Akari Therapeutics plc — Q1 2024 Form 10-Q
Period: Three months ended March 31, 2024; filed May 15, 2024. Akari is a clinical-stage biotechnology company developing therapies for autoimmune and inflammatory diseases. It has no approved products and generated no revenue.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $2.279 million | $1.731 million; up 32% |
| General and administrative expense | $3.710 million | $2.863 million; up 30% |
| Operating loss | $5.989 million | $4.594 million |
| Net loss / income | $5.566 million loss | $1.001 million income |
| Operating cash used | $4.044 million | $4.880 million |
| Cash at period end | $1.310 million | $3.845 million at Dec. 31, 2023 |
| Total assets / current liabilities | $2.772 million / $6.325 million | $4.355 million / $4.584 million at Dec. 31, 2023 |
| Shareholders’ deficit | $3.553 million | $0.229 million at Dec. 31, 2023 |
Margins are not meaningful because the company has no revenue. The 2023 quarterly net income primarily reflected a $5.587 million non-cash gain from warrant revaluation; the comparable gain was $0.649 million in 2024. No conventional long-term debt is reported. A $1.1 million insurance-premium financing arrangement carried 7.49% interest, with $0.9 million outstanding at quarter-end and payments scheduled through November 2024.
Material changes and developments
- Operating expenses rose 30%, driven partly by higher clinical and manufacturing development costs and approximately $1.0 million more in legal and professional fees, primarily related to the proposed Peak Bio merger.
- Akari raised approximately $2.0 million gross, or $1.7 million net, in a March private placement. It issued 1.321 million ADSs; ordinary shares outstanding rose to 15.973 billion by March 31.
- Operating cash use was lower year over year partly because the company deferred payables to preserve cash.
- After quarter-end, Akari reported a May 10 convertible-note financing of $1.0 million from existing investors/directors. The notes bear 15% interest, potentially 17% on specified defaults, and are due by November 10, 2024 or earlier upon receipt of specified U.K. tax-credit proceeds. Holders may convert at $1.59 per ADS before the specified merger-related deadline.
Outlook, risks and unusual items
- Going concern: Management concluded that substantial doubt exists about the company’s ability to continue as a going concern within one year after issuance. The $1.3 million quarter-end cash balance was insufficient for the following year; the filing states that cash, including the May notes, was expected to fund operations only through the end of May. Further financing is required, with no assurance it will be available.
- Merger and financing condition: The proposed Peak Bio merger is subject to shareholder approvals and other conditions, including a simultaneous PIPE investment yielding at least $10 million net to Akari. Management said it intended to raise additional capital to fund operations through the anticipated third-quarter 2024 merger closing. The merger could be delayed or terminated if conditions are not met.
- Pipeline and restructuring: On May 1, Akari announced suspension of its pediatric HSCT-TMA program and discontinuation of enrollment in the active study. The anticipated combined company is to focus on Peak Bio’s ADC platform and Akari’s preclinical PAS-nomacopan program for geographic atrophy; a pre-IND meeting was expected in Q3 2024. A workforce reduction of approximately 67% began May 1, with estimated costs of $3.1–$3.2 million, including $1.6 million non-cash equity-award expense, expected to be paid through Q4 2024. Estimates may change, and the reduction carries execution and staffing risks.
- Nasdaq listing: Akari received notice that it did not meet Nasdaq’s $2.5 million minimum shareholders’ equity requirement. Its March 31 deficit was $3.6 million. It planned to submit a compliance plan by May 20; a possible extension could run through October 2, 2024, but acceptance and cure are not assured.
- There were no material legal proceedings reported. Management stated disclosure controls were effective as of March 31, 2024.
Most important facts for investors to verify
- Whether Akari obtained sufficient additional capital to fund operations and whether cash runway improved beyond the filing’s stated end-of-May expectation.
- Whether the proposed Peak Bio merger and required PIPE financing closed, and the final exchange ratio, dilution and transaction terms.
- Whether Akari regained Nasdaq shareholders’ equity compliance and maintained its listing.
- Whether the HSCT-TMA suspension and workforce reduction produced the expected savings, and whether actual restructuring costs matched estimates.
- Progress, funding and regulatory plans for PAS-nomacopan, including the anticipated pre-IND meeting.