Akari Therapeutics plc — FY 2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone Q4 report. Akari is a clinical-stage biopharmaceutical company developing nomacopan, with no product sales or product revenue to date. Financial statements are prepared under U.S. GAAP.
Financial results and liquidity
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $9.13 million | $8.82 million |
| General and administrative expense | $8.08 million | $9.16 million |
| Operating loss | $17.21 million | $17.98 million |
| Net loss | $17.42 million | $17.08 million |
| Comprehensive loss | $17.32 million | $17.38 million |
| Net cash used in operating activities | $18.85 million | $16.95 million |
| Cash at year-end | $9.36 million | $14.06 million |
- Operating expenses totaled $17.21 million, down from $17.98 million. Lower G&A, including the absence of a $0.9 million non-cash Aspire financing expense recorded in 2020, partly offset higher R&D costs.
- Other items shifted from $0.90 million of income in 2020 to $0.21 million of expense in 2021; the 2020 result included a warrant fair-value gain. Net loss increased modestly year over year.
- Year-end current assets were $11.63 million and current liabilities were $6.09 million, including $1.12 million of subscription proceeds recorded as a liability pending completion of a registered offering. Shareholders’ equity was $5.55 million; total assets were $11.65 million.
- Financing provided $14.29 million of net cash in 2021, compared with $25.07 million in 2020. No investing cash flow was reported. The company had no short- or long-term debt requiring interest payments and no significant contractual obligations disclosed at year-end.
- Operating margins are not meaningful for a pre-revenue company reporting operating losses. No dividends are anticipated for the foreseeable future.
Material changes and business developments
- R&D expense rose 4% to $9.13 million. G&A declined 12% to $8.08 million, primarily because 2020 included the $0.9 million non-cash Aspire commitment-share expense.
- Operating cash use increased by approximately $1.90 million, while cash declined by $4.69 million during the year. The company raised net financing proceeds through 2021 equity offerings and Aspire Capital sales.
- Ordinary shares outstanding rose from 3.85 billion to 4.76 billion during 2021. Further equity issuance could materially dilute existing holders.
- Akari reported prior-period financial statement misstatements relating to options, restated 2015–2020 financial statements, and says the accounting error was non-cash. The associated material weakness was remediated in 2021; management concluded internal control over financial reporting was effective as of December 31, 2021.
Outlook, risks and unusual items
- Going concern and funding: The auditor’s report highlights substantial doubt about Akari’s ability to continue as a going concern, citing recurring losses and net capital deficiency. Management estimated existing resources would support operations into December 2022 without additional Aspire sales. The company expects continued substantial losses and needs additional financing; funding may be unavailable or dilutive.
- Financing after year-end: The December 2021 registered offering closed in January 2022, raising approximately $6.0 million gross; $1.12 million received before closing was classified as a year-end liability. A March 2022 offering raised approximately $8.9 million gross. These are subsequent events, not FY 2021 operating revenue.
- Clinical pipeline: Nomacopan is the lead candidate. The Phase III pediatric HSCT-TMA study was enrolling in the U.S. and Europe, with initial patients dosed. The BP Phase III program began in 2021, but supply-chain issues delayed recruitment; the filing says the issues were resolved by May 2022 and sites began recruiting. These programs remain subject to clinical and regulatory uncertainty.
- Development evidence: The company describes positive Phase II BP topline results from 2020 and historical PNH trial findings, but PNH studies are closed and the filing cautions that the small studies cannot establish outcomes for future trials. Eye programs include limited clinical data and preclinical work; efficacy results in the small AKC study were not statistically conclusive.
- Principal risks: Clinical failure or delays, patient enrollment, reliance on third-party manufacturers and CROs, supply constraints, lack of commercial infrastructure, competition, patent protection, COVID-19 disruption, capital-market access and potential shareholder dilution. The company had nine full-time employees and no sales or distribution infrastructure.
- Other matters: Management noted foreign-exchange exposure but no hedging, and no material legal proceedings. Historical financial restatements, related-party transactions and the year-end offering deposit warrant attention.
Key investor verification points
- Confirm current cash, cash runway and financing availability, including remaining capacity and terms under the Aspire Capital facility, and account for subsequent offerings and dilution.
- Review the auditor’s going-concern discussion and management’s assumptions supporting the stated runway.
- Verify enrollment, timelines, endpoints and regulatory status of the BP and HSCT-TMA trials, as well as resolution of reported supply-chain issues.
- Examine the restated historical financial statements, the material weakness remediation and the basis for management’s 2021 controls conclusion.
- Assess the clinical evidence underlying nomacopan’s programs, the concentration of manufacturing supply, and patent expiry and enforceability risks.