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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-33876
 Athersys, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-4864095(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)3201 Carnegie Avenue, Cleveland, Ohio
    
    44115-2634(Address of principal executive offices)
    
    (Zip Code)Registrants telephone
number, including area code (216) 431-9900
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, par value $.001 per share
    
    NASDAQ Stock Market LLC
 Securities registered pursuant
to Section 12(g) of the Act: None
 Yes o No þ
 o þ
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller Reporting Company þ
 o þ




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TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    18Item 1B. Unresolved Staff Comments
    
    
    32Item 2. Properties
    
    
    32Item 3. Legal Proceedings
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 4A. Executive Officers of the Registrant
    
    
    32PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    34Item 6. Selected Financial Data
    
    
    35Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    37Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 8. Financial Statements and Supplementary Data
    
    
    50Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
    
    
    82Item 9A(T). Controls and Procedures
    
    
    82Item 9B. Other Information
    
    
    82PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    82Item 11. Executive Compensation
    
    
    83Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    83Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    83Item 14. Principal Accountant Fees and Services
    
    
    83PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    84Exhibit 21Exhibit 23Exhibit 24Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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PART I
 
 ITEM 1. BUSINESS
 ®
      3




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4




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Business Strategy
  
    
    Efficiently develop product candidates in established areas of
significant clinical need.We will continue to develop certain
product candidates using a fast follower approach, thereby
mitigating risk and reducing costs. This approach allows us to
leverage 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 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 RAGE and MultiStem, 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.
  5




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
    
    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.
    
    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 can
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
  Regenerative Medicine Programs
 MultiStem  A Novel Approach to Stem Cell Therapy and Regenerative Medicine
    6




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
    
    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.
    7




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MultiStem for Heart Attack, HSC Transplant Support in Treatment of Hematologic Malignancies &
Stroke
   Heart Attack
      8




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HSC Transplant Support in Hematologic Malignancy
     Stroke
     9




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Pharmaceutical Programs
  ® ®
      10




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H 3 Antagonists for the Treatment of Sleep Disorders and Certain Other Cognitive
Disorders
  ®
   11




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Other Key Technologies
  Collaborations and Partnerships
 Angiotech
    
    
    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.
  12




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Bristol-Myers Squibb
    Competition
    13




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Intellectual Property
    14




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Research and Development
  Government Regulation
      15




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
    
    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.
      16




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Employees
   Available Information
 www.athersys.com
 Merger and Name Change
   17




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ITEM 1A. RISK FACTORS
  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.
  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 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;
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
    
    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 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.
  
    
    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.
  19




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The results seen in animal testing of our product candidates may not be replicated in humans.
  
    
    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.
  Our product canditates 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 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.
   20




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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.
    21




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Even if we or our collaborators receive regulatory approval for our products, those products may
never be commercially successful.
  
    
    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.
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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.
    
    
    the size of the patient population;
    
    the proximity of patients to clinical sites;
    
    the eligibility criteria for the trial;
    
    the perceptions of investigators and patients regarding safety; and
    
    the availability of other treatment options.
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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.
   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.
    24




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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.
  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.
  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.
     25




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Our ability to compete in the biopharmaceutical market may decline if we do not adequately protect
our proprietary technologies.
   
    
    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.
    26




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We may not have adequate protection for our unpatented proprietary information, which could
adversely affect our competitive position.
  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.
     27




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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.
       28




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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.
  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.
  
    
    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 the 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.
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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.
  
    
    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.
  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.
  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.
  We may encounter difficulties managing our growth, which could adversely affect our business.
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We may be sued for product liability, which could adversely affect our business.
   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.
   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.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
    Gil Van Bokkelen, Ph.D.
 Dr. Van Bokkelen
 William (BJ) Lehmann, Jr., J.D.
 Mr. Lehmann
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John J. Harrington, Ph.D.
 Dr. Harrington
 Robert J. Deans, Ph.D.
 Dr. Deans
 Laura K. Campbell, CPA
 Ms. Campbell
  33




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  High
    
    
    LowYear ended December 31, 2008:First Quarter
    
    $
    5.00
    
    
    $
    3.00Second Quarter
    
    $
    4.23
    
    
    $
    1.55Third Quarter
    
    $
    4.00
    
    
    $
    1.17Fourth Quarter
    
    $
    1.88
    
    
    $
    0.15
 High
    
    
    LowYear ended December 31, 2007:Fourth Quarter (from December 12, 2007 through December 31, 2007)
    
    $
    5.01
    
    
    $
    3.51
  High
    
    
    LowYear ended December 31, 2007:Second Quarter
    
    $
    10.00
    
    
    $
    5.25Third Quarter
    
    $
    8.75
    
    
    $
    7.00Fourth Quarter (through December 11, 2007)
    
    $
    8.00
    
    
    $
    4.40
  Holders
  Dividend Policy
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ITEM 6. SELECTED FINANCIAL DATA
  Year Ended December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Consolidated Statement of
Operations Data:Revenues:License fees
    
    $
    1,880
    
    
    $
    1,433
    
    
    $
    1,908
    
    
    $
    763
    
    
    $
    820Grants
    
    
    1,225
    
    
    
    1,827
    
    
    
    1,817
    
    
    
    2,833
    
    
    
    2,318Total revenues
    
    
    3,105
    
    
    
    3,260
    
    
    
    3,725
    
    
    
    3,596
    
    
    
    3,138Costs and expenses:Research and development
    
    
    16,500
    
    
    
    15,817
    
    
    
    9,741
    
    
    
    12,578
    
    
    
    12,415General and administrative
    
    
    5,479
    
    
    
    7,975
    
    
    
    3,347
    
    
    
    3,755
    
    
    
    4,717Depreciation
    
    
    218
    
    
    
    283
    
    
    
    528
    
    
    
    982
    
    
    
    1,297Restructuring costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251
    
    
    
    107Loss from operations
    
    
    (19,092
    )
    
    
    (20,815
    )
    
    
    (9,891
    )
    
    
    (13,970
    )
    
    
    (15,398
    )Other income (expense):Other income and equity
in earnings of
unconsolidated
affiliate
    
    
    48
    
    
    
    2,017
    
    
    
    208
    
    
    
    18
    
    
    
    Interest income
    
    
    1,146
    
    
    
    1,591
    
    
    
    119
    
    
    
    317
    
    
    
    317Interest expense and other
    
    
    (94
    )
    
    
    (1,263
    )
    
    
    (1,047
    )
    
    
    (964
    )
    
    
    (73
    )Accretion of premium on
convertible debt
    
    
    
    
    
    
    (456
    )
    
    
    (260
    )
    
    
    
    
    
    
    Loss before cumulative
effect of change in
accounting principle
    
    $
    (17,992
    )
    
    $
    (18,926
    )
    
    $
    (10,871
    )
    
    $
    (14,599
    )
    
    $
    (15,154
    )Cumulative effect of
change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    306
    
    
    
    
    
    
    
    Net loss
    
    
    (17,992
    )
    
    
    (18,926
    )
    
    
    (10,565
    )
    
    
    (14,599
    )
    
    
    (15,154
    )Preferred stock dividends
    
    
    
    
    
    
    (659
    )
    
    
    (1,408
    )
    
    
    (2,253
    )
    
    
    (2,325
    )Deemed dividend resulting
from induced conversion of
convertible preferred
stock
    
    
    
    
    
    
    (4,800
    )
    
    
    
    
    
    
    
    
    
    
    Net loss attributable to
common stockholders
    
    $
    (17,992
    )
    
    $
    (24,385
    )
    
    $
    (11,973
    )
    
    $
    (16,852
    )
    
    $
    (17,479
    )Basic and diluted net loss
per common share
attributable to common
stockholders:Loss before cumulative
effect of change in
accounting principle
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (41.89
    )
    
    $
    (57.79
    )
    
    $
    (59.82
    )Cumulative effect of
change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    1.05
    
    
    
    
    
    
    
    Net loss
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (40.84
    )
    
    $
    (57.79
    )
    
    $
    (59.82
    )Weighted average shares
outstanding, basic and
diluted
    
    
    18,927,988
    
    
    
    10,811,119
    
    
    
    293,142
    
    
    
    291,612
    
    
    
    292,173
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##### Table of Contents



December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    12,552
    
    
    $
    13,248
    
    
    $
    1,528
    
    
    $
    1,080
    
    
    $
    3,303Available-for-sale securities (short-tem)
    
    
    15,460
    
    
    
    22,477
    
    
    
    
    
    
    
    3,481
    
    
    
    13,976Working capital (deficit)
    
    
    26,789
    
    
    
    32,849
    
    
    
    (3,206
    )
    
    
    1,828
    
    
    
    17,018Available-for-sale securities (long-tem)
    
    
    3,601
    
    
    
    13,850
    
    
    
    
    
    
    
    
    
    
    
    Total assets
    
    
    33,877
    
    
    
    52,225
    
    
    
    4,266
    
    
    
    7,309
    
    
    
    20,894Long-term obligations, less current portion
    
    
    
    
    
    
    
    
    
    
    9,310
    
    
    
    4,684
    
    
    
    7,215Accrued dividends
    
    
    
    
    
    
    
    
    
    
    8,882
    
    
    
    7,473
    
    
    
    11,236Total stockholders equity (deficit)
    
    
    31,563
    
    
    
    47,631
    
    
    
    (20,007
    )
    
    
    (8,584
    )
    
    
    1,151
  36




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Overview and Recent Developments
  Current Programs
        37




---



##### Table of Contents



Financial
         38




---



##### Table of Contents



Results of Operations
   Year ended December 31,Revenues
    
    2008
    
    
    2007
    
    
    2006License fees
    
    $
    1,880
    
    
    $
    1,433
    
    
    $
    1,908Grant revenue
    
    
    1,225
    
    
    
    1,827
    
    
    
    1,817$
    3,105
    
    
    $
    3,260
    
    
    $
    3,725
 Research and development expenses
    
    Year ended December 31,Type of expense
    
    2008
    
    
    2007
    
    
    2006Personnel costs
    
    $
    2,924
    
    
    $
    2,813
    
    
    $
    2,721Research supplies
    
    
    849
    
    
    
    679
    
    
    
    1,208Facilities
    
    
    817
    
    
    
    762
    
    
    
    879Clinical and preclinical development costs
    
    
    7,878
    
    
    
    5,723
    
    
    
    2,702Sponsored research
    
    
    393
    
    
    
    465
    
    
    
    579Patent legal fees
    
    
    1,481
    
    
    
    1,086
    
    
    
    595Other
    
    
    1,431
    
    
    
    1,821
    
    
    
    781Stock-based compensation
    
    
    727
    
    
    
    2,468
    
    
    
    276$
    16,500
    
    
    $
    15,817
    
    
    $
    9,741
  39




---



##### Table of Contents



General and administrative expenses
    
    Year ended December 31,Type of expense
    
    2008
    
    
    2007
    
    
    2006Personnel costs
    
    $
    1,726
    
    
    $
    1,987
    
    
    $
    1,891Facilities
    
    
    342
    
    
    
    330
    
    
    
    291Legal and professional fees
    
    
    1,032
    
    
    
    1,165
    
    
    
    590Other
    
    
    1,250
    
    
    
    1,822
    
    
    
    392Stock-based compensation
    
    
    1,129
    
    
    
    2,671
    
    
    
    183$
    5,479
    
    
    $
    7,975
    
    
    $
    3,347
 Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Revenues.
 Research and Development Expenses.
  40




---



##### Table of Contents



General and Administrative Expenses.
 Depreciation.
 Other Income.
 Interest Income.
 Interest Expense.
 Accretion of Premium on Convertible Debt.
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Revenues.
 Research and Development Expenses.
  41




---



##### Table of Contents



General and Administrative Expenses.
 Depreciation.
 Other Income and Equity in Earnings of Unconsolidated Affiliate.
 Interest Income.
 Interest Expense.
 Accretion of Premium on Convertible Debt.
 Cumulative Effect of Change in Accounting Principle.
  42




---



##### Table of Contents



Liquidity and Capital Resources
         43




---



##### Table of Contents



44




---



##### Table of Contents



Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1  3 Years
    
    
    3  5 Years
    
    
    5 YearsOperating leases
for facilities and
equipment lease
    
    $
    493,000
    
    
    $
    335,000
    
    
    $
    137,000
    
    
    $
    21,000
    
    
    
    Research funding
    
    
    253,000
    
    
    
    253,000
    
    
    
    
    
    
    
    Total
    
    $
    746,000
    
    
    $
    588,000
    
    
    $
    137,000
    
    
    $
    21,000
    
    
    
    
      Critical Accounting Policies and Management Estimates
   45




---



##### Table of Contents



Revenue Recognition
    Collaborative Arrangements
  Clinical Trial Costs
  Investments in Available-for-Sale Securities
   46




---



##### Table of Contents



Determining the Fair Value of a Financial Asset When the Market for That Asset Is
Not Active Fair Value Measurements
 Stock-Based Compensation
     Recently Issued Accounting Standards
 Accounting for
Collaborative Arrangements.
 Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
 Business Combinations
  47




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##### Table of Contents



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.
  
    
    our ability to successfully initiate or complete clinical trials for our product
candidates;
    
    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 enter into licensing or co-development arrangements for
certain product candidates;
    
    our possible inability to execute our strategy due to changes in our industry or the
economy generally, including the current economic crisis;
    
    our ability to obtain capital in difficult market conditions;
    
    changes in financial stability of collaborators;
    
    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.
   48




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
    49




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Consolidated Financial Statements
 
  50




---



##### Table of Contents



Contents
 Report of Independent Registered Public Accounting Firm
    
    
    52Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    53Consolidated Statements of Operations for each of the years ended December 31, 2008,
2007 and 2006
    
    
    54Consolidated Statements of Stockholders Equity (Deficit) for each of the years ended
December 31, 2008, 2007 and 2006
    
    
    55Consolidated Statements of Cash Flows for each of the years ended December 31, 2008,
2007 and 2006
    
    
    56Notes to Consolidated Financial Statements
    
    
    57
  51




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##### Table of Contents



Share-Based Payment
  
  52




---



##### Table of Contents



(In Thousands, Except Share and Per Share Amounts)
 December 31,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    12,552
    
    
    $
    13,248Available-for-sale securities
    
    
    15,460
    
    
    
    22,477Accounts receivable
    
    
    260
    
    
    
    836Receivable from Angiotech
    
    
    234
    
    
    
    63Investment interest receivable
    
    
    189
    
    
    
    262Deposits
    
    
    
    
    
    
    163Prepaid expenses and other
    
    
    408
    
    
    
    394Total current assets
    
    
    29,103
    
    
    
    37,443Available-for-sale securities
    
    
    3,601
    
    
    
    13,850Deposits
    
    
    144
    
    
    
    100Accounts receivable, net
    
    
    
    
    
    
    42Notes receivable, net
    
    
    12
    
    
    
    86Equipment, net
    
    
    701
    
    
    
    387Equity investments
    
    
    316
    
    
    
    317Total assets
    
    $
    33,877
    
    
    $
    52,225Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    1,498
    
    
    $
    1,011Accrued compensation and related benefits
    
    
    97
    
    
    
    71Accrued clinical trial costs
    
    
    58
    
    
    
    735Accrued expenses and other
    
    
    661
    
    
    
    993Current portion of long-term debt, net
    
    
    
    
    
    
    1,784Total current liabilities
    
    
    2,314
    
    
    
    4,594Stockholders equity:Preferred stock, at stated value; 10,000,000 shares authorized,
and no shares issued and outstanding at December 31, 2008 and December 31, 2007
    
    
    
    
    
    
    Common stock, $0.001 par value; 100,000,000 shares
authorized, 18,927,988 shares issued and outstanding at December 31, 2008 and
and December 31, 2007
    
    
    19
    
    
    
    19Additional paid-in capital
    
    
    209,895
    
    
    
    208,039Accumulated other comprehensive income
    
    
    120
    
    
    
    52Accumulated deficit
    
    
    (178,471
    )
    
    
    (160,479
    )Total stockholders equity
    
    
    31,563
    
    
    
    47,631Total liabilities and stockholders equity
    
    $
    33,877
    
    
    $
    52,225
 See accompanying notes.
  53




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##### Table of Contents



(In Thousands, Except Share and Per Share Amounts)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006RevenuesLicense fees
    
    $
    1,880
    
    
    $
    1,433
    
    
    $
    1,908Grant revenue
    
    
    1,225
    
    
    
    1,827
    
    
    
    1,817Total revenues
    
    
    3,105
    
    
    
    3,260
    
    
    
    3,725Costs and expensesResearch and development (including stock
compensation expense of $727, $2,468 and
$276 in 2008, 2007 and 2006, respectively)
    
    
    16,500
    
    
    
    15,817
    
    
    
    9,741General and administrative (including stock
compensation expense of $1,129, $2,671 and
$183 in 2008, 2007 and 2006, respectively)
    
    
    5,479
    
    
    
    7,975
    
    
    
    3,347Depreciation
    
    
    218
    
    
    
    283
    
    
    
    528Total costs and expenses
    
    
    22,197
    
    
    
    24,075
    
    
    
    13,616Loss from operations
    
    
    (19,092
    )
    
    
    (20,815
    )
    
    
    (9,891
    )Other income
    
    
    49
    
    
    
    2,017
    
    
    
    91Equity in earnings (loss) of unconsolidated affiliate
    
    
    (1
    )
    
    
    
    
    
    
    117Interest income
    
    
    1,146
    
    
    
    1,591
    
    
    
    119Interest expense
    
    
    (94
    )
    
    
    (1,263
    )
    
    
    (1,047
    )Accretion of premium on convertible debt
    
    
    
    
    
    
    (456
    )
    
    
    (260
    )Loss before cumulative effect of change
in accounting principle
    
    
    (17,992
    )
    
    
    (18,926
    )
    
    
    (10,871
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    306Net loss
    
    $
    (17,992
    )
    
    $
    (18,926
    )
    
    $
    (10,565
    )Preferred stock dividends
    
    
    
    
    
    
    (659
    )
    
    
    (1,408
    )Deemed dividend resulting from induced conversion
of convertible preferred stock
    
    
    
    
    
    
    (4,800
    )
    
    
    Net loss attributable to common stockholders
    
    $
    (17,992
    )
    
    $
    (24,385
    )
    
    $
    (11,973
    )Basic and diluted net loss per common share
attributable
to common stockholdersLoss before cumulative effect of
change in accounting principle
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (41.89
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    1.05Net loss
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (40.84
    )Weighted average shares outstanding, basic and
diluted
    
    
    18,927,988
    
    
    
    10,811,119
    
    
    
    293,142
 See accompanying notes.
  54




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##### Table of Contents



(In Thousands, Except Share Amounts)
 Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    Unearned
    
    
    
    
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Compensation-
    
    
    
    
    
    
    StockholdersNumber
    
    
    Stated
    
    
    Number
    
    
    Par
    
    
    Paid-in
    
    
    Treasury
    
    
    Comprehensive
    
    
    Common Stock
    
    
    Accumulated
    
    
    Equityof Shares
    
    
    Value
    
    
    of Shares
    
    
    Value
    
    
    Capital
    
    
    Stock
    
    
    Income (Loss)
    
    
    Options
    
    
    Deficit
    
    
    (Deficit)Balance at January 1, 2006
    
    
    364,524
    
    
    $
    68,301
    
    
    
    290,941
    
    
    $
    
    
    
    $
    55,179
    
    
    $
    (250
    )
    
    $
    (17
    )
    
    $
    (809
    )
    
    $
    (130,988
    )
    
    $
    (8,584
    )Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    2,829
    
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130Issuance of common stock warrant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    250Adoption of SFAS No. 123(R)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (809
    )
    
    
    
    
    
    
    
    
    
    
    809
    
    
    
    
    
    
    
    Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153Accrued dividends  Class C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,408
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,408
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,565
    )
    
    
    (10,565
    )Unrealized
gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,548
    )Balance at December 31, 2006
    
    
    364,524
    
    
    
    68,301
    
    
    
    293,770
    
    
    
    
    
    
    
    53,495
    
    
    
    (250
    )
    
    
    
    
    
    
    
    
    
    
    (141,553
    )
    
    
    (20,007
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,139
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,139Accrued dividends  Class C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (659
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (659
    )Elimination of cumulative accrued
dividends  Class C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,541Conversion of preferred stock to common
stock
    
    
    (364,524
    )
    
    
    (68,301
    )
    
    
    1,912,356
    
    
    
    2
    
    
    
    68,299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock from
warrant exercises
    
    
    
    
    
    
    
    
    
    
    1,003,190
    
    
    
    1
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares of common stock for merger
with BTHC VI, Inc.
    
    
    
    
    
    
    
    
    
    
    299,622
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock, net of expenses
    
    
    
    
    
    
    
    
    
    
    13,001,379
    
    
    
    13
    
    
    
    58,479
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,492Issuance of common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492Issuance of common stock for
conversion of convertible notes
    
    
    
    
    
    
    
    
    
    
    2,417,671
    
    
    
    3
    
    
    
    13,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,497Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,926
    )
    
    
    (18,926
    )Unrealized
gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,874
    )Balance at December 31, 2007
    
    
    
    
    
    
    
    
    
    
    18,927,988
    
    
    
    19
    
    
    
    208,039
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    (160,479
    )
    
    
    47,631Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,856
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,856Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,992
    )
    
    
    (17,992
    )Unrealized
gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    
    
    
    
    68Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,924
    )Balance at December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    18,927,988
    
    
    $
    19
    
    
    $
    209,895
    
    
    $
    
    
    
    $
    120
    
    
    $
    
    
    
    $
    (178,471
    )
    
    $
    31,563
 See accompanying notes.  55




---



##### Table of Contents



(In Thousands)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Operating activitiesNet loss
    
    $
    (17,992
    )
    
    $
    (18,926
    )
    
    $
    (10,565
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    218
    
    
    
    283
    
    
    
    528Gain on sale of equipment
    
    
    (24
    )
    
    
    
    
    
    
    Equity in (earnings) loss of unconsolidated affiliate
    
    
    1
    
    
    
    
    
    
    
    (117
    )Accretion of premium on convertible debt
    
    
    
    
    
    
    456
    
    
    
    260Provision/forgiveness of notes receivable
    
    
    74
    
    
    
    193
    
    
    
    122Earned milestone applied to note receivable
    
    
    
    
    
    
    283
    
    
    
    Stock-based compensation
    
    
    1,856
    
    
    
    5,139
    
    
    
    459Expense related to warrants issued to lenders
    
    
    16
    
    
    
    476
    
    
    
    Income from cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (306
    )Amortization
of premium (discount) on available-for-sale securities and other
    
    
    11
    
    
    
    (52
    )
    
    
    15Changes in operating assets and liabilities:Accounts receivable
    
    
    618
    
    
    
    111
    
    
    
    (361
    )Receivable from Angiotech
    
    
    (171
    )
    
    
    (63
    )
    
    
    Prepaid expenses and other assets
    
    
    178
    
    
    
    (558
    )
    
    
    21Accounts payable and accrued expenses
    
    
    (496
    )
    
    
    592
    
    
    
    1,546Net cash used in operating activities
    
    
    (15,711
    )
    
    
    (12,066
    )
    
    
    (8,398
    )Investing activitiesPurchase of available-for-sale securities
    
    
    (26,594
    )
    
    
    (46,316
    )
    
    
    (3,426
    )Proceeds from maturities of available-for-sale securities
    
    
    43,917
    
    
    
    10,100
    
    
    
    6,932Proceeds from sale of equipment
    
    
    24
    
    
    
    
    
    
    
    Purchases of equipment
    
    
    (532
    )
    
    
    (161
    )
    
    
    (83
    )Net cash provided by (used in) investing activities
    
    
    16,815
    
    
    
    (36,377
    )
    
    
    3,423Financing activitiesPrincipal payments on debt
    
    
    (1,800
    )
    
    
    (3,332
    )
    
    
    (2,083
    )Proceeds from convertible promissory notes
    
    
    
    
    
    
    5,000
    
    
    
    7,500Proceeds from issuance of common stock, net
    
    
    
    
    
    
    58,495
    
    
    
    6Net cash (used in) provided by financing activities
    
    
    (1,800
    )
    
    
    60,163
    
    
    
    5,423(Decrease) increase in cash and cash equivalents
    
    
    (696
    )
    
    
    11,720
    
    
    
    448Cash and cash equivalents at beginning of year
    
    
    13,248
    
    
    
    1,528
    
    
    
    1,080Cash and cash equivalents at end of year
    
    $
    12,552
    
    
    $
    13,248
    
    
    $
    1,528
 See accompanying notes.
  56




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##### Table of Contents



A. Background, Merger and Offering
       57




---



##### Table of Contents



A. Background, Merger and Offering, continued
      58




---



##### Table of Contents



A. Background, Merger and Offering, continued
  B. Accounting Policies
 Principles of Consolidation
  Revenue Recognition
 Revenue Recognition Revenue
Arrangements with Multiple Deliverables
   59




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##### Table of Contents



B. Accounting Policies, continued
  Cash and Cash Equivalents
  Research and Development
  Collaborative Arrangements
   60




---



##### Table of Contents



B. Accounting Policies, continued
 Clinical Trial Costs
  Royalties
  Investments in Available-for-Sale Securities
  Long-Lived Assets
  Accounting for the Impairment or Disposal of Long-lived Assets
  61




---



##### Table of Contents



B. Accounting Policies, continued
 Patent Costs and Rights
  Comprehensive Income (Loss)
  Concentration of Credit Risk
  Use of Estimates
   62




---



##### Table of Contents



B. Accounting Policies, continued
 Stock-Based Compensation
 Share-Based Payment
    December 31,2008
    
    
    2007
    
    
    2006Volatility
    
    
    69.6
    %
    
    
    73.4
    %
    
    
    53.6
    %Risk-free interest rate
    
    
    3.0
    %
    
    
    5.3
    %
    
    
    4.8
    %Expected life of option
    
    5.09 years
    
    
    5.36 years
    
    
    4.0 yearsExpected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
  63




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##### Table of Contents



B. Accounting Policies, continued
 Income Taxes
 Accounting for Income Taxes,
 Accounting for Uncertainty in Income Taxes
  64




---



##### Table of Contents



B. Accounting Policies, continued
 Net Loss per Share
 Earnings Per Share
   
    
    Outstanding stock options to purchase 3,738,473, 3,679,884 and 116,083, shares of common
stock for the years ended December 31, 2008, 2007 and 2006, respectively;
 
    
    Warrants to purchase 5,125,496, 5,125,496 and 25,639, shares of common stock for the
years ended December 31, 2008, 2007 and 2006, respectively;
 
    
    Shares of common stock issuable upon conversion of convertible preferred stock in the
amount of 160,041 and 364,524 for the years ended December 31, 2007 and 2006, respectively;
and
 
    
    Shares of common stock issuable upon the conversion of convertible promissory notes in
the amount of 112,098 and 72,995 for the years ended December 31, 2007 and 2006,
respectively.
  65




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##### Table of Contents



B. Accounting Policies, continued
 Recently Issued Accounting Standards
 Fair Value Measurements
 Determining the Fair Value
of a Financial Asset When the Market for That Asset Is Not Active Fair Value Measurements
 Accounting for
Collaborative Arrangements.
 Accounting for Convertible
Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)
  66




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##### Table of Contents



B. Accounting Policies, continued
 Business Combinations
 C. Equipment
 December 31,Equipment consists of (in thousands):
    
    2008
    
    
    2007Laboratory equipment
    
    $
    6,045
    
    
    $
    5,839Office equipment and leasehold improvements
    
    
    3,607
    
    
    
    3,4819,652
    
    
    
    9,320Accumulated depreciation
    
    
    (8,951
    )
    
    
    (8,933
    )$
    701
    
    
    $
    387
  67




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##### Table of Contents



D. Notes Receivable; MCL Acquisition
 Note Receivable from Officer
  MCL Acquisition
    68




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##### Table of Contents



E. Financial Instruments
 Investments in Available-for-Sale Securities
   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.
  Fair Value Measurements at December 31, 2008 UsingQuoted Prices in Active
    
    
    Significant OtherBalance as of
    
    
    Markets for Identical
    
    
    Observable Inputs
    
    
    Significant UnobservableDescription
    
    December 31, 2008
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Available-for-sale
securities
    
    $
    19,061
    
    
    $
    19,061
    
    
    $
    
    
    
    $
    
   69




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##### Table of Contents



E. Financial Instruments, continued
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Losses
    
    
    Gains
    
    
    ValueDecember 31, 2008:U.S. government obligations
    
    $
    13,603
    
    
    $
    
    
    
    $
    125
    
    
    $
    13,728Corporate debt securities
    
    
    5,338
    
    
    
    (24
    )
    
    
    19
    
    
    
    5,333$
    18,941
    
    
    $
    (24
    )
    
    $
    144
    
    
    $
    19,061December 31, 2007:Floating Rate Notes
    
    $
    6,000
    
    
    $
    
    
    
    $
    
    
    
    $
    6,000U.S. government obligations
    
    
    20,400
    
    
    
    
    
    
    
    49
    
    
    
    20,449Corporate debt securities
    
    
    3,336
    
    
    
    (6
    )
    
    
    9
    
    
    
    3,339Commercial paper
    
    
    6,539
    
    
    
    
    
    
    
    
    
    
    
    6,539$
    36,275
    
    
    $
    (6
    )
    
    $
    58
    
    
    $
    36,327
    70




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##### Table of Contents



E. Financial Instruments, continued
 December 31, 2008Amortized
    
    
    EstimatedCost
    
    
    Fair ValueDue in one year or less
    
    $
    15,375
    
    
    $
    15,460Due after one year through two years
    
    
    3,566
    
    
    
    3,601$
    18,941
    
    
    $
    19,061
 Financing Arrangements
    Long-Term Debt
  December 31,2008
    
    
    2007Notes payable to lenders; issued November 2004; matured June 2008
including $487,500 terminal payment; 13% interest rate; secured
    
    $
    
    
    
    $
    1,800Discount related to warrant issuance
    
    
    
    
    
    
    (16
    )Total, net
    
    
    
    
    
    
    1,784Less  current portion, net
    
    
    
    
    
    
    1,784Long-term debt
    
    $
    
    
    
    $
    
  71




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##### Table of Contents



E. Financial Instruments, continued
     F. Collaboration
   72




---



##### Table of Contents



F. Collaboration, continued
  Accounting for Collaborative
Arrangements
 G. Convertible Bridge Notes
    73




---



##### Table of Contents



G. Convertible Bridge Notes, continued
   H. Capitalization
    74




---



##### Table of Contents



H. Capitalization, continued
  December 312008
    
    
    2007Stock option plans
    
    
    4,500
    
    
    
    4,500Warrants to purchase common stock  Offering
    
    
    4,976
    
    
    
    4,976Warrants to purchase common stock  Lenders
    
    
    149
    
    
    
    1499,625
    
    
    
    9,625
  75




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##### Table of Contents



I. Joint Venture and Investment in Equity Securities
    EstimatedCarrying
    
    
    Unrealized
    
    
    Fair(in thousands)
    
    Amount
    
    
    Losses
    
    
    ValueDecember 31, 2008:Equity securities held by Athersys
    
    $
    200
    
    
    $
    (32
    )
    
    $
    168Equity securities held by Oculus
(50.2% Athersys portion)
    
    
    142
    
    
    
    (13
    )
    
    
    129$
    342
    
    
    $
    (45
    )
    
    $
    297
  76




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##### Table of Contents



J. Stock Option Plans
       77




---



##### Table of Contents



J. Stock Option Plans, continued
  WeightedAverageNumber
    
    
    Exerciseof Options
    
    
    PriceOutstanding January 1, 2006
    
    
    138,796
    
    
    $
    92.05Granted
    
    
    
    
    
    
    Exercised
    
    
    (72
    )
    
    
    83.68Forfeited
    
    
    (22,641
    )
    
    
    150.91Outstanding December 31, 2006
    
    
    116,083
    
    
    
    80.62Granted
    
    
    3,738,000
    
    
    
    5.06Exercised
    
    
    
    
    
    
    Forfeited / Terminated / Expired
    
    
    (174,199
    )
    
    
    51.21Outstanding December 31, 2007
    
    
    3,679,884
    
    
    
    5.24Granted
    
    
    218,000
    
    
    
    3.36Exercised
    
    
    
    
    
    
    Forfeited / Expired
    
    
    (159,411
    )
    
    
    6.64Outstanding December 31, 2008
    
    
    3,738,473
    
    
    $
    5.07Vested during 2008
    
    
    858,477
    
    
    $
    5.05Vested and exercisable at December 31, 2008
    
    
    2,416,657
    
    
    $
    5.20
  78




---



##### Table of Contents



J. Stock Option Plans, continued
 December 31, 2008Options Outstanding
    
    
    Options Vested and ExercisableWeighted
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    Average
    
    
    WeightedNumber
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    Remaining
    
    
    Averageof
    
    
    Contractual
    
    
    Exercise
    
    
    of
    
    
    Contractual
    
    
    ExerciseExercise Price
    
    Options
    
    
    Life
    
    
    Price
    
    
    Options
    
    
    Life
    
    
    Price$1.88  2.96
    
    
    115,000
    
    
    
    5.60
    
    
    $
    2.74
    
    
    
    20,625
    
    
    
    4.48
    
    
    $
    2.90$4.00  4.99
    
    
    141,000
    
    
    
    8.89
    
    
    $
    4.31
    
    
    
    19,250
    
    
    
    8.62
    
    
    $
    4.69$5.00  7.80
    
    
    3,480,000
    
    
    
    7.52
    
    
    $
    5.06
    
    
    
    2,374,309
    
    
    
    7.62
    
    
    $
    5.05$69.74  278.95
    
    
    2,473
    
    
    
    2.49
    
    
    $
    174.97
    
    
    
    2,473
    
    
    
    2.49
    
    
    $
    174.973,738,473
    
    
    
    
    
    
    
    
    
    
    
    2,416,657
  K. Income Taxes
    79




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##### Table of Contents



K. Income Taxes, continued
  December 31,2008
    
    
    2007Net operating loss carryforwards
    
    $
    7,755
    
    
    $
    2,387Net operating loss carryforwards  Pre-Merger NOL
    
    
    2,908
    
    
    
    3,066Research and development credit carryforwards
    
    
    1,404
    
    
    
    438Compensation expense
    
    
    1,700
    
    
    
    1,221Other
    
    
    468
    
    
    
    539Total deferred tax assets
    
    
    14,235
    
    
    
    7,651Valuation allowance for deferred tax assets
    
    
    (14,235
    )
    
    
    (7,651
    )Net deferred tax assets
    
    $
    
    
    
    $
    
  L. Profit Sharing Plan and 401(k) Plan
   80




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##### Table of Contents



M. Quarterly Financial Data (unaudited)
  2008First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Full YearRevenues
    
    $
    792
    
    
    $
    776
    
    
    $
    1,278
    
    
    $
    259
    
    
    $
    3,105Net loss
    
    $
    (4,664
    )
    
    $
    (4,122
    )
    
    $
    (4,493
    )
    
    $
    (4,713
    )
    
    $
    (17,992
    )Preferred stock dividends
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Deemed dividend resulting
from induced conversion
of convertible preferred
stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss attributable to
common stockholders
    
    $
    (4,664
    )
    
    $
    (4,122
    )
    
    $
    (4,493
    )
    
    $
    (4,713
    )
    
    $
    (17,992
    )Basic and diluted net loss
per common share
attributable to common
stockholders
    
    $
    (0.25
    )
    
    $
    (0.22
    )
    
    $
    (0.24
    )
    
    $
    (0.25
    )
    
    $
    (0.95
    )
 2007First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Full YearRevenues
    
    $
    879
    
    
    $
    723
    
    
    $
    860
    
    
    $
    798
    
    
    $
    3,260Net loss
    
    $
    (2,720
    )
    
    $
    (7,069
    )
    
    $
    (4,439
    )
    
    $
    (4,698
    )
    
    $
    (18,926
    )Preferred stock dividends
    
    $
    (375
    )
    
    $
    (284
    )
    
    $
    
    
    
    $
    
    
    
    $
    (659
    )Deemed dividend resulting
from induced conversion
of convertible preferred
stock
    
    $
    
    
    
    $
    (4,800
    )
    
    $
    
    
    
    $
    
    
    
    $
    (4,800
    )Net loss attributable to
common stockholders
    
    $
    (3,095
    )
    
    $
    (12,153
    )
    
    $
    (4,439
    )
    
    $
    (4,698
    )
    
    $
    (24,385
    )Basic and diluted net loss
per common share
attributable to common
stockholders
    
    $
    (10.54
    )
    
    $
    (2.53
    )
    
    $
    (0.23
    )
    
    $
    (0.25
    )
    
    $
    (2.26
    )
  81




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A(T). CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures:
 Managements report on internal control over financial reporting:
  Changes in internal control:
 
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
      82




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##### Table of Contents



ITEM
11. EXECUTIVE COMPENSATION
   
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
  Equity Compensation Plan Information
 Number of securitiesremaining available forfuture issuance underequity compensationNumber of securities to
    
    
    Weighted-average
    
    
    plans (excludingbe issued upon exercise
    
    
    exercise price of
    
    
    securities reflected inof outstanding options
    
    
    outstanding options
    
    
    column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plan approved by
security holders
    
    
    2,493,500
    
    
    $
    4.86
    
    
    
    541,500Equity compensation
plan not approved
by security holders
(1)
    
    
    1,244,973
    
    
    $
    5.38
    
    
    
    222,500Total
    
    
    3,738,473
    
    
    
    
    
    
    
    764,000
 (1)
    
    Includes 2,473 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
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESN
   83




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PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
            Balance atBeginning of
    
    
    
    
    
    
    
    
    Balance at(In thousands)
    
    Year
    
    
    Additions
    
    
    Deductions
    
    
    End of YearYear Ended December 31,
2008Deducted from asset
accounts:Allowance for doubtful accounts
    
    $
    193
    
    
    $
    74
    (A)
    
    $
    
    
    
    $
    267Tax valuation allowances
    
    
    7,651
    
    
    
    6,584
    
    
    
    
    
    
    
    14,235Total 2008
    
    $
    7,844
    
    
    $
    6,658
    
    
    $
    
    
    
    $
    14,502Year Ended December 31,
2007Deducted from asset
accounts:Allowance for doubtful accounts
    
    $
    
    
    
    $
    193
    (A)
    
    $
    
    
    
    $
    193Tax valuation allowances
    
    
    47,971
    
    
    
    1,954
    
    
    
    42,274
    (B)
    
    
    7,651Total 2007
    
    $
    47,971
    
    
    $
    2,147
    
    
    $
    42,274
    
    
    $
    7,844Year Ended December 31,
2006Deducted from asset
accounts:Tax valuation allowances
    
    $
    43,974
    
    
    $
    3,997
    
    
    $
    
    
    
    $
    47,971Total 2006
    
    $
    43,974
    
    
    $
    3,997
    
    
    $
    
    
    
    $
    47,971
 (A)
    
     Reserve on note receivable.(B)
    
     Deferred tax assets are fully offset by valuation allowances. As a result of the
June 2007 equity offering and merger, the Company lost the use of a significant portion of
its pre-merger net operating loss carryforwards.   84




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##### Table of Contents



Exhibit No.
    
    Exhibit Description2.1
    
    
    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)2.2
    
    
    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)3.1
    
    
    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)3.2
    
    
    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)10.1
    *
    
    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)10.2
    *
    
    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)10.3
    *
    
    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)10.4
    
    
    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)10.5
    
    
    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)10.6
    
    
    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)10.7
    
    
    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)10.8
    
    
    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)10.9
    
    
    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)
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Exhibit No.
    
    Exhibit Description10.10
    
    
    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)10.11
    
    
    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)10.12
    
    
    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)10.13
    
    
    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)10.14
    
    
    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)10.15
    
    
    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)10.16
    
    
    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)10.17
    
    
    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)10.18
    
    
    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)10.19
    
    
    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)10.20
    
    
    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)10.21
    
    
    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)10.22
    
    
    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)10.23
    
    
    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)
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Exhibit No.
    
    Exhibit Description10.24
    
    
    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)10.25
    
    
    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)10.26
    
    
    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)10.27
    
    
    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)10.28
    
    
    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)10.29
    
    
    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)10.30
    
    
    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)10.31
    
    
    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)10.32
    
    
    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)10.33
    
    
    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)10.34
    
    
    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)10.35
    *
    
    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)10.36
    *
    
    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)10.37
    
    
    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)10.38
    
    
    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)
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Exhibit No.
    
    Exhibit Description10.39
    
    
    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)10.40
    
    
    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)10.41
    
    
    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)21
    
    
    List of Subsidiaries23
    
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24
    
    
    Power of Attorney31.1
    
    
    Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, pursuant to SEC
Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    
    Certification of Laura 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 2002.32.1
    
    
    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  88




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SIGNATURES
  ATHERSYS, INC.By:
    
    /s/ Gil Van BokkelenGil Van BokkelenTitle: Chief Executive Officer
  Signature
    
    
    
    Title
    
    
    
    Date/s/
Gil Van BokkelenGil Van Bokkelen
    
    
    
    Chief Executive Officer
and Chairman of the Board of
Directors (Principal Executive
Officer)
    
    
    
    March 12, 2009/s/
Laura K. CampbellLaura K. Campbell
    
    
    
    Vice President, Finance
(Principal Financial Officer
and Principal Accounting Officer)
    
    
    
    March 12, 2009*

John J. Harrington
    
    
    
    Executive Vice President,
Chief Scientific Officer and Director
    
    
    
    March 12, 2009*

William C. Mulligan
    
    
    
    Director
    
    
    
    March 12, 2009*

George M. Milne, Jr.
    
    
    
    Director
    
    
    
    March 12, 2009*

Jordan S. Davis
    
    
    
    Director
    
    
    
    March 12, 2009*

Floyd D. Loop
    
    
    
    Director
    
    
    
    March 12, 2009*

Michael Sheffery
    
    
    
    Director
    
    
    
    March 12, 2009*

Lorin J. Randall
    
    
    
    Director
    
    
    
    March 12, 2009
 *
    
    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 a Power of Attorney executed by
such persons and filed with the Securities and Exchange Commission. By:
    
    /s/ Gil Van BokkelenGil Van Bokkelen
Attorney-in-fact
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EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Description2.1
    
    
    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)2.2
    
    
    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)3.1
    
    
    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)3.2
    
    
    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)10.1
    *
    
    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)10.2
    *
    
    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)10.3
    *
    
    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)10.4
    
    
    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)10.5
    
    
    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)10.6
    
    
    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)10.7
    
    
    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)10.8
    
    
    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)10.9
    
    
    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)
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Exhibit No.
    
    Exhibit Description10.10
    
    
    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)10.11
    
    
    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)10.12
    
    
    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)10.13
    
    
    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)10.14
    
    
    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)10.15
    
    
    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)10.16
    
    
    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)10.17
    
    
    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)10.18
    
    
    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)10.19
    
    
    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)10.20
    
    
    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)10.21
    
    
    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)10.22
    
    
    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)10.23
    
    
    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)
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##### Table of Contents



Exhibit No.
    
    Exhibit Description10.24
    
    
    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)10.25
    
    
    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)10.26
    
    
    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)10.27
    
    
    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)10.28
    
    
    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)10.29
    
    
    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)10.30
    
    
    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)10.31
    
    
    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)10.32
    
    
    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)10.33
    
    
    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)10.34
    
    
    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)10.35
    *
    
    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)10.36
    *
    
    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)10.37
    
    
    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)10.38
    
    
    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)
  92




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##### Table of Contents



Exhibit No.
    
    Exhibit Description10.39
    
    
    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)10.40
    
    
    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)10.41
    
    
    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)21
    
    
    List of Subsidiaries23
    
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24
    
    
    Power of Attorney31.1
    
    
    Certification of Gil Van Bokkelen, Chairman and Chief Executive Officer, pursuant to SEC
Rules 13a-14(a) and 15d-14(a) adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    
    Certification of Laura 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 2002.32.1
    
    
    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  93