##### Table of Contents



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, 2009
 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.
  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
 o þ
 o þ
 þ o
 þ
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller Reporting Company þ
 o þ




---



##### 



TABLE OF CONTENTS
 PART IItem 1. Business
    
    
    3Item 1A. Risk Factors
    
    
    17Item 1B. Unresolved Staff Comments
    
    
    31Item 2. Properties
    
    
    31Item 3. Legal Proceedings
    
    
    31Item 3A. Executive Officers of the Registrant
    
    
    31Item 4. Reserved
    
    
    32PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    33Item 6. Selected Financial Data
    
    
    34Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    35Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item 8. Financial Statements and Supplementary Data
    
    
    46Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
    
    
    73Item 9A(T). Controls and Procedures
    
    
    73Item 9B. Other Information
    
    
    73PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    73Item 11. Executive Compensation
    
    
    74Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    74Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    74Item 14. Principal Accountant Fees and Services
    
    
    74PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    75Exhibit 10.42Exhibit 10.43Exhibit 10.45Exhibit 21Exhibit 23Exhibit 24.1Exhibit 24.2Exhibit 31.1Exhibit 31.2Exhibit 32.1
   - 2 -




---



##### Table of Contents



PART I
 
 ITEM 1.
    
    BUSINESS.
 ®
 Recent Developments
  Business Strategy
  
    
    Efficiently develop product candidates in established areas of
significant clinical need.We will continue to develop certain
product candidates leveraging others prior clinical efforts and
validation while we focus on development of best-in-class product
candidates with differentiated profiles. Our intention is to develop
our products for ultimate commercialization by us, our partners or
licensees after they have received approval from the U.S. Food and
Drug Administration, or FDA, and/or other regulatory agencies.
 
    
    Apply our proprietary technologies toward the rapid identification,
validation, and development of therapeutic product candidates.We
will continue to use our proprietary technologies to identify and
validate therapeutic product candidates. We believe our technologies,
including MultiStem and RAGE (Random Activation of Gene Expression),
provide us with a competitive advantage in drug discovery and product
development by allowing us to move products quickly from the discovery
phase into clinical trials. We will select candidates for internal
development based on several factors, including the required
regulatory approval pathway and the potential market into which the
product may be sold, and our ability to feasibly fund development
activities through commercialization and marketing of the approved
product.
 
    
    Enter into licensing or co-development arrangements for certain
product candidates.We intend to license certain of our product
candidates to, or co-develop them with, qualified collaborators to
broaden and accelerate our product development and commercialization
efforts. We anticipate that this strategy will help us to enhance our
return on product candidates for which we enter into collaborations
through the receipt of a mix of license fees, milestone payments, and
profit sharing or royalties. Certain partnerships may include
strategic equity investments.
  - 3 -




---



##### Table of Contents




    
    Continue to expand our intellectual property portfolio.Our
intellectual property is important to our business and we take
significant steps to protect its value. We have an ongoing research
and development effort, both through internal activities and through
collaborative research activities with others, which aims to develop
new intellectual property and enables us to file patent applications
that cover new applications of our existing technologies or product
candidates, including MultiStem.
 
    
    Out-license non-core applications of our technologies.Certain
elements of our technologies, such as their application toward the
development of novel diagnostics or their use for the analysis,
characterization or production of certain types of therapeutic product
candidates such as biogenerics or biosimilars, may not be relevant to
the key elements of our corporate strategy. We believe these
applications may have significant potential value, however, and may
provide capital to us that can be applied to our other development
efforts. Where appropriate, we may seek to license non-core
applications of our technologies to others to realize this value.
 Our Current Programs
  Regenerative Medicine Programs
 MultiStem  A Novel Allogeneic Approach to Stem Cell Therapy and Regenerative Medicine
     - 4 -




---



##### Table of Contents




    
    Broad plasticity and multiple potential mechanisms of action.
MultiStem cells have a demonstrated ability in animal models to form a
range of cell types and appear to be able to deliver therapeutic
benefit through multiple mechanisms, such as producing factors that
protect tissues against damage and inflammation, as well as enhancing
or playing a direct role in revascularization or tissue regeneration.
 
    
    Large scale production.Unlike conventional stem cells, such as
blood-forming or hematopoietic stem cells, MultiStem cells may be
produced on a large scale, processed, and cryogenically preserved, and
then used clinically in a rapid and efficient manner. Material
obtained from a single donor may be used to produce hundreds of
thousands or millions of individual doses, representing a yield far
greater than other stem cells have been able to achieve.
 
    
    Off-the-shelf utility.Unlike traditional bone marrow or
hematopoietic stem cell transplants that require extensive genetic
matching between donor and recipient, MultiStem is administered
without tissue matching or the requirement for immune suppressive
drugs. MultiStem is administered as a cryogenically preserved
allogeneic product, meaning that these cells are not genetically
matched between donor and recipient. This feature, combined with the
ability to establish large MultiStem banks, could make it practical
for clinicians to efficiently deliver stem cell therapy to a large
number of patients.
 
    
    Safety.Other stem cell types, such as embryonic stem cells, can pose
serious safety risks, such as the formation of tumors or ectopic
tissue. In contrast, MultiStem cells have an outstanding safety
profile that has been compiled over several years of preclinical study
in a range of animal models by a variety of investigators.
    - 5 -




---



##### Table of Contents



MultiStem for Heart Attack, HSC Transplant Support in Treatment of Hematologic Malignancies &
Stroke
   Heart Attack
    - 6 -




---



##### Table of Contents



HSC Transplant Support in Hematologic Malignancy
     Stroke
   - 7 -




---



##### Table of Contents



IBD
   Pharmaceutical Programs
   - 8 -




---



##### Table of Contents



®
    - 9 -




---



##### Table of Contents



H 3 Antagonists for the Treatment of Sleep Disorders and Certain Other Cognitive
Disorders
      - 10 -




---



##### Table of Contents



Other Key Technologies
  Collaborations and Partnerships
 Pfizer
    - 11 -




---



##### Table of Contents



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.
  Bristol-Myers Squibb
   - 12 -




---



##### Table of Contents



Competition
       - 13 -




---



##### Table of Contents



Intellectual Property
      - 14 -




---



##### Table of Contents



Research and Development
  Government Regulation
      
    
    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.
  - 15 -




---



##### Table of Contents



Employees
   Available Information
 www.athersys.com
 Merger and Name Change
   - 16 -




---



##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
  Risks Related To Our Business and Our Industry
 Athersys has incurred losses since inception and we expect to incur significant net losses in the
foreseeable future and may never become profitable.
  We will need substantial additional funding to develop our products and for our future operations.
If we are unable to obtain the funds necessary to do so, we may be required to delay, scale back or
eliminate our product development activities or may be unable to continue our business.
  
    
    the progress and costs of our research and development programs, including our ability to develop our
current portfolio of therapeutic products, or discover and develop new ones;
 
    
    our ability, or our partners ability and willingness, to advance partnered products or programs, and
the speed in which they are advanced;
 
    
    the cost of prosecuting, defending and enforcing patent claims and other intellectual property rights;
 
    
    the progress, scope, costs, and results of our preclinical and clinical testing of any current or
future pharmaceutical or MultiStem related products;
 
    
    the time and cost involved in obtaining regulatory approvals;
 
    
    the cost of manufacturing our product candidates;
 
    
    expenses related to complying with GMP of therapeutic product candidates;
 
    
    costs of financing the purchases of additional capital equipment and development technologies;
  - 17 -




---



##### Table of Contents




    
    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.
  - 18 -




---



##### Table of Contents



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.
   - 19 -




---



##### Table of Contents



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.
     - 20 -




---



##### Table of Contents



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.
     - 21 -




---



##### Table of Contents



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.
   - 22 -




---



##### Table of Contents



We may rely on third parties to manufacture our pharmaceutical product candidates and our MultiStem
product candidate. There can be no guarantee that we can obtain sufficient and acceptable
quantities of our pharmaceutical product candidates or of our MultiStem product candidate on
acceptable terms, which may delay or impair our ability to develop, test and market such products.
    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.
   - 23 -




---



##### Table of Contents



If we are unable to create and maintain sales, marketing and distribution capabilities or enter
into agreements with third parties to perform those functions, we will not be able to commercialize
our product candidates.
  If we are unable to attract and retain key personnel and advisors, it may adversely affect our
ability to obtain financing, pursue collaborations or develop our product candidates.
    Our ability to compete in the biopharmaceutical market may decline if we do not adequately protect
our proprietary technologies.
   - 24 -




---



##### Table of Contents




    
    we were the first to file patent applications or to invent the subject matter claimed
in patent applications relating to the technologies or product candidates upon which
we rely;
    
    others will not independently develop similar or alternative technologies or duplicate
any of our technologies;
    
    others did not publicly disclose our claimed technology before we conceived the
subject matter included in any of our patent applications;
    
    any of our pending or future patent applications will result in issued patents;
    
    any of our patent applications will not result in interferences or disputes with third
parties regarding priority of invention;
    
    any patents that may be issued to us, our collaborators or our licensors will provide
a basis for commercially viable products or will provide us with any competitive
advantages or will not be challenged by third parties;
    
    we will develop additional proprietary technologies that are patentable;
    
    the patents of others will not have an adverse effect on our ability to do business; or
    
    new proprietary technologies from third parties, including existing licensors, will be
available for licensing to us on reasonable commercial terms, if at all.
     - 25 -




---



##### Table of Contents



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.
      - 26 -




---



##### Table of Contents



Many potential competitors, including those who have greater resources and experience than we do,
may develop products or technologies that make ours obsolete or noncompetitive.
       We 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.
   - 27 -




---



##### Table of Contents



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;
    
    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;
  - 28 -




---



##### Table of Contents




    
    changes in currency exchange rates;
 
    
    economic and political instability;
 
    
    changes in government regulations and laws;
 
    
    absence in some jurisdictions of effective laws to protect our intellectual property rights; and
 
    
    currency transfer and other restrictions and regulations that may limit our ability to sell
certain products or repatriate profits to the United States.
  Foreign governments often impose strict price controls on approved products, which may adversely
affect our future profitability in those countries, and the re-importation of drugs to the United
States from foreign countries that impose price controls may adversely affect our future
profitability.
  If we elect not to sell our products in foreign countries that impose government mandated price
controls because we decide it is uneconomical to do so, a foreign government or patent office may
attempt to terminate our intellectual property rights in that country, enabling competitors to make
and sell our products.
  We may encounter difficulties managing our growth, which could adversely affect our business.
  We may be sued for product liability, which could adversely affect our business.
   - 29 -




---



##### Table of Contents



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.
   - 30 -




---



##### Table of Contents



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
  - 31 -




---



##### Table of Contents



John J. Harrington, Ph.D.
 Dr. Harrington
 Robert J. Deans, Ph.D.
 Dr. Deans
 Laura K. Campbell, CPA
 Ms. Campbell
 
 ITEM 4.
    
    RESERVED
  - 32 -




---



##### Table of Contents



PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  High
    
    
    LowYear ended December 31, 2009:First Quarter
    
    $
    1.28
    
    
    $
    0.45Second Quarter
    
    $
    1.04
    
    
    $
    0.75Third Quarter
    
    $
    1.35
    
    
    $
    0.78Fourth Quarter
    
    $
    6.40
    
    
    $
    0.97Year ended December 31, 2008:First Quarter
    
    $
    5.00
    
    
    $
    3.00Second Quarter
    
    $
    4.23
    
    
    $
    1.55Third Quarter
    
    $
    4.00
    
    
    $
    1.17Fourth Quarter
    
    $
    1.88
    
    
    $
    0.15
 Holders
  Dividend Policy
   - 33 -




---



##### Table of Contents



ITEM 6.
    
    SELECTED FINANCIAL DATA
  Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Consolidated Statement of
Operations Data:Revenues:Contract revenue
    
    $
    1,079
    
    
    $
    1,880
    
    
    $
    1,433
    
    
    $
    1,908
    
    
    $
    763Grant revenue
    
    
    1,080
    
    
    
    1,225
    
    
    
    1,827
    
    
    
    1,817
    
    
    
    2,833Total revenues
    
    
    2,159
    
    
    
    3,105
    
    
    
    3,260
    
    
    
    3,725
    
    
    
    3,596Costs and expenses:Research and development
    
    
    11,920
    
    
    
    16,500
    
    
    
    15,817
    
    
    
    9,741
    
    
    
    12,578General and administrative
    
    
    5,621
    
    
    
    5,479
    
    
    
    7,975
    
    
    
    3,347
    
    
    
    3,755Depreciation
    
    
    233
    
    
    
    218
    
    
    
    283
    
    
    
    528
    
    
    
    982Restructuring costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    251Loss from operations
    
    
    (15,615
    )
    
    
    (19,092
    )
    
    
    (20,815
    )
    
    
    (9,891
    )
    
    
    (13,970
    )Other (expense) income:Other (expense) income, net
    
    
    (126
    )
    
    
    48
    
    
    
    2,017
    
    
    
    208
    
    
    
    18Interest income
    
    
    375
    
    
    
    1,146
    
    
    
    1,591
    
    
    
    119
    
    
    
    317Interest expense
    
    
    
    
    
    
    (94
    )
    
    
    (1,263
    )
    
    
    (1,047
    )
    
    
    (964
    )Accretion of premium on
convertible debt
    
    
    
    
    
    
    
    
    
    
    (456
    )
    
    
    (260
    )
    
    
    Loss before cumulative
effect of change in
accounting principle
    
    
    (15,366
    )
    
    
    (17,992
    )
    
    
    (18,926
    )
    
    
    (10,871
    )
    
    
    (14,599
    )Cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    306
    
    
    
    Net loss
    
    $
    (15,366
    )
    
    $
    (17,992
    )
    
    $
    (18,926
    )
    
    $
    (10,565
    )
    
    $
    (14,599
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (659
    )
    
    
    (1,408
    )
    
    
    (2,253
    )Deemed dividend resulting
from induced conversion of
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    (4,800
    )
    
    
    
    
    
    
    Net loss attributable to
common stockholders
    
    $
    (15,366
    )
    
    $
    (17,992
    )
    
    $
    (24,385
    )
    
    $
    (11,973
    )
    
    $
    (16,852
    )Basic and diluted net loss
per common share
attributable to common
stockholders:Loss before cumulative
effect of change in
accounting principle
    
    $
    (0.81
    )
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (41.89
    )
    
    $
    (57.79
    )Cumulative effect of change
in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.05
    
    
    
    Net loss per share
    
    $
    (0.81
    )
    
    $
    (0.95
    )
    
    $
    (2.26
    )
    
    $
    (40.84
    )
    
    $
    (57.79
    )Weighted average shares
outstanding, basic and
diluted
    
    
    18,928,379
    
    
    
    18,927,988
    
    
    
    10,811,119
    
    
    
    293,142
    
    
    
    291,612Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    11,167
    
    
    $
    12,552
    
    
    $
    13,248
    
    
    $
    1,528
    
    
    $
    1,080Available-for-sale securities
(short-tem)
    
    
    10,135
    
    
    
    15,460
    
    
    
    22,477
    
    
    
    
    
    
    
    3,481Working capital (deficit)
    
    
    16,291
    
    
    
    26,789
    
    
    
    32,849
    
    
    
    (3,206
    )
    
    
    1,828Available-for-sale securities
(long-tem)
    
    
    5,080
    
    
    
    3,601
    
    
    
    13,850
    
    
    
    
    
    
    
    Total assets
    
    
    28,331
    
    
    
    33,877
    
    
    
    52,225
    
    
    
    4,266
    
    
    
    7,309Long-term obligations, less current
portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,310
    
    
    
    4,684Accrued dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,882
    
    
    
    7,473Total stockholders equity (deficit)
    
    
    18,957
    
    
    
    31,563
    
    
    
    47,631
    
    
    
    (20,007
    )
    
    
    (8,584
    )
  - 34 -




---



##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Overview and Recent Developments
  Current Programs
    Financial
    - 35 -




---



##### Table of Contents



Results of Operations
   Revenues
 Year ended December 31,2009
    
    
    2008
    
    
    2007Contract revenue
    
    $
    1,079
    
    
    $
    1,880
    
    
    $
    1,433Grant revenue
    
    
    1,080
    
    
    
    1,225
    
    
    
    1,827$
    2,159
    
    
    $
    3,105
    
    
    $
    3,260
  - 36 -




---



##### Table of Contents



Research and development expenses
 Year ended December 31,Type of expense
    
    2009
    
    
    2008
    
    
    2007Personnel costs
    
    $
    3,607
    
    
    $
    2,924
    
    
    $
    2,813Research supplies
    
    
    907
    
    
    
    849
    
    
    
    679Facilities
    
    
    826
    
    
    
    817
    
    
    
    762Clinical and preclinical development costs
    
    
    1,904
    
    
    
    7,878
    
    
    
    5,723Sponsored research
    
    
    878
    
    
    
    393
    
    
    
    465Patent legal fees
    
    
    1,351
    
    
    
    1,481
    
    
    
    1,086Other
    
    
    1,151
    
    
    
    1,431
    
    
    
    1,821Stock-based compensation
    
    
    1,296
    
    
    
    727
    
    
    
    2,468$
    11,920
    
    
    $
    16,500
    
    
    $
    15,817
 General and administrative expenses
 Year ended December 31,Type of expense
    
    2009
    
    
    2008
    
    
    2007Personnel costs
    
    $
    1,975
    
    
    $
    1,726
    
    
    $
    1,987Facilities
    
    
    299
    
    
    
    342
    
    
    
    330Legal and professional fees
    
    
    916
    
    
    
    1,032
    
    
    
    1,165Other
    
    
    919
    
    
    
    1,250
    
    
    
    1,822Stock-based compensation
    
    
    1,512
    
    
    
    1,129
    
    
    
    2,671$
    5,621
    
    
    $
    5,479
    
    
    $
    7,975
 Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Revenues.
  - 37 -




---



##### Table of Contents



Research and Development Expenses.
 General and Administrative Expenses.
 Depreciation.
 Other Expense.
 Interest Income.
 Interest Expense.
 Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Revenues.
  - 38 -




---



##### Table of Contents



Research and Development Expenses.
 General and Administrative Expenses.
 Depreciation.
 Other Income.
 Interest Income.
 Interest Expense.
 Accretion of Premium on Convertible Debt.
  - 39 -




---



##### Table of Contents



Liquidity and Capital Resources
       - 40 -




---



##### Table of Contents



- 41 -




---



##### Table of Contents



MoreLess Than
    
    
    
    
    
    
    
    
    
    
    ThanContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1  3 Years
    
    
    3  5 Years
    
    
    5 YearsOperating leases
for facilities and
equipment lease
    
    $
    470,000
    
    
    $
    384,000
    
    
    $
    86,000
    
    
    $
    
    
    
    $
    
     Critical Accounting Policies and Management Estimates
   Revenue Recognition
 Multiple-Element Arrangements
  - 42 -




---



##### Table of Contents



Collaborative Arrangements
  Clinical Trial Costs
  Investments in Available-for-Sale Securities
   - 43 -




---



##### Table of Contents



Stock-Based Compensation
    Recently Issued Accounting Standards
 Collaborative Arrangements
 Derivative and Hedging
 Investments-Debt and Equity Securities
 Fair
Value Measurements and Disclosures
 Subsequent Events,
  - 44 -




---



##### Table of Contents



Debt with
Conversion and Other Options
 Multiple-Element Arrangements
 CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
 This annual report on Form 10-K contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These
forward-looking statements relate to, among other things, the expected timetable for development of
our product candidates, our growth strategy, and our future financial performance, including our
operations, economic performance, financial condition, prospects, and other future events. We have
attempted to identify forward-looking statements by using such words as anticipates, believes,
can, continue, could, estimates, expects, intends, may, plans, potential,
should, will, or other similar expressions. These forward-looking statements are only
predictions and are largely based on our current expectations. These forward-looking statements
appear in a number of places in this annual report.
  
    
    the possibility of delays in, adverse results of and excessive costs of the development
process;
 
    
    changes in external market factors;
 
    
    changes in our industrys overall performance;
 
    
    changes in our business strategy;
 
    
    our ability to protect our intellectual property portfolio;
 
    
    our possible inability to realize commercially valuable discoveries in our
collaborations with pharmaceutical and other biotechnology companies;
 
    
    our ability to meet milestones under our collaboration
agreements;
 
    
    our possible inability to execute our strategy due to changes in our industry or the
economy generally;
 
    
    changes in productivity and reliability of suppliers;
 
    
    the success of our competitors and the emergence of new competitors; and
 
    
    the risks mentioned elsewhere in this annual report under Item 1A, Risk Factors.
  - 45 -




---



##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
   
 ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Consolidated Financial Statements
 
  - 46 -




---



##### Table of Contents



Contents
 Report of Independent Registered Public Accounting Firm
    
    
    48Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    49Consolidated Statements of Operations for each of the years ended December 31, 2009,
2008 and 2007
    
    
    50Consolidated Statements of Stockholders Equity (Deficit) for each of the years ended
December 31, 2009, 2008 and 2007
    
    
    51Consolidated Statements of Cash Flows for each of the years ended December 31, 2009,
2008 and 2007
    
    
    52Notes to Consolidated Financial Statements
    
    
    53
  - 47 -




---



##### Table of Contents



Cleveland, Ohio
    
    /s/ ERNST & YOUNG LLPMarch 11, 2010
  - 48 -




---



##### Table of Contents



(In Thousands, Except Share and Per Share Amounts)
 December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    11,167
    
    
    $
    12,552Available-for-sale securities
    
    
    10,135
    
    
    
    15,460Accounts receivable
    
    
    352
    
    
    
    260Receivable from Angiotech
    
    
    229
    
    
    
    234Investment interest receivable
    
    
    93
    
    
    
    189Prepaid expenses and other
    
    
    173
    
    
    
    408Total current assets
    
    
    22,149
    
    
    
    29,103Available-for-sale securities
    
    
    5,080
    
    
    
    3,601Deposits and other
    
    
    38
    
    
    
    156Equipment, net
    
    
    849
    
    
    
    701Equity investments
    
    
    215
    
    
    
    316Total assets
    
    $
    28,331
    
    
    $
    33,877Liabilities and stockholders equityCurrent liabilities:Accounts payable
    
    $
    1,128
    
    
    $
    1,498Accrued compensation and related benefits
    
    
    667
    
    
    
    97Accrued clinical trial costs
    
    
    83
    
    
    
    58Accrued expenses
    
    
    857
    
    
    
    603Deferred revenue
    
    
    3,123
    
    
    
    58Total current liabilities
    
    
    5,858
    
    
    
    2,314Deferred revenue
    
    
    3,516
    
    
    
    Stockholders equity:Preferred stock, at stated value; 10,000,000 shares authorized,
and no shares issued and outstanding at December 31, 2009 and December 31, 2008
    
    
    
    
    
    
    Common stock, $0.001 par value; 100,000,000 shares
authorized, 18,929,333 and 18,927,988 shares issued and outstanding at
December 31, 2009 and December 31, 2008, respectively
    
    
    19
    
    
    
    19Additional paid-in capital
    
    
    212,704
    
    
    
    209,895Accumulated other comprehensive income
    
    
    71
    
    
    
    120Accumulated deficit
    
    
    (193,837
    )
    
    
    (178,471
    )Total stockholders equity
    
    
    18,957
    
    
    
    31,563Total liabilities and stockholders equity
    
    $
    28,331
    
    
    $
    33,877
 See accompanying notes.
  - 49 -




---



##### Table of Contents



(In Thousands, Except Share and Per Share Amounts)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007RevenuesContract revenue
    
    $
    1,079
    
    
    $
    1,880
    
    
    $
    1,433Grant revenue
    
    
    1,080
    
    
    
    1,225
    
    
    
    1,827Total revenues
    
    
    2,159
    
    
    
    3,105
    
    
    
    3,260Costs and expensesResearch and development (including stock
compensation expense of $1,296, $727 and
$2,468 in 2009, 2008 and 2007, respectively)
    
    
    11,920
    
    
    
    16,500
    
    
    
    15,817General and administrative (including stock
compensation expense of $1,512, $1,129 and
$2,671 in 2009, 2008 and 2007, respectively)
    
    
    5,621
    
    
    
    5,479
    
    
    
    7,975Depreciation
    
    
    233
    
    
    
    218
    
    
    
    283Total costs and expenses
    
    
    17,774
    
    
    
    22,197
    
    
    
    24,075Loss from operations
    
    
    (15,615
    )
    
    
    (19,092
    )
    
    
    (20,815
    )Other (expense) income, net
    
    
    (126
    )
    
    
    48
    
    
    
    2,017Interest income
    
    
    375
    
    
    
    1,146
    
    
    
    1,591Interest expense
    
    
    
    
    
    
    (94
    )
    
    
    (1,263
    )Accretion of premium on convertible debt
    
    
    
    
    
    
    
    
    
    
    (456
    )Net loss
    
    $
    (15,366
    )
    
    $
    (17,992
    )
    
    $
    (18,926
    )Preferred stock dividends
    
    
    
    
    
    
    
    
    
    
    (659
    )Deemed dividend resulting from induced conversion
of convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    (4,800
    )Net loss attributable to common stockholders
    
    $
    (15,366
    )
    
    $
    (17,992
    )
    
    $
    (24,385
    )Basic and diluted net loss per common share
attributable
to common stockholders
    
    $
    (0.81
    )
    
    $
    (0.95
    )
    
    $
    (2.26
    )Weighted average shares outstanding, basic and
diluted
    
    
    18,928,379
    
    
    
    18,927,988
    
    
    
    10,811,119
 See accompanying notes.
  - 50 -




---



##### Table of Contents



(In Thousands, Except Share Amounts)
 Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    TotalPreferred Stock
    
    
    Common Stock
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    StockholdersNumber
    
    
    Stated
    
    
    Number
    
    
    Par
    
    
    Paid-in
    
    
    Treasury
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Equityof Shares
    
    
    Value
    
    
    of Shares
    
    
    Value
    
    
    Capital
    
    
    Stock
    
    
    Income (Loss)
    
    
    Deficit
    
    
    (Deficit)Balance at January 1, 2007
    
    
    364,524
    
    
    $
    68,301
    
    
    
    293,770
    
    
    $
    
    
    
    $
    53,495
    
    
    $
    (250
    )
    
    $
    
    
    
    $
    (141,553
    )
    
    $
    (20,007
    )Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,139
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,139Accrued dividends  Class C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (659
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (659
    )Elimination of cumulative accrued
dividends  Class C
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,541
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,541Conversion of preferred stock to
common stock
    
    
    (364,524
    )
    
    
    (68,301
    )
    
    
    1,912,356
    
    
    
    2
    
    
    
    68,299
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock from
warrant exercises
    
    
    
    
    
    
    
    
    
    
    1,003,190
    
    
    
    1
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10Retirement of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (250
    )
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    Shares of common stock for merger
with BTHC VI, Inc.
    
    
    
    
    
    
    
    
    
    
    299,622
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock, net of
expenses
    
    
    
    
    
    
    
    
    
    
    13,001,379
    
    
    
    13
    
    
    
    58,479
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,492Issuance of common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492Issuance of common stock for
conversion of convertible notes
    
    
    
    
    
    
    
    
    
    
    2,417,671
    
    
    
    3
    
    
    
    13,494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,497Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,926
    )
    
    
    (18,926
    )Unrealized gain on available-for-
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    52Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,874
    )Balance at December 31, 2007
    
    
    
    
    
    
    
    
    
    
    18,927,988
    
    
    
    19
    
    
    
    208,039
    
    
    
    
    
    
    
    52
    
    
    
    (160,479
    )
    
    
    47,631Stock based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,856
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,856Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,992
    )
    
    
    (17,992
    )Unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    
    
    
    
    68Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,924
    )Balance at December 31, 2008
    
    
    
    
    
    
    
    
    
    
    18,927,988
    
    
    
    19
    
    
    
    209,895
    
    
    
    
    
    
    
    120
    
    
    
    (178,471
    )
    
    
    31,563Stock 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
    )
    
    
    18,957
 See accompanying notes.
  - 51 -




---



##### Table of Contents



(In Thousands)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Operating activitiesNet loss
    
    $
    (15,366
    )
    
    $
    (17,992
    )
    
    $
    (18,926
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    
    233
    
    
    
    218
    
    
    
    283Gain on sale of equipment
    
    
    (21
    )
    
    
    (24
    )
    
    
    Accretion of premium on convertible debt
    
    
    
    
    
    
    
    
    
    
    456Provision on notes receivable
    
    
    
    
    
    
    74
    
    
    
    193Earned milestone applied to note receivable
    
    
    
    
    
    
    
    
    
    
    283Stock-based compensation
    
    
    2,808
    
    
    
    1,856
    
    
    
    5,139Expense related to warrants issued to lenders
    
    
    
    
    
    
    16
    
    
    
    476Amortization of premium (discount) on available-
for-sale securities and other
    
    
    305
    
    
    
    12
    
    
    
    (52
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (92
    )
    
    
    618
    
    
    
    111Receivable from Angiotech
    
    
    5
    
    
    
    (171
    )
    
    
    (63
    )Prepaid expenses and other assets
    
    
    449
    
    
    
    178
    
    
    
    (558
    )Accounts payable and accrued expenses
    
    
    479
    
    
    
    (467
    )
    
    
    505Deferred revenue
    
    
    6,581
    
    
    
    (29
    )
    
    
    87Net cash used in operating activities
    
    
    (4,619
    )
    
    
    (15,711
    )
    
    
    (12,066
    )Investing activitiesPurchase of available-for-sale securities
    
    
    (11,692
    )
    
    
    (26,594
    )
    
    
    (46,316
    )Proceeds from maturities of available-for-sale securities
    
    
    15,300
    
    
    
    43,917
    
    
    
    10,100Investment in privately-held company
    
    
    (14
    )
    
    
    
    
    
    
    Proceeds from sale of equipment
    
    
    21
    
    
    
    24
    
    
    
    Purchases of equipment
    
    
    (381
    )
    
    
    (532
    )
    
    
    (161
    )Net cash provided by (used in) investing activities
    
    
    3,234
    
    
    
    16,815
    
    
    
    (36,377
    )Financing activitiesPrincipal payments on debt
    
    
    
    
    
    
    (1,800
    )
    
    
    (3,332
    )Proceeds from convertible promissory notes
    
    
    
    
    
    
    
    
    
    
    5,000Proceeds from issuance of common stock, net
    
    
    
    
    
    
    
    
    
    
    58,495Net cash (used in) provided by financing activities
    
    
    
    
    
    
    (1,800
    )
    
    
    60,163(Decrease) increase in cash and cash equivalents
    
    
    (1,385
    )
    
    
    (696
    )
    
    
    11,720Cash and cash equivalents at beginning of year
    
    
    12,552
    
    
    
    13,248
    
    
    
    1,528Cash and cash equivalents at end of year
    
    $
    11,167
    
    
    $
    12,552
    
    
    $
    13,248
 See accompanying notes.
  - 52 -




---



##### Table of Contents



A. Background, Merger and Offering
       - 53 -




---



##### Table of Contents



A. Background, Merger and Offering, continued
    B. Accounting Policies
 Principles of Consolidation
   - 54 -




---



##### Table of Contents



B. Accounting Policies, continued
 Revenue Recognition
 Our license and collaboration agreements may contain multiple elements,
including license and technology access fees, research and development funding,
manufacturing revenue, cost-sharing, milestones and royalties. The deliverables
under such an arrangement are evaluated under Accounting Standards Codification
(ASC) 605-25, Multiple-Element Arrangements, (which originated primarily from
the guidance in EITF 00-21) to assess whether they have standalone value and
objective and reliable evidence of fair value, and if so, are accounted for as
a single unit. We then recognize revenue for each unit based on the
culmination of the earnings process under ASC 605-S25 (issued as SAB Topic 13)
and our estimated performance period for the single units of accounting based
on the specific terms of each collaborative agreement. We subsequently adjust
the estimated performance periods, if appropriate, on a prospective basis based
upon available facts and circumstances. Future changes in estimates of the
performance period may materially impact the timing of future revenue
recognized. Amounts received prior to satisfying the revenue recognition
criteria for contract revenues are recorded as deferred revenue in the
accompanying balance sheets. Reimbursement amounts (other than those accounted
for using collaboration accounting) paid to us are recorded on a gross basis in
the statements of operations as contract revenues.We entered into a collaboration agreement with Pfizer, Inc. (Pfizer) in
December 2009 that contains multiple elements and deliverables. For a
description of the collaboration agreement and the determination of contract
revenues, see Note E.
    - 55 -




---



##### Table of Contents



B. Accounting Policies, continued
 Cash and Cash Equivalents
  Research and Development
  Collaborative Arrangements
  Clinical Trial Costs
   - 56 -




---



##### Table of Contents



B. Accounting Policies, continued
 Royalties
  Investments in Available-for-Sale Securities
  Long-Lived Assets
     - 57 -




---



##### Table of Contents



B. Accounting Policies, continued
 Patent Costs and Rights
  Comprehensive Income (Loss)
  Concentration of Credit Risk
  Use of Estimates
   - 58 -




---



##### Table of Contents



B. Accounting Policies, continued
 Stock-Based Compensation
     December 31,2009
    
    
    2008
    
    
    2007Volatility
    
    
    89.5%
    
    
    
    69.6%
    
    
    
    73.4%Risk-free interest rate
    
    
    2.4%
    
    
    
    3.0%
    
    
    
    5.3%Expected life of option
    
    5.01 years
    
    5.09 years
    
    5.36 yearsExpected dividend yield
    
    
    0.0%
    
    
    
    0.0%
    
    
    
    0.0%
 Income Taxes
   - 59 -




---



##### Table of Contents



B. Accounting Policies, continued
  Net Loss per Share
   
    
    Outstanding stock options to purchase 4,001,149, 3,738,473 and 3,679,884 shares of
common stock for the years ended December 31, 2009, 2008 and 2007, respectively;
 
    
    Warrants to purchase 5,125,496 shares of common stock for each the years ended December
31, 2009, 2008 and 2007;
 
    
    Shares of common stock issuable upon conversion of convertible preferred stock in the
amount of 160,041 for the year ended December 31, 2007; and
 
    
    Shares of common stock issuable upon the conversion of convertible promissory notes in
the amount of 112,098 for the year ended December 31, 2007.
  - 60 -




---



##### Table of Contents



B. Accounting Policies, continued
 Recently Issued Accounting Standards
 Collaborative Arrangements
 Derivative and Hedging
 Investments-Debt and Equity Securities
 Fair
Value Measurements and Disclosures
 Subsequent Events,
  - 61 -




---



##### Table of Contents



B. Accounting Policies, continued
 Debt with Conversion and Other Options
 Multiple-Element Arrangements
 Reclassifications
  C. Equipment
 December 31,Equipment consists of (in thousands):
    
    2009
    
    
    2008Laboratory equipment
    
    $
    6,262
    
    
    $
    6,045Office equipment and leasehold improvements
    
    
    3,639
    
    
    
    3,6079,901
    
    
    
    9,652Accumulated depreciation
    
    
    (9,052
    )
    
    
    (8,951
    )$
    849
    
    
    $
    701
  - 62 -




---



##### Table of Contents



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, 2009 UsingQuoted Prices in Active
    
    
    Significant Other
    
    
    SignificantBalance as of
    
    
    Markets for Identical
    
    
    Observable Inputs
    
    
    UnobservableDescription
    
    December 31, 2009
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)Available-for-sale
securities
    
    $
    15,215
    
    
    $
    15,215
    
    
    $
    
    
    
    $
    
   - 63 -




---



##### Table of Contents



D. Financial Instruments, continued
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Losses
    
    
    Gains
    
    
    ValueDecember 31, 2009:U.S. government
obligations, which
included
government-backed
agencies
    
    $
    12,613
    
    
    $
    (12
    )
    
    $
    52
    
    
    $
    12,653Corporate debt securities
    
    
    2,531
    
    
    
    
    
    
    
    31
    
    
    
    2,562$
    15,144
    
    
    $
    (12
    )
    
    $
    83
    
    
    $
    15,215December 31, 2008:U.S. government
obligations, which
included
government-backed
agencies
    
    $
    13,603
    
    
    $
    
    
    
    $
    125
    
    
    $
    13,728Corporate debt securities
    
    
    5,338
    
    
    
    (24
    )
    
    
    19
    
    
    
    5,333$
    18,941
    
    
    $
    (24
    )
    
    $
    144
    
    
    $
    19,061
    - 64 -




---



##### Table of Contents



D. Financial Instruments, continued
 December 31, 2009Amortized
    
    
    EstimatedCost
    
    
    Fair ValueDue in one year or less
    
    $
    10,065
    
    
    $
    10,135Due after one year through two years
    
    
    5,079
    
    
    
    5,080$
    15,144
    
    
    $
    15,215
 Financing Arrangements
      - 65 -




---



##### Table of Contents



E. Collaborations
 Pfizer
    Angiotech
   - 66 -




---



##### Table of Contents



E. Collaborations, continued
    F. Capitalization
    - 67 -




---



##### Table of Contents



F. Capitalization, continued
  December 312009
    
    
    2008Stock 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 Option Plans
     - 68 -




---



##### Table of Contents



G. Stock Option Plans, continued
    WeightedAverageNumber
    
    
    Exerciseof Options
    
    
    PriceOutstanding January 1, 2007
    
    
    116,083
    
    
    $
    80.62Granted
    
    
    3,738,000
    
    
    
    5.06Exercised
    
    
    
    
    
    
    Forfeited / Terminated / Expired
    
    
    (174,199
    )
    
    
    51.21Outstanding December 31, 2007
    
    
    3,679,884
    
    
    
    5.24Granted
    
    
    218,000
    
    
    
    3.36Exercised
    
    
    
    
    
    
    Forfeited / Expired
    
    
    (159,411
    )
    
    
    6.64Outstanding December 31, 2008
    
    
    3,738,473
    
    
    
    5.07Granted
    
    
    272,000
    
    
    
    3.17Exercised
    
    
    
    
    
    
    Forfeited / Expired
    
    
    (9,324
    )
    
    
    8.26Outstanding December 31, 2009
    
    
    4,001,149
    
    
    $
    4.94Vested during 2009
    
    
    854,459
    
    
    $
    4.81Vested and exercisable at December 31, 2009
    
    
    3,265,792
    
    
    $
    5.09
  - 69 -




---



##### Table of Contents



G. Stock Option Plans, continued
 December 31, 2009Options 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  2.96
    
    
    267,000
    
    
    
    5.68
    
    
    $
    2.03
    
    
    
    87,377
    
    
    
    4.40
    
    
    $
    2.46$4.00  4.99
    
    
    137,000
    
    
    
    7.89
    
    
    $
    4.32
    
    
    
    67,042
    
    
    
    7.84
    
    
    $
    4.36$5.00  7.80
    
    
    3,595,000
    
    
    
    6.63
    
    
    $
    5.07
    
    
    
    3,109,224
    
    
    
    6.54
    
    
    $
    5.05$90.66  278.95
    
    
    2,149
    
    
    
    1.86
    
    
    $
    184.76
    
    
    
    2,149
    
    
    
    1.86
    
    
    $
    184.764,001,149
    
    
    
    
    
    
    
    
    
    
    
    3,265,792
  H. Income Taxes
    - 70 -




---



##### Table of Contents



H. Income Taxes, continued
  December 31,2009
    
    
    2008Net operating loss carryforwards
    
    $
    9,892
    
    
    $
    7,755Net operating loss carryforwards  Pre-Merger NOL
    
    
    2,751
    
    
    
    2,908Research and development credit carryforwards
    
    
    2,070
    
    
    
    1,404License fee
    
    
    2,011Compensation expense
    
    
    2,432
    
    
    
    1,700Other
    
    
    506
    
    
    
    468Total deferred tax assets
    
    
    19,662
    
    
    
    14,235Valuation allowance for deferred tax assets
    
    
    (19,662
    )
    
    
    (14,235
    )Net deferred tax assets
    
    $
    
    
    
    $
    
  I. Profit Sharing Plan and 401(k) Plan
   - 71 -




---



##### Table of Contents



J. Quarterly Financial Data (unaudited)
  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
    )Net loss attributable to common stockholders
    
    $
    (3,625
    )
    
    $
    (3,347
    )
    
    $
    (3,380
    )
    
    $
    (5,014
    )
    
    $
    (15,366
    )Basic and diluted net loss
per common share attributable to common stockholders
    
    $
    (0.19
    )
    
    $
    (0.18
    )
    
    $
    (0.18
    )
    
    $
    (0.26
    )
    
    $
    (0.81
    )
 2008First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Full YearRevenues
    
    $
    792
    
    
    $
    776
    
    
    $
    1,278
    
    
    $
    259
    
    
    $
    3,105Net loss
    
    $
    (4,664
    )
    
    $
    (4,122
    )
    
    $
    (4,493
    )
    
    $
    (4,713
    )
    
    $
    (17,992
    )Net loss attributable to common stockholders
    
    $
    (4,664
    )
    
    $
    (4,122
    )
    
    $
    (4,493
    )
    
    $
    (4,713
    )
    
    $
    (17,992
    )Basic and diluted net loss per common share attributable to common stockholders
    
    $
    (0.25
    )
    
    $
    (0.22
    )
    
    $
    (0.24
    )
    
    $
    (0.25
    )
    
    $
    (0.95
    )
  - 72 -




---



##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A(T).
    
    CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures:
 Managements report on internal control over financial reporting:
  Changes in internal control:
 
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    - 73 -




---



##### Table of Contents



ITEM 11.
    
    EXECUTIVE COMPENSATION
   
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
SHAREHOLDER MATTERS
  Equity Compensation Plan Information
 Number of securitiesremaining available forfuture issuance underequity compensationNumber of securities to
    
    
    Weighted-average
    
    
    plans (excludingbe issued upon exercise
    
    
    exercise price of
    
    
    securities reflected inof outstanding options
    
    
    outstanding options
    
    
    column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plan approved by security holders
    
    
    2,637,256
    
    
    $
    4.82
    
    
    
    397,744Equity compensation plan not approved by security holders (1)
    
    
    1,363,893
    
    
    $
    5.07
    
    
    
    103,256Total
    
    
    4,001,149
    
    
    
    
    
    
    
    501,000
 (1)
    
    Includes 2,149 of shares of common stock issuable upon exercise of stock options that
were assumed by BTHC VI in the merger. 
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   - 74 -




---



##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
            - 75 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description2.1
    
    
    Agreement and Plan of Merger, dated as of May 24, 2007, by and among Athersys, Inc., BTHC VI,
Inc. and B-VI Acquisition Corp. (incorporated herein by reference to Exhibit 10.1 to
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on May 24, 2007)2.2
    
    
    First Amendment to Agreement and Plan of Merger, dated as of June 8, 2007, by and among
Athersys, Inc., BTHC VI, Inc. and B-VI Acquisition Corp. (incorporated herein by reference to
Exhibit 2.2 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed
with the Commission on June 14, 2007)3.1
    
    
    Certificate of Incorporation of Athersys, Inc., as amended as of August 31, 2007
(incorporated herein by reference to Exhibit 3.1 to the registrants Registration Statement on
Form S-3/A (Registration No. 333-144433) filed with the Commission on October 10, 2007)3.2
    
    
    Bylaws of Athersys, Inc., as amended as of October 30, 2007 (incorporated herein by reference
to Exhibit 3.1 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed
with the Commission on October 31, 2007)10.1
    *
    
    Research Collaboration and License Agreement, dated as of December 8, 2000, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit
10.1 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.2
    *
    
    Cell Line Collaboration and License Agreement, dated as of July 1, 2002, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit
10.2 to the registrants Current Report on Form 8-K/A (Commission No. 000-52108) filed with
the Commission on September 27, 2007)10.3
    *
    
    Extended Collaboration and License Agreement, dated as of January 1, 2006, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit
10.3 to the registrants Current Report on Form 8-K/A (Commission No. 000-52108) filed with
the Commission on September 27, 2007)10.4
    
    
    License Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and Angiotech
Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.4 to the registrants
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14,
2007)10.5
    
    
    Sublicense Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and
Angiotech Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.5 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.6
    
    
    Amended and Restated Registration Rights Agreement, dated as of April 28, 2000, by and among
Athersys, Inc. and the stockholders of Athersys, Inc. parties thereto (incorporated herein by
reference to Exhibit 10.6 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.7
    
    
    Amendment No. 1 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated
as of January 29, 2002, by and among Athersys, Inc., the New Stockholders, the Investors,
Biotech and the Stockholders (each as defined in the Amended and Restated Registration Rights
Agreement, dated as April 28, 2000, by and among Athersys, Inc. and the stockholders of
Athersys, Inc. parties thereto) (incorporated herein by reference to Exhibit 10.7 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.8
    
    
    Amendment No. 2 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated
as of November 19, 2002, by and among Athersys, Inc., the New Stockholders, the Investors,
Biotech and the Stockholders (each as defined in the Amended and Restated Registration Rights
Agreement, dated as April 28, 2000, as amended, by and among Athersys, Inc. and the
stockholders of Athersys, Inc. parties thereto) (incorporated herein by reference to Exhibit
10.8 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.9
    
    
    Amendment No. 3 to Amended and Restated Registration Rights Agreement, dated as of May 15,
2007, by and among Athersys, Inc. and the Existing Stockholders (as defined therein)
(incorporated herein by reference to Exhibit 10.9 to the registrants Current Report on Form
8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
  - 76 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description10.10
    
    
    BTHC VI, Inc. Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.10 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.11
    
    
    BTHC VI, Inc. Equity Incentive Compensation Plan (incorporated herein by reference to
Exhibit 10.11 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed
with the Commission on June 14, 2007)10.12
    
    
    Loan and Security Agreement, and Supplement, dated as of November 2, 2004, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.1 to the registrants
Quarterly Report on Form 10-Q (Commission No. 000-52108) filed with the Commission on November
14, 2007)10.13
    
    
    Second Amendment to Loan and Security Agreement, dated as of October 30, 2007, by and among
ABT Holding Company, Advanced Biotherapeutics, Inc., Venture Lending and Leasing IV, Inc., and
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.2 to the registrants
Quarterly Report on Form 10-Q (Commission No. 000-52108) filed with the Commission on November
14, 2007)10.14
    
    
    Amendment to Loan and Security Agreement, dated as of September 29, 2006, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.13 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.15
    
    
    Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of
April 1, 1998, by and between Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by
reference to Exhibit 10.14 to the registrants
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on
June 14, 2007)10.16
    
    
    Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by
and between Advanced Biotherapeutics, Inc. and Gil Van Bokkelen (incorporated herein by
reference to Exhibit 10.15 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.17
    
    
    Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by reference to Exhibit 10.16 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.18
    
    
    Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of
April 1, 1998, by and between Athersys, Inc. and Dr. John J. Harrington (incorporated herein
by reference to Exhibit 10.17 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.19
    
    
    Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by
and between Advanced Biotherapeutics, Inc. and John Harrington (incorporated herein by
reference to Exhibit 10.18 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.20
    
    
    Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. John J. Harrington (incorporated herein by reference to Exhibit 10.19
to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.21
    
    
    Employment Agreement, dated as of May 22, 1998, by and between Athersys, Inc. and Laura K.
Campbell (incorporated herein by reference to Exhibit 10.20 to the registrants Current Report
on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)10.22
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Laura Campbell (incorporated herein by reference to Exhibit 10.21 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.23
    
    
    Employment Agreement, dated as of September 25, 2000, by and between Advanced
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.22 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)
  - 77 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description10.24
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.23 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.25
    
    
    Non-Competition and Confidentiality Agreement, dated as of September 25, 2000, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by
reference to Exhibit 10.24 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.26
    
    
    Employment Agreement, dated as of October 3, 2003, by and between Advanced Biotherapeutics,
Inc. and Robert Deans, Ph.D. (incorporated herein by reference to Exhibit 10.25 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.27
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Robert Deans (incorporated herein by reference to Exhibit 10.26 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.28
    
    
    Non-Competition and Confidentiality Agreement, dated as of October 3, 2003, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Robert Deans (incorporated herein by
reference to Exhibit 10.27 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.29
    
    
    Employment Agreement, dated as of January 1, 2004, by and between Advanced Biotherapeutics,
Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.28 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.30
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.29
to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.31
    
    
    Non-Competition and Confidentiality Agreement, dated as of September 10, 2001, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and William Lehmann (incorporated herein by
reference to Exhibit 10.30 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.32
    
    
    Form Incentive Agreement by and between Advanced Biotherapeutics, Inc. and named executive
officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC (incorporated herein by
reference to Exhibit 10.31 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.33
    
    
    Form Amendment No. 1 to Incentive Agreement by and between Advanced Biotherapeutics, Inc.
and named executive officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC
(incorporated herein by reference to Exhibit 10.32 to the registrants Current Report on Form
8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)10.34
    
    
    Securities Purchase Agreement, dated as of June 8, 2007, by and among Athersys, BTHC VI,
Inc. and Investors (as defined therein) (incorporated herein by reference to Exhibit 10.33 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.35
    *
    
    Exclusive License Agreement, dated as of May 17, 2002, by and between Regents of the
University of Minnesota and MCL LLC, assumed by ReGenesys, LLC through operation of merger on
November 4, 2003 (incorporated herein by reference to Exhibit 10.34 to the registrants
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14,
2007)10.36
    *
    
    Strategic Alliance Agreement, by and between Athersys, Inc. and Angiotech Pharmaceuticals,
Inc., dated as of May 5, 2006 (incorporated herein by reference to Exhibit 10.35 to the
registrants Current Report on Form 8-K/A (Commission No. 000-52108) filed with the Commission
on October 9, 2007)
  - 78 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description10.37
    
    
    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)10.40
    
    
    Advisory Agreement, dated as of May 24, 2007, by and between Halter Financial Group, L.P.
and Athersys, Inc. (incorporated herein by reference to Exhibit 10.40 to the registrants
Registration Statement on Form S-1/A(Registration No. 333-144433) filed with the Commission
on September 12, 2007)10.41
    
    
    Summary of Athersys, Inc. 2008 Cash Bonus Plan (incorporated herein by reference to Exhibit
10.1 to the registrants Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with
the Commission on May 8, 2008)10.42
    *
    
    Collaboration and License Agreement, dated as of December 18, 2009, by and between Athersys,
Inc., ABT Holding Company, and Pfizer Inc.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.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)21
    
    
    List of Subsidiaries23
    
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24.1
    
    
    Power of Attorney24.2
    
    
    Power of Attorney for Michael B. Sheffery and Jordan S. Davis31.1
    
    
    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.  - 79 -




---



##### 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 11, 2010/s/ Laura K. Campbell

Laura K. Campbell
    
    Vice President, Finance

(Principal Financial Officer
and Principal Accounting Officer)
    
    March 11, 2010*

John J. Harrington
    
    Executive Vice President, 

Chief Scientific Officer and Director
    
    March 11, 2010*
    
    Director
    
    March 11, 2010William C. Mulligan*
    
    Director
    
    March 11, 2010George M. Milne, Jr.*
    
    Director
    
    March 11, 2010Jordan S. Davis*
    
    Director
    
    March 11, 2010Floyd D. Loop*
    
    Director
    
    March 11, 2010Michael Sheffery*
    
    Director
    
    March 11, 2010Lorin J. Randall
 *
    
    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  - 80 -




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Description2.1
    
    
    Agreement and Plan of Merger, dated as of May 24, 2007, by and among Athersys, Inc., BTHC VI,
Inc. and B-VI Acquisition Corp. (incorporated herein by reference to Exhibit 10.1 to
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on May 24, 2007)2.2
    
    
    First Amendment to Agreement and Plan of Merger, dated as of June 8, 2007, by and among
Athersys, Inc., BTHC VI, Inc. and B-VI Acquisition Corp. (incorporated herein by reference to
Exhibit 2.2 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed
with the Commission on June 14, 2007)3.1
    
    
    Certificate of Incorporation of Athersys, Inc., as amended as of August 31, 2007
(incorporated herein by reference to Exhibit 3.1 to the registrants Registration Statement on
Form S-3/A (Registration No. 333-144433) filed with the Commission on October 10, 2007)3.2
    
    
    Bylaws of Athersys, Inc., as amended as of October 30, 2007 (incorporated herein by reference
to Exhibit 3.1 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed
with the Commission on October 31, 2007)10.1
    *
    
    Research Collaboration and License Agreement, dated as of December 8, 2000, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit
10.1 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.2
    *
    
    Cell Line Collaboration and License Agreement, dated as of July 1, 2002, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit
10.2 to the registrants Current Report on Form 8-K/A (Commission No. 000-52108) filed with
the Commission on September 27, 2007)10.3
    *
    
    Extended Collaboration and License Agreement, dated as of January 1, 2006, by and between
Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit
10.3 to the registrants Current Report on Form 8-K/A (Commission No. 000-52108) filed with
the Commission on September 27, 2007)10.4
    
    
    License Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and Angiotech
Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.4 to the registrants
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14,
2007)10.5
    
    
    Sublicense Agreement, effective as of May 5, 2006, by and between Athersys, Inc. and
Angiotech Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.5 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.6
    
    
    Amended and Restated Registration Rights Agreement, dated as of April 28, 2000, by and among
Athersys, Inc. and the stockholders of Athersys, Inc. parties thereto (incorporated herein by
reference to Exhibit 10.6 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.7
    
    
    Amendment No. 1 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated
as of January 29, 2002, by and among Athersys, Inc., the New Stockholders, the Investors,
Biotech and the Stockholders (each as defined in the Amended and Restated Registration Rights
Agreement, dated as April 28, 2000, by and among Athersys, Inc. and the stockholders of
Athersys, Inc. parties thereto) (incorporated herein by reference to Exhibit 10.7 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.8
    
    
    Amendment No. 2 to Athersys, Inc. Amended and Restated Registration Rights Agreement, dated
as of November 19, 2002, by and among Athersys, Inc., the New Stockholders, the Investors,
Biotech and the Stockholders (each as defined in the Amended and Restated Registration Rights
Agreement, dated as April 28, 2000, as amended, by and among Athersys, Inc. and the
stockholders of Athersys, Inc. parties thereto) (incorporated herein by reference to Exhibit
10.8 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.9
    
    
    Amendment No. 3 to Amended and Restated Registration Rights Agreement, dated as of May 15,
2007, by and among Athersys, Inc. and the Existing Stockholders (as defined therein)
(incorporated herein by reference to Exhibit 10.9 to the registrants Current Report on Form
8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)
  - 81 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description10.10
    
    
    BTHC VI, Inc. Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.10 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.11
    
    
    BTHC VI, Inc. Equity Incentive Compensation Plan (incorporated herein by reference to
Exhibit 10.11 to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed
with the Commission on June 14, 2007)10.12
    
    
    Loan and Security Agreement, and Supplement, dated as of November 2, 2004, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.1 to the registrants
Quarterly Report on Form 10-Q (Commission No. 000-52108) filed with the Commission on November
14, 2007)10.13
    
    
    Second Amendment to Loan and Security Agreement, dated as of October 30, 2007, by and among
ABT Holding Company, Advanced Biotherapeutics, Inc., Venture Lending and Leasing IV, Inc., and
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.2 to the registrants
Quarterly Report on Form 10-Q (Commission No. 000-52108) filed with the Commission on November
14, 2007)10.14
    
    
    Amendment to Loan and Security Agreement, dated as of September 29, 2006, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc., Venture Lending & Leasing IV, Inc., and
Costella Kirsch IV, L.P. (incorporated herein by reference to Exhibit 10.13 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.15
    
    
    Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of
April 1, 1998, by and between Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by
reference to Exhibit 10.14 to the registrants
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on
June 14, 2007)10.16
    
    
    Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by
and between Advanced Biotherapeutics, Inc. and Gil Van Bokkelen (incorporated herein by
reference to Exhibit 10.15 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.17
    
    
    Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. Gil Van Bokkelen (incorporated herein by reference to Exhibit 10.16 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.18
    
    
    Amended and Restated Employment Agreement, dated as of December 1, 1998 but effective as of
April 1, 1998, by and between Athersys, Inc. and Dr. John J. Harrington (incorporated herein
by reference to Exhibit 10.17 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.19
    
    
    Amendment No. 1 to Amended and Restated Employment Agreement, dated as of May 31, 2007, by
and between Advanced Biotherapeutics, Inc. and John Harrington (incorporated herein by
reference to Exhibit 10.18 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.20
    
    
    Non-Competition and Confidentiality Agreement, dated as of December 1, 1998, by and between
Athersys, Inc. and Dr. John J. Harrington (incorporated herein by reference to Exhibit 10.19
to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.21
    
    
    Employment Agreement, dated as of May 22, 1998, by and between Athersys, Inc. and Laura K.
Campbell (incorporated herein by reference to Exhibit 10.20 to the registrants Current Report
on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)10.22
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Laura Campbell (incorporated herein by reference to Exhibit 10.21 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.23
    
    
    Employment Agreement, dated as of September 25, 2000, by and between Advanced
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.22 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)
  - 82 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description10.24
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by reference to Exhibit 10.23 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.25
    
    
    Non-Competition and Confidentiality Agreement, dated as of September 25, 2000, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Kurt Brunden (incorporated herein by
reference to Exhibit 10.24 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.26
    
    
    Employment Agreement, dated as of October 3, 2003, by and between Advanced Biotherapeutics,
Inc. and Robert Deans, Ph.D. (incorporated herein by reference to Exhibit 10.25 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.27
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and Robert Deans (incorporated herein by reference to Exhibit 10.26 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.28
    
    
    Non-Competition and Confidentiality Agreement, dated as of October 3, 2003, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and Robert Deans (incorporated herein by
reference to Exhibit 10.27 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.29
    
    
    Employment Agreement, dated as of January 1, 2004, by and between Advanced Biotherapeutics,
Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.28 to the
registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission
on June 14, 2007)10.30
    
    
    Amendment No. 1 to Employment Agreement, dated as of May 31, 2007, by and between Advanced
Biotherapeutics, Inc. and William Lehmann (incorporated herein by reference to Exhibit 10.29
to the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.31
    
    
    Non-Competition and Confidentiality Agreement, dated as of September 10, 2001, by and among
Athersys, Inc., Advanced Biotherapeutics, Inc. and William Lehmann (incorporated herein by
reference to Exhibit 10.30 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.32
    
    
    Form Incentive Agreement by and between Advanced Biotherapeutics, Inc. and named executive
officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC (incorporated herein by
reference to Exhibit 10.31 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)10.33
    
    
    Form Amendment No. 1 to Incentive Agreement by and between Advanced Biotherapeutics, Inc.
and named executive officers, and acknowledged by Athersys, Inc. and ReGenesys, LLC
(incorporated herein by reference to Exhibit 10.32 to the registrants Current Report on Form
8-K (Commission No. 000-52108) filed with the Commission on June 14, 2007)10.34
    
    
    Securities Purchase Agreement, dated as of June 8, 2007, by and among Athersys, BTHC VI,
Inc. and Investors (as defined therein) (incorporated herein by reference to Exhibit 10.33 to
the registrants Current Report on Form 8-K (Commission No. 000-52108) filed with the
Commission on June 14, 2007)10.35
    *
    
    Exclusive License Agreement, dated as of May 17, 2002, by and between Regents of the
University of Minnesota and MCL LLC, assumed by ReGenesys, LLC through operation of merger on
November 4, 2003 (incorporated herein by reference to Exhibit 10.34 to the registrants
Current Report on Form 8-K (Commission No. 000-52108) filed with the Commission on June 14,
2007)10.36
    *
    
    Strategic Alliance Agreement, by and between Athersys, Inc. and Angiotech Pharmaceuticals,
Inc., dated as of May 5, 2006 (incorporated herein by reference to Exhibit 10.35 to the
registrants Current Report on Form 8-K/A (Commission No. 000-52108) filed with the Commission
on October 9, 2007)10.37
    
    
    Amendment No. 1 to Cell Line Collaboration and License Agreement, dated as of January 1,
2006, by and between Athersys, Inc. and Bristol-Myers Squibb Company (incorporated herein by
reference to Exhibit 10.36 to the registrants Current Report on Form 8-K (Commission No.
000-52108) filed with the Commission on June 14, 2007)
  - 83 -




---



##### Table of Contents



Exhibit No.
    
    Exhibit Description10.38
    
    
    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)10.40
    
    
    Advisory Agreement, dated as of May 24, 2007, by and between Halter Financial Group, L.P.
and Athersys, Inc. (incorporated herein by reference to Exhibit 10.40 to the registrants
Registration Statement on Form S-1/A (Registration No. 333-144433) filed with the Commission
on September 12, 2007)10.41
    
    
    Summary of Athersys, Inc. 2008 Cash Bonus Plan (incorporated herein by reference to Exhibit
10.1 to the registrants Quarterly Report on Form 10-Q (Commission No. 001-33876) filed with
the Commission on May 8, 2008)10.42
    *
    
    Collaboration and License Agreement, dated as of December 18, 2009, by and between Athersys,
Inc., ABT Holding Company, and Pfizer Inc.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.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)21
    
    
    List of Subsidiaries23
    
    
    Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm24.1
    
    
    Power of Attorney24.2
    
    
    Power of Attorney for Michael B. Sheffery and Jordan S. Davis31.1
    
    
    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.  - 84 -