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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, 2010
 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
 Yes o No þ
 Yes þ No o
 o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller Reporting Company þ
 Yes o No þ




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TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    19Item 1B. Unresolved Staff Comments
    
    
    33Item 2. Properties
    
    
    33Item 3. Legal Proceedings
    
    
    33Item 3A. Executive Officers of the Registrant
    
    
    33Item 4. Reserved
    
    
    34PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    35Item 6. Selected Financial Data
    
    
    36Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    38Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    49Item 8. Financial Statements and Supplementary Data
    
    
    49Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
    
    
    50Item 9A. Controls and Procedures
    
    
    50Item 9B. Other Information
    
    
    50PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    50Item 11. Executive Compensation
    
    
    51Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    51Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    51Item 14. Principal Accountant Fees and Services
    
    
    51PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    51Exhibit 10.41Exhibit 10.47Exhibit 10.48Exhibit 21Exhibit 23Exhibit 24.1Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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PART I
 
 ITEM 1.
    
    BUSINESS.
 ®
  Recent Developments
  Business Strategy
  
    
    Efficiently develop product candidates in established areas of
significant clinical need.We are focused on the development of
best-in-class product candidates with differentiated profiles, meaning
improved safety and/or efficacy relative to current standards of care.
Our intention is to develop our products for ultimate
commercialization by us, our partners or licensees after they have
received approval from the U.S. Food and Drug Administration, or FDA,
and/or other regulatory agencies.
    
    Apply our proprietary technologies toward the identification,
validation, and development of therapeutic product candidates.We
will continue to use our proprietary technologies to identify and
validate therapeutic product candidates. We believe our technologies,
including MultiStem and RAGE (Random Activation of Gene
Expression)®, provide us with a competitive advantage in
discovery and product development by allowing us to move product
candidates quickly from the discovery phase into clinical trials. We
select candidates for internal development based on several factors,
including the required regulatory approval pathway, the potential
market into which the product may be sold and our ability to feasibly
fund development activities.
    
    Enter into licensing or co-development arrangements for certain
product candidates.In addition to our internal development efforts,
an important part of our product development strategy is to work with
collaborators and
partners to accelerate product development, reduce our development
costs, and broaden our commercialization capabilities. We have
entered into multiple licensing and product co-development
arrangements with qualified commercial partners to achieve these objectives. We
anticipate that this strategy will help us to develop a portfolio of
high quality product development opportunities, enhance our clinical
development and commercialization capabilities, and increase our
ability to generate value from our proprietary technologies.
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
    
    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 ongoing research and
development efforts, both through internal activities and through
collaborative research activities with others, which aim to develop
new intellectual property and enable 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 may not be relevant to
the key elements of our corporate strategy. We believe these
applications may have significant potential value, however, and may
provide capital to us that can be applied to our other development
efforts. Where appropriate, we may seek to license non-core
applications of our technologies to others to realize this value.
 Our Current Programs
  
    
    An ongoing Phase II clinical study involving administration of MultiStem to
patients suffering from ulcerative colitis, the most common form of inflammatory bowel
disease, or IBD. This study was authorized by the FDA in November 2010 and is being
conducted with our partner, Pfizer Inc., or Pfizer. This trial began enrolling patients
in the study in February 2011;
    
    A Phase I clinical study involving administration of MultiStem to patients
that have suffered an acute myocardial infarction, or AMI, more commonly referred to as a
heart attack. We announced initial results for this study in July 2010, demonstrating a
consistent safety profile and encouraging signs of improvement in heart function among
patients who had received treatment after experiencing a heart attack
and exhibiting severely compromised heart function. We intend to initiate a Phase II study in
 2011 with our partner, Angiotech Pharmaceuticals, Inc., or Angiotech, to evaluate
the safety and efficacy of MultiStem administration to AMI patients;
    
    An ongoing Phase I clinical study involving administration of MultiStem to
patients suffering from leukemia or certain other blood-borne cancers, in which patients
undergo radiation therapy and then receive a hematopoietic stem cell, or HSC, transplant.
Such patients are at risk for serious complications, including graft versus host disease,
or GVHD, which is an imbalance of immune system function caused by transplanted immune
cells that attack various tissues and organs in the patient. In January 2011, we announced
that we had successfully completed enrollment for the single ascending dose portion of
this clinical trial and expect to announce preliminary results in the second quarter of
2011. In addition, the multiple ascending dose portion of this study is ongoing.
    
    An FDA authorized Phase I clinical study to evaluate administration of
MultiStem to patients that have suffered an ischemic stroke. We are currently working
with our clinical advisors to modify the proposed study design, including increasing the
size of the study so that we can evaluate safety and efficacy.
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Regenerative Medicine Programs
 MultiStem  A Novel Allogeneic Approach to Stem Cell Therapy and Regenerative Medicine
      
    
    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 also 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.
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
    
    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  ectopic
tissue or tumor-like growths. 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 and that is
supported by emerging clinical data.
   MultiStem for Cardiovascular Disease, Immune System Disorders, and Neurological Conditions
 in vitro
   
    
    A Phase I clinical study involving administration of MultiStem to patients
that have suffered an AMI with our partner, Angiotech, and we intend to initiate in 2011 a
Phase II study to evaluate the safety and efficacy of MultiStem administration to AMI
patients;
    
    An ongoing Phase I clinical study involving administration of MultiStem to
patients suffering from leukemia or certain other blood-borne cancers, in which patients
undergo radiation therapy and then receive a HSC transplant and are at risk for serious
complications, including GVHD. We have successfully completed enrollment for the single
ascending dose portion of this trial and the multiple ascending dose portion of this study
is ongoing;
  6




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
    
    An ongoing Phase II clinical study involving administration of MultiStem to
patients suffering from ulcerative colitis, the most common form of IBD with our partner,
Pfizer. This trial began enrolling patients in the study in February 2011; and
    
    An FDA authorized Phase I clinical study to evaluate administration of
MultiStem to patients that have suffered an ischemic stroke, and we are working with our
clinical advisors to modify the proposed study design so that we can evaluate safety and
efficacy.
  Cardiovascular
Disease  Evaluating MultiStem for Heart Attack
      7




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Immunological Disorders  MultiStem for IBD and HSC Transplant Support
        8




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Neurological Disease  MultiStem for Ischemic Stroke
      9




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Pharmaceutical Programs
 Novel 5HT2c agonists for the treatment of obesity and related conditions
  ®
    10




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Other Small Molecule Programs & Key Technologies
    11




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Collaborations and Partnerships
 Pfizer
    12




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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.
     13




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RTI Biologics, Inc.
  Bristol-Myers Squibb
     Competition
    14




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Intellectual Property
   15




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Research and Development
  Government Regulation
   16




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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.
     17




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Employees
   Available Information
 www.athersys.com
  18




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ITEM 1A.
    
    RISK FACTORS
  Risks Related To Our Business and Our Industry
 We have 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;
    
    costs of financing the purchases of additional capital equipment and development technologies;
  19




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
    
    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.
  20




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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 candidates are in an early stage of development and we currently have no therapeutic
products approved for sale. If we are unable to develop, obtain regulatory approval or market any
of our product candidates, our financial condition will be negatively affected, and we may have to
curtail or cease our operations.
   We 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.
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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.
     22




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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.
     23




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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.
 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.
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We may rely on third parties to manufacture our MultiStem product candidate.
   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.
   25




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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.
    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;
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
    
    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.
    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.
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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 our common stock;
    
    an acquisition may negatively impact our results of operations because
it may require us to incur large one-time charges to earnings,
amortize or write down amounts related to goodwill and other
intangible assets, or incur or assume substantial debt or liabilities,
or it may cause adverse tax consequences, substantial depreciation or
deferred compensation charges;
  29




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
    
    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.
  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.
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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.
  We may be sued for product liability, which could adversely affect our business.
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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.
   32




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ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 3A.
    
    EXECUTIVE OFFICERS OF THE REGISTRANT
    Gil Van Bokkelen, Ph.D.
 Dr. Van Bokkelen
 William (BJ) Lehmann, Jr., J.D.
 Mr. Lehmann
  33




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John J. Harrington, Ph.D.
 Dr. Harrington
 Robert J. Deans, Ph.D.
 Dr. Deans
 Laura K. Campbell, CPA
 Ms. Campbell
 
 ITEM 4.
    
    RESERVED
  34




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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, 2010:First Quarter
    
    $
    4.40
    
    
    $
    2.32Second Quarter
    
    $
    3.63
    
    
    $
    2.56Third Quarter
    
    $
    3.55
    
    
    $
    2.34Fourth Quarter
    
    $
    3.19
    
    
    $
    2.42Year ended December 31, 2009:First Quarter
    
    $
    1.28
    
    
    $
    0.45Second Quarter
    
    $
    1.04
    
    
    $
    0.75Third Quarter
    
    $
    1.35
    
    
    $
    0.78Fourth Quarter
    
    $
    6.40
    
    
    $
    0.97
 Holders
  Dividend Policy
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ITEM 6.
    
    SELECTED FINANCIAL DATA
  Year Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Consolidated Statement of
Operations Data:Revenues:Contract revenue
    
    $
    6,685
    
    
    $
    1,079
    
    
    $
    1,880
    
    
    $
    1,433
    
    
    $
    1,908Grant revenue
    
    
    2,254
    
    
    
    1,080
    
    
    
    1,225
    
    
    
    1,827
    
    
    
    1,817Total revenues
    
    
    8,939
    
    
    
    2,159
    
    
    
    3,105
    
    
    
    3,260
    
    
    
    3,725Costs and expenses:Research and development
    
    
    14,779
    
    
    
    11,920
    
    
    
    16,500
    
    
    
    15,817
    
    
    
    9,741General and administrative
    
    
    5,387
    
    
    
    5,621
    
    
    
    5,479
    
    
    
    7,975
    
    
    
    3,347Depreciation
    
    
    284
    
    
    
    233
    
    
    
    218
    
    
    
    283
    
    
    
    528Loss from operations
    
    
    (11,511
    )
    
    
    (15,615
    )
    
    
    (19,092
    )
    
    
    (20,815
    )
    
    
    (9,891
    )Other (expense) income:Other (expense) income, net
    
    
    (69
    )
    
    
    (126
    )
    
    
    48
    
    
    
    2,017
    
    
    
    208Interest income
    
    
    203
    
    
    
    375
    
    
    
    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
    
    
    (11,377
    )
    
    
    (15,366
    )
    
    
    (17,992
    )
    
    
    (18,926
    )
    
    
    (10,871
    )Cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    306Net loss
    
    $
    (11,377
    )
    
    $
    (15,366
    )
    
    $
    (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
    
    $
    (11,377
    )
    
    $
    (15,366
    )
    
    $
    (17,992
    )
    
    $
    (24,385
    )
    
    $
    (11,973
    )Basic and diluted net loss
per common share attributable
to common stockholders:Loss before cumulative effect
of change in accounting
principle
    
    $
    (0.60
    )
    
    $
    (0.81
    )
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (41.89
    )Cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.05Net loss per share
    
    $
    (0.60
    )
    
    $
    (0.81
    )
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (40.84
    )Weighted average shares
outstanding, basic and
diluted
    
    
    18,929,749
    
    
    
    18,928,379
    
    
    
    18,927,988
    
    
    
    10,811,119
    
    
    
    293,142
  36




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##### Table of Contents



December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    2,105
    
    
    $
    11,167
    
    
    $
    12,552
    
    
    $
    13,248
    
    
    $
    1,528Available-for-sale securities, short-tem
    
    
    13,076
    
    
    
    10,135
    
    
    
    15,460
    
    
    
    22,477
    
    
    
    Working capital (deficit)
    
    
    9,106
    
    
    
    16,291
    
    
    
    26,789
    
    
    
    32,849
    
    
    
    (3,206
    )Available-for-sale securities, long-tem
    
    
    
    
    
    
    5,080
    
    
    
    3,601
    
    
    
    13,850
    
    
    
    Total assets
    
    
    19,106
    
    
    
    28,331
    
    
    
    33,877
    
    
    
    52,225
    
    
    
    4,266Long-term obligations, less current
portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,310Accrued dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,882Total stockholders equity (deficit)
    
    
    9,005
    
    
    
    18,957
    
    
    
    31,563
    
    
    
    47,631
    
    
    
    (20,007
    )
  37




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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
  
    
    An ongoing Phase II clinical study involving administration of MultiStem to
patients suffering from ulcerative colitis, the most common form of IBD. This study was
authorized by the FDA in November 2010, and is being conducted with our partner Pfizer.
This trial began enrolling patients in the study in February 2011;
    
    A Phase I clinical study involving administration of MultiStem to patients
that have suffered an AMI, more commonly referred to as a heart attack. We successfully
completed patient enrollment for this study in February 2010 and announced initial results
in July 2010, demonstrating a consistent safety profile and encouraging signs of
improvement in heart function among patients that had received treatment. We intend to
initiate a Phase II study with our partner, Angiotech, to evaluate the safety and efficacy
of MultiStem administration to AMI patients in 2011;
    
    An ongoing Phase I clinical study involving administration of MultiStem to
patients suffering from leukemia or certain other blood-borne cancers, in which patients
undergo radiation therapy and then receive a HSC transplant. Such patients are at risk
for serious complications, including GVHD, which is an imbalance of immune system function
caused by transplanted immune cells that attack various tissues and organs in the patient.
In January 2011, we announced that we had successfully completed enrollment for the single
ascending dose portion of this clinical trial and expect to announce preliminary results
in the second quarter of 2011. In addition, the multiple ascending dose portion of this study is ongoing.
    
    An FDA authorized Phase I clinical study to evaluate administration of
MultiStem to patients that have suffered an ischemic stroke. We are currently working
with our clinical advisors to modify the proposed study design, including increasing the
size of the study so that we can evaluate safety and efficacy.
    38




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##### Table of Contents



Financial
   Results of Operations
   Revenues
 Year ended December 31,2010
    
    
    2009
    
    
    2008Contract revenue
    
    $
    6,685
    
    
    $
    1,079
    
    
    $
    1,880Grant revenue
    
    
    2,254
    
    
    
    1,080
    
    
    
    1,225$
    8,939
    
    
    $
    2,159
    
    
    $
    3,105
  39




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##### Table of Contents



Research and development expenses
 Year ended December 31,Type of expense
    
    2010
    
    
    2009
    
    
    2008Personnel costs
    
    $
    4,124
    
    
    $
    3,607
    
    
    $
    2,924Research supplies
    
    
    1,218
    
    
    
    907
    
    
    
    849Facilities
    
    
    870
    
    
    
    826
    
    
    
    817Clinical and preclinical development costs
    
    
    4,394
    
    
    
    1,904
    
    
    
    7,878Sponsored research
    
    
    1,149
    
    
    
    878
    
    
    
    393Patent legal fees
    
    
    1,477
    
    
    
    1,351
    
    
    
    1,481Other
    
    
    1,002
    
    
    
    1,151
    
    
    
    1,431Stock-based compensation
    
    
    545
    
    
    
    1,296
    
    
    
    727$
    14,779
    
    
    $
    11,920
    
    
    $
    16,500
 General and administrative expenses
 Year ended December 31,Type of expense
    
    2010
    
    
    2009
    
    
    2008Personnel costs
    
    $
    1,897
    
    
    $
    1,975
    
    
    $
    1,726Facilities
    
    
    279
    
    
    
    299
    
    
    
    342Legal and professional fees
    
    
    1,007
    
    
    
    916
    
    
    
    1,032Other
    
    
    1,283
    
    
    
    919
    
    
    
    1,250Stock-based compensation
    
    
    921
    
    
    
    1,512
    
    
    
    1,129$
    5,387
    
    
    $
    5,621
    
    
    $
    5,479
 Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Revenues.
  40




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##### Table of Contents



Research and Development Expenses
 General and Administrative Expenses.
 Depreciation.
 Other Expense.
 Interest Income.
 Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Revenues.
 Research and Development Expenses.
  41




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##### Table of Contents



General and Administrative Expenses.
 Depreciation.
 Other Expense.
 Interest Income.
 Interest Expense.
 Liquidity and Capital Resources
    42




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##### Table of Contents



43




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##### Table of Contents



44




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##### Table of Contents



Payment due by Period
 Contractual Obligations
    
    Total
    
    
    Less than 1 Year
    
    
    1  3 Years
    
    
    3  5 Years
    
    
    More than 5 YearsOperating leases for
facilities and equipment
lease
    
    $
    487,000
    
    
    $
    390,000
    
    
    $
    97,000
    
    
    $
    
    
    
    $
    Research funding
    
    
    465,000
    
    
    
    327,000
    
    
    
    138,000
    
    
    
    
    
    
    
    Total
    
    $
    952,000
    
    
    $
    717,000
    
    
    $
    235,000
    
    
    $
    
    
    
    $
    
     Critical Accounting Policies and Management Estimates
   45




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##### Table of Contents



Revenue Recognition
     Collaborative Arrangements
  Clinical Trial Costs
   46




---



##### Table of Contents



Investments in Available-for-Sale Securities
  Stock-Based Compensation
    Recently Issued Accounting Standards
 Multiple-Element Arrangements
 Milestone Method of Revenue Recognition
  47




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##### Table of Contents



CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
   
    
    the possibility of delays in, adverse results of and excessive costs of the development
process;
    
    our ability to successfully initiate and complete clinical trials;
    
    changes in external market factors;
    
    changes in our industrys overall performance;
    
    changes in our business strategy;
    
    our ability to protect our intellectual property portfolio;
    
    our possible inability to realize commercially valuable discoveries in our
collaborations with pharmaceutical and other biotechnology companies;
    
    our ability to meet milestones under our collaboration agreements;
    
    our collaborators ability to continue to fulfill their obligations under the terms of
our collaboration agreements;
    
    our possible inability to execute our strategy due to changes in our industry or the
economy generally;
    
    changes in productivity and reliability of suppliers;
    
    the success of our competitors and the emergence of new competitors; and
    
    the risks mentioned elsewhere in this annual report under Item 1A, Risk Factors.
   48




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ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
   
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  49




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Consolidated Financial Statements




---



##### Table of Contents



Contents
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-3Consolidated Statements of Operations for each of the years ended December 31, 2010,
2009 and 2008
    
    
    F-4Consolidated Statements of Stockholders Equity for each of the years ended
December 31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statements of Cash Flows for each of
the years ended December 31, 2010,
2009 and 2008
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
  F-1




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Cleveland, Ohio
    
    /s/ ERNST & YOUNG LLPMarch 25, 2011
  F-2




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##### Table of Contents



(In Thousands, Except Share and Per Share Amounts)
 December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    2,105
    
    
    $
    11,167Available-for-sale securities
    
    
    13,076
    
    
    
    10,135Accounts receivable
    
    
    2,328
    
    
    
    352Receivable from Angiotech
    
    
    106
    
    
    
    229Investment interest receivable
    
    
    71
    
    
    
    93Prepaid expenses and other
    
    
    258
    
    
    
    173Total current assets
    
    
    17,944
    
    
    
    22,149Available-for-sale securities
    
    
    
    
    
    
    5,080Deposits and other
    
    
    38
    
    
    
    38Equipment, net
    
    
    955
    
    
    
    849Equity investments
    
    
    169
    
    
    
    215Total assets
    
    $
    19,106
    
    
    $
    28,331Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    1,498
    
    
    $
    1,128Accrued compensation and related benefits
    
    
    580
    
    
    
    667Accrued clinical trial costs
    
    
    207
    
    
    
    83Accrued expenses
    
    
    1,012
    
    
    
    857Deferred revenue
    
    
    5,541
    
    
    
    3,123Total current liabilities
    
    
    8,838
    
    
    
    5,858Deferred revenue
    
    
    1,263
    
    
    
    3,516Stockholders equity:Preferred stock, at stated value; 10,000,000 shares authorized,
and no shares issued and outstanding at December 31, 2010 and
December 31, 2009
    
    
    
    
    
    
    Common stock, $0.001 par value; 100,000,000 shares
authorized, 18,930,678 and 18,929,333 shares issued and outstanding at
December 31, 2010 and December 31, 2009, respectively
    
    
    19
    
    
    
    19Additional paid-in capital
    
    
    214,174
    
    
    
    212,704Accumulated other comprehensive income
    
    
    26
    
    
    
    71Accumulated deficit
    
    
    (205,214
    )
    
    
    (193,837
    )Total stockholders equity
    
    
    9,005
    
    
    
    18,957Total liabilities and stockholders equity
    
    $
    19,106
    
    
    $
    28,331
 See accompanying notes.
  F-3




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##### Table of Contents



(In Thousands, Except Share and Per Share Amounts)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008RevenuesContract revenue
    
    $
    6,685
    
    
    $
    1,079
    
    
    $
    1,880Grant revenue
    
    
    2,254
    
    
    
    1,080
    
    
    
    1,225Total revenues
    
    
    8,939
    
    
    
    2,159
    
    
    
    3,105Costs and expensesResearch and development (including stock
compensation expense of $545, $1,296 and
$727 in 2010, 2009 and 2008,
respectively)
    
    
    14,779
    
    
    
    11,920
    
    
    
    16,500General and administrative (including stock
compensation expense of $921, $1,512 and
$1,129 in 2010, 2009 and 2008,
respectively)
    
    
    5,387
    
    
    
    5,621
    
    
    
    5,479Depreciation
    
    
    284
    
    
    
    233
    
    
    
    218Total costs and expenses
    
    
    20,450
    
    
    
    17,774
    
    
    
    22,197Loss from operations
    
    
    (11,511
    )
    
    
    (15,615
    )
    
    
    (19,092
    )Other (expense) income, net
    
    
    (69
    )
    
    
    (126
    )
    
    
    48Interest income
    
    
    203
    
    
    
    375
    
    
    
    1,146Interest expense
    
    
    
    
    
    
    
    
    
    
    (94
    )Net loss
    
    $
    (11,377
    )
    
    $
    (15,366
    )
    
    $
    (17,992
    )Basic and diluted net loss per common share
    
    $
    (0.60
    )
    
    $
    (0.81
    )
    
    $
    (0.95
    )Weighted average shares outstanding, basic and
diluted
    
    
    18,929,749
    
    
    
    18,928,379
    
    
    
    18,927,988
 See accompanying notes.
  F-4




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##### Table of Contents



(In Thousands, Except Share Amounts)
 AccumulatedPreferred Stock
    
    
    Common Stock
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    TotalNumber
    
    
    Stated
    
    
    Number
    
    
    Par
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Stockholdersof Shares
    
    
    Value
    
    
    of Shares
    
    
    Value
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    EquityBalance at January 1, 2008
    
    
    
    
    
    $
    
    
    
    
    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
    )
    
    
    31,563Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,808
    
    
    
    
    
    
    
    
    
    
    
    2,808Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    1,345
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,366
    )
    
    
    (15,366
    )Unrealized loss on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    
    
    
    
    (49
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,415
    )Balance at December 31, 2009
    
    
    
    
    
    
    
    
    
    
    18,929,333
    
    
    
    19
    
    
    
    212,704
    
    
    
    71
    
    
    
    (193,837
    )
    
    
    18,957Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,466
    
    
    
    
    
    
    
    
    
    
    
    1,466Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    1,345
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,377
    )
    
    
    (11,377
    )Unrealized loss on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45
    )
    
    
    
    
    
    
    (45
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,422
    )Balance at December 31, 2010
    
    
    
    
    
    $
    
    
    
    
    18,930,678
    
    
    $
    19
    
    
    $
    214,174
    
    
    $
    26
    
    
    $
    (205,214
    )
    
    $
    9,005
 See accompanying notes.
  F-5




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##### Table of Contents



(In Thousands)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Operating activitiesNet loss
    
    $
    (11,377
    )
    
    $
    (15,366
    )
    
    $
    (17,992
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    284
    
    
    
    233
    
    
    
    218Gain on sale of equipment
    
    
    
    
    
    
    (21
    )
    
    
    (24
    )Provision on notes receivable
    
    
    
    
    
    
    
    
    
    
    74Stock-based compensation
    
    
    1,466
    
    
    
    2,808
    
    
    
    1,856Amortization of premium on available-for-sale securities and other
    
    
    225
    
    
    
    305
    
    
    
    28Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,976
    )
    
    
    (92
    )
    
    
    618Receivable from Angiotech
    
    
    123
    
    
    
    5
    
    
    
    (171
    )Prepaid expenses and other assets
    
    
    (63
    )
    
    
    449
    
    
    
    178Accounts payable and accrued expenses
    
    
    562
    
    
    
    479
    
    
    
    (467
    )Deferred revenue
    
    
    165
    
    
    
    6,581
    
    
    
    (29
    )Net cash used in operating activities
    
    
    (10,591
    )
    
    
    (4,619
    )
    
    
    (15,711
    )Investing activitiesPurchase of available-for-sale securities
    
    
    (8,834
    )
    
    
    (11,692
    )
    
    
    (26,594
    )Proceeds from maturities of available-for-sale securities
    
    
    10,753
    
    
    
    15,300
    
    
    
    43,917Investment in privately-held company
    
    
    
    
    
    
    (14
    )
    
    
    Proceeds from sale of equipment
    
    
    
    
    
    
    21
    
    
    
    24Purchases of equipment
    
    
    (390
    )
    
    
    (381
    )
    
    
    (532
    )Net cash provided by investing activities
    
    
    1,529
    
    
    
    3,234
    
    
    
    16,815Financing activitiesPrincipal payments on debt
    
    
    
    
    
    
    
    
    
    
    (1,800
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    (1,800
    )Decrease in cash and cash equivalents
    
    
    (9,062
    )
    
    
    (1,385
    )
    
    
    (696
    )Cash and cash equivalents at beginning of year
    
    
    11,167
    
    
    
    12,552
    
    
    
    13,248Cash and cash equivalents at end of year
    
    $
    2,105
    
    
    $
    11,167
    
    
    $
    12,552
 See accompanying notes.
  F-6




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##### Table of Contents



Athersys, Inc.
 
 Notes to Consolidated Financial Statements
 A. Background
  B. Accounting Policies
 Principles of Consolidation
  Revenue Recognition
 Multiple-Element Arrangements
  F-7




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 B. Accounting Policies, continued
 Revenue Recognition, continued
   Cash and Cash Equivalents
  Research and Development
   F-8




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 B. Accounting Policies, continued
 Collaborative Arrangements
  Clinical Trial Costs
  Royalties
  Investments in Available-for-Sale Securities
   F-9




---



##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 B. Accounting Policies, continued
 Long-Lived Assets
    Patent Costs and Rights
  Comprehensive Income (Loss)
  Concentration of Credit Risk
   F-10




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 B. Accounting Policies, continued
 Use of Estimates
  Stock-Based Compensation
     December 31,2010
    
    
    2009
    
    
    2008Volatility
    
    
    119.5
    %
    
    
    89.5
    %
    
    
    69.6
    %Risk-free interest rate
    
    
    1.0
    %
    
    
    2.4
    %
    
    
    3.0
    %Expected life of option
    
    4.09 years
    
    5.01 years
    
    
    5.09 yearsExpected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
  F-11




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 B. Accounting Policies, continued
 Income Taxes
   Net Loss per Share
  
    
    Outstanding stock options to purchase 4,308,013, 4,001,149 and 3,738,473 shares of
common stock for the years ended December 31, 2010, 2009 and 2008, respectively; and
 
    
    Warrants to purchase 5,125,496 shares of common stock for each of the years ended
December 31, 2010, 2009 and 2008.
  F-12




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 
 B. Accounting Policies, continued
 Recently Issued Accounting Standards
 Multiple-Element Arrangements
 Milestone Method of Revenue Recognition
 Reclassifications
  C. Equipment
 December 31,Equipment consists of (in thousands):
    
    2010
    
    
    2009Laboratory equipment
    
    $
    5,915
    
    
    $
    6,262Office equipment and leasehold improvements
    
    
    3,731
    
    
    
    3,6399,646
    
    
    
    9,901Accumulated depreciation
    
    
    (8,691
    )
    
    
    (9,052
    )$
    955
    
    
    $
    849
  F-13




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 D. 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, 2010 UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantBalance as of
    
    
    Markets for Identical
    
    
    Observable Inputs
    
    
    UnobservableDescription
    
    December 31, 2010
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Available-for-sale
securities
    
    $
    13,076
    
    
    $
    13,076
    
    
    $
    
    
    
    $
    
   F-14




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 D. Financial Instruments, continued
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Losses
    
    
    Gains
    
    
    ValueDecember 31, 2010:U.S. government obligations,
including government-backed
agencies
    
    $
    11,034
    
    
    $
    
    
    
    $
    23
    
    
    $
    11,057Corporate debt securities
    
    
    2,016
    
    
    
    
    
    
    
    3
    
    
    
    2,019$
    13,050
    
    
    $
    
    
    
    $
    26
    
    
    $
    13,076December 31, 2009:U.S. government
obligations, including
government-backed agencies
    
    $
    12,613
    
    
    $
    (12
    )
    
    $
    52
    
    
    $
    12,653Corporate debt securities
    
    
    2,531
    
    
    
    
    
    
    
    31
    
    
    
    2,562$
    15,144
    
    
    $
    (12
    )
    
    $
    83
    
    
    $
    15,215
   December 31, 2010Amortized
    
    
    EstimatedCost
    
    
    Fair ValueDue in one year or less
    
    $
    13,050
    
    
    $
    13,076Due after one year through two years
    
    
    
    
    
    
    $
    13,050
    
    
    $
    13,076
  F-15




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 D. Financial Instruments, continued
 Financing Arrangements
    E. Collaborations and Revenue Recognition
 Pfizer
   F-16




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 E. Collaborations and Revenue Recognition, continued
 Pfizer, continued
   Angiotech
    F-17




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 E. Collaborations and Revenue Recognition, continued
 RTI Biologics, Inc.
   F. Capitalization
    F-18




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 F. Capitalization, continued
  December 312010
    
    
    2009Stock option plans
    
    
    4,500
    
    
    
    4,500Warrants to purchase common stock  2007 offering
    
    
    4,976
    
    
    
    4,976Warrants to purchase common stock  Lenders
    
    
    149
    
    
    
    1499,625
    
    
    
    9,625
  G. Stock-Based Compensation
     F-19




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 G. Stock-Based Compensation, continued
  WeightedAverageNumber
    
    
    Exerciseof Options
    
    
    PriceOutstanding January 1, 2008
    
    
    3,679,884
    
    
    $
    5.24Granted
    
    
    218,000
    
    
    
    3.36Exercised
    
    
    
    
    
    
    Forfeited / Terminated / Expired
    
    
    (159,411
    )
    
    
    6.64Outstanding December 31, 2008
    
    
    3,738,473
    
    
    
    5.07Granted
    
    
    272,000
    
    
    
    3.17Exercised
    
    
    
    
    
    
    Forfeited / Expired
    
    
    (9,324
    )
    
    
    8.26Outstanding December 31, 2009
    
    
    4,001,149
    
    
    
    4.94Granted
    
    
    390,437
    
    
    
    2.96Exercised
    
    
    
    
    
    
    Forfeited / Expired
    
    
    (83,573
    )
    
    
    6.39Outstanding December 31, 2010
    
    
    4,308,013
    
    
    $
    4.73Vested during 2010
    
    
    680,570
    
    
    $
    4.46Vested and exercisable at December 31, 2010
    
    
    3,921,601
    
    
    $
    5.05
 December 31, 2010Options 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$1.35  3.20
    
    
    584,938
    
    
    
    5.28
    
    
    $
    2.59
    
    
    
    234,317
    
    
    
    4.62
    
    
    $
    2.40$4.00  4.99
    
    
    137,000
    
    
    
    6.89
    
    
    $
    4.32
    
    
    
    101,209
    
    
    
    6.83
    
    
    $
    4.34$5.00  7.80
    
    
    3,585,000
    
    
    
    5.63
    
    
    $
    5.07
    
    
    
    3,585,000
    
    
    
    5.63
    
    
    $
    5.07$90.66
    
    
    1,075
    
    
    
    2.39
    
    
    $
    90.66
    
    
    
    1,075
    
    
    
    2.39
    
    
    $
    90.664,308,013
    
    
    
    
    
    
    
    
    
    
    
    3,921,601
   F-20




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 H. Income Taxes
    December 31,2010
    
    
    2009Net operating loss carryforwards
    
    $
    13,779
    
    
    $
    9,892Net operating loss carryforwards  Pre-Merger NOL
    
    
    2,593
    
    
    
    2,751Research and development credit carryforwards
    
    
    2,990
    
    
    
    2,070License fee
    
    
    1,195
    
    
    
    2,011Compensation expense
    
    
    2,715
    
    
    
    2,432Other
    
    
    636
    
    
    
    506Total deferred tax assets
    
    
    23,908
    
    
    
    19,662Valuation allowance for deferred tax assets
    
    
    (23,908
    )
    
    
    (19,662
    )Net deferred tax assets
    
    $
    
    
    
    $
    
  I. Profit Sharing Plan and 401(k) Plan
   F-21




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##### Table of Contents



Athersys, Inc.
 Notes to Consolidated Financial Statements, (continued)
 J. Quarterly Financial Data (unaudited)
  2010First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Full YearRevenues
    
    $
    1,740
    
    
    $
    1,871
    
    
    $
    1,996
    
    
    $
    3,332
    
    
    $
    8,939Net loss
    
    $
    (2,561
    )
    
    $
    (3,077
    )
    
    $
    (3,688
    )
    
    $
    (2,051
    )
    
    $
    (11,377
    )Basic and diluted net loss
per common share
    
    $
    (0.14
    )
    
    $
    (0.16
    )
    
    $
    (0.19
    )
    
    $
    (0.11
    )
    
    $
    (0.60
    )
 2009First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Full YearRevenues
    
    $
    370
    
    
    $
    436
    
    
    $
    484
    
    
    $
    869
    
    
    $
    2,159Net loss
    
    $
    (3,625
    )
    
    $
    (3,347
    )
    
    $
    (3,380
    )
    
    $
    (5,014
    )
    
    $
    (15,366
    )Basic and diluted net loss
per common share
    
    $
    (0.19
    )
    
    $
    (0.18
    )
    
    $
    (0.18
    )
    
    $
    (0.26
    )
    
    $
    (0.81
    )
  F-22




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A.
    
    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
  Target
    
    
    Weighting onTitle
    
    Bonus
    
    
    Corporate GoalsChief Executive Officer
    
    
    40
    %
    
    
    100
    %President & Chief Operating Officer
    
    
    33
    %
    
    
    80
    %Executive Vice President &
Chief Scientific Officer
    
    
    33
    %
    
    
    80
    %Sr. Vice President,
Regenerative Medicine
    
    
    30
    %
    
    
    60
    %Vice President of Finance
    
    
    25
    %
    
    
    60
    %
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   50




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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
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
            51




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##### Table of Contents



Exhibit No.
    
    Exhibit Description3.1
    
    
    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)4.1
    
    
    Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the registrants Current
Report on Form 8-K (Commission No. 001-33876) filed with the Commission on January 28, 2011)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)10.10
    
    
    Athersys, 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
    
    
    Axthersys, 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)
  52




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##### Table of Contents



Exhibit No.
    
    Exhibit Description10.12
    
    
    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)10.24
    
    
    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)
  53




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##### Table of Contents



Exhibit No.
    
    Exhibit Description10.26
    
    
    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)10.39
    
    
    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)
  54




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Exhibit No.
    
    Exhibit Description10.41
    
    
    Summary of Athersys, Inc. 2011 Cash Bonus Incentive Plan10.42
    *
    
    Collaboration and License Agreement, dated as of December 18, 2009, by and between Athersys,
Inc., ABT Holding Company, and Pfizer Inc. (incorporated herein by reference to Exhibit 10.42
to the registrants Annual Report on Form 10-K for the year ended December 31, 2009
(Commission No. 001-33876) filed with the Commission on March 11, 2010)10.43
    *
    
    Stand-by License Agreement, dated as of December 18, 2009, by and between Regents of the
University of Minnesota, ABT Holding Company and Pfizer Inc. (incorporated herein by reference
to Exhibit 10.43 to the registrants Annual Report on Form 10-K for the year ended December
31, 2009 (Commission No. 001-33876) filed with the Commission on March 11, 2010)10.44
    
    
    Amendment dated as of March 31, 2009 to the Extended Collaboration and License Agreement, by
and between Athersys, Inc. and Bristol-Myers Squibb Company effective January 1, 2006
(incorporated herein by reference to Exhibit 10.1 to the registrants Current Report on Form
8-K (Commission No. 001-33876) filed with the Commission on April 9, 2009)10.45
    
    
    Amendment No. 4 to Amended and Restated Registration Rights Agreement, dated as of March 8,
2010, by and among Athersys, Inc. and the Existing Stockholders (as defined therein)
(incorporated herein by reference to Exhibit 10.45 to the registrants Annual Report on Form
10-K for the year ended December 31, 2009 (Commission No. 001-33876) filed with the Commission
on March 11, 2010)10.46
    *
    
    License and Technical Assistance Agreement, dated as of September 10, 2010, between ABT
Holding Company and RTI Biologics, Inc. (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 November 8, 2010)10.47
    
    

Form
of Incentive Stock Option Agreement10.48
    
    

Form
of Nonqualified Stock Option Agreement for Non-Employee Directors21
    
    
    List of Subsidiaries23
    
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24.1
    
    
    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
  55




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##### Table of Contents



SIGNATURES
  ATHERSYS, INC.By:
    /s/ Gil Van BokkelenGil Van BokkelenTitle:
    Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Gil Van Bokkelen

Gil Van Bokkelen
    
    Chief Executive Officer and Chairman of the Board of Directors 
(Principal Executive Officer)
    
    March 25, 2011/s/ Laura K. Campbell

Laura K. Campbell
    
    Vice President of Finance 
(Principal Financial Officer 
and Principal Accounting Officer)
    
    March 25, 2011*

John J. Harrington
    
    Executive Vice President, 
Chief Scientific Officer and Director
    
    March 25, 2011*

Lorin J. Randall
    
    Director
    
    March 25, 2011*

George M. Milne, Jr.
    
    Director
    
    March 25, 2011*

Jack L. Wyszomierski
    
    Director
    
    March 25, 2011*

Lee Babiss
    
    Director
    
    March 25, 2011*

Ismail Kola
    
    Director
    
    March 25, 2011
 *
    
    Gil Van Bokkelen, by signing his name hereto, does hereby sign this Form 10-K on behalf of each of the above named and designated directors of the Company pursuant to Powers of Attorney executed by such persons and filed with the Securities and Exchange Commission.
 By:
    /s/ Gil Van BokkelenGil Van BokkelenAttorney-in-fact  56




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EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Description3.1
    
    
    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)4.1
    
    
    Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the
registrants Current Report on Form 8-K (Commission No. 001-33876) filed
with the Commission on January 28, 2011)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)10.10
    
    
    Athersys, 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)
  57




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Exhibit No.
    
    Exhibit Description10.11
    
    
    Athersys, 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)10.24
    
    
    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)
  58




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Exhibit No.
    
    Exhibit Description10.25
    
    
    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)10.41
    
    
    Summary of Athersys, Inc. 2011 Cash Bonus Incentive Plan10.42
    *
    
    Collaboration and License Agreement, dated as of December 18, 2009, by and
between Athersys, Inc., ABT Holding Company, and Pfizer Inc. (incorporated
herein by reference to Exhibit 10.42 to the registrants Annual Report on
Form 10-K for the year ended December 31, 2009 (Commission No. 001-33876)
filed with the Commission on March 11, 2010)10.43
    *
    
    Stand-by License Agreement, dated as of December 18, 2009, by and between
Regents of the University of Minnesota, ABT Holding Company and Pfizer
Inc. (incorporated herein by reference to Exhibit 10.43 to the
registrants Annual Report on Form 10-K for the year ended December 31,
2009 (Commission No. 001-33876) filed with the Commission on March 11,
2010)10.44
    
    
    Amendment dated as of March 31, 2009 to the Extended Collaboration and
License Agreement, by and between Athersys, Inc. and Bristol-Myers Squibb
Company effective January 1, 2006 (incorporated herein by reference to
Exhibit 10.1 to the registrants Current Report on Form 8-K (Commission
No. 001-33876) filed with the Commission on April 9, 2009)10.45
    
    
    Amendment No. 4 to Amended and Restated Registration Rights Agreement,
dated as of March 8, 2010, by and among Athersys, Inc. and the Existing
Stockholders (as defined therein) (incorporated herein by reference to
Exhibit 10.45 to the registrants Annual Report on Form 10-K for the year
ended December 31, 2009 (Commission No. 001-33876) filed with the
Commission on March 11, 2010)10.46
    *
    
    License and Technical Assistance Agreement, dated as of September 10,
2010, between ABT Holding Company and RTI Biologics, Inc. (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
November 8, 2010)10.47
    
    

Form
of Incentive Stock Option Agreement10.48
    
    

Form
of Nonqualified Stock Option Agreement for Non-Employee Directors21
    
    
    List of Subsidiaries23
    
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24.1
    
    
    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
  60