Business context and reporting period
The supplied filing is Aikido Pharma Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2020; it does not identify Dominari Holdings Inc. as the registrant. The company described itself as an early-stage biotechnology business developing cancer therapies and a broad-spectrum antiviral platform, alongside investments and intellectual-property activities. Its common stock traded as AIKI on Nasdaq.
Financial highlights
Amounts below are in millions of dollars except per-share data. The filing reports no revenue line; management said it did not expect product revenue until its biotechnology products were fully developed.
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Operating expenses | $1.79 | $0.89 | $4.19 | $1.60 |
| Operating loss | $1.79 | $0.89 | $4.19 | $1.60 |
| Other income (expense), net | $(0.52) | $0.24 | $(6.45) | $(0.19) |
| Net loss | $(2.31) | $(0.64) | $(10.65) | $(1.79) |
| Net loss per share | $(0.07) | $(0.30) | $(0.50) | $(0.87) |
| Net cash used in operating activities | Not provided quarterly | Not provided quarterly | $(2.39) | $(1.61) |
At June 30, 2020, cash and cash equivalents were $2.83 million, marketable securities were $26.31 million, and investments were $3.21 million, versus $0.09 million, $0.86 million, and $10.15 million, respectively, at December 31, 2019. Current assets were $29.25 million and current liabilities $0.97 million. Total liabilities were $0.97 million; the balance sheet lists no debt. Stockholders’ equity was $31.49 million and accumulated deficit was $154.91 million. No gross or operating margin is presented, and margins are not meaningful without reported revenue.
For the six months, investing activities used $26.48 million, reflecting substantial purchases of marketable securities, while financing activities provided $31.61 million, primarily from stock and warrant offerings and warrant exercises. Cash increased by $2.74 million.
Material changes versus prior periods
- Six-month operating loss increased to $4.19 million from $1.60 million, due to increased general and administrative and research and development costs, including $1.11 million recorded for an acquired research-and-development license.
- Six-month net loss rose to $10.65 million from $1.79 million, mainly because the reported fair value of the Hoth investment declined by $6.73 million. In Q2, the Hoth valuation decline was $1.66 million, partly offset by marketable-securities gains.
- Financing proceeds supported a marked increase in cash and marketable securities. Common shares outstanding rose from approximately 4.83 million at year-end 2019 to 34.92 million at June 30, 2020, reflecting equity issuance and warrant exercises.
Outlook, risks and unusual items
- Management stated that available cash was sufficient to fund operations for at least the next 12 months, but significant additional capital would be needed to develop product candidates and pursue regulatory approvals. If financing is unavailable on acceptable terms, development and infrastructure plans could be curtailed.
- The company reported no clinical-stage product candidates and described development, regulatory approval, commercialization, funding, collaboration and intellectual-property protection as material risks. It discussed a planned IND filing for DHA-dFdC and hoped to begin human testing in 2021, while cautioning that timing was uncertain. Elsewhere, the filing describes different cancer indications and a focus on prostate cancer; investors should verify the current program and indication.
- Management did not expect a material long-term effect from COVID-19 on development timelines or liquidity, but stated that the pandemic’s specific financial and operational effects were uncertain.
- Nasdaq notified the company of a minimum-bid-price deficiency in April 2020. The filing says it regained compliance after the share price met the requirement for 10 consecutive trading days through July 30, 2020.
- Disclosure controls and procedures were deemed ineffective as of June 30, 2020 because of material weaknesses, including inadequate segregation of duties and insufficient controls to ensure material transactions and developments were reflected in the financial statements. No material control changes during the quarter were reported.
- The filing notes that the company’s auditors had expressed substantial doubt about its ability to continue as a going concern in their report on the prior-year financial statements. The company reported no material active or pending legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing is for Aikido Pharma Inc., not Dominari Holdings Inc.
- Review the composition, liquidity and valuation sensitivity of marketable securities and investments, particularly the Hoth holding and its contribution to reported losses.
- Assess cash runway against operating burn and the company’s stated need for additional financing, including potential dilution or debt restrictions.
- Verify the development status, target indications and timetable for DHA-dFdC and other programs, including the filing’s differing descriptions of cancer focus.
- Monitor remediation of the disclosed internal-control material weaknesses and continued Nasdaq listing compliance.