Akari Therapeutics plc — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022; this is an annual report, not a standalone fourth-quarter filing. Financial statements are prepared under U.S. GAAP. Akari is a clinical-stage biotechnology company with no product sales or commercial revenue.
Financial results and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | None | None | No product revenue |
| Research and development expense | $9.56 million | $9.13 million | Up 5% |
| General and administrative expense | $13.53 million | $8.08 million | Up 67% |
| Operating loss | $23.09 million | $17.21 million | Loss increased |
| Net loss | $17.75 million | $17.42 million | Loss increased slightly |
| Net cash used in operating activities | $21.50 million | $18.85 million | Cash use increased |
| Cash at year-end | $13.25 million | $9.36 million | Up $3.89 million |
Gross margin and operating margin are not meaningful because the company had no revenue. The 2022 net loss was materially offset by non-cash warrant-related gains: a $6.95 million gain from the decline in the fair value of liability-classified warrants, partly offset by a $1.96 million expense because their initial fair value exceeded offering proceeds. The company also expensed approximately $1.7 million of related issuance costs in general and administrative expense.
At December 31, 2022, total assets were $13.83 million, current liabilities were $12.04 million, and shareholders’ equity was $1.79 million. The filing reports no short- or long-term debt requiring interest payments. Financing activities provided $25.29 million in 2022, mainly from share offerings. Ordinary shares outstanding rose to 7.445 billion from 4.760 billion at year-end 2021.
Material changes and business developments
- General and administrative expense rose primarily due to executive hiring and compensation, severance, consulting and compliance costs, and expenses from the September 2022 financing and warrant accounting.
- Akari raised approximately $12.8 million gross in a September 2022 registered direct offering and approximately $8.9 million gross in a March 2022 offering. The September offering included Series A and B warrants for up to 30.2 million ADSs in total, exercisable at $0.85 per ADS; their liability classification and valuation affected reported results and equity.
- In March 2023, after year-end, the company raised approximately $4.0 million gross (about $3.7 million net) by issuing 26.7 million ADSs at $0.15 per ADS. The Aspire Capital financing facility expired in January 2023 after approximately $8.0 million of its $30 million commitment had been used.
Outlook, risks and unusual items
- Funding and going concern: The auditor’s report and management identify substantial doubt about Akari’s ability to continue as a going concern, given recurring losses, negative operating cash flows and dependence on additional financing. As of April 28, 2023, management expected cash, including March offering proceeds, to fund operations through October 2023. Further financing is required; availability and terms are uncertain.
- Development priorities: Akari prioritized nomacopan for pediatric HSCT-TMA and PAS-nomacopan for geographic atrophy (GA). The company reported that Phase 3 Part A in pediatric HSCT-TMA had enrolled two of three age cohorts; it planned to advance pivotal Part B for patients aged 2 to under 18, with enrollment expected by year-end 2023. Adult HSCT-TMA study enrollment was expected in 2024.
- Additional program outlook: Akari targeted submission of an IND for PAS-nomacopan in GA in the first half of 2024, based on preclinical results. These are plans and expectations, not assured milestones. The company discontinued its bullous pemphigoid clinical program in 2022 for pipeline-prioritization and cost reasons, and its PNH program was closed; it was not then pursuing BP, GBS or PNH clinical development.
- Clinical and operational risks: Nomacopan remains investigational and is Akari’s principal development focus. Outcomes depend on trial efficacy and safety, enrollment, regulatory decisions, financing, and third-party manufacturing and supply. Akari relies on external manufacturers and has no commercial sales, marketing or distribution infrastructure.
- Listing and dilution: Nasdaq had granted an extension through October 23, 2023 to regain the $1.00 minimum bid-price requirement. Akari also reported shareholders’ equity below Nasdaq’s $2.5 million threshold at year-end and expected a related deficiency notice. Additional equity financing could materially dilute shareholders. The filing also notes that Akari may have been a PFIC in 2022; it had not completed a detailed determination.
- Other notable disclosures: Prior financial statements for 2015–2020 were restated for an options-accounting error. Management stated disclosure controls and internal control over financial reporting were effective as of year-end 2022, while noting the inherent limits of controls. The company reported no material legal proceedings.
Most important facts for investors to verify
- Current cash, actual spending rate and whether subsequent financing extends the disclosed October 2023 runway.
- Progress, enrollment, safety findings and regulatory feedback for pediatric HSCT-TMA Part A and planned Part B, plus the timing and funding of adult HSCT-TMA.
- Whether the planned PAS-nomacopan GA IND submission and other development milestones remain achievable.
- Nasdaq bid-price and shareholders’ equity compliance, and the potential dilution from future offerings, warrants and equity awards.
- The final U.S. tax classification for PFIC purposes and any investor-specific consequences.