| Item 7.01. | Regulation FD Disclosure. |
Athersys, Inc. (the “Company”) is providing the following disclosure in response to the amendments to Schedule 13D (the “Healios 13D Amendments”) filed with the SEC by HEALIOS K.K. (“Healios”) on November 13, 2020 and November 18, 2020.
The Company has had a collaboration with Healios since 2016. Pursuant to an Investor Rights Agreement entered into with Healios in 2018, Healios was granted the right to nominate a nominee for election to the Company’s Board of Directors (the “Board”) so long as it continues to beneficially own a certain percentage of the Company’s outstanding shares of common stock. Hardy TS Kagimoto, M.D., Healios’ Chairman and Chief Executive Officer, currently serves on the Board as Healios’ Director nominee. Given the commercial relationship between the Company and Healios, Dr. Kagimoto is not considered an “independent” Director under the independence rules of NASDAQ.
The Company vigorously disputes the claims made by Healios and Dr. Kagimoto in the Healios 13D Amendments. The Company believes that the assertions made by Healios and Dr. Kagimoto regarding the Company’s corporate governance practices are motivated not by Dr. Kagimoto’s position as a Director of the Company, but rather as a result of his position as Chairman and Chief Executive Officer and majority shareholder of Healios, as well as his related business objectives. The assertions in the Healios 13D Amendments filing are demonstrably false.
The Board, just like the boards of Directors of other public companies, forms and acts through committees, including the Audit Committee, the Compensation Committee and the Nominations and Corporate Governance Committee (the “NCG Committee”), all of which are required to be comprised solely of independent Directors. The Board has also formed an Executive Committee to evaluate, discuss and potentially act on matters that may represent or involve a potential conflict of interest for one or more of the members of the Board. As Healios and Dr. Kagimoto acknowledge in the Healios 13D Amendments, given Healios’ role as a commercial partner of the Company, certain matters may represent a conflict of interest for Dr. Kagimoto. These are the kinds of conflicted-related matters that the Executive Committee evaluates and discusses.
In the Healios 13D Amendments, Healios and Dr. Kagimoto object to the process that led to the Board’s recent appointment of three new Directors. However, at the Board meeting at which the three new Directors were appointed, Dr. Kagimoto specifically stated that the three new Directors were excellent candidates, and he also formally voted in favor of their appointment. In light of recent and anticipated vacancies on the Board, the NCG Committee undertook a search for new Director candidates to, among other things, ensure that the Board will be comprised of a majority of independent Directors, provide adequate Director capacity to carry out the responsibilities of the independent Board committees and increase diversity, including diversity of experience and perspective, on the Board. As a result of the thorough process undertaken by the NCG Committee, three new Director candidates were identified. Information regarding these candidates was shared with Dr. Kagimoto, as well as the other Directors that do not serve on the NCG Committee, several days in advance of the November 12, 2020 Board meeting at which the three Director candidates were discussed and subsequently appointed as Directors. Prior to the Board meeting, Dr. Kagimoto raised no concerns as to the qualifications or the election of the candidates. During the Board meeting, the Chairman of the NCG Committee thoroughly described the Director search process. During the Board meeting, Dr. Kagimoto did not question or object to the credentials or experience of the Director candidates; rather, Dr. Kagimoto agreed that they were well-qualified and excellent candidates. In response to Dr. Kagimoto’s questions about independence and conflicts of interest with respect to the Director candidates, Dr. Kagimoto was informed that a thorough independence and conflicts assessment was conducted and that the Director candidates were considered to be independent under the NASDAQ rules and free from conflicts of interest. After discussion, the Director candidates were elected to the Board by a unanimous vote, including the affirmative vote from Dr. Kagimoto.
