Akari Therapeutics plc — FY2018 Form 20-F
Reporting period: Fiscal year ended December 31, 2018; this is an annual report, not a standalone fourth-quarter filing. The company is a clinical-stage biopharmaceutical developer focused on rare and orphan diseases. Financial statements are prepared under U.S. GAAP.
Financial and operating summary
| Metric | FY2018 / year-end | FY2017 / comparison |
|---|---|---|
| Revenue | None; no products commercialized | None |
| Research and development expense | $11.80 million | $23.29 million |
| General and administrative expense | $10.90 million | $11.80 million |
| Net loss | $16.47 million | $35.40 million |
| Basic and diluted loss per ordinary share | $0.01 | $0.03 |
| Net cash used in operating activities | $22.58 million | $31.60 million |
| Cash | $5.45 million | $28.11 million |
| Total assets | $8.03 million | $29.05 million |
| Total liabilities | $4.92 million | $11.90 million |
| Shareholders’ equity | $3.11 million | $17.15 million |
There was no debt requiring interest payments at year-end. Cash and restricted cash together were approximately $5.97 million. Current liabilities were $4.92 million. No operating margin is meaningful because the company had no revenue.
Material changes versus FY2017
- Net loss narrowed by about $18.93 million, primarily as R&D expense fell 49%, reflecting lower manufacturing costs and recognition of a $3.79 million U.K. R&D tax credit.
- Operating cash use declined by about $9.02 million. Cash nevertheless fell by about $22.66 million during 2018, while financing cash inflow was only $0.31 million, compared with $15.67 million in 2017.
- The company recorded a $2.70 million litigation-settlement gain in 2018, reflecting insurance proceeds that funded the securities class-action settlement. A $2.70 million settlement loss had been recorded in 2017. The filing’s financial statements present the 2018 amount as a reduction of operating expenses.
- Shares outstanding rose to 1.581 billion at year-end from 1.526 billion. The September 2018 Aspire Capital arrangement included 30 million commitment shares and a sale of 25 million shares for $0.5 million.
Outlook, commentary and risks
- Funding and going concern: Management estimated year-end cash would fund operations only through the end of the second quarter of 2019, excluding potential Aspire Capital sales. The auditor’s report states that recurring operating losses and negative cash flows raise substantial doubt about the company’s ability to continue as a going concern. Additional financing is needed; equity financing could materially dilute shareholders.
- Financing facility: Aspire Capital committed to purchase up to $20 million of ADSs over 30 months, subject to terms, limits and a minimum ADS closing price of $0.25. The registration statement became effective in March 2019. The company reported $19.3 million remained available at the filing date; proceeds are intended for working capital and general purposes.
- Development: Nomacopan (Coversin) is the lead candidate. The company reported early Phase IIa bullous pemphigoid results from three patients, was recruiting for a Phase I/II atopic keratoconjunctivitis study and a Phase III PNH study, and planned to begin a pediatric TMA-HSCT trial in Q4 2019. These are company-reported findings and plans, not proof of approval or commercial success. The aHUS Phase II program was put on hold while the broader TMA strategy was reassessed.
- Clinical uncertainty: The filing reports enrollment delays in rare-disease trials. In the completed COBALT PNH trial, the primary endpoint was met overall, but some individual patients did not meet it; the filing also describes adverse events and a patient withdrawal. Safety, efficacy, trial execution and regulatory approval remain uncertain.
- SEC and litigation: An SEC investigation, including a June 2018 subpoena relating primarily to the Phase II PNH trial, remained ongoing. The securities class action settlement was finally approved in November 2018 and funded by insurance; a separate Edison-related matter was settled for an amount described as immaterial to operations and cash flows.
- Other risks: The company relied on third parties for manufacturing and clinical work, had no sales or distribution infrastructure, and had 13 full-time employees plus one full-time-equivalent consultant. Management reported that prior-year internal-control material weaknesses were remediated and controls were effective at December 31, 2018. No cash dividends were anticipated.
Important facts for investors to verify
- Current cash, subsequent financing proceeds and the actual runway relative to the disclosed Q2 2019 estimate.
- Availability and dilution implications of the Aspire Capital facility, including shares issued and remaining capacity.
- Full clinical datasets, patient-level results and subsequent regulatory feedback for Nomacopan programs.
- Status and potential consequences of the SEC investigation and any related proceedings.
- Whether manufacturing supply, trial enrollment and planned TMA/AKC milestones were achieved after the filing date.
- Reconciliation of the reported litigation settlement gain/loss and timing of related insurance and settlement cash flows.