, is legally distinct from us and has no obligation to pay 
amounts to us. The ability of ABT Holding Company to make dividend and other payments to us is subject to, 
among other things, the availability of funds, the terms of our indebtedness and applicable state laws. We did not pay 
cash dividends on our common stock during the past two years. We do not anticipate that we will pay any dividends 
on our common stock in the foreseeable future. Rather, we anticipate that we will retain earnings, if any, for use in 
the development of our business. 

- 32 - 

 
 
 
 
  
 
 
 
 
 
 
 
 
 
ITEM 6. SELECTED FINANCIAL DATA  

(in thousands, except per share data)  

Consolidated Statement of Operations Data:
Revenues: 

Contract revenue ............................................
Grant revenue .................................................
Total revenues ....................................................
Costs and expenses: 

Research and development ............................
General and administrative ............................
Depreciation ...................................................
Restructuring costs .........................................
Loss from operations ..................................

Other (expense) income: 

2009

Year Ended December 31, 
2007
2008

2006 

2005

$

1,079 $
1,080
2,159

1,880 $
1,225
3,105

1,433  $ 
1,827 
3,260 

1,908  $
1,817 
3,725 

763
2,833
3,596

11,920
5,621
233
—
(15,615)

16,500
5,479
218
—
(19,092)

15,817 
7,975 
283 
— 
(20,815) 

2,017 

1,591 

(1,263) 
(456) 

9,741 
3,347 
528 
— 
(9,891) 

208 

119 

(1,047) 
(260) 

12,578
3,755
982
251
(13,970)

18

317

(964)
—

Other (expense) income, net ..........................

(126)

Interest income ...............................................

Interest expense .............................................
Accretion of premium on convertible debt ....

375

—
—

48

1,146

(94)
—

Loss before cumulative effect of change in 

accounting principle ........................................

(15,366)

(17,992)

(18,926) 

(10,871) 

(14,599)

Cumulative effect of change in accounting 

principle ...........................................................
Net loss ..............................................................

$

—
(15,366) $

—
(17,992) $

— 

—
(18,926)  $  (10,565)  $ (14,599)

306 

Preferred stock dividends ..................................

Deemed dividend resulting from induced 

conversion of convertible preferred stock........

Net loss attributable to common 

stockholders ....................................................
Basic and diluted net loss per common share

attributable to common stockholders: 

Loss before cumulative effect of change in 

—

—

—

—

(659) 

(1,408) 

(2,253)

(4,800) 

— 

—

$

(15,366) $

(17,992) $

(24,385)  $  (11,973)  $ (16,852)

accounting principle ........................................

$

(0.81) $

(0.95) $

(2.26)  $ 

(41.89)  $

(57.79)

Cumulative effect of change in accounting 

principle ...........................................................

—

—

— 

1.05 

—

Net loss per share .............................................

$

(0.81) $

(0.95) $

(2.26)  $ 

(40.84)  $

(57.79)

Weighted average shares outstanding, basic and
diluted ..............................................................

Consolidated Balance Sheet Data: 

18,928,379 18,927,988 10,811,119 

  293,142 

291,612

Cash and cash equivalents .................................
Available-for-sale securities (short-tem) ............
Working capital (deficit) ....................................
Available-for-sale securities (long-tem).............
Total assets .........................................................
Long-term obligations, less current portion .......
Accrued dividends .............................................

$

11,167 $
10,135
16,291
5,080
28,331
—
—

12,552 $
15,460
26,789
3,601
33,877
—
—

13,248  $ 
22,477 
32,849 
13,850 
52,225 
— 
— 

1,528  $
— 
(3,206) 
— 
4,266 
9,310 
8,882 

1,080
3,481
1,828
—
7,309
4,684
7,473

Total stockholders’ equity (deficit) ....................

18,957

31,563

47,631 

(20,007) 

(8,584)

- 33 - 

 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 

RESULTS OF OPERATIONS 

You should read the following discussion and analysis in conjunction with “Item 8. Financial Statements and 
Supplementary Data” included below in this annual report on Form 10-K. 

Overview and Recent Developments 

We are a biopharmaceutical company engaged in the discovery and development of therapeutic product candidates 
designed to extend and enhance the quality of human life. Through the application of our proprietary technologies, 
we have established a pipeline of therapeutic product development programs in multiple disease areas. Our current 
product development portfolio consists of MultiStem, a patented and proprietary stem cell product that we are 
developing as a treatment for multiple disease indications, and that is currently being evaluated in two ongoing 
clinical trials. In addition, we are developing novel pharmaceuticals to treat indications such as obesity, certain 
cognitive and attention disorders, as well as narcolepsy, other forms of excessive daytime sleepiness and chronic 
fatigue associated with certain disease indications. 

Current Programs 

In 2008, we advanced two MultiStem programs into clinical development, initiating phase I studies in 
cardiovascular disease (treating patients that have suffered an acute myocardial infarction) and in oncology 
treatment support (administering MultiStem to leukemia or lymphoma patients who are receiving a traditional bone 
marrow or HSC transplant to reduce the risk or severity of GVHD). We are conducting the acute myocardial 
infarction clinical trial with our partner Angiotech, and we completed phase I enrollment in the first quarter of 2010. 
In May 2006, we entered into a product co-development collaboration with Angiotech to jointly develop and 
ultimately market MultiStem for the treatment of damage caused by myocardial infarction and peripheral vascular 
disease. 

In December 2009, we entered into a collaboration agreement with Pfizer to develop and commercialize MutiStem 
for the treatment of IBD for the worldwide market. We are currently planning and preparing for a phase I clinical 
study in the IBD area and plan to initiate the study as soon as possible after regulatory approval. 

We are also independently developing novel orally active pharmaceutical products for the treatment of obesity and 
certain central nervous system disorders, including disorders such as narcolepsy, excessive daytime sleepiness, and 
chronic fatigue, as well as other potential indications such as attention deficit hyperactivity disorder and other 
cognitive disorders such as schizophrenia. 

Financial 

In June 2007, we completed a merger with BTHC VI, Inc. and its wholly-owned subsidiary that was formed for the 
purpose of completing the merger. BTHC VI was a public shell corporation with substantially no assets, liabilities or 
operations. We continued as the surviving entity in the merger and our business became the sole operations of BTHC 
VI after the merger. BTHC VI’s acquisition of us effected a change in control and was accounted for as a reverse 
acquisition whereby we were the acquirer for financial statement purposes. Accordingly, our financial statements 
present our historical results and do not include the historical financial results of BTHC VI prior to the merger. At 
the time the merger was effective, each share of common stock of Athersys was exchanged into 0.0358493 shares of 
BTHC VI common stock, par value $0.001 per share. 

In connection with the merger in June 2007, Athersys completed a restructuring of its capital stock, which included 
the conversion of the preferred stock into shares of its common stock, the termination of certain warrants, and the 
elimination of accrued dividends. As a result, immediately prior to the consummation of the merger with BTHC VI, 
all convertible preferred stock (including termination of warrants and elimination of accrued dividends) was 
converted into 53,341,747 shares of common stock and then exchanged for 1,912,356 shares of BTHC VI common 
stock using the merger exchange ratio of 0.0358493. The change to the conversion ratios of the convertible preferred 
stock was deemed to be an induced conversion, which resulted in a $4.8 million deemed dividend and an increase to 
the net loss attributable to common stockholders in June 2007. 

- 34 - 

 
 
 
 
 
 
 
 
 
 
 
Immediately after the merger, we completed an offering of 13,000,000 shares of common stock for aggregate net 
proceeds of $58.5 million in June 2007, which included the issuance of warrants to purchase 3,250,000 shares of 
common stock to the investors. We also issued warrants to purchase 500,000 shares of common stock to the lead 
investor and warrants to purchase 1,093,525 shares of common stock to the placement agents. 

Upon the closing of the June 2007 offering, bridge investors from 2006 also received five-year warrants to purchase 
132,945 shares of common stock at $6.00 per share, which terms were consistent with the warrants issued to new 
investors in the offering. 

In 2007, Athersys terminated the majority of stock option awards and granted options for 3,625,000 shares of 
common stock under our equity incentive plans to its officers, employees, directors and consultants with an exercise 
price of $5.00 per share, resulting in stock compensation expense of $5.1 million in 2007. 

We have incurred losses since inception of operations in December 1995 and had an accumulated deficit of $194 
million at December 31, 2009. 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 have used the financing proceeds from private equity and debt offerings and 
other sources of capital to develop our technologies, to discover and develop therapeutic product candidates and to 
acquire certain technologies and assets. We have also built drug development capabilities that have enabled us to 
advance product candidates into clinical trials. We have established strategic collaborations that have provided 
revenues and capabilities to help further advance our product candidates, and we have also built a substantial 
portfolio of intellectual property. 

Results of Operations 

Since our inception, our revenues have consisted of license fees and milestone payments from our collaborators and 
grant proceeds primarily from federal and state grants. We have derived no revenue on the sale of FDA-approved 
products to date. Research and development expenses consist primarily of costs associated with external clinical and 
preclinical study fees, manufacturing costs, salaries and related personnel costs, legal expenses resulting from 
intellectual property application processes, 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 products and manufacture our 
products. General and administrative expenses consist primarily of salaries and related personnel costs, professional 
fees and other corporate expenses. To date, we have financed our operations through private equity and debt 
financing and investments by strategic collaborators. We expect to continue to incur substantial losses through at 
least the next several years. 

The following table sets forth our revenues and expenses for the periods indicated. The following tables are stated in 
thousands. 

Revenues 

Contract revenue ..................................................................................................
Grant revenue ......................................................................................................

Year ended December 31,
  2008 
2009

2007

$

$

1,079  $  
1,080 
2,159  $  

1,880 $
1,225
3,105 $

1,433
1,827
3,260

- 35 - 

 
 
 
 
 
 
 
 
 
 
  
  
 
 
   
 
 
Research and development expenses 

Type of expense 
Personnel costs ....................................................................................................
Research supplies ................................................................................................
Facilities ..............................................................................................................
Clinical and preclinical development costs..........................................................
Sponsored research ..............................................................................................
Patent legal fees ...................................................................................................
Other ....................................................................................................................
Stock-based compensation ...................................................................................

General and administrative expenses 

Type of expense 
Personnel costs ..................................................................................................
Facilities ............................................................................................................
Legal and professional fees ...............................................................................
Other ..................................................................................................................
Stock-based compensation .................................................................................

$

$

$

$

Year ended December 31,
2009 

2008 

2007

2,813
3,607  $ 
679
907 
762
826 
5,723
1,904 
465
878 
1,086
1,351 
1,821
1,151 
1,296 
2,468
11,920  $  16,500 $ 15,817

2,924 $
849
817
7,878
393
1,481
1,431
727

Year ended December 31,
  2008 

2009 

1,975  $  
299 
916 
919 
1,512 
5,621  $  

1,726 $
342
1,032
1,250
1,129
5,479 $

2007
1,987
330
1,165
1,822
2,671
7,975

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008 

Revenues. Revenues decreased to $2.2 million for the year ended December 31, 2009 from $3.1 million for 2008. 
Contract revenues for the year ended December 31, 2009 included $171,000 of revenues from Pfizer in connection 
with our collaboration agreement entered into in December 2009. We expect our contract revenues related to the 
Pfizer collaboration in the next few years to include amortization of the $6.0 million license fee over the estimated 
performance period, research and development funding, as well as payments for manufacturing and potential 
milestone achievement. Also included in contract revenues are license fees and milestone payments from our 
collaboration with Bristol-Myers Squibb, which decreased in 2009 as a result of a decline in activity and as a result 
of a clinical development milestone achieved in September 2008. We intend to continue to prepare and deliver 
validated drug targets as needed by Bristol-Myers Squibb for use in its drug discovery efforts, and will remain 
entitled to receive license fees, milestone payments and royalties on compounds developed by Bristol-Myers Squibb 
using our technology. Beyond 2009, however, we anticipate that Bristol-Myers Squibb’s demand for new targets will 
be substantially reduced or cease altogether. Grant revenue decreased $145,000 primarily due to the completion of a 
state grant in 2008 and due to the timing of expenditures that are reimbursed with grant proceeds. Additionally, our 
grant revenues could fluctuate during any year based on the timing of grant-related activities and the award of new 
grants. 

Research and Development Expenses. Research and development expenses decreased to $11.9 million in 2009 from 
$16.5 million in 2008. The decrease of $4.6 million related primarily to a decrease in clinical and preclinical 
development costs of $6.0 million, a decrease in other research and development expenses of $280,000 and a 
decrease in patent legal fee expense of $130,000 in 2009 compared to 2008. These decreases were partially offset by 
an increase in personnel costs of $683,000, an increase in stock compensation expense of $569,000, an increase in 
sponsored research of $485,000, and an increase in research supplies and facilities expenses of $67,000 in 2009 
compared to 2008. Of the $6.0 million decrease in clinical and preclinical development costs, $5.3 million related to 
costs associated with the completion of an ATHX-105 phase I clinical trial in the first half of 2008 and preparations 
for a phase II clinical trial of ATHX-105 in 2008, which included several preclinical studies and manufacturing 
costs. ATHX-105 development was suspended early in 2009 and there will be no future costs incurred for this 
product candidate. The remaining $700,000 decrease in clinical and preclinical development costs related primarily 
to a $235,000 credit from a renegotiated contract with a contract research organization in June 2009, reduced 
manufacturing costs associated with our MultiStem clinical trials, and reduced external costs for regulatory 
consulting and preclinical studies. Our clinical costs in 2009 and 2008 are reflected net of Angiotech’s cost-sharing 

- 36 - 

 
 
  
 
 
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
   
 
 
 
 
reimbursements related to our MultiStem acute myocardial infarction collaboration in the amount of $847,000 and 
$943,000, respectively. Patent legal fee expense for 2009 decreased compared to 2008, but continued to be 
significant as a result of further development and maintaining our portfolio of patent applications. The increase in 
personnel costs related to the addition of personnel in support of our clinical programs and regulatory affairs, a 2009 
company-wide performance bonus, salary increases and increased benefit costs. The increase in stock compensation 
expense related to a change in our estimated forfeiture rate, increased expense related to options held by certain 
consultants that are computed using variable accounting, and the issuance of stock option awards in 2009. 
Sponsored research costs increased primarily due to grant-funded programs that require collaboration with certain 
academic research institutions. We expect our research and development expenses to increase in 2010, primarily due 
to increased MultiStem clinical trial expenses and support of our Pfizer and Angiotech collaborations. 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 $5.6 million in 2009 from 
$5.5 million in 2008. The $100,000 increase was due primarily to an increase in stock compensation expense of 
$383,000 and an increase in personnel costs of $249,000, partially offset by a decrease in other expenses of 
$331,000, a decrease in legal and professional fees of $116,000 and a decrease in facilities expense of $43,000 in 
2009 compared to 2008. The increase in stock compensation expense related to a change in our estimated forfeiture 
rate and the issuance of stock option awards in 2009. The increase in personnel costs related to a 2009 company-
wide performance bonus, salary increases and increased benefit costs. The decrease in other expenses for 2009 was 
primarily a result of reduced temporary help and outsourced accounting services in 2009. The decrease in legal and 
professional fees in 2009 was primarily a result of reduced legal fees incurred in connection with SEC filings and 
transactional work. We expect our general and administrative expenses to continue at similar levels in 2010. 

Depreciation. Depreciation expense increased to $233,000 in 2009 from $218,000 in 2008. The increase in 
depreciation expense was due to depreciation on capital purchases made in 2009. 

Other Expense. Included in other expense for 2009 is an impairment loss of $115,000 related to an investment in a 
privately-held company. 

Interest Income. Interest income decreased to $375,000 in 2009 from $1.1 million in 2008. The change in interest 
income was due to the decline in cash and investment balances during the period. While we received $6.0 million in 
fees from Pfizer in 2009, this payment had limited impact on interest income given its receipt in late December. Due 
to declining interest rates and lower cash balances as a result of our ongoing and planned clinical and preclinical 
development, we expect our 2010 interest income to be less than 2009 absent any new financings or business 
transactions. 

Interest Expense. Interest expense decreased to $0 in 2009 from $94,000 in 2008 due to the repayment of our senior 
loan in June 2008. We do not expect any significant interest expense in 2010. 

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007 

Revenues. Revenues decreased to $3.1 million for the year ended December 31, 2008 from $3.3 million for 2007. 
Grant revenue decreased $0.6 million primarily due to the completion of a 2006 state grant in October 2008 as well 
as the timing of expenditures that are reimbursed with grant proceeds. License fee revenues increased $0.4 million 
as a result of the nature and timing of target acceptances under our collaboration agreement with Bristol-Myers 
Squibb and the achievement of a clinical development milestone in September 2008. 

Research and Development Expenses. Research and development expenses increased to $16.5 million in 2008 from 
$15.8 million in 2007. The increase of approximately $0.7 million related primarily to an increase in clinical and 
preclinical development costs of $2.2 million, an increase in patent legal fees of $395,000, an increase in research 
supplies expenses of $170,000 and an increase in personnel costs of $111,000 in 2008 compared to 2007. These 
increases were partially offset by a decrease in stock compensation expense of $1.7 million, a decrease in other 
expenses of $390,000 and a decrease in sponsored research of $72,000 in 2008 compared to 2007. The $2.2 million 
increase in preclinical and clinical costs was a result of the completion of the ATHX-105 phase I clinical trial, 
preparations for the ATHX-105 phase II clinical trial, completion of two additional phase I trials in the United 

- 37 - 

 
 
 
 
 
 
 
 
 
Kingdom, performance of ATHX-105 non-clinical studies, and increases in MultiStem preclinical and clinical costs 
and manufacturing expenses. Our clinical costs in 2008 and 2007 are reflected net of Angiotech’s cost-sharing 
reimbursements related to our MultiStem acute myocardial infarction collaboration in the amount of $943,000 and 
$63,000, respectively. The increase in patent legal fees for 2008 was a result of maintaining our growing and 
maturing portfolio of patent applications, including prosecution costs for several cases that entered the national 
phase in 2008. Personnel costs increased due to the addition of personnel in support of our clinical programs, annual 
salary increases and increased benefit costs, which was partially offset by the absence of bonus payments in 2008. 
The decrease in other expenses was primarily a result of a milestone payment in 2007 in the amount of $1.0 million 
associated with a stem cell collaboration milestone and a stem cell IND milestone and was paid to the former owners 
of the technology. This decrease was partially offset by an increase in outsourced research and development 
expenses. 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 decreased to $5.5 million in 2008 from 
$8.0 million in 2007. The $2.5 million decrease was due primarily to a decrease in stock compensation expense of 
$1.5 million, decrease in other expenses of $572,000, decrease in personnel costs of $261,000, and a decrease in 
legal and professional fees of $133,000. The decrease in other expenses for 2008 was primarily as result of a one-
time advisory fee of $350,000 in 2007 related to the merger. Personnel costs decreased due to the absence of bonus 
payments in 2008, which was partially offset by the addition of administrative support personnel, annual salary 
increases and increased benefit costs. The decrease in legal and professional fees in 2008 was primarily a result of 
reduced legal fees incurred in connection with SEC filings and transactional work. 

Depreciation. Depreciation expense decreased to $218,000 in 2008 from $283,000 in 2007. The decrease in 
depreciation expense was due to more laboratory equipment, computer equipment, furniture and leasehold 
improvements becoming fully depreciated. 

Other Income. In May 2007, Athersys sold certain non-core technology related to its asthma discovery program to 
Wyeth Pharmaceuticals for $2.0 million. 

Interest Income. Interest income decreased to $1.1 million in 2008 from $1.6 million in 2007. The change in interest 
income was due to the receipt and investment of the proceeds from the equity offering in June 2007, the proceeds of 
which had declined as they were used to fund operations. 

Interest Expense. Interest expense on Athersys’ debt outstanding under its senior loan and its subordinated 
convertible promissory notes decreased to $94,000 in 2008 from $1.3 million in 2007. The decrease in interest 
expense was due to the repayment of the senior loan in June 2008, conversion in June 2007 of $2.5 million in 
aggregate principal amount of subordinated convertible promissory notes issued to bridge investors, and conversion 
in June 2007 of $10 million in aggregate principal amount of subordinated convertible promissory notes issued to 
Angiotech. 

Accretion of Premium on Convertible Debt. The accretion of premium on convertible debt of $0.5 million in 2007 
relates to the $2.5 million in aggregate principal amount of subordinated secured convertible promissory notes 
issued to bridge investors in 2006 that were converted into common stock upon the closing of the equity offering in 
June 2007. The notes, if not converted, were repayable with accrued interest at maturity, plus a repayment fee of 
200% of the outstanding principal. Athersys computed a premium on the debt in the amount of $5.25 million due 
upon redemption, which was being accreted over the term of the notes using the effective interest method. The 
unamortized premium was reversed and recorded in additional paid-in-capital when the notes were converted in 
June 2007. 

Liquidity and Capital Resources 

Our sources of liquidity include our cash balances and available-for-sale securities. At December 31, 2009, we had 
$11.2 million in cash and cash equivalents and $15.2 million in available-for-sale securities. Athersys has primarily 
financed its operations through private equity and debt financings that have resulted in aggregate cumulative 
proceeds of approximately $200 million. 

- 38 - 

 
 
 
 
 
 
 
 
 
 
In December 2009, we entered into a collaboration agreement with Pfizer to develop and commercialize MutiStem 
for the treatment of IBD for the worldwide market. Under the terms of the agreement, we received an up-front cash 
payment of $6 million from Pfizer and will receive research funding and support during the initial phase of the 
collaboration. In addition, we are also eligible to receive milestone payments of up to $105 million upon the 
successful achievement of certain development, regulatory and commercial milestones, though there can be no 
assurance that we will achieve any milestones. We will be responsible for manufacturing and Pfizer will pay us for 
manufacturing product for clinical development and commercialization purposes. Pfizer will have responsibility for 
development, regulatory and commercialization and will pay us tiered royalties on worldwide commercial sales of 
MultiStem IBD products. Alternatively, in lieu of royalties and certain commercialization milestones, we may elect 
to co-develop with Pfizer and the parties will share development and commercialization expenses and profits/losses 
on an agreed basis beginning at phase III clinical development. 

In connection with our MultiStem collaboration with Angiotech, upon the successful achievement of specified 
clinical development and commercialization milestones, we may also receive up to $3.75 million of additional 
equity investments and $63.75 million of aggregate cash payments, though there can be no assurance that we will 
achieve any milestones. Under the terms of the collaboration, the parties are jointly funding clinical development 
activity, whereby preclinical costs are borne solely by us, costs for phase I and phase II clinical trials are borne 50% 
by us and 50% by Angiotech, costs for the first phase III clinical trial will be borne 33% by us and 67% by 
Angiotech, and costs for any phase III clinical trials subsequent to the first phase III clinical trial will be borne 25% 
by us and 75% by Angiotech. We have lead responsibility for preclinical and early clinical development and 
manufacturing of the MultiStem product, and Angiotech will take the lead on later clinical trials and 
commercialization. Late in 2007, the parties began to share costs for phase I clinical development, which is 
reconciled quarterly. As of December 31, 2009, $229,000 was due from Angiotech representing its share of costs for 
the fourth quarter of 2009. Upon product commercialization, we will receive nearly half of the net profits from the 
sale of any jointly developed, approved products. 

Our collaboration agreement with Bristol-Myers Squibb, which was initially established in 2001, is now in its final 
phase. In September 2008, Bristol-Myers Squibb successfully advanced into phase II clinical development a drug 
candidate discovered using a target provided by us, thereby triggering a clinical development milestone payment to 
us. We intend to continue to prepare and deliver validated drug targets as needed by Bristol-Myers Squibb for use in 
its drug discovery efforts. We will remain entitled to receive license fees for targets delivered to Bristol-Myers 
Squibb, as well as milestone payments and royalties on compounds developed by Bristol-Myers Squibb using our 
technology, though there can be no assurance that we will achieve any milestones or royalties. Beyond 2009, we 
anticipate that Bristol-Myers Squibb’s demand for new targets will be substantially reduced or cease altogether. 

Our available-for-sale securities typically include United States government obligations, commercial paper and 
corporate debt securities. As of December 31, 2009, approximately 83% of our investments were in United States 
government obligations, including government-backed agencies. We have been investing conservatively due to the 
ongoing economic conditions and have prioritized liquidity and the preservation of principal in lieu of potentially 
higher returns. As a result, we have experienced no losses on the principal of our investments and have held our 
investments until maturity. Also, although these unfavorable market and economic conditions have resulted in a 
decrease to our market capitalization, there has been no impairment to the value of our assets. Our fixed assets are 
used for internal research and development and, therefore, are not impacted by these external factors. 

We will require substantial additional funding in order to continue our research and product development programs, 
including preclinical testing and clinical trials of our product candidates. We expect to have available cash to fund 
our operations through 2011 based on our current business and operational plans and assuming no new financings or 
significant business transactions. Our funding requirements may change at any time due to technological advances 
or competition from other companies. Our future capital requirements will also depend on numerous other factors, 
including scientific progress in our research and development programs, additional personnel costs, progress in 
preclinical testing and clinical trials, the time and cost related to proposed regulatory approvals, if any, and the costs 
in filing and prosecuting patent applications and enforcing patent claims. We cannot assure you that adequate 
funding will be available to us or, if available, that it will be available on acceptable terms, particularly in light of the 
current credit crisis. Any shortfall in funding could result in our having to curtail our research and development 
efforts. 

- 39 - 

 
 
 
 
 
 
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. 

Net cash used in operating activities was $4.6 million, $15.7 million and $12.1 million in 2009, 2008 and 2007, 
respectively, and represented the use of cash in funding clinical and preclinical product development activities. We 
expect that net cash used in operating activities will increase in 2010 in connection with increased research and 
development expenses of our MultiStem clinical trials and our Pfizer and Angiotech collaborations. 

Net cash provided by investing activities was $3.2 million in 2009 and $16.8 million in 2008. Net cash used in 
investing activities was $36.4 million in 2007. The fluctuations from period to period are due to the timing of 
purchases and maturity dates of investments and the purchase of equipment. Purchases of equipment were $381,000, 
$532,000 and $161,000 in 2009, 2008 and 2007, respectively. We expect that our capital equipment expenditures 
will continue at similar levels in 2010 compared to 2009. 

Financing activities neither used nor provided cash in 2009, used cash of $1.8 million in 2008, and provided cash of 
$60.2 million in 2007. These fluctuations relate primarily to proceeds from the equity offering in June 2007, the 
issuance of a convertible promissory note in 2007 to Angiotech, and repayments of our senior loan. 

Investors in the equity offering in June 2007 received five-year warrants to purchase an aggregate of 3,250,000 
shares of common stock with an exercise price of $6.00 per share. The lead investor in the June offering, Radius 
Venture Partners, invested $10.0 million and received additional five-year warrants to purchase an aggregate of 
500,000 shares of common stock with a cash or cashless exercise price of $6.00 per share. The placement agents for 
the June offering received five-year warrants to purchase an aggregate of 1,093,525 shares of common stock with a 
cash or cashless exercise price of $6.00 per share. The exercise of such warrants could provide us with cash 
proceeds. No warrants have been exercised at December 31, 2009. 

Our senior loan was repaid in full in June 2008. The senior lenders retain a right to receive a milestone payment of 
$2.25 million upon the occurrence of certain events as follows: (1) the entire amount upon (a) the merger with or 
into another entity where our stockholders do not hold at least a majority of the voting power of the surviving entity, 
(b) the sale of all or substantially all of our assets, or (c) our liquidation or dissolution; or (2) a portion of the amount 
from proceeds of equity financings not tied to specific research and development activities that are part of a research 
or development collaboration, in which case, the senior lenders will receive an amount equal to 10% of proceeds 
above $5.0 million in cumulative gross proceeds until the milestone amount is paid in full. The milestone payment is 
payable in cash, except that if the milestone event is (2) above, we may elect to pay 75% of the milestone in shares 
of common stock at the per-share offering price. No milestone events have occurred as of December 31, 2009. The 
senior lenders also received warrants to purchase 149,026 shares of common stock with an exercise price of $5.00 
upon the closing of our equity offering in June 2007. The exercise of such warrants could provide us with cash 
proceeds. No warrants were exercised at December 31, 2009. 

Our contractual payment obligations as of December 31, 2009 are as follows:  

Contractual Obligations 

Operating leases for facilities and equipment

Total

 Less Than 
1 Year

1 – 3 Years  

 3 – 5 Years  

More
  Than 
5 Years

lease ....................................................................

$ 470,000 $ 384,000 $

86,000  $ 

—  $

—

We lease office and laboratory space under an operating lease and have options to renew the lease in annual 
increments through March 2013 at the initial rental rate. We executed options to renew through March 2011. Also, 
we lease office and laboratory space for our Belgian subsidiary. The lease expires December 2014 and the annual 
rent is subject to adjustments based on an inflationary index. 

- 40 - 

 
 
 
 
 
 
 
 
 
  
  
  
  
  
 
 
 
 
We filed a resale registration statement with the SEC for 18,508,251 shares of common stock, which includes all 
shares of common stock issued in the equity offering in June 2007 and shares of common stock issuable upon 
exercise of the warrants issued in the offering (as well as the 531,781 shares of common stock issued to the bridge 
investors and the 132,945 shares underlying their warrants). The resale registration statement was declared effective 
by the SEC on October 18, 2007. Under the registration rights agreement entered into in connection with the 
offering, subject to certain exceptions, if the resale registration statement ceases to remain effective, a 1% cash 
penalty will be assessed for each 30-day period until the registration statement becomes effective again, capped at 
10% of the aggregate gross proceeds we received from the equity offering. Because the penalty is based on the 
number of unregistered shares of common stock held by investors in the offering, our maximum penalty exposure 
will decline over time as investors sell their shares of common stock that were included in the registration statement. 

Athersys has never paid dividends on its capital stock, and all accrued cumulative dividends were eliminated in June 
2007 in connection with the merger. 

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 operation are based on Athersys’ consolidated financial statements, 
which have been prepared in accordance with United States generally accepted accounting principles, or GAAP. 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 discussion of the material implications of uncertainties associated with the methods, assumptions and estimates 
underlying our critical accounting polices is as follows: 

Revenue Recognition 

Our license and collaboration agreements may contain multiple elements, including license and technology access 
fees, research and development funding, manufacturing revenue, cost-sharing, milestones and royalties. The 
deliverables under such an arrangement are evaluated under Accounting Standards Codification, or ASC, 605-25, 
Multiple-Element Arrangements, (which originated primarily from the guidance in EITF 00-21) to assess whether 
they have standalone value and objective and reliable evidence of fair value, and if so, are accounted for as a single 
unit. We then recognize revenue for each unit based on the culmination of the earnings process under ASC 605-S25 
(issued as SAB Topic 13) and our estimated performance period for the single units of accounting based on the 
specific terms of each collaborative agreement. We subsequently adjust the estimated performance periods, if 
appropriate, on a prospective basis based upon available facts and circumstances. Future changes in estimates of the 
performance period may materially impact the timing of future revenue recognized. Amounts received prior to 
satisfying the revenue recognition criteria for contract revenues are recorded as deferred revenue in the 
accompanying balance sheets. Reimbursement amounts (other than those accounted for using collaboration 
accounting) paid to us are recorded on a gross basis in the statements of operations as contract revenues. 

We entered into a collaboration agreement with Pfizer in December 2009 that contains multiple elements and 
deliverables. For a description of the collaboration agreement and the determination of contract revenues, see Note E 
to our consolidated financial statements included in this annual report on Form 10-K. 

Also included in contract revenue are license fees received from Bristol-Myers Squibb, which are specifically set 
forth in the license and collaboration agreement as amounts due to us based on our completion of certain tasks (e.g., 
delivery and acceptance of a cell line) and development milestones (e.g., clinical trial phases), and as such, are not 
based on estimates that are susceptible to change. Such amounts are invoiced and recorded as revenue as tasks are 
completed and as milestones are achieved. 

- 41 - 

 
 
 
 
 
 
 
 
 
 
 
Similarly, grant revenue consists of funding under cost reimbursement programs primarily from federal and state 
sources for qualified research and development activities performed by us, and as such, are not based on estimates 
that are susceptible to change. Such amounts are invoiced (unless prepaid) and recorded as revenue as tasks are 
completed. 

Collaborative Arrangements 

Collaborative arrangements that involve cost or future profit sharing are reviewed to determine the nature of the 
arrangement and the nature of the collaborative parties’ businesses. The arrangements are also reviewed to determine 
if one party has sole or primary responsibility for an activity, or whether the parties have shared responsibility for 
the activity. If responsibility for an activity is shared and there is no principal party, then the related costs of that 
activity are recognized by us on a net basis in the statement of operations (e.g., total cost, less reimbursement from 
collaborator). If we are deemed to be the principal party for an activity, then the costs and revenues associated with 
that activity are recognized on a gross basis in the statement of operations. The accounting may be susceptible to 
change if the nature of a collaborator’s business changes. Currently, our only collaboration accounted for on a net 
basis is our cost-sharing collaboration with Angiotech. 

Clinical Trial Costs 

Clinical trial costs are accrued based on work performed by outside contractors who manage and perform the trials. 
We obtain initial estimates of total costs based on enrollment of subjects, project management estimates and other 
activities. Actual costs are typically charged to us and recognized as the tasks are completed by the contractor. 
Accrued clinical trial costs may be subject to revisions as clinical trials progress, and any revisions are recorded in 
the period in which the facts that give rise to the revisions become known. Since such actual costs are typically 
invoiced as incurred or based on contractual amounts for services rendered, the amounts are generally not 
susceptible to significant changes in estimates. 

Investments in Available-for-Sale Securities 

We determine the appropriate classification of investment securities at the time of purchase and re-evaluate such 
designation as of each balance sheet date. Our investments typically consist primarily of United States government 
obligations, commercial paper and corporate debt securities, which are classified as available-for-sale and are valued 
based on quoted prices in active markets for identical assets (Level 1). Available-for-sale securities are carried at fair 
value, with the unrealized gains and losses, net of tax, reported as a component of accumulated other comprehensive 
income. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to 
maturity. Such amortization or accretion is included in interest income. Realized gains and losses on available-for-
sale securities are included in interest income. The cost of securities sold is based on the specific identification 
method. Interest earned on securities classified as available-for-sale is included in interest income. Since the 
elements related to accounting for these investments are reflected on monthly statements, the amounts are not based 
on estimates that are susceptible to change. None of our financial assets are in markets that are not active. 

Stock-Based Compensation 

We recognize stock-based compensation expense on the straight-line method and use a Black-Scholes option-pricing 
model to estimate the grant-date fair value of share-based awards. The expected term of options granted represent 
the period of time that option grants are expected to be outstanding. We use the “simplified” method to calculate the 
expected life of option grants given our limited history and determine volatility by using the historical stock 
volatility of other companies with similar characteristics. Estimates of fair value are not intended to predict actual 
future events or the value ultimately realized by persons who receive equity awards. 

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures 
differ from those estimates and if our expectations on forfeitures changes. If actual forfeitures vary from the 
estimate, we will recognize the difference in compensation expense in the period the actual forfeitures occur or when 
options vest. 

- 42 - 

 
 
 
 
 
 
 
 
 
 
 
All of the aforementioned estimates and assumptions are evaluated on a quarterly basis and may change as facts and 
circumstances warrant. Changes in these assumptions can materially affect the estimate of the fair value of our 
share-based payments and the related amount recognized in our financial statements. 

Recently Issued Accounting Standards 

In December 2007, the Financial Accounting Standards Board, or FASB, issued guidance (issued as EITF Issue No. 
07-1) related to accounting for collaborative arrangements codified in ASC 808, Collaborative Arrangements. The 
effective date of the guidance was January 1, 2009 for calendar year companies with retrospective application 
required for all periods presented for collaborative arrangements existing as of the effective date. ASC 808 requires 
certain disclosures related to collaborative arrangements where parties are active participants and exposed to 
significant risks and rewards dependent on the commercial success of the activity. The adoption of the new guidance 
did not have a material impact on our financial statements because our accounting for our collaborative agreement 
with Angiotech was consistent with the standard’s provisions. 

In June 2008, the FASB issued clarifying guidance (issued as EITF Issue No. 07-5) related to determining whether 
an instrument is indexed to an entity’s own stock, codified in ASC 815, Derivative and Hedging. The new guidance 
was effective for us on January 1, 2009. The adoption of the new guidance had no impact on our financial 
statements. 

In April 2009, the FASB issued guidance (issued as Staff Position FAS 115-2 and FAS 124-2) related to the 
recognition and presentation of other-than-temporary impairments, codified in ASC 320, Investments-Debt and 
Equity Securities. The guidance requires, among other things, that other-than-temporary impairments be separated 
into the amount recognized in earnings and the amount recognized in other comprehensive income. The guidance 
was effective for us on June 30, 2009. The adoption of the new guidance had no impact on our financial statements. 

In April 2009, the FASB issued additional guidance (issued as FSP 157-4) related to determining fair value when the 
volume and level of activity for the asset or liability has significantly decreased in relation to normal market activity 
and required additional disclosures about fair value measurements in annual and interim reporting periods, which 
was codified in ASC 820, Fair Value Measurements and Disclosures. The standard also provides guidance on 
circumstances that may indicate that a transaction is not orderly. This additional guidance within ASC 820 was 
effective for us on June 30, 2009. The adoption of the additional guidance had no impact on our financial statements. 

In May 2009, the FASB issued additional guidance (issued as SFAS No. 165), codified in ASC 855, Subsequent 
Events, related to subsequent events and provides authoritative guidance regarding subsequent events as this 
guidance was previously only addressed in auditing literature. The additional guidance was effective for us on June 
30, 2009 and its adoption had no impact on our financial statements. 

In May 2008, the FASB issued guidance (issued as Staff Position APB 14-1) related to accounting for convertible 
debt that may be settled in cash upon conversion, codified in ASC 470-20, Debt with Conversion and Other Options. 
The new guidance requires the issuer of certain convertible debt instruments that may be settled in cash on 
conversion to separately account for the liability and equity components in a manner that reflects the issuer’s 
nonconvertible debt borrowing rate. We have no current convertible debt instruments, and concluded that all of our 
prior instruments were not within the scope of the new guidance; therefore, there was no retrospective effect from 
the adoption of the new guidance on our financial statements. 

In September 2009, ASC 605-25, Multiple-Element Arrangements, was updated (ASU No. 2009-13) related to 
revenue recognition for arrangements with multiple elements. The new guidance is effective for our annual report on 
Form 10-K for the year ended December 31, 2010, however, early adoption is permitted provided that the new 
guidance is retroactively applied to the beginning of the year of adoption. We have not yet evaluated the potential 
effect of the future adoption of this new guidance. 

- 43 - 

 
 
 
 
 
 
 
 
 
 
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS 

This annual report on Form 10-K 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,” “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 
annual 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 human 
therapeutics, including the uncertainty regarding market acceptance of our product candidates and our ability to 
generate revenues. The following risks 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: 

• 

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

•  changes in external market factors;  

•  changes in our industry’s overall performance;  

•  changes in our business strategy;  

•  our ability to protect our intellectual property portfolio;  

•  our possible inability to realize commercially valuable discoveries in our collaborations with pharmaceutical 

and other biotechnology companies; 

•  our ability to meet milestones under our collaboration agreements;  

•  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 this annual report 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. 

- 44 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  

Interest Rate Risk 

Our exposure to interest rate risk is related to our investment portfolio and our borrowings. Fixed rate investments 
and borrowings may have their fair market value adversely impacted from changes in interest rates. Due in part to 
these factors, our future investment income may fall short of expectations. Further, we may suffer losses in 
investment principal if we are forced to sell securities that have declined in market value due to changes in interest 
rates. We invest our excess cash primarily in debt instruments of the United States government and its agencies, 
commercial paper and corporate debt securities. As of December 31, 2009, approximately 83% of our investments 
were in United States government obligations, including government-backed agencies. We have been investing 
conservatively due to the current economic conditions, including the current credit crisis, and have prioritized 
liquidity and the preservation of principal in lieu of potentially higher returns. As a result, we have experienced no 
losses on the principal of our investments. 

We enter into loan arrangements with financial institutions when needed and when available to us. At December 31, 
2009, we had no borrowings outstanding. 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  

CONSOLIDATED FINANCIAL STATEMENTS 

Athersys, Inc. 
Years Ended December 31, 2009, 2008 and 2007 

- 45 - 

 
 
 
 
 
 
 
 
Athersys, Inc. 

Consolidated Financial Statements 

Years Ended December 31, 2009, 2008 and 2007 

Contents 

Report of Independent Registered Public Accounting Firm ...................................................................................

Consolidated Balance Sheets as of December 31, 2009 and 2008 .........................................................................

Consolidated Statements of Operations for each of the years ended December 31, 2009, 2008 and 2007 ............

Consolidated Statements of Stockholders’ Equity (Deficit) for each of the years ended December 31, 2009,

2008 and 2007 ......................................................................................................................................................

Consolidated Statements of Cash Flows for each of the years ended December 31, 2009, 2008 and 2007 ...........

Notes to Consolidated Financial Statements...........................................................................................................

47

48

49

50

51

52

- 46 - 

 
 
 
 
 
 
 
 
 
 
 
Report of Independent Registered Public Accounting Firm 

The Board of Directors and Stockholders 
Athersys, Inc. 

We have audited the accompanying consolidated balance sheets of Athersys, Inc. as of December 31, 2009 and 
2008, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three 
years in the period ended December 31, 2009. These financial statements are the responsibility of the Company’s 
management. Our responsibility is to express an opinion on these financial statements based on our audits. 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board 
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about 
whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the 
Company’s internal control over financial reporting. Our audits included consideration of internal control over 
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the 
purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. 
Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the 
amounts and disclosures in the financial statements, assessing the accounting principles used and significant 
estimates made by management, and evaluating the overall financial statement presentation. We believe that our 
audits provide a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the 
consolidated financial position of Athersys, Inc. at December 31, 2009 and 2008, and the consolidated results of its 
operations and its cash flows for each of the three years in the period ended December 31, 2009, in conformity with 
U. S. generally accepted accounting principles. 

Cleveland, Ohio  
March 11, 2010 

/s/ ERNST & YOUNG LLP  

- 47 - 

 
 
 
 
 
 
 
Athersys, Inc. 

Consolidated Balance Sheets 

(In Thousands, Except Share and Per Share Amounts) 

December 31,

2009 

2008

Assets 
Current assets: 

Cash and cash equivalents ............................................................................................
Available-for-sale securities ..........................................................................................
Accounts receivable ......................................................................................................
Receivable from Angiotech...........................................................................................
Investment interest receivable .......................................................................................
Prepaid expenses and other ...........................................................................................
Total current assets ...........................................................................................................

Available-for-sale securities .............................................................................................
Deposits and other ............................................................................................................
Equipment, net ..................................................................................................................
Equity investments ...........................................................................................................
Total assets ........................................................................................................................

Liabilities and stockholders’ equity 
Current liabilities: 

Accounts payable ..........................................................................................................
Accrued compensation and related benefits..................................................................
Accrued clinical trial costs ............................................................................................
Accrued expenses .........................................................................................................
Deferred revenue ..........................................................................................................
Total current liabilities ......................................................................................................

$ 

$ 

$ 

11,167  $
10,135 
352 
229 
93 
173 
22,149 

5,080 
38 
849 
215 
28,331  $

1,128  $
667 
83 
857 
3,123 
5,858 

Deferred revenue ..............................................................................................................

3,516 

12,552
15,460
260
234
189
408
29,103

3,601
156
701
316
33,877

1,498
97
58
603
58
2,314

—

—

Stockholders’ equity: 

Preferred stock, at stated value; 10,000,000 shares authorized, and no shares issued

and outstanding at December 31, 2009 and December 31, 2008 ................................

Common stock, $0.001 par value; 100,000,000 shares authorized, 18,929,333 and 

18,927,988 shares issued and outstanding at December 31, 2009 and December 31, 
2008, respectively .......................................................................................................
Additional paid-in capital .............................................................................................
Accumulated other comprehensive income ..................................................................
Accumulated deficit ......................................................................................................
Total stockholders’ equity .................................................................................................
Total liabilities and stockholders’ equity ..........................................................................

See accompanying notes. 

- 48 - 

— 

19 
212,704 
71 

(193,837)   
18,957 
28,331  $

$ 

19
209,895
120
(178,471)
31,563
33,877

 
 
 
 
 
  
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Athersys, Inc. 

Consolidated Statements of Operations 

(In Thousands, Except Share and Per Share Amounts) 

Revenues 
Contract revenue .............................................................................. $
Grant revenue ..................................................................................
Total revenues ..............................................................................

Costs and expenses 
Research and development (including stock compensation

expense of $1,296, $727 and $2,468 in 2009, 2008 and 2007, 
respectively) ..................................................................................

General and administrative (including stock compensation

expense of $1,512, $1,129 and $2,671 in 2009, 2008 and 2007, 
respectively) ..................................................................................
Depreciation ....................................................................................
Total costs and expenses ..............................................................
Loss from operations .......................................................................
Other (expense) income, net ............................................................
Interest income ................................................................................
Interest expense ...............................................................................
Accretion of premium on convertible debt ......................................
Net loss ............................................................................................ $
Preferred stock dividends ................................................................
Deemed dividend resulting from induced conversion of

convertible preferred stock ............................................................
Net loss attributable to common stockholders ............................ $

Year Ended December 31,
2008 

2007

2009

$

1,079
1,080
2,159

1,880  $ 
1,225 
3,105 

1,433
1,827
3,260

11,920

16,500 

15,817

5,621
233
17,774
(15,615)
(126)
375
—
—
(15,366) $
—

5,479 
218 
22,197 
(19,092) 
48 
1,146 
(94) 
— 
(17,992)  $ 
— 

7,975
283
24,075
(20,815)
2,017
1,591
(1,263)
(456)
(18,926)
(659)

—
(15,366) $

— 
(17,992)  $ 

(4,800)
(24,385)

Basic and diluted net loss per common share attributable to

common stockholders .................................................................. $

(0.81) $

(0.95)  $ 

(2.26)

Weighted average shares outstanding, basic and diluted ...........

18,928,379

18,927,988 

  10,811,119

See accompanying notes. 

- 49 - 

 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Athersys, Inc. 

Consolidated Statements of Stockholders’ Equity (Deficit) 

(In Thousands, Except Share Amounts) 

Convertible 
Preferred Stock 

  Number 
 of Shares  

  Stated 
  Value 

Common Stock
Number
Par
of Shares
Value

Additional
Paid-in
Capital

Treasury
Stock

Accumulated 
Other
Comprehensive 
Income (Loss)   

 Accumulated 
  Deficit 

Total
Stockholders’
Equity
(Deficit)

— 

— 

— 

— 

— 

— 
— 

Balance at January 1, 2007 ...........     364,524 
— 

Stock based compensation ........    
Accrued dividends —  
Class C .....................................    
Elimination of cumulative 
accrued dividends —  
Class C ....................................    
Conversion of preferred stock 
to common stock .....................     (364,524) 
Issuance of common stock 
from warrant exercises ............    
Retirement of treasury stock .....    
Shares of common stock for 
merger with BTHC VI, Inc. ....    
Issuance of common stock, 
net of expenses ........................    
Issuance of common stock 
warrants ...................................    
Issuance of common stock for 
conversion of convertible 
notes ........................................    
Comprehensive loss: 
Net loss .....................................    
Unrealized gain on available-
for- sale securities ...................    
Total comprehensive loss ..........    
Balance at December 31, 2007 ...    
Stock based compensation ........    
Comprehensive loss: 
Net loss .....................................    
Unrealized gain on available-
for-sale securities ....................    
Total comprehensive loss ..........    
Balance at December 31, 2008 ...    
Stock based compensation ........    
Issuance of common stock ........    
Comprehensive loss: 
Net loss .....................................    
Unrealized loss on available-
for-sale securities ....................    
Total comprehensive loss ..........    
Balance at December 31, 2009 ...    

— 
— 
— 

  — 

— 
— 

— 

— 

— 

— 

— 

— 

— 

$  68,301 
— 

293,770
—

$ — $
—

53,495 $
5,139

$

(250)
—

—  $  
— 

— 

— 

—

—

  (68,301) 

1,912,356

— 
— 

— 

1,003,190
—

299,622

— 

13,001,379

— 

— 

— 

— 

— 
— 

— 

— 

— 
— 
— 

— 

— 

—

2,417,671

—

—

18,927,988
—

—

—

18,927,988
—
1,345

—

—

— 

18,929,333

—

—

2

1
—

—

13

—

3

—

—

19
—

—

—

19
—
—

—

—

19

(659)

9,541

68,299

9
(250)

58,479

492

13,494

—

—

208,039
1,856

—

—

209,895
2,808
1

—

—

212,704

—

—

—

—
250

—

—

—

—

—

—

—
—

—

—

—
—
—

—

—

—

— 

— 

— 

— 
— 

— 

— 

— 

— 

— 

52 

52 
— 

— 

68 

120 
— 
— 

— 

(49) 

71 

(141,553)  $

— 

— 

— 

— 

— 
— 

— 

— 

— 

— 

(20,007)
5,139

(659)

9,541

—

10
—

—

58,492

492

13,497

(18,926) 

(18,926)

— 

(160,479) 
— 

52
(18,874)
47,631
1,856

(17,992) 

(17,992)

— 

(178,471) 
— 
— 

68
(17,924)
31,563
2,808
1

(15,366) 

(15,366)

— 

(193,837) 

(49)
(15,415)
18,957

See accompanying notes. 

- 50 - 

 
 
 
 
 
   
  
 
 
 
 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
   
 
Athersys, Inc. 

Consolidated Statements of Cash Flows 

(In Thousands) 

Operating activities 
Net loss ............................................................................................................
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation .................................................................................................
Gain on sale of equipment ...........................................................................
Accretion of premium on convertible debt ..................................................
Provision on notes receivable ......................................................................
Earned milestone applied to note receivable................................................
Stock-based compensation ...........................................................................
Expense related to warrants issued to lenders..............................................
Amortization of premium (discount) on available- for-sale securities and

other ...........................................................................................................

Changes in operating assets and liabilities:

Accounts receivable .................................................................................
Receivable from Angiotech ......................................................................
Prepaid expenses and other assets ............................................................
Accounts payable and accrued expenses..................................................
Deferred revenue ......................................................................................
Net cash used in operating activities ................................................................

Investing activities 
Purchase of available-for-sale securities ..........................................................
Proceeds from maturities of available-for-sale securities ................................
Investment in privately-held company ............................................................
Proceeds from sale of equipment .....................................................................
Purchases of equipment ...................................................................................
Net cash provided by (used in) investing activities .........................................

Financing activities 
Principal payments on debt ..............................................................................
Proceeds from convertible promissory notes...................................................
Proceeds from issuance of common stock, net ................................................
Net cash (used in) provided by financing activities.........................................

Year Ended December 31,

2009

  2008 

2007

$ (15,366)   $  (17,992)  $ (18,926)

233 
(21)   
— 
— 
— 
2,808 
— 

218 
(24) 
— 
74 
— 
1,856 
16 

283
—
456
193
283
5,139
476

305 

12 

(52)

(92)   
5 
449 
479 
6,581 
(4,619)   

618 
(171) 
178 
(467) 
(29) 
(15,711) 

(11,692)   
15,300 

(14)   
21 
(381)    
3,234 

(26,594) 
43,917 
— 
24 
(532) 
16,815 

111
(63)
(558)
505
87
(12,066)

(46,316)
10,100
—
—
(161)
(36,377)

— 
— 
— 
— 

(1,800) 
— 
— 
(1,800) 

(3,332)
5,000
58,495
60,163

(Decrease) increase in cash and cash equivalents............................................
Cash and cash equivalents at beginning of year ..............................................
Cash and cash equivalents at end of year ........................................................

(1,385)   
12,552 
11,167 

(696) 
13,248 
 $  12,552  $

11,720
1,528
13,248

$

See accompanying notes. 

- 51 - 

 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
  
Athersys, Inc. 

Notes to Consolidated Financial Statements 

A. Background, Merger and Offering  

We are a biopharmaceutical company engaged in the discovery and development of therapeutic products in one 
business segment. Operations consist primarily of research and product development activities. 

On June 8, 2007, our subsidiary, which was then named Athersys, Inc. (“Old Athersys”), effected a merger into a 
wholly-owned subsidiary of a public company (the “Merger”). The public company, BTHC VI, Inc. (“BTHC VI”), 
was a shell corporation with no assets, liabilities or operations as of the date of the Merger. Upon completion of the 
Merger, the officers and directors of Old Athersys assumed control over the operations of BTHC VI, and Old 
Athersys’ operations became the sole operations of BTHC VI on a consolidated basis. In August 2007, BTHC VI 
changed its name to Athersys, Inc. (the “Company” or “us”). 

Prior to the consummation of the Merger, Old Athersys completed a restructuring of its capital stock, which included 
the conversion of its preferred stock into shares of Old Athersys’ common stock, termination of certain warrants and 
the elimination of accrued dividends. As a result, immediately prior to the consummation of the Merger, all 
convertible preferred stock (including termination of warrants and elimination of accrued dividends) was converted 
into 53,341,747 shares of common stock and then exchanged for 1,912,356 shares of BTHC VI common stock using 
the Merger exchange ratio of 0.0358493. The change to the conversion ratios of the convertible preferred stock was 
deemed to be an induced conversion, which resulted in a $4.8 million deemed dividend and an increase to the net 
loss attributable to common stockholders in June 2007. 

BTHC VI’s acquisition of Old Athersys effected a change in control and was accounted for as a reverse acquisition 
whereby Old Athersys is the accounting acquirer for financial statement purposes. Accordingly, our financial 
statements as presented reflect the historical results of Old Athersys and do not include the historical financial results 
of BTHC VI prior to the consummation of the Merger. 

Immediately after the Merger, we completed an offering of 13,000,000 shares of common stock for net proceeds of 
$58.5 million (the “Offering”). The Offering included the issuance of warrants to purchase 3,250,000 shares of 
common stock to the investors with an exercise price of $6.00 and a five-year term. We also issued warrants to 
purchase 500,000 shares of common stock to the lead investor and warrants to purchase 1,093,525 shares of 
common stock to the placement agents, all with an exercise price of $6.00. 

Upon the closing of the Offering, bridge investors from 2006 also received five-year warrants to purchase 132,945 
shares of common stock at $6.00 per share, which terms were consistent with the warrants issued to new investors in 
the Offering. 

We filed a resale registration statement with the SEC for 18,508,251 shares of common stock, which includes all 
shares of common stock issued in the Offering and shares of common stock issuable upon exercise of the warrants 
issued in the Offering (as well as the 531,781 shares of common stock issued to the bridge investors and the 132,945 
shares underlying their warrants). The resale registration statement was declared effective by the SEC on October 
18, 2007. Under the purchase agreement for the Offering, subject to certain exceptions, if the resale registration 
statement ceases to remain effective, a 1% cash penalty will be assessed for each 30-day period until the registration 
statement becomes effective again, capped at 10% of the aggregate gross proceeds received in the Offering. Because 
the penalty is based on the number of unregistered shares of common stock held by investors in the Offering, our 
maximum penalty exposure will decline over time as investors sell their shares of common stock that were included 
in the registration statement. 

In 2007, Old Athersys sold certain non-core technology related to its asthma drug discovery program to a 
pharmaceutical company for $2.0 million, which was recognized as a gain on the sale in other income in 2007. 

- 52 - 

 
 
 
 
 
 
 
 
 
 
 
 
Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

B. Accounting Policies  

Principles of Consolidation 

The consolidated financial statements include our accounts and results of operations and those of our wholly owned 
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Investments in joint 
ventures are accounted for using the equity method when we do not control the investee, but have the ability to 
exercise significant influence over the investee’s operations and financial policies. 

Revenue Recognition 

Our license and collaboration agreements may contain multiple elements, including license and technology access 
fees, research and development funding, manufacturing revenue, cost-sharing, milestones and royalties. The 
deliverables under such an arrangement are evaluated under Accounting Standards Codification (“ASC”) 605-25, 
Multiple-Element Arrangements, (which originated primarily from the guidance in EITF 00-21) to assess whether 
they have standalone value and objective and reliable evidence of fair value, and if so, are accounted for as a single 
unit. We then recognize revenue for each unit based on the culmination of the earnings process under ASC 605-S25 
(issued as SAB Topic 13) and our estimated performance period for the single units of accounting based on the 
specific terms of each collaborative agreement. We subsequently adjust the estimated performance periods, if 
appropriate, on a prospective basis based upon available facts and circumstances. Future changes in estimates of the 
performance period may materially impact the timing of future revenue recognized. Amounts received prior to 
satisfying the revenue recognition criteria for contract revenues are recorded as deferred revenue in the 
accompanying balance sheets. Reimbursement amounts (other than those accounted for using collaboration 
accounting) paid to us are recorded on a gross basis in the statements of operations as contract revenues.  

We entered into a collaboration agreement with Pfizer, Inc. (“Pfizer”) in December 2009 that contains multiple 
elements and deliverables. For a description of the collaboration agreement and the determination of contract 
revenues, see Note E. 

Also included in contract revenue are license fees received from Bristol-Myers Squibb, which are specifically set 
forth in the license and collaboration agreement as amounts due to us based on our completion of certain tasks (e.g., 
delivery and acceptance of a cell line) and development milestones (e.g., clinical trial phases), and as such, are not 
based on estimates that are susceptible to change. Such amounts are invoiced and recorded as revenue as tasks are 
completed and as milestones are achieved. 

Similarly, grant revenue consists of funding under cost reimbursement programs primarily from federal and state 
sources for qualified research and development activities performed by us, and as such, are not based on estimates 
that are susceptible to change. Such amounts are invoiced (unless prepaid) and recorded as revenue as tasks are 
completed. 

Cash and Cash Equivalents 

We consider all highly liquid investments with a maturity of three months or less when purchased to be cash 
equivalents. Cash equivalents are primarily invested in money market funds and commercial paper. The carrying 
amount of our cash equivalents approximates fair value due to the short maturity of the investments. 

Research and Development 

Research and development expenditures, which consist primarily of costs associated with external clinical and 
preclinical study fees, manufacturing costs, salaries and related personnel costs, legal expenses resulting from 
intellectual property application processes, and laboratory supply and reagent costs, including direct and allocated 
overhead expenses, are charged to expense as incurred. 

- 53 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

B. Accounting Policies, continued 

Collaborative Arrangements 

Collaborative arrangements that involve cost or future profit sharing are reviewed to determine the nature of the 
arrangement and the nature of the collaborative parties’ businesses. The arrangements are also reviewed to determine 
if one party has sole or primary responsibility for an activity, or whether the parties have shared responsibility for 
the activity. If responsibility for an activity is shared and there is no principal party, then the related costs of that 
activity are recognized by us on a net basis in the statement of operations (e.g., total cost, less reimbursement from 
collaborator). If we are deemed to be the principal party for an activity, then the costs and revenues associated with 
that activity are recognized on a gross basis in the statement of operations. The accounting may be susceptible to 
change if the nature of a collaborator’s business changes. Currently, our only collaboration accounted for on a net 
basis is our cost-sharing collaboration with Angiotech Pharmaceuticals, Inc. (“Angiotech”). 

Clinical Trial Costs 

Clinical trial costs are accrued based on work performed by outside contractors, who manage and perform the trials. 
We obtain initial estimates of total costs based on enrollment of subjects, project management estimates and other 
activities. Actual costs are typically charged to us and recognized as the tasks are completed by the contractor. 
Accrued clinical trial costs may be subject to revisions as clinical trials progress, and any revisions are recorded in 
the period in which the facts that give rise to the revisions become known. 

Royalties 

We may be required to make royalty payments to certain parties based on product sales under license agreements. 
We did not pay any royalties during the three-year period ended December 31, 2009. 

Investments in Available-for-Sale Securities 

We determine the appropriate classification of investment securities at the time of purchase and re-evaluate such 
designation as of each balance sheet date. Our investments typically consist of U.S. government obligations, 
commercial paper and corporate debt securities, which are classified as available-for-sale and are valued based on 
quoted prices in active markets for identical assets (Level 1). Available-for-sale securities are carried at fair value, 
with the unrealized gains and losses, net of applicable tax, reported as a component of accumulated other 
comprehensive income. The amortized cost of debt securities is adjusted for amortization of premiums and accretion 
of discounts to maturity. Such amortization or accretion is included in interest income. Realized gains and losses on 
available-for-sale securities are included in interest income. The cost of securities sold is based on the specific 
identification method. Interest earned on securities classified as available-for-sale is included in interest income. 
None of our financial assets are in markets that are not active. 

Long-Lived Assets 

Equipment is stated at acquired cost less accumulated depreciation. Laboratory and office equipment are depreciated 
on the straight-line basis over the estimated useful lives (three to seven years). 

Long-lived assets are evaluated for impairment when events or changes in circumstances indicate that the carrying 
amount of the asset or related group of assets may not be recoverable. If the expected future undiscounted cash 
flows are less than the carrying amount of the asset, an impairment loss is recognized at that time. Measurement of 
impairment may be based upon appraisal, market value of similar assets or discounted cash flows. 

In connection primarily with a settlement that occurred in 2003 and a milestone that was achieved in 2006, we and 
an affiliate own preferred stock in a privately-held company with an aggregate value of approximately $300,000. We 
evaluated this cost-method investment and deemed the investment to be other-than-temporarily impaired at 
December 31, 2009, recognizing $115,000 of impairment loss in 2009. No impairment losses were recorded in 2008 
or 2007. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

B. Accounting Policies, continued 
Patent Costs and Rights 

Costs of prosecuting and maintaining patents and patent rights are expensed as incurred. As of December 31, 2009, 
we have filed for broad intellectual property protection on our proprietary technologies. We currently have numerous 
U.S. patent applications and corresponding international patent applications related to our technologies, as well as 
many issued U.S. and international patents. 

Comprehensive Income (Loss) 

Unrealized gains and losses on our available-for-sale securities are the only components of accumulated other 
comprehensive income (loss). Total comprehensive income or loss is disclosed in the consolidated statement of 
stockholders’ equity (deficit). 

Concentration of Credit Risk 

Accounts receivable are subject to concentration of credit risk due to the absence of a large number of customers. At 
December 31, 2008, one customer accounted for 39% of accounts receivable. We do not require collateral from our 
customers. 

Use of Estimates 

The preparation of financial statements in conformity with accounting principles generally accepted in the United 
States requires management to make estimates and assumptions that affect the amounts reported in the financial 
statements and accompanying notes. Actual results could differ from those estimates. 

Stock-Based Compensation 

We recognize stock-based compensation expense on the straight-line method and use a Black-Scholes option-pricing 
model to estimate the grant-date fair value of share-based awards. The expected term of options granted represent 
the period of time that option grants are expected to be outstanding. We use the “simplified” method to calculate the 
expected life of option grants given our limited history and determine volatility by using the historical stock 
volatility of other companies with similar characteristics. Estimates of fair value are not intended to predict actual 
future events or the value ultimately realized by persons who receive equity awards. 

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures 
differ from those estimates. If actual forfeitures vary from the estimate, we recognize the difference in compensation 
expense in the period the actual forfeitures occur or when options vest. 

All of the aforementioned estimates and assumptions are evaluated on a quarterly basis and may change as facts and 
circumstances warrant. Changes in these assumptions can materially affect the estimate of the fair value of our 
share-based payments and the related amount recognized in our financial statements 

The following weighted-average input assumptions were used in determining the fair value: 

Volatility ..........................................................................................
Risk-free interest rate .......................................................................
Expected life of option ....................................................................
Expected dividend yield ..................................................................

2009

89.5%
2.4%
5.01 years
0.0%

December 31, 
2008 

69.6% 
3.0% 
5.09 years 
0.0% 

2007

73.4%
5.3%
5.36 years
0.0%

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

B. Accounting Policies, continued 

Income Taxes 

Deferred tax liabilities and assets are determined based on the differences between the financial reporting and tax 
basis of assets and liabilities and are measured using the tax rate and laws currently in effect. We evaluate our 
deferred income taxes to determine if a valuation allowance should be established against the deferred tax assets or 
if the valuation allowance should be reduced based on consideration of all available evidence, both positive and 
negative, using a “more likely than not’ standard. 

We had no liability for uncertain income tax positions as of December 31, 2009 and 2008. Our policy is to recognize 
potential accrued interest and penalties related to the liability for uncertain tax benefits, if applicable, in income tax 
expense. Net operating loss and credit carryforwards since inception remain open to examination by taxing 
authorities, and will for a period post utilization. 

Net Loss per Share 

We compute basic and diluted net loss per share using the weighted-average number of common stock outstanding 
during the period. The change to the conversion ratios of the convertible preferred stock in June 2007 represented an 
induced conversion, which resulted in a deemed dividend in the amount of $4.8 million that was included in 
determining the net loss attributable to common stockholders in 2007. 

We have outstanding options and warrants that have not been used in the calculation of diluted net loss per share 
because their effects would be anti-dilutive. Therefore, the numerator and the denominator used in computing both 
basic and diluted net loss per share are equal. The following instruments were excluded from the calculation of 
diluted net loss per share attributable to common stockholders because their effects were antidilutive: 

•  Outstanding stock options to purchase 4,001,149, 3,738,473 and 3,679,884 shares of common stock for the 

years ended December 31, 2009, 2008 and 2007, respectively; 

•  Warrants to purchase 5,125,496 shares of common stock for each the years ended December 31, 2009, 2008 

and 2007; 

•  Shares of common stock issuable upon conversion of convertible preferred stock in the amount of 160,041 

for the year ended December 31, 2007; and 

•  Shares of common stock issuable upon the conversion of convertible promissory notes in the amount of 

112,098 for the year ended December 31, 2007. 

Recently Issued Accounting Standards 

In December 2007, the Financial Accounting Standards Board (“FASB”) issued guidance (issued as EITF Issue No. 
07-1) related to accounting for collaborative arrangements, codified in ASC 808, Collaborative Arrangements. The 
effective date of the guidance was January 1, 2009 for calendar year companies with retrospective application 
required for all periods presented for collaborative arrangements existing as of the effective date. ASC 808 requires 
certain disclosures related to collaborative arrangements where parties are active participants and exposed to 
significant risks and rewards dependent on the commercial success of the activity. The adoption of the new guidance 
did not have a material impact on our financial statements because our accounting for our collaborative agreement 
with Angiotech was consistent with the standard’s provisions. 

In June 2008, the FASB issued clarifying guidance (issued as EITF Issue No. 07-5) related to determining whether 
an instrument is indexed to an entity’s own stock, codified in ASC 815, Derivative and Hedging. The new guidance 
was effective for us on January 1, 2009. The adoption of the new guidance had no impact on our financial 
statements. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

B. Accounting Policies, continued 

In April 2009, the FASB issued guidance (issued as Staff Position FAS 115-2 and FAS 124-2) related to the 
recognition and presentation of other-than-temporary impairments, codified in ASC 320, Investments-Debt and 
Equity Securities. The guidance requires, among other things, that other-than-temporary impairments be separated 
into the amount recognized in earnings and the amount recognized in other comprehensive income. The guidance 
was effective for us on June 30, 2009. The adoption of the new guidance had no impact on our financial statements. 

In April 2009, the FASB issued additional guidance (issued as FSP 157-4) related to determining fair value when the 
volume and level of activity for the asset or liability has significantly decreased in relation to normal market activity 
and required additional disclosures about fair value measurements in annual and interim reporting periods, which 
was codified in ASC 820, Fair Value Measurements and Disclosures. The standard also provides guidance on 
circumstances that may indicate that a transaction is not orderly. This additional guidance within ASC 820 was 
effective for us on June 30, 2009. The adoption of the additional guidance had no impact on our financial statements. 

In May 2009, the FASB issued additional guidance (issued as SFAS No. 165), codified in ASC 855, Subsequent 
Events, related to subsequent events and provides authoritative guidance regarding subsequent events as this 
guidance was previously only addressed in auditing literature. The additional guidance was effective for us on June 
30, 2009 and its adoption had no impact on our financial statements. 

In May 2008, the FASB issued guidance (issued as Staff Position APB 14-1) related to accounting for convertible 
debt that may be settled in cash upon conversion, codified in ASC 470-20, Debt with Conversion and Other Options. 
The new guidance requires the issuer of certain convertible debt instruments that may be settled in cash on 
conversion to separately account for the liability and equity components in a manner that reflects the issuer’s 
nonconvertible debt borrowing rate. We have no current convertible debt instruments, and concluded that all of our 
prior instruments were not within the scope of the new guidance; therefore, there was no retrospective effect from 
the adoption of the new guidance on our financial statements. 

In September 2009, ASC 605-25, Multiple-Element Arrangements, was updated (ASU No. 2009-13) related to 
revenue recognition for arrangements with multiple elements. The new guidance is effective for our annual report on 
Form 10-K for the year ended December 31, 2010, however, early adoption is permitted provided that the new 
guidance is retroactively applied to the beginning of the year of adoption. We have not yet evaluated the potential 
effect of the future adoption of this new guidance. 

Reclassifications 

Certain prior year amounts have been reclassified to conform with current year presentations. 

C. Equipment  

Equipment consists of (in thousands): 

  December 31,
2008
  2009 

Laboratory equipment ................................................................................................................   $  6,262  $ 6,045
3,607
Office equipment and leasehold improvements.........................................................................  
9,652
(8,951)
701

Accumulated depreciation .........................................................................................................  

3,639 
9,901 
(9,052)

849  $

$ 

D. Financial Instruments  

Investments in Available-for-Sale Securities 

Our available-for-sale securities typically include U.S. government obligations, commercial paper and corporate 
debt securities. As of December 31, 2009, approximately 83% of our investments were in U.S. government 
obligations, which included government-backed agencies.

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

D. Financial Instruments, continued 

We classify the inputs used to measure fair value into the following hierarchy:  

Level 1  Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2  Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for 
identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that 
are observable for the asset or liability.

Level 3  Unobservable inputs for the asset or liability.

The following table provides a summary of the financial assets and liabilities measured at fair value on a recurring 
basis as of December 31, 2009 (in thousands): 

Description 

  Balance as of 
 December 31, 2009  

Fair Value Measurements at December 31, 2009 Using

Quoted Prices in Active
  Markets for Identical 
Assets (Level 1)

Significant Other 
  Observable Inputs 
(Level 2) 

  Significant
  Unobservable 
 Inputs (Level 3)

Available-for-sale 

securities ..............   $ 

15,215  $

15,215 $

—  $ 

—

Fair value is based upon quoted market prices in active markets. We had no Level 2 or Level 3 assets at December 
31, 2009. We review and reassess the fair value hierarchy classifications on a quarterly basis. Changes from one 
quarter to the next related to the observability of inputs to a fair value measurement may result in a reclassification 
between hierarchy levels. 

The following is a summary of available-for-sale securities (in thousands) at December 31, 2009 and 2008, 
respectively: 

December 31, 2009: 

U.S. government obligations, which included

government-backed agencies ....................................
Corporate debt securities ............................................

December 31, 2008: 

U.S. government obligations, which included

government-backed agencies ....................................
Corporate debt securities ............................................

 Amortized 
Cost

Gross
 Unrealized 
Losses

Gross 
 Unrealized 
Gains 

 Estimated
  Fair 
  Value

$

$

$

$

12,613
2,531

15,144

13,603
5,338

18,941

$

$

$

$

(12) $ 
—

52  $
31 

12,653
2,562

(12) $ 

83  $

15,215

— $ 
(24)

125  $
19 

13,728
5,333

(24) $ 

144  $

19,061

We had no realized gains or losses on the sale of available-for-sale securities for any of the periods presented. 
Unrealized gains and losses on our available-for-sale securities are excluded from earnings and are reported as a 
separate component of stockholders’ equity within accumulated other comprehensive income until realized. When 
available-for-sale securities are sold in the future, the cost of the securities will be specifically identified and used to 
determine any realized gain or loss. The net unrealized gain on available-for-sale securities was $71,000 and 
$120,000 as of December 31, 2009 and 2008, respectively. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

D. Financial Instruments, continued 

The amortized cost of and estimated fair value of available-for-sale securities at December 31, 2009 by contractual 
maturity are shown below (in thousands). Actual maturities may differ from contractual maturities because the 
issuers of the securities may have the right to repay the obligations without prepayment penalties. Although the 
investments are available-for-sale, it is our intention to hold the investments classified as long-term for more than a 
year from December 31, 2009. 

Due in one year or less ......................................................................................................
Due after one year through two years ................................................................................

  December 31, 2009
 Amortized 
  Cost 
$   10,065  $

 Estimated
 Fair Value
10,135
5,080
15,215

$   15,144  $

5,079 

Financing Arrangements 

We lease office and laboratory space under an operating lease and have options to renew the lease in annual 
increments through March 2013 at the initial rental rate. We executed options to renew through March 2011. Also, 
we entered into a three-year lease agreement for office and laboratory space for our Belgian subsidiary through 
December 2010, which includes options to renew annually through December 2014. The annual rent is subject to 
adjustments based on an inflationary index, and the lease included an option to expand that was exercised in 2009. 

Aggregate rent expense was approximately $337,000 in 2009, $314,000 in 2008, and $267,000 in 2007. The future 
annual minimum lease commitments at December 31, 2009 are approximately $359,000 for 2010 and $67,000 for 
2011. 

Our former lenders retain a right to receive a milestone payment of $2.25 million upon the occurrence of certain 
events as follows: (1) the entire amount upon (a) the merger with or into another entity where our stockholders do 
not hold at least a majority of the voting power of the surviving entity, (b) the sale of all or substantially all of our 
assets, or (c) our liquidation or dissolution; or (2) a portion of the amount from proceeds of equity financings not 
tied to specific research and development activities that are part of a research or development collaboration, in 
which case, the lenders will receive an amount equal to 10% of proceeds above $5.0 million in cumulative gross 
proceeds until the milestone amount is paid in full. The milestone payment is payable in cash, except that if the 
milestone event is (2) above, we may elect to pay 75% of the milestone in shares of common stock at the per-share 
offering price. No amounts have been recorded for the milestone in December 31, 2009, 2008 or 2007. We paid 
interest of $0, $76,000 and $456,000 during the years ended December 31, 2009, 2008 and 2007, respectively. 

The former lenders also received warrants to purchase 149,026 shares of common stock with an exercise price of 
$5.00 per share and a seven-year term upon the closing of the Offering in June 2007 in accordance with the loan 
agreement. The value of the warrants was $492,000 based on the Black-Scholes valuation of the underlying security, 
of which $16,000 and $476,000 was recorded as interest expense in 2008 and 2007, respectively. 

E. Collaborations  

Pfizer 

In December 2009, we entered into a collaboration with Pfizer to develop and commercialize MutiStem to treat 
inflammatory bowel disease (“IBD”) for the worldwide market. Under the terms of the agreement, we received an 
up-front license and technology access payment of $6.0 million from Pfizer and will receive research funding and 
support during the initial phase of the collaboration, which began in December 2009 and is estimated to be 
completed in 2012. In addition, we are also eligible to receive milestone payments of up to $105 million upon the 
successful achievement of certain development, regulatory and commercial milestones, for which we evaluated the 
nature of the events triggering these contingent payments and concluded that these events constituted substantive 
milestones that will be recognized as revenue in the period in which the underlying triggering event occurs. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

E. Collaborations, continued 

We will be responsible for manufacturing and Pfizer will pay us for manufacturing product for clinical development 
and commercialization purposes. Pfizer will have responsibility for development, regulatory and commercialization 
and will pay us tiered royalties on worldwide commercial sales of MultiStem IBD products. Alternatively, in lieu of 
royalties and certain commercialization milestones, we may elect to co-develop with Pfizer and the parties will share 
development and commercialization expenses and profits/losses on an agreed basis beginning at phase III clinical 
development. 

We evaluated the facts and circumstances of the agreement to determine whether the Pfizer agreement had 
obligations constituting deliverables and concluded that it had multiple deliverables, including deliverables relating 
to the grant of a license and access to our technology, performance of research and development services, and 
performance of certain manufacturing services, and concluded that these deliverables should be combined into a 
single unit of accounting. We will recognize the license and technology access fee and research and development 
funding ratably on a straight-line basis over the estimated performance period, which began in December 2009 and 
is estimated to be completed in 2012, and will recognize manufacturing revenue as the services are performed. 
Prepaid license and technology access fee and prepaid research and development funding is recorded as deferred 
revenue and is amortized on a straight-line basis over the research period. 

Angiotech 

In 2006, we entered into a co-development collaboration with Angiotech. We issued convertible promissory notes to 
Angiotech in the principal amounts of $5.0 million in 2006 at inception and $5.0 million in 2007 upon the 
achievement of a milestone. Upon the closing of the Offering, the convertible notes were converted along with 
accrued interest into common stock at a conversion price of 110% of the price per share in the Offering, in 
accordance with the terms of the notes. 

We may receive equity investments and cash payments based on the successful achievement of specified clinical 
development and commercialization milestones. Under the terms of the collaboration, we bear all preclinical costs 
and the parties jointly fund clinical development activity. We have primary responsibility for preclinical and early 
clinical development and clinical manufacturing, and Angiotech will take the lead on pivotal and later clinical trials 
and commercialization. The parties will share net profits from the future sale of approved products. 

Under the terms of the collaboration, the parties jointly fund clinical development activity, whereby costs for phase I 
and II studies are borne 50% by us and 50% by Angiotech, costs for the first phase III study will be borne 33% by us 
and 67% by Angiotech, and costs for any phase III studies subsequent to the first phase III study will be borne 25% 
by us and 75% by Angiotech. The parties began to share costs for phase I clinical development in 2007. 

We determined that neither party is a principal party for clinical development costs, since both the costs and 
responsibilities are shared and neither party is in the business of conducting clinical development services for others. 
Therefore, we record clinical development costs net of Angiotech’s 50% cost-share, which amounted to $847,000, 
$943,000, and $63,000 in 2009, 2008, and 2007, respectively. The amount due from Angiotech was $229,000 and 
$234,000 at December 31, 2009 and 2008, respectively, and is disclosed separately on the balance sheet. 

F. Capitalization  

At December 31, 2009, we had 100.0 million shares of common stock and 10.0 million shares of undesignated 
preferred stock authorized. No shares of preferred stock have been issued as of December 31, 2009. 

We may issue shares of common stock to our former lenders and to Angiotech in connection with future milestones 
(see Notes D and E). Also, we entered into a license and sponsored research agreement in 2007 with an academic 
institution whereby, in addition to annual research funding, the institution may receive 1,345 shares of common 
stock on each of five anniversary dates. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

F. Capitalization, continued  

The following shares of common stock were reserved for future issuance (in thousands): 

Stock option plans .........................................................................................................................  
Warrants to purchase common stock — 2007 Offering.................................................................  
Warrants to purchase common stock — Lenders...........................................................................  

  December 31
2008
  2009 

4,500
4,976
149
    9,625

4,500
4,976
149
9,625

G. Stock Option Plans  

In 2007, we adopted two incentive plans that authorized an aggregate of 4,500,000 shares of common stock for 
awards to employees, directors and consultants. These equity incentive plans authorize the issuance of equity-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 to qualified employees, directors and consultants. 

In 2007, the majority of Old Athersys’ pre-Merger outstanding options were terminated. We accounted for the 
termination of these awards as a settlement and all previously unrecognized compensation expense ($385,000) was 
recognized on the termination date in 2007. New option awards to purchase 3,625,000 shares of common stock with 
an exercise price of $5.00 per share were granted to employees, directors and consultants in June 2007 upon the 
closing of the Merger. The options that were granted to employees generally vested 40% on the date of grant and 
vest ratably over three years. The options granted to non-employees and board members generally vest at varying 
percentages over three years. 

Prior to the Merger in 2007, Old Athersys maintained equity incentive plans in which 277,000 shares were available 
for issuance. Upon the closing of the Merger, BTHC VI assumed 5,052 of these options, which will be governed by 
Old Athersys’ original equity plans until the awards expire. As of December 31, 2009, 2,149 of these assumed 
awards remain outstanding. All of the remaining outstanding option awards under Old Athersys’ former equity 
incentive plans were terminated prior to the Merger. 

As of December 31, 2009, a total of 501,000 shares were available for issuance under our equity compensation plans 
and options to purchase 4,001,149 shares of common stock were outstanding (including the assumed options 
covering 2,149 shares described above). We recognized $2,808,000, $1,856,000 and $5,139,000 of stock 
compensation expense in 2009, 2008 and 2007, respectively, which included approximately $264,000 in 2009 
related to a change in estimate of our forfeiture rate. At December 31, 2009, total unrecognized estimated 
compensation cost related to unvested stock options was approximately $1,600,000, which is expected to be 
recognized by March 31, 2013 using the straight-line method. 

The weighted average fair value of option shares granted in 2009, 2008 and 2007 was $2.04, $2.00 and $2.82 per 
share, respectively. The total fair value of option shares vested in 2009, 2008 and 2007 was $2,257,000, $2,337,000 
and $4,742,000, respectively. There is no aggregate intrinsic value of fully vested option shares and option shares 
expected to vest as of December 31, 2009 since the market value was less than the exercise price of the options at 
the end of the year. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

G. Stock Option Plans, continued  

A summary of our stock option activity and related information is as follows:  

 Weighted
  Average 
  Exercise 
  Price

  Number 
 of Options  

Outstanding January 1, 2007 ............................................................................................
Granted .........................................................................................................................
Exercised ......................................................................................................................
Forfeited / Terminated / Expired ...................................................................................
Outstanding December 31, 2007 ......................................................................................
Granted .........................................................................................................................
Exercised ......................................................................................................................
Forfeited / Expired ........................................................................................................
Outstanding December 31, 2008 ......................................................................................
Granted .........................................................................................................................
Exercised ......................................................................................................................
Forfeited / Expired ........................................................................................................
Outstanding December 31, 2009 ......................................................................................

116,083  $

  3,738,000 
— 
    (174,199) 
  3,679,884 
218,000 
— 
    (159,411) 
  3,738,473 
272,000 
— 
(9,324) 

   4,001,149  $

Vested during 2009 ...........................................................................................................
Vested and exercisable at December 31, 2009..................................................................

854,459  $
  3,265,792  $

80.62
5.06
—
51.21
5.24
3.36
—
6.64
5.07
3.17
—
8.26
4.94

4.81
5.09

Options Outstanding

Options Vested and Exercisable

December 31, 2009

Weighted
  Average 
  Remaining 
 Contractual 
Life

 Weighted 
  Average 
  Exercise 
Price

5.68 $
7.89 $
6.63 $
1.86 $

2.03
4.32
5.07
184.76

  Number 
of 
  Options   

267,000 
137,000 
  3,595,000 
  2,149 
   4,001,149 

 Number 
of 
Options

87,377
67,042
3,109,224
2,149
3,265,792

Weighted 
  Average 
 Remaining 
 Contractual 
Life 

 Weighted 
  Average 
  Exercise 
  Price

4.40  $
7.84  $
6.54  $
1.86  $

2.46
4.36
5.05
184.76

Exercise Price 

$1.35 – 2.96 
$4.00 – 4.99 
$5.00 – 7.80 
$90.66 – 278.95 

The weighted average contractual life of unvested options at December 31, 2009 was 7.07 years. 

H. Income Taxes  

At December 31, 2009, we had net operating loss and research and development tax credit carryforwards of 
approximately $29,093,000 and $2,070,000, respectively, for income tax purposes. Such losses and credits may be 
used to reduce future taxable income and tax liabilities and will expire in 2029. 

As a result of the change in ownership related to the capital restructuring and the June 2007 Offering, we lost the use 
of a significant portion of our pre-Merger net operating loss carryforwards. The remaining pre-merger net operating 
loss carryforward of approximately $8,090,000 (“Pre-Merger NOL”) is limited for use under Section 382 of the 
Internal Revenue Code to an annual net operating loss carryforward of $464,000. The Pre-Merger NOL may be used 
to reduce future taxable income and tax liabilities and will expire at various dates between 2011 and 2026. 

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Athersys, Inc. 

Notes to Consolidated Financial Statements (continued) 

H. Income Taxes, continued  

Significant components of our deferred tax assets are as follows (in thousands): 

  December 31,
  2009 

2008

Net operating loss carryforwards ..........................................................................................   $ 
Net operating loss carryforwards — Pre-Merger NOL ........................................................  
Research and development credit carryforwards..................................................................  
License fee ............................................................................................................................  
Compensation expense .........................................................................................................  
Other .....................................................................................................................................  
Total deferred tax assets ........................................................................................................  
Valuation allowance for deferred tax assets ..........................................................................  
Net deferred tax assets ..........................................................................................................   $ 

9,892  $
2,751 
2,070 
2,011 
2,432 
506 
19,662 
(19,662) 

—  $

7,755
2,908
1,404

1,700
468
14,235
(14,235)
—

Because of our cumulative losses, the deferred tax assets have been fully offset by a valuation allowance. We have 
not paid income taxes for the three-year period ended December 31, 2009. 

I. Profit Sharing Plan and 401(k) Plan  

We have a profit sharing and 401(k) plan that covers substantially all employees and allows for discretionary 
contributions by us. We made no contributions to this plan for the three-year period ended December 31, 2009. 

J. Quarterly Financial Data (unaudited)  

The following table presents quarterly data for the years ended December 31, 2009 and 2008, in thousands, except 
per share data: 

First
Quarter

Second
Quarter

2009
Third
Quarter

  Fourth 
  Quarter   

  Full Year

Revenues ................................................................ $
Net loss ................................................................... $
Net loss attributable to common stockholders ... $

370 $
(3,625) $
(3,625) $

436 $
(3,347) $
(3,347) $

484 $ 
(3,380) $ 
(3,380) $ 

869  $ 
(5,014)  $ 
(5,014)  $ 

2,159
(15,366)
(15,366)

Basic and diluted net loss per common share

attributable to common stockholders ............... $

(0.19) $

(0.18) $

(0.18) $ 

(0.26)  $ 

(0.81)

Revenues...............................................................
Net loss .................................................................
Net loss attributable to common stockholders ......

Basic and diluted net loss per common share

First
Quarter
$
$
$

792 $
(4,664) $
(4,664) $

Second
Quarter

2008
Third
Quarter

  Fourth 
  Quarter   

  Full Year

776 $
(4,122) $
(4,122) $

1,278 $ 
(4,493) $ 
(4,493) $ 

259  $ 
(4,713)  $ 
(4,713)  $ 

3,105
(17,992)
(17,992)

attributable to common stockholders ..................

$

(0.25) $

(0.22) $

(0.24) $ 

(0.25)  $ 

(0.95)

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 

FINANCIAL DISCLOSURE 

Not applicable.  

ITEM 9A(T). CONTROLS AND PROCEDURES  

Evaluation of disclosure controls and procedures: An evaluation was carried out under the supervision and with 
the participation of our management, including our principal executive officer and our principal financial officer, of 
the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. 
Based on that evaluation, these officers have concluded that as of December 31, 2009, our disclosure controls and 
procedures are effective. 

Management’s report on internal control over financial reporting: Management is responsible for establishing 
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 
13a-15(f). Under the supervision and with the participation of management, including our principal executive officer 
and principal financial officer, we conducted an evaluation of the effectiveness of internal control over financial 
reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of 
Sponsoring Organizations of the Treadway Commission. Based on this evaluation under the framework in Internal 
Control — Integrated Framework, management concluded that our internal control over financial reporting was 
effective as of December 31, 2009. 

This annual report does not include an attestation report of our independent registered public accounting firm 
regarding internal control over financial reporting. Management’s report was not subject to attestation by our 
independent registered public accounting firm pursuant to temporary rules of the SEC that permit Athersys to 
provide only management’s report in this annual report. 

Changes in internal control: During the fourth quarter of 2009, there has been no change in our internal control 
over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control 
over financial reporting. 

ITEM 9B. OTHER INFORMATION  

On March 8, 2010, we entered into a Waiver and Amendment No. 4 to the Amended and Restated Registration 
Rights Agreement, dated April 28, 2000, as amended with holders of our common stock who are party to the 
agreement. The amendment provides for the waiver by the holders of any piggyback registration rights granted 
under the agreement to the holders in connection with the filing of the registration statement on Form S-3 by 
Athersys on January 14, 2010, including the holders’ right to receive written notice of the filing. The amendment 
further provides that all piggyback registration rights granted under the agreement expire on January 1, 2010. 

PART III 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  

The information regarding Athersys’ directors, including the identification of the audit committee and the audit 
committee financial expert, is incorporated by reference to the information contained in Athersys’ Proxy Statement 
with respect to the 2010 Annual Meeting of Stockholders, or the 2010 Proxy Statement under the headings “Election 
of Directors” and “The Board of Directors and its Committees”. Information concerning executive officers is 
contained in Item 3A of Part I of this annual report on Form 10-K under the heading “Executive Officers of the 
Registrant.” 

The information regarding Section 16(a) beneficial ownership reporting compliance is incorporated by reference to 
the material under the heading “Section 16(a) Beneficial Ownership Reporting Compliance” in the 2010 Proxy 
Statement. 

- 64 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Athersys has adopted a code of ethics that applies to its principal executive officer, principal financial officer and 
principal accounting officer. Athersys’ code of ethics is posted under the Investors tab of its website at 
www.athersys.com. Athersys will post any amendments to, or waivers of, its code of ethics that apply to its principal 
executive officer, principal financial officer and principal accounting officer on its website. 

ITEM 11. EXECUTIVE COMPENSATION  

The information regarding executive officer and director compensation is incorporated by reference to the 
information contained in the 2010 Proxy Statement under the heading “Executive Compensation”. 

The compensation committee report is incorporated by reference to the information contained in the 2010 Proxy 
Statement under the heading “Compensation Committee Report”. 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 

RELATED SHAREHOLDER MATTERS 

The information regarding security ownership of certain beneficial owners and management is incorporated by 
reference to the information contained in the 2010 Proxy Statement under the heading “Beneficial Ownership of 
Common Stock”. 

Equity Compensation Plan Information. The following table sets forth certain information regarding the 
Company’s equity compensation plans as of December 31, 2009, unless otherwise indicated. 

 Number of securities to 
 be issued upon exercise 
  of outstanding options 
(a)

  Weighted-average 
  exercise price of 
 outstanding options 
(b)

  Number of securities
 remaining available for 
  future issuance under 
  equity compensation 
plans (excluding 
  securities reflected in 
column (a)) 
(c)

2,637,256

1,363,893
4,001,149

$

$

4.82 

5.07 

397,744

103,256
501,000

Plan Category 
Equity compensation plan approved by 
security holders ...................................  

Equity compensation plan not 

approved by security holders (1) ........  
Total ..................................................  

(1) 

Includes 2,149 of shares of common stock issuable upon exercise of stock options that were assumed by BTHC
VI in the merger. 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR 

INDEPENDENCE 

The information regarding certain relationships and related transactions and director independence is incorporated 
by reference to the information contained in the 2010 Proxy Statement under the heading “The Board of Directors 
and its Committees”. 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES  

Information regarding fees paid to and services provided by our independent registered public accounting firm 
during the fiscal years ended December 31, 2009 and 2008 and the pre-approval policies and procedures of the audit 
committee is incorporated by reference to the information contained in the 2010 Proxy Statement under the heading 
“Ratification of the Appointment of Independent Auditors”. 

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PART IV 

ITEM 15.      EXHIBITS AND FINANCIAL STATEMENT SCHEDULES  

(a)(1) Financial Statements:  

The following consolidated financial statements of Athersys, Inc. are included in Item 8: 

Report of Independent Registered Public Accounting Firm 

Consolidated Balance Sheets as of December 31, 2009 and 2008 

Consolidated Statements of Operations for each of the years ended December 31, 2009, 2008 and 2007 

Consolidated Statements of Stockholders’ Equity (Deficit) for each of the years ended December 31, 2009, 2008 
and 2007 

Consolidated Statements of Cash Flow for each of the years ended December 31, 2009, 2008 and 2007 

Notes to Consolidated Financial Statements 

(a)(2) Financial Statement Schedules:  

All schedules for which provision is made in the applicable accounting regulation of the SEC are not required under 
the related instructions or are inapplicable and, therefore, omitted. 

(a)(3) Exhibits.  

  Exhibit No.    Exhibit Description 

2.1

2.2

3.1

3.2

10.1* 

10.2* 

10.3* 

10.4

10.5

Agreement and Plan of Merger, dated as of May 24, 2007, by and among Athersys, Inc., BTHC VI, 
Inc. and B-VI Acquisition Corp. (incorporated herein by reference to Exhibit 10.1 to registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on May 24, 
2007) 
First Amendment to Agreement and Plan of Merger, dated as of June 8, 2007, by and among 
Athersys, Inc., BTHC VI, Inc. and B-VI Acquisition Corp. (incorporated herein by reference to 
Exhibit 2.2 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on June 14, 2007)
Certificate of Incorporation of Athersys, Inc., as amended as of August 31, 2007 (incorporated herein 
by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-3/A (Registration No. 
333-144433) filed with the Commission on October 10, 2007)
Bylaws of Athersys, Inc., as amended as of October 30, 2007 (incorporated herein by reference to 
Exhibit 3.1 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on October 31, 2007)
Research Collaboration and License Agreement, dated as of December 8, 2000, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.1 
to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the 
Commission on June 14, 2007)
Cell Line Collaboration and License Agreement, dated as of July 1, 2002, by and between Athersys, 
Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.2 to the 
registrant’s Current Report on Form 8-K/A (Commission No. 000-52108) filed with the Commission 
on September 27, 2007) 
Extended Collaboration and License Agreement, dated as of January 1, 2006, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.3 
to the registrant’s Current Report on Form 8-K/A (Commission No. 000-52108) filed with the 
Commission on September 27, 2007)
License Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and Angiotech
Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.4 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Sublicense Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and Angiotech
Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.5 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)

- 66 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Exhibit No.    Exhibit Description 

10.6

10.7

10.8

10.9

10.10† 

10.11† 

10.12

10.13

10.14

10.15† 

10.16† 

10.17† 

10.18† 

10.19† 

Amended and Restated Registration Rights Agreement, dated as of April 28, 2000, by and among 
Athersys, Inc. and the stockholders of Athersys, Inc. parties thereto (incorporated herein by reference 
to Exhibit 10.6 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Amendment No. 1 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated as
of January 29, 2002, by and among Athersys, Inc., the New Stockholders, the Investors, Biotech and 
the Stockholders (each as defined in the Amended and Restated Registration Rights Agreement, dated
as April 28, 2000, by and among Athersys, Inc. and the stockholders of Athersys, Inc. parties thereto) 
(incorporated herein by reference to Exhibit 10.7 to the registrant’s Current Report on Form 8-K 
(Commission No. 000-52108) filed with the Commission on June 14, 2007) 
Amendment No. 2 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated as
of November 19, 2002, by and among Athersys, Inc., the New Stockholders, the Investors, Biotech 
and the Stockholders (each as defined in the Amended and Restated Registration Rights Agreement, 
dated as April 28, 2000, as amended, by and among Athersys, Inc. and the stockholders of Athersys, 
Inc. parties thereto) (incorporated herein by reference to Exhibit 10.8 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Amendment No. 3 to Amended and Restated Registration Rights Agreement, dated as of May 15, 
2007, by and among Athersys, Inc. and the Existing Stockholders (as defined therein) (incorporated 
herein by reference to Exhibit 10.9 to the registrant’s Current Report on Form 8-K (Commission No. 
000-52108) filed with the Commission on June 14, 2007)
BTHC VI, Inc. Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.10 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
BTHC VI, Inc. Equity Incentive Compensation Plan (incorporated herein by reference to Exhibit
10.11 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the 
Commission on June 14, 2007)
Loan and Security Agreement, and Supplement, dated as of November 2, 2004, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and Costella 
Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report 
on Form 10-Q (Commission No. 000-52108) filed with the Commission on November 14, 2007)
Second Amendment to Loan and Security Agreement, dated as of October 30, 2007, by and among 
ABT Holding Company, Advanced Biotherapeutics, Inc., Venture Lending and Leasing IV, Inc., and 
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly 
Report on Form 10-Q (Commission No. 000-52108) filed with the Commission on November 14, 
2007) 
Amendment to Loan and Security Agreement, dated as of September 29, 2006, by and among 
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and Costella 
Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.13 to the registrant’s Current Report 
on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007) 
Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of 
April 1, 1998, by and between Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by 
reference to Exhibit 10.14 to the registrant’s Current Report on Form 8-K (Commission No. 000-
52108) filed with the Commission on June 14, 2007)
Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by 
and between Advanced Biotherapeutics, Inc. and Gil Van Bokkelen (incorporated herein by reference 
to Exhibit 10.15 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by reference to Exhibit 10.16 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of 
April 1, 1998, by and between Athersys, Inc. and Dr. John J. Harrington (incorporated herein by 
reference to Exhibit 10.17 to the registrant’s Current Report on Form 8-K (Commission No. 000-
52108) filed with the Commission on June 14, 2007)
Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by 
and between Advanced Biotherapeutics, Inc. and John Harrington (incorporated herein by reference 
to Exhibit 10.18 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)

- 67 - 

 
 
 
 
 
  Exhibit No.    Exhibit Description 

10.20† 

10.21† 

10.22† 

10.23† 

10.24† 

10.25† 

10.26† 

10.27† 

10.28† 

10.29† 

10.30† 

10.31† 

10.32† 

10.33† 

10.34

Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. John J. Harrington (incorporated herein by reference to Exhibit 10.19 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Employment Agreement, dated as of May 22, 1998, by and between Athersys, Inc. and Laura K.
Campbell (incorporated herein by reference to Exhibit 10.20 to the registrant’s Current Report on 
Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007) 
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Laura Campbell (incorporated herein by reference to Exhibit 10.21 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Employment Agreement, dated as of September 25, 2000, by and between Advanced 
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.22 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.23 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Non-Competition and Confidentiality Agreement, dated as of September 25, 2000, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference 
to Exhibit 10.24 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Employment Agreement, dated as of October 3, 2003, by and between Advanced Biotherapeutics,
Inc. and Robert Deans, Ph.D. (incorporated herein by reference to Exhibit 10.25 to the registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 
2007) 
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Robert Deans (incorporated herein by reference to Exhibit 10.26 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Non-Competition and Confidentiality Agreement, dated as of October 3, 2003, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Robert Deans (incorporated herein by reference to 
Exhibit 10.27 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Employment Agreement, dated as of January 1, 2004, by and between Advanced Biotherapeutics,
Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.28 to the registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 
2007) 
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.29 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Non-Competition and Confidentiality Agreement, dated as of September 10, 2001, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and William Lehmann (incorporated herein by 
reference to Exhibit 10.30 to the registrant’s Current Report on Form 8-K (Commission No. 000-
52108) filed with the Commission on June 14, 2007)
Form Incentive Agreement by and between Advanced Biotherapeutics, Inc. and named executive
officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC (incorporated herein by reference 
to Exhibit 10.31 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Form Amendment No. 1 to Incentive Agreement by and between Advanced Biotherapeutics, Inc. and
named executive officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC (incorporated 
herein by reference to Exhibit 10.32 to the registrant’s Current Report on Form 8-K (Commission 
No. 000-52108) filed with the Commission on June 14, 2007)
Securities Purchase Agreement, dated as of June 8, 2007, by and among Athersys, BTHC VI, Inc. and 
Investors (as defined therein) (incorporated herein by reference to Exhibit 10.33 to the registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 
2007) 

- 68 - 

 
 
 
 
 
  Exhibit No.    Exhibit Description 

10.35* 

10.36* 

10.37

10.38† 

10.39† 

10.40

10.41† 

10.42* 

10.43* 

10.44

10.45

21
23
24.1
24.2
31.1

31.2

32.1

Exclusive License Agreement, dated as of May 17, 2002, by and between Regents of the University
of Minnesota and MCL LLC, assumed by ReGenesys, LLC through operation of merger on 
November 4, 2003 (incorporated herein by reference to Exhibit 10.34 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Strategic Alliance Agreement, by and between Athersys, Inc. and Angiotech Pharmaceuticals, Inc., 
dated as of May 5, 2006 (incorporated herein by reference to Exhibit 10.35 to the registrant’s Current 
Report on Form 8-K/A (Commission No. 000-52108) filed with the Commission on October 9, 2007)
Amendment No. 1 to Cell Line Collaboration and License Agreement, dated as of January 1, 2006, 
by and between Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference 
to Exhibit 10.36 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Consulting Agreement, by and among Athersys, Inc., Advanced Biotherapeutics, Inc. and Dr. Kurt
Brunden, dated as of July 23, 2007 (incorporated herein by reference to Exhibit 10.13 to the 
registrant’s Quarterly Report on Form 10-Q (Commission No. 000-52108) filed with the Commission 
on August 17, 2007) 
Form Indemnification Agreement for Directors, Officers and Directors and Officers (incorporated 
herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K (Commission No. 
000-52108) filed with the Commission on August 6, 2007)
Advisory Agreement, dated as of May 24, 2007, by and between Halter Financial Group, L.P. and
Athersys, Inc. (incorporated herein by reference to Exhibit 10.40 to the registrant’s Registration 
Statement on Form S-1/A (Registration No. 333-144433) filed with the Commission on September 
12, 2007) 
Summary of Athersys, Inc. 2008 Cash Bonus Plan (incorporated herein by reference to Exhibit 10.1 
to the registrant’s Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with the 
Commission on May 8, 2008)
Collaboration and License Agreement, dated as of December 18, 2009, by and between Athersys,
Inc., ABT Holding Company, and Pfizer Inc.
Stand-by License Agreement, dated as of December 18, 2009, by and between Regents of the
University of Minnesota, ABT Holding Company and Pfizer Inc.
Amendment dated as of March 31, 2009 to the Extended Collaboration and License Agreement, by 
and between Athersys, Inc. and Bristol-Myers Squibb Company effective January 1, 2006 
(incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K 
(Commission No. 001-33876) filed with the Commission on April 9, 2009) 
Amendment No. 4 to Amended and Restated Registration Rights Agreement, dated as of March 8, 
2010, by and among Athersys, Inc. and the Existing Stockholders (as defined therein) 
List of Subsidiaries 
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 
Power of Attorney 
Power of Attorney for Michael B. Sheffery and Jordan S. Davis
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.
Certification of Laura Campbell, 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. 
Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, and Laura Campbell, Vice 
President of Finance, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002.

*  Confidential treatment requested as to certain portions, which portions have been filed separately with the 

† 

Securities and Exchange Commission. 
Indicates management contract or compensatory plan, contract or arrangement in which one or more directors or
executive officers of the registrant may be participants.

- 69 - 

 
 
 
 
 
 
 
 
 
SIGNATURES 

Pursuant to the requirements of Section 13 or 15(d) 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, in the city of Cleveland, 
State of Ohio, on March 11, 2010. 

ATHERSYS, INC.  

By: /s/ Gil Van Bokkelen 
Gil Van Bokkelen  
Title: Chief Executive Officer 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the 
following persons on behalf of the registrant and in the capacities and on the date indicated. 

Signature 

/s/ Gil Van Bokkelen 
Gil Van Bokkelen 

/s/ Laura K. Campbell 
Laura K. Campbell 

* 
John J. Harrington 

* 
William C. Mulligan 

* 
George M. Milne, Jr. 

* 
Jordan S. Davis 

* 
Floyd D. Loop 

* 
Michael Sheffery 

* 
Lorin J. Randall 

Title

Chief Executive Officer
and Chairman of the Board of Directors 
(Principal Executive Officer)

Vice President, Finance
(Principal Financial Officer and  
Principal Accounting Officer)

Executive Vice President,
Chief Scientific Officer and Director

Director

Director

Director

Director

Director

Director

Date

March 11, 2010

March 11, 2010

March 11, 2010

March 11, 2010

March 11, 2010

March 11, 2010

March 11, 2010

March 11, 2010

March 11, 2010

*  Gil Van Bokkelen, by signing his name hereto, does hereby sign this Form 10-K on behalf of each of the above 
named and designated directors of the Company pursuant to Powers of Attorney executed by such persons and 
filed with the Securities and Exchange Commission. 

By: /s/ Gil Van Bokkelen 
Gil Van Bokkelen 
Attorney-in-fact 

- 70 - 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EXHIBIT INDEX 

 Exhibit No.    Exhibit Description 

2.1 

2.2 

3.1 

3.2 

10.1 * 

10.2 * 

10.3 * 

10.4 

10.5 

10.6 

10.7 

10.8 

10.9 

10.10 † 

Agreement and Plan of Merger, dated as of May 24, 2007, by and among Athersys, Inc., BTHC VI, 
Inc. and B-VI Acquisition Corp. (incorporated herein by reference to Exhibit 10.1 to registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on May 24, 
2007) 
First Amendment to Agreement and Plan of Merger, dated as of June 8, 2007, by and among 
Athersys, Inc., BTHC VI, Inc. and B-VI Acquisition Corp. (incorporated herein by reference to 
Exhibit 2.2 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on June 14, 2007)
Certificate of Incorporation of Athersys, Inc., as amended as of August 31, 2007 (incorporated herein 
by reference to Exhibit 3.1 to the registrant’s Registration Statement on Form S-3/A (Registration No. 
333-144433) filed with the Commission on October 10, 2007)
Bylaws of Athersys, Inc., as amended as of October 30, 2007 (incorporated herein by reference to 
Exhibit 3.1 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on October 31, 2007)
Research Collaboration and License Agreement, dated as of December 8, 2000, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.1 
to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the 
Commission on June 14, 2007)
Cell Line Collaboration and License Agreement, dated as of July 1, 2002, by and between Athersys, 
Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.2 to the 
registrant’s Current Report on Form 8-K/A (Commission No. 000-52108) filed with the Commission 
on September 27, 2007) 
Extended Collaboration and License Agreement, dated as of January 1, 2006, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10.3 
to the registrant’s Current Report on Form 8-K/A (Commission No. 000-52108) filed with the 
Commission on September 27, 2007)
License Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and Angiotech
Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.4 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Sublicense Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and Angiotech
Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.5 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Amended and Restated Registration Rights Agreement, dated as of April 28, 2000, by and among 
Athersys, Inc. and the stockholders of Athersys, Inc. parties thereto (incorporated herein by reference 
to Exhibit 10.6 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Amendment No. 1 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated as
of January 29, 2002, by and among Athersys, Inc., the New Stockholders, the Investors, Biotech and 
the Stockholders (each as defined in the Amended and Restated Registration Rights Agreement, dated 
as April 28, 2000, by and among Athersys, Inc. and the stockholders of Athersys, Inc. parties thereto) 
(incorporated herein by reference to Exhibit 10.7 to the registrant’s Current Report on Form 8-K 
(Commission No. 000-52108) filed with the Commission on June 14, 2007) 
Amendment No. 2 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated as
of November 19, 2002, by and among Athersys, Inc., the New Stockholders, the Investors, Biotech 
and the Stockholders (each as defined in the Amended and Restated Registration Rights Agreement, 
dated as April 28, 2000, as amended, by and among Athersys, Inc. and the stockholders of Athersys, 
Inc. parties thereto) (incorporated herein by reference to Exhibit 10.8 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Amendment No. 3 to Amended and Restated Registration Rights Agreement, dated as of May 15, 
2007, by and among Athersys, Inc. and the Existing Stockholders (as defined therein) (incorporated 
herein by reference to Exhibit 10.9 to the registrant’s Current Report on Form 8-K (Commission No. 
000-52108) filed with the Commission on June 14, 2007)
BTHC VI, Inc. Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.10 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 

- 71 - 

 
 
 
 
 
 
 Exhibit No.    Exhibit Description 

10.11 † 

10.12 

10.13 

10.14 

10.15 † 

10.16 † 

10.17 † 

10.18 † 

10.19 † 

10.20 † 

10.21 † 

10.22 † 

10.23 † 

10.24 † 

10.25 † 

BTHC VI, Inc. Equity Incentive Compensation Plan (incorporated herein by reference to Exhibit
10.11 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the 
Commission on June 14, 2007)
Loan and Security Agreement, and Supplement, dated as of November 2, 2004, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and Costella 
Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report 
on Form 10-Q (Commission No. 000-52108) filed with the Commission on November 14, 2007)
Second Amendment to Loan and Security Agreement, dated as of October 30, 2007, by and among 
ABT Holding Company, Advanced Biotherapeutics, Inc., Venture Lending and Leasing IV, Inc., and 
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly 
Report on Form 10-Q (Commission No. 000-52108) filed with the Commission on November 14, 
2007) 
Amendment to Loan and Security Agreement, dated as of September 29, 2006, by and among 
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and Costella 
Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.13 to the registrant’s Current Report 
on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007) 
Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of 
April 1, 1998, by and between Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by 
reference to Exhibit 10.14 to the registrant’s Current Report on Form 8-K (Commission No. 000-
52108) filed with the Commission on June 14, 2007)
Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by 
and between Advanced Biotherapeutics, Inc. and Gil Van Bokkelen (incorporated herein by reference 
to Exhibit 10.15 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by reference to Exhibit 10.16 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of 
April 1, 1998, by and between Athersys, Inc. and Dr. John J. Harrington (incorporated herein by 
reference to Exhibit 10.17 to the registrant’s Current Report on Form 8-K (Commission No. 000-
52108) filed with the Commission on June 14, 2007)
Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by 
and between Advanced Biotherapeutics, Inc. and John Harrington (incorporated herein by reference 
to Exhibit 10.18 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. John J. Harrington (incorporated herein by reference to Exhibit 10.19 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Employment Agreement, dated as of May 22, 1998, by and between Athersys, Inc. and Laura K.
Campbell (incorporated herein by reference to Exhibit 10.20 to the registrant’s Current Report on 
Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007) 
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Laura Campbell (incorporated herein by reference to Exhibit 10.21 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Employment Agreement, dated as of September 25, 2000, by and between Advanced Biotherapeutics,
Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.22 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.23 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Non-Competition and Confidentiality Agreement, dated as of September 25, 2000, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to 
Exhibit 10.24 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on June 14, 2007)

- 72 - 

 
 
 
 
 
 Exhibit No.    Exhibit Description 

10.26 † 

10.27 † 

10.28 † 

10.29 † 

10.30 † 

10.31 † 

10.32 † 

10.33 † 

10.34 

10.35 * 

10.36 * 

10.37 

10.38 † 

10.39 † 

10.40 

Employment Agreement, dated as of October 3, 2003, by and between Advanced Biotherapeutics,
Inc. and Robert Deans, Ph.D. (incorporated herein by reference to Exhibit 10.25 to the registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 
2007) 
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Robert Deans (incorporated herein by reference to Exhibit 10.26 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Non-Competition and Confidentiality Agreement, dated as of October 3, 2003, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Robert Deans (incorporated herein by reference to 
Exhibit 10.27 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on June 14, 2007)
Employment Agreement, dated as of January 1, 2004, by and between Advanced Biotherapeutics, Inc. 
and William Lehmann (incorporated herein by reference to Exhibit 10.28 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.29 to the 
registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on 
June 14, 2007) 
Non-Competition and Confidentiality Agreement, dated as of September 10, 2001, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and William Lehmann (incorporated herein by 
reference to Exhibit 10.30 to the registrant’s Current Report on Form 8-K (Commission No. 000-
52108) filed with the Commission on June 14, 2007)
Form Incentive Agreement by and between Advanced Biotherapeutics, Inc. and named executive
officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC (incorporated herein by reference 
to Exhibit 10.31 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed 
with the Commission on June 14, 2007)
Form Amendment No. 1 to Incentive Agreement by and between Advanced Biotherapeutics, Inc. and
named executive officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC (incorporated 
herein by reference to Exhibit 10.32 to the registrant’s Current Report on Form 8-K (Commission No. 
000-52108) filed with the Commission on June 14, 2007)
Securities Purchase Agreement, dated as of June 8, 2007, by and among Athersys, BTHC VI, Inc. and 
Investors (as defined therein) (incorporated herein by reference to Exhibit 10.33 to the registrant’s 
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 
2007) 
Exclusive License Agreement, dated as of May 17, 2002, by and between Regents of the University
of Minnesota and MCL LLC, assumed by ReGenesys, LLC through operation of merger on 
November 4, 2003 (incorporated herein by reference to Exhibit 10.34 to the registrant’s Current 
Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
Strategic Alliance Agreement, by and between Athersys, Inc. and Angiotech Pharmaceuticals, Inc., 
dated as of May 5, 2006 (incorporated herein by reference to Exhibit 10.35 to the registrant’s Current 
Report on Form 8-K/A (Commission No. 000-52108) filed with the Commission on October 9, 2007)
Amendment No. 1 to Cell Line Collaboration and License Agreement, dated as of January 1, 2006, by 
and between Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to 
Exhibit 10.36 to the registrant’s Current Report on Form 8-K (Commission No. 000-52108) filed with 
the Commission on June 14, 2007)
Consulting Agreement, by and among Athersys, Inc., Advanced Biotherapeutics, Inc. and Dr. Kurt
Brunden, dated as of July 23, 2007 (incorporated herein by reference to Exhibit 10.13 to the 
registrant’s Quarterly Report on Form 10-Q (Commission No. 000-52108) filed with the Commission 
on August 17, 2007) 
Form Indemnification Agreement for Directors, Officers and Directors and Officers (incorporated 
herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K (Commission No. 
000-52108) filed with the Commission on August 6, 2007)
Advisory Agreement, dated as of May 24, 2007, by and between Halter Financial Group, L.P. and
Athersys, Inc. (incorporated herein by reference to Exhibit 10.40 to the registrant’s Registration 
Statement on Form S-1/A (Registration No. 333-144433) filed with the Commission on September 
12, 2007) 

- 73 - 

 
 
 
 
 
 Exhibit No.    Exhibit Description 

10.41 † 

10.42 * 

10.43 * 

10.44 

10.45 

21 
23 
24.1 
24.2 
31.1 

31.2 

32.1 

Summary of Athersys, Inc. 2008 Cash Bonus Plan (incorporated herein by reference to Exhibit 10.1 
to the registrant’s Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with the 
Commission on May 8, 2008)
Collaboration and License Agreement, dated as of December 18, 2009, by and between Athersys,
Inc., ABT Holding Company, and Pfizer Inc.
Stand-by License Agreement, dated as of December 18, 2009, by and between Regents of the
University of Minnesota, ABT Holding Company and Pfizer Inc.
Amendment dated as of March 31, 2009 to the Extended Collaboration and License Agreement, by 
and between Athersys, Inc. and Bristol-Myers Squibb Company effective January 1, 2006 
(incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K 
(Commission No. 001-33876) filed with the Commission on April 9, 2009) 
Amendment No. 4 to Amended and Restated Registration Rights Agreement, dated as of March 8, 
2010, by and among Athersys, Inc. and the Existing Stockholders (as defined therein) 
List of Subsidiaries 
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 
Power of Attorney 
Power of Attorney for Michael B. Sheffery and Jordan S. Davis
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.
Certification of Laura Campbell, 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. 
Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, and Laura Campbell, Vice 
President of Finance, pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the 
Sarbanes-Oxley Act of 2002.

*  Confidential treatment requested as to certain portions, which portions have been filed separately with the 

† 

Securities and Exchange Commission. 
Indicates management contract or compensatory plan, contract or arrangement in which one or more directors 
or executive officers of the registrant may be participants.

- 74 - 

 
 
 
 
 
 
 
 
CERTIFICATIONS 

I, Gil Van Bokkelen, certify that:  

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

EXHIBIT 31.1 

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. 

March 11, 2010 

/s/ Gil Van Bokkelen 
Gil Van Bokkelen  
Chief Executive Officer and Chairman of the Board of Directors 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(This Page Intentionally Left Blank)

CERTIFICATIONS 

I, Laura K. Campbell, certify that:  

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

EXHIBIT 31.2 

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. 

March 11, 2010 

/s/ Laura K. Campbell 
Laura K. Campbell  
Vice President, Finance 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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CERTIFICATION PURSUANT TO 
18 U.S.C. SECTION 1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 

EXHIBIT 32.1 

In connection with the Annual Report of Athersys, Inc. (the “Company”) on Form 10-K for the year ended 
December 31, 2009, 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: March 11, 2010 

/s/ Gil Van Bokkelen 
Name: Gil Van Bokkelen  
Title:   Chairman and Chief Executive Officer  

/s/ Laura K. Campbell 
Name: Laura K. Campbell  
Title:   Vice President, 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. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(This Page Intentionally Left Blank)

Highlights

Directors and Corporate Ofﬁcers

Shareholder Information

Athersys is a clinical

stage biopharmaceutical

company with a growing

pipeline of potential

best-in-class therapeutics

that are designed to

treat signiﬁcant and

life-threatening diseases.

The Company’s lead

programs are in the areas

of cardiovascular disease;

bone marrow transplant

support; neurological

disease, including stroke;

obesity; and central nervous

system disorders, including

those involving attention,

cognition and wakefulness.

Athersys’ strategic

approach builds on internal

and external knowledge

to identify and develop

highly differentiated

products with best-in-class

potential, as well as

enable the Company to

limit development risks

and costs.

Entered global collaborative agreement with
Pﬁzer to develop and market MultiStem®
(a patented, adult-derived “off-the-shelf”
stem cell product platform in development
for multiple disease indications), for the
treatment of inﬂammatory bowel disease (IBD)

Completed patient enrollment in Phase I
clinical trial of MultiStem in acute myocardial
infarction (AMI)

Completed the ﬁrst two dose groups of study
for transplant support in leukemia and related
types of cancer, and are now enrolling patients
in the third dosing group. In addition, we have
initiated the multi-dose administration study

Developed a high quality portfolio of
compounds for obesity which demonstrate
strong activity at the 5HT2c receptor
but exhibit no physiologically-relevant agonist
activity at either the 5HT2b or 5HT2a receptors

Key United States and European patent
issuances enhance MultiStem intellectual
property estate

Revenues of $2.2 million and a net loss of
$15.4 million for the year ended
December 31, 2009

Year-end capital position of $26.4 million in
cash, cash equivalents and available-for-sale
securities expected to support planned
operations through 2011

Management

Board of Directors

Corporate Headquarters

Athersys, Inc.

Gil Van Bokkelen, Ph.D.

Gil Van Bokkelen, Ph.D.

3201 Carnegie Ave.

Chairman and CEO

Chairman and CEO

Cleveland, OH 44115-2634

John J. Harrington, Ph.D.

John J. Harrington

Phone: (216) 431-9900

Fax: (216) 361-9495

Executive Vice President and

Executive Vice President and

www.Athersys.com

Chief Scientific Officer

Chief Scientific Officer

Stock Listing

William (B.J.) Lehmann Jr., J.D.

George M. Milne, Ph.D.

The Company’s common stock

President and

Retired, former President of

trades on the NASDAQ Capital

Chief Operating Officer

Worldwide Strategic and

Market under the symbol “ATHX”

Operations Management

Robert J. Deans, Ph.D.

Senior Vice President,

Regenerative Medicine

and Executive Vice President

Transfer Agent & Registrar

of Global Research and

Computershare

Development of Pfizer Inc.

250 Royall Street

Laura K. Campbell, C.P.A.

William C. Mulligan

Vice President, Finance

Managing Partner,

Independent Auditors

Canton, MA 02021

Primus Venture Partners

Ernst & Young

Suite 1300

Michael B. Sheffery, Ph.D.

925 Euclid Avenue

General Partner,

OrbiMed Advisors

Jordan S. Davis

Managing Partner,

Radius Ventures

Floyd D. Loop, M.D.

Cleveland, OH 44115

Legal Counsel

Jones Day

North Point

901 Lakeside Avenue

Cleveland, OH 44114

Retired, former CEO and

Investor Relations

Chairman of the Board

of Govenors of the

Lisa Wilson

President

Cleveland Clinic Foundation

In-Site Communications

Lorin J. Randall

Financial Consultant

211 E 70th St, 30G

New York, NY 10021

Media Relations

Keri Mattox

Sr. Vice President

Pure Communications, Inc.

634 West Cliveden Street

Philadelphia, PA 19119

Athersys.com

ATHERSYS
ANNUAL REPORT

a b c

3201 Carnegie Avenue

Cleveland, OH 44115-2634

Strategic
Collaborations…

Dynamic
Efficiencies…

Emerging
Best-In-Class
Therapeutics…