Business context and reporting period
This is Aikido Pharma Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2020; the filing identifies the registrant as formerly Spherix Incorporated. The request metadata names Dominari Holdings Inc., which does not match the company identified in the filing.
Aikido describes itself as a development-stage biotechnology company pursuing therapeutics for pancreatic cancer, AML and ALL, and a broad-spectrum antiviral platform. It also holds investments in Hoth Therapeutics and DatChat and acquired assets from CBM BioPharma. The filing reports no operating revenue for the periods presented.
Financial results and position
| Metric ($ millions, except per-share data) | Q3 2020 | Q3 2019 | 9M 2020 | 9M 2019 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Operating expenses | 0.966 | 0.902 | 5.159 | 2.503 |
| Operating loss | (0.966) | (0.902) | (5.159) | (2.503) |
| Other expense | (1.051) | (2.461) | (7.504) | (2.653) |
| Net loss | (2.017) | (3.363) | (12.663) | (5.156) |
| Basic and diluted loss per share | (0.06) | (1.38) | (0.49) | (2.35) |
At September 30, 2020, cash and cash equivalents were $0.910 million and marketable securities were $26.388 million, totaling $27.298 million in cash and marketable securities. Current assets were $27.344 million, current liabilities $0.459 million, and stockholders’ equity $29.208 million. No debt is presented on the balance sheet. The company reported no gross margin or operating margin; revenue was not reported.
For the first nine months, operating cash use was $3.579 million, investing cash use was $27.210 million, and financing cash inflow was $31.608 million. Cash increased by $0.819 million from year-end 2019. Investing cash flows included substantial purchases and sales of marketable securities. Financing proceeds included equity and warrant-related transactions.
Changes versus comparable periods
- Q3 net loss narrowed to $2.017 million from $3.363 million, principally because the reported loss from change in investment fair value was lower; this was partly offset by greater losses on marketable securities. Operating loss increased modestly.
- Nine-month net loss increased to $12.663 million from $5.156 million. Operating loss more than doubled, reflecting increased R&D, including a $1.154 million acquired-license expense, and higher general and administrative costs. Other expense also rose, primarily due to the change in fair value of the Hoth investment and marketable-security losses.
- Cash and marketable securities rose substantially from December 31, 2019, while investments declined from $10.153 million to $2.323 million. The filing attributes significant funding to 2020 equity offerings and warrant exercises.
- Common shares outstanding increased from 4,825,549 at year-end 2019 to 34,920,219 at September 30, 2020. The filing reports 34,920,219 shares outstanding as of November 12, 2020.
Outlook, risks and notable items
- Management stated that cash on hand was sufficient to fund operations for at least the next 12 months, but that significant additional capital would be needed for longer-term development and regulatory work. Future funding may require equity or debt, strategic relationships, grants or other arrangements; unavailable or unacceptable financing could curtail development plans, and equity financing could dilute shareholders.
- The company expected CMC and formulation work on its pancreatic candidate to continue through year-end 2020, with formulation optimization and animal toxicology and pharmacology studies planned for the first half of 2021. It planned to prepare an IND and seek FDA discussions in that period. No IND or NDA had been submitted as of the filing. The proposed use of the FDA’s Section 505(b)(2) pathway is management’s expectation, not an approval or assurance of reduced development time or cost.
- The company received a Nasdaq minimum-bid-price deficiency notice on September 24, 2020, with a compliance deadline of March 23, 2021; the stock needed to close at or above $1 for at least 10 consecutive business days to regain compliance.
- Management identified material weaknesses in internal control over financial reporting, including insufficient segregation of duties and inadequate controls to ensure material transactions and developments are reflected. It concluded disclosure controls were not effective as of September 30, 2020.
- Management stated COVID-19’s specific impact was not readily determinable; the financial statements included no related adjustments. The filing reports no material active or pending legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the registrant identity: the supplied request says Dominari Holdings Inc., while the filing is for Aikido Pharma Inc. (formerly Spherix Incorporated).
- Review the company’s liquidity runway, expected operating and clinical-development costs, and financing needs against its 12-month funding statement.
- Track Nasdaq bid-price compliance and the potential for further dilution from financing or outstanding warrants.
- Assess the valuation and liquidity of marketable securities and investments, and the effect of fair-value changes on reported earnings.
- Monitor progress and costs for CMC, animal studies, FDA discussions and any future IND submission; these are plans, not completed milestones.
- Review remediation of the disclosed internal-control weaknesses and the related risk to financial reporting.