Business Context and Reporting Period
This Form 8-K, dated September 16, 2015, reports the completion of a transformative acquisition and financing by Celsus Therapeutics Plc, which subsequently changed its name to Akari Therapeutics Plc. The primary event is the acquisition of all capital stock of Volution Immuno Pharmaceuticals SA ("Volution") from RPC Pharma Limited ("RPC"), consummated on September 18, 2015. Concurrently, the company executed a private placement financing and restructured its capitalization and leadership.
Key Financial Metrics and Capital Structure
- Financing Proceeds: The company raised gross proceeds of $75 million through the sale of 3,958,811 restricted ADSs (representing 395,881,100 Ordinary Shares) in a private placement.
- Acquisition Consideration: The company issued 722,345,600 Ordinary Shares to RPC in exchange for Volution.
- Post-Transaction Ownership: Following the acquisition and financing, RPC owned approximately 61.0% of outstanding Ordinary Shares, the new financing buyers owned approximately 33.3%, and pre-acquisition Celsus securityholders owned approximately 5.7%.
- Share Count: The company has 1,177,693,383 Ordinary Shares issued and outstanding as of the filing date.
- Warrant Adjustments: Existing warrants were adjusted from 1,929,824 shares at $0.57 per share to 5,617,977 shares at an adjusted exercise price of $0.1958 per share.
- Trading Symbol: American Depositary Shares (ADSs) began trading on the NASDAQ Capital Market under the symbol "AKTX" on September 21, 2015, with a ratio of 100 Ordinary Shares per ADS.
Note: This filing does not provide specific revenue, profit, cash flow, margin, or debt figures for the reporting period. Pro forma financial information is incorporated by reference to a separate Proxy Statement.
Material Changes Versus Prior Period
- Corporate Identity: The company changed its name from Celsus Therapeutics Plc to Akari Therapeutics Plc.
- Control and Ownership: A change in control occurred as RPC became the majority shareholder (61.0%) following the acquisition.
- Capitalization: Significant dilution occurred for pre-acquisition shareholders, whose ownership dropped to approximately 5.7% of the combined entity.
- ADS Ratio: The ADS ratio was changed such that each ADS now represents 100 Ordinary Shares.
Management Commentary, Risks, and Unusual Items
- Leadership Changes: The executive management team was restructured. Ray Prudo, M.D. (former CEO of Volution) became Executive Chairman. Gur Roshwalb, M.D. (former CEO of Celsus) remained CEO. Clive Richardson (Volution) became Chief Operating Officer. Two directors resigned, and two new directors were appointed.
- Compensation Adjustments: Ray Prudo will receive an annual fee of $200,000 as Chairman. New non-executive directors received options to purchase 25,000 Ordinary Shares each.
- Equity Plan Amendment: Shareholders approved an amendment to the 2014 Equity Incentive Plan to increase the number of shares available for grants by 135,277,420.
- Director Fees Cap: Shareholders approved a cap on aggregate director fees at US$500,000 per annum, with automatic annual increases tied to the U.S. Consumer Price Index.
- Regulatory Exemptions: The issuance of shares for the acquisition and financing was exempt from registration under Section 4(a)(2) and Regulation S/D of the Securities Act of 1933.
Investor Verification Checklist
- Verify the pro forma financial statements and historical financial data of Volution Immuno Pharmaceuticals SA, which are incorporated by reference in the Definitive Proxy Statement on Schedule 14A filed August 3, 2015.
- Confirm the exact terms of the Share Exchange Agreement and the Securities Purchase Agreement regarding the $75 million financing.
- Review the biographical information and potential conflicts of interest for the newly appointed directors and executive officers.
- Assess the impact of the 135,277,420 share increase in the Equity Incentive Plan on future dilution.
- Monitor the trading volume and price stability of the new "AKTX" ticker on the NASDAQ Capital Market following the September 21, 2015 commencement.