UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ |
Commission File Number
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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* Trading, but only in connection with the American Depository Shares.
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
The number of shares of Registrant’s Ordinary Shares outstanding as of May 10, 2024 was
TABLE OF CONTENTS
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PART I |
1 |
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Item 1. |
1 |
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1 |
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Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income |
2 |
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Condensed Consolidated Statements of Shareholders' (Deficit) Equity |
3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
Item 3. |
29 |
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Item 4. |
30 |
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PART II |
31 |
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Item 1. |
31 |
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Item 1A. |
31 |
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Item 2. |
31 |
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Item 3. |
31 |
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Item 4. |
31 |
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Item 5. |
32 |
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Item 6. |
33 |
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34 |
i
GENERAL INFORMATION
Unless otherwise stated or the context requires otherwise, references in this Quarterly Report on Form 10-Q ("Form 10-Q") to “Akari,” the “company,” the “Company,” “we,” “us,” “our” or similar designations refer to Akari Therapeutics, Plc and its subsidiaries, taken together. All trademarks, service marks, trade names and registered marks used in this report are trademarks, trade names or registered marks of their respective owners.
Statements made in this Quarterly Report on Form 10-Q concerning the contents of any agreement, contract or other document are summaries of such agreements, contracts or documents and are not complete description of all of their terms. If we filed any of these agreements, contracts or documents as exhibits to this Quarterly Report on Form 10-Q or to any previous filing with the Securities and Exchange Commission (“SEC”), you may read the document itself for a complete understanding of its terms.
ii
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and the documents we incorporate by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, included or incorporated in this report regarding, among other things, our cash resources and projected cash runway, financial position, our strategy, strategic alternatives, future operations, clinical trials (including, without limitation, the anticipated timing enrollment, and results thereof), collaborations, intellectual property, future revenues, projected costs, fundraising and/or financing plans, prospects, developments relating to our competitors and our industry, the timing or likelihood of regulatory actions, filings and approvals for our current and future drug candidates, and the benefits related to the Merger Agreement (as defined below) and the plans and objectives of management are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,” “potential,” “likely,” “projects,” “intend,” “continue,” “will,” “schedule,” “would,” “aim,” “contemplate,” “estimate,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we will actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements.
There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These important factors include those set forth under Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Form 10-K”) and Part II “Item 1A. Risk Factors” of this Form 10-Q and in our other disclosures and filings we have made with the SEC. These factors and the other cautionary statements made in this Form 10-Q and the documents we incorporate by reference should be read as being applicable to all related forward-looking statements whenever they appear in this Form 10-Q and the documents we incorporate by reference.
In addition, any forward-looking statements represent our estimates only as of the date that this Form 10-Q is filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. All forward-looking statements included in this Form 10-Q are made as of the date hereof and are expressly qualified in their entirety by this cautionary notice. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by law.
iii
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
AKARI THERAPEUTICS, PLC
Condensed Consolidated Balance Sheets
(Unaudited, in U.S. dollars)
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March 31, |
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December 31, |
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(In thousands, except share and per share amounts) |
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2024 |
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2023* |
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ASSETS |
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Current assets: |
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Cash |
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$ |
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$ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Patent acquisition costs, net |
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— |
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Total assets |
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$ |
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$ |
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LIABILITIES AND SHAREHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Warrant liability |
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Other current liabilities |
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Total current liabilities |
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(Note 9) |
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Shareholders’ deficit: |
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Share capital of $ |
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Authorized: |
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Additional paid-in capital |
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Capital redemption reserve |
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Accumulated other comprehensive loss |
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( |
) |
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( |
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Accumulated deficit |
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( |
) |
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( |
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Total shareholders’ deficit |
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( |
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( |
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Total liabilities and shareholders' deficit |
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$ |
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$ |
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———————
* The condensed balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date.
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
AKARI THERAPEUTICS, PLC
Condensed Consolidated Statements of Operations
and Comprehensive (Loss) Income
(Unaudited, in U.S. dollars)
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Three Months Ended |
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March 31, |
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(In thousands, except share and per share amounts) |
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2024 |
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2023 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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General and administrative |
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Loss from operations |
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( |
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( |
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Other income (expense): |
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Interest income |
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Change in fair value of warrant liability |
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Foreign currency exchange loss, net |
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( |
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( |
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Other expense, net |
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( |
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( |
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Total other income (expense), net |
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Net (loss) income |
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$ |
( |
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$ |
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Net (loss) income per share –– basic and diluted |
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$ |
( |
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$ |
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Weighted-average number of ordinary shares used in computing |
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— Basic |
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— Diluted |
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Comprehensive (loss) income: |
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Net (loss) income |
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$ |
( |
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$ |
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Other comprehensive income, net of tax: |
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Foreign currency translation adjustment |
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Total other comprehensive income, net of tax |
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Total comprehensive (loss) income |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
AKARI THERAPEUTICS, PLC
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
(Unaudited, in U.S. dollars)
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Three Months Ended March 31, 2024 |
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Accumulated |
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Additional |
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Capital |
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Other |
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Total |
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Share Capital $ |
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Paid-in- |
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Redemption |
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Comprehensive |
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Accumulated |
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Shareholders' |
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(In thousands, except share amounts) |
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Shares |
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Amount |
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Capital |
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Reserve |
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Loss |
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Deficit |
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Deficit |
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Balance, December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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Issuance of share capital related to |
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— |
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— |
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— |
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Vesting of restricted shares |
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( |
) |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance, March 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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Three Months Ended March 31, 2023 |
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Accumulated |
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Additional |
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Capital |
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Other |
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Total |
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Share Capital $ |
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Paid-in- |
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Redemption |
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Comprehensive |
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Accumulated |
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Shareholders' |
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(In thousands, except share amounts) |
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Shares |
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Amount |
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Capital |
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Reserve |
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Loss |
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Deficit |
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Equity |
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Balance, December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of share capital related to |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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Foreign currency translation |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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Balance, March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AKARI THERAPEUTICS, PLC
Condensed Consolidated Statements of Cash Flows
(Unaudited, in U.S. dollars)
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Three Months Ended |
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March 31, |
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(In thousands) |
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2024 |
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2023 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net (loss) income |
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$ |
( |
) |
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$ |
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Adjustments to reconcile net (loss) income to net cash used in operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Change in fair value of warrant liability |
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( |
) |
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( |
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Foreign currency exchange (gains) losses |
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Change in assets and liabilities: |
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Prepaid expenses and other current assets |
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( |
) |
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Accounts payable and accrued expenses |
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( |
) |
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Net cash used in operating activities |
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( |
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( |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of shares, net of issuance costs |
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Proceeds from employee vesting of restricted shares |
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— |
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Payments on short-term financing arrangement |
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( |
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— |
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Net cash provided by financing activities |
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Effect of exchange rates on cash |
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( |
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— |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash at beginning of period |
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Cash at end of period |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES: |
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Financing costs in accrued expenses |
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$ |
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$ |
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Subscription receivable |
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$ |
— |
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$ |
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Non-cash seller-financed purchases |
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$ |
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$ |
— |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
AKARI THERAPEUTICS, PLC
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Description of Business
Business Overview
Akari Therapeutics, Plc, (the “Company” or “Akari”) is incorporated in the United Kingdom. The Company is a clinical-stage biotechnology company focused on developing advanced therapies for autoimmune and inflammatory diseases involving the complement component 5 (“C5”) and leukotriene B4 (“LTB4”) pathways. The Company’s activities since inception have consisted of performing research and development activities and raising capital.
The Company is subject to a number of risks similar to those of clinical stage companies, including dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with clinical trials of products, dependence on third-party collaborators for research and development operations, need for marketing authorization of products, risks associated with protection of intellectual property, and competition with larger, better-capitalized companies.
To fully execute its business plan, the Company will need, among other things, to complete its research and development efforts and clinical and regulatory activities. These activities may take several years and will require significant operating and capital expenditures in the foreseeable future. There can be no assurance that these activities will be successful. If the Company is not successful in these activities it could delay, limit, reduce or terminate preclinical studies, clinical trials or other research and development activities.
Agreement and Plan of Merger
As further described in Note 3, in March 2024, the Company entered into an Agreement and Plan of Merger with Peak Bio, Inc. (“Peak Bio”). However, the Company has prepared these condensed consolidated financial statements as if the Company will remain an independent company.
Liquidity and Financial Condition
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.
The Company has incurred substantial losses and negative cash flows since inception and had an accumulated deficit of $
The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses. Substantial additional financing will be needed by the Company to fund its operations and to commercially develop its product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These
5
strategies may include, but are not limited to: product development financing, private placements and/or public offerings of equity and/or debt securities, and strategic research and development collaborations and/or similar arrangements. There can be no assurance that these future funding efforts will be successful.
Nasdaq Continued Listing Rules
On April 5, 2024, the Company received a letter (“Letter”) from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Capital Market (“Nasdaq”) notifying the Company that the Company’s shareholders’ equity as reported in its Form 10-K is no longer in compliance with the minimum shareholders’ equity requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(b)(1), which requires listed companies to maintain shareholders’ equity of at least $
In accordance with the Nasdaq Listing Rules, the Company has 45 calendar days, or until May 20, 2024, to submit a plan to regain compliance with the Stockholders’ Equity Requirement (the “Compliance Plan”), which the Company plans to timely submit for the Staff’s consideration. If the Compliance Plan is accepted, the Staff may grant the Company an extension period of up to 180 calendar days from the date of the Letter, through October 2, 2024, to regain compliance with the Shareholders’ Equity Requirement.
There can be no assurance that the Staff will accept the Compliance Plan or, if accepted, that the Company will be able to evidence compliance with the Shareholders’ Equity Requirement during any extension period that the Staff may grant. If the Staff does not accept the Compliance Plan or if the Company is unable to regain compliance within any extension period granted by the Staff, the Staff would be required to issue a delisting determination. The Company would, at that time, be entitled to request a hearing before a Nasdaq Hearings Panel to present its Compliance Plan to regain compliance and to request a further extension period to regain compliance with the Shareholders’ Equity Requirement. The request for a hearing would stay any delisting action by the Staff.
If the Company continues to not be in compliance or it fails to meet any of the other Nasdaq continuing listing requirements, its ADSs may be subject to delisting and the Company may become subject to delisting proceedings. The Company is currently assessing its available options to regain compliance with the Shareholders' Equity Requirement.
6
Note 2. Summary of Significant Accounting Policies
Basis of presentation – The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the rules and regulations of the SEC and assumes that the Company will continue to operate as a going concern. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, including normal and recurring adjustments, which the Company considers necessary for the fair presentation of financial information. The results of operations and comprehensive loss for the three months ended March 31, 2024 are not necessarily indicative of expected results for the fiscal year ended December 31, 2024 or any other future period. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2023 and notes thereto included in its Form 10-K, as filed with the SEC on March 29, 2024.
Principles of consolidation – The condensed consolidated financial statements include the accounts of the Company, Celsus Therapeutics, Inc., a Delaware corporation, Volution Immuno Pharmaceuticals SA, a private Swiss company, and Akari Malta Limited, a private Maltese company, each wholly-owned subsidiaries. All intercompany transactions have been eliminated.
Foreign currency – The functional currency of the Company is U.S. dollars, as that is the currency of the primary economic environment in which the Company operates as well as the currency in which it has been financed.
The reporting currency of the Company is U.S. dollars. The financial statements of certain of the Company's foreign subsidiaries are measured using their local currency as the functional currency. The Company translates its non-U.S. operations’ assets and liabilities denominated in foreign currencies into U.S. dollars at current rates of exchange as of the balance sheet date and income and expense items at the average exchange rate for the reporting period. Translation adjustments resulting from exchange rate fluctuations are recorded as foreign currency translation adjustments, a component of accumulated other comprehensive loss. Gains or losses from foreign currency transactions are included in foreign currency exchange gains/(losses).
Use of estimates – The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets, liabilities, expenses and related disclosures. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, the valuation of share-based awards, the valuation of warrant liabilities, research and development prepayments, accruals and related expenses, and the valuation allowance for deferred income taxes. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.
Concentration of credit risk – Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash. The Company generally maintains balances in various operating accounts at financial institutions in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.
7
Fair value measurements – Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. The fair value hierarchy also requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
Cash – The Company considers all highly-liquid investments with original maturities of 90 days or less at the time of acquisition to be cash equivalents. The Company had
Prepaid expenses – Payments made prior to the receipt of goods or services are capitalized until the goods or services are received.
Other current assets – Other current assets as of March 31, 2024 and December 21, 2023 were principally comprised of Value Added Tax (“VAT”) receivables.
Patent acquisition costs – Patent acquisition costs and related capitalized legal fees are amortized on a straight-line basis over the shorter of the legal or economic life. The estimated useful life is
Accrued expenses – As part of the process of preparing the condensed consolidated financial statements, the Company estimates accrued expenses. This process involves identifying services that third parties have performed on the Company’s behalf and estimating the level of service performed and the associated cost incurred on these services as of each balance sheet date in the Company’s condensed consolidated financial statements. Examples of estimated accrued expenses include contract service fees in conjunction with pre-clinical and clinical trials, professional service fees and contingent liabilities. In connection with these service fees, the Company’s estimates are most affected by its understanding of the status and timing of services provided relative to the actual services incurred by the service providers. If the Company does not identify certain costs that have been incurred or it under or over-estimates the level of services or costs of such services, the Company’s reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to the Company’s estimation and judgment. The Company makes these judgments based upon the facts and circumstances known to it in accordance with U.S. GAAP. See Note 5.
8
Warrant Liability – The Company accounts for ordinary share or ADS warrants as either equity instruments, liabilities or derivative liabilities in accordance with ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and/or ASC Topic 815, Derivatives and Hedging (“ASC 815”), depending on the specific terms of the warrant agreement. Liability-classified warrants are recorded at their estimated fair values at issuance are remeasured each reporting period until they are exercised, terminated, reclassified or otherwise settled. Changes in the estimated fair value of liability-classified warrants are recorded in "change in fair value of warrant liability" in the Company’s condensed consolidated statements of operations and comprehensive (loss) income. Equity-classified warrants are recorded within "additional paid-in capital" in the Company's condensed consolidated statements of shareholders' (deficit) equity at the time of issuance and not subject to remeasurement.
Other Current Liabilities – In February 2024, the Company entered into a short-term financing arrangement with a third-party vendor to finance insurance premiums. The aggregate amount financed under this agreement was $
Research and development expenses – Costs associated with research and development are expensed as incurred unless there is an alternative future use in other research and development projects. Research and development expenses include, among other costs, salaries and personnel–related expenses, fees paid for contract research services, fees paid to clinical research organizations, costs incurred by outside laboratories, manufacturers and other accredited facilities in connection with clinical trials and preclinical studies.
Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. The Company records expenses related to clinical studies and manufacturing development activities based on its estimates of the services received and efforts expended pursuant to contracts with multiple contract research organizations and manufacturing vendors that conduct and manage these activities on its behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven cash flows. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical study milestones. In amortizing or accruing service fees, the Company estimates the time period over which services will be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the Company will adjust the accrued or prepaid expense balance accordingly.
The Company accounts for research and development tax credits at the time its realization becomes probable as a credit to research and development expenses in the condensed consolidated statements of operations and comprehensive (loss) income.
Share-based compensation expense – The Company measures all share-based awards granted to employees, directors and non-employees based on the estimated fair value on the date of grant and recognizes compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective awards. Forfeitures are accounted for as they occur. The Company classifies share-based compensation expense in its condensed consolidated statements of operations and comprehensive (loss) income in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.
The fair value of each restricted ordinary share award is determined on the date of grant based on the fair value of the Company’s ordinary shares on that same date. The fair value of each share option grant is determined on the date of grant using the Black-Scholes option pricing model, which requires inputs based on certain assumptions, including the expected stock price volatility, the expected term of the award, the risk-free interest rate, and expected dividends (See Note 7). The Company estimates stock price volatility based on the Company’s historical stock price performance over a period of time that matches the expected term of the stock options. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend
9
yield is based on the fact that the Company has never paid cash dividends on ordinary shares and does not expect to pay any cash dividends in the foreseeable future.
Leases – The Company accounts for its leases in accordance with ASC 842, Leases. In accordance with ASC 842, the Company records a right-of-use (“ROU”) asset and corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheet and are recognized on a straight-line basis over the lease term. As of March 31, 2024 and December 31, 2023, the Company did not have any leases with a term longer than twelve months. Accordingly, no ROU assets and corresponding lease liabilities are included in the Company’s condensed consolidated balance sheets as of March 31, 2024 or December 31, 2023.
Income taxes – In accordance with ASC 270, Interim Reporting, and ASC 740, Income Taxes, the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. For the three months ended March 31, 2024 and 2023, the Company recorded no tax expense or benefit due to the expected current year loss and its historical losses. The Company has not recorded its net deferred tax asset as of either March 31, 2024 or December 31, 2023 because it maintained a full valuation allowance against all deferred tax assets as of these dates as management has determined that it is not more likely than not that the Company will realize these future tax benefits. As of March 31, 2024 and December 31, 2023, the Company had no uncertain tax positions.
Net (loss) income per share – Basic net (loss) income per ordinary share is computed by dividing net (loss) income available to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period, which includes ordinary shares underlying pre-funded warrants, as such warrant is exercisable, in whole or in part, for nominal cash consideration with no expiration date. Diluted net (loss) income per ordinary share is computed by dividing the diluted net (loss) income available to ordinary shareholders by the weighted average number of ordinary shares, including potential dilutive ordinary shares assuming the dilutive effect as determined using the treasury stock method.
For periods in which the Company has reported net losses, diluted net loss per ordinary share is the same as basic net loss per ordinary share, since dilutive ordinary shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss for the three months ended March 31, 2024 and net income for the three months ended March 31, 2023.
The following potential dilutive securities, presented based on amounts outstanding at the end of each reporting period, have been excluded from the calculation of diluted net loss per share because including them would have had an anti-dilutive impact:
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Stock options |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
Warrants |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
New Accounting Pronouncements – From time to time, new accounting pronouncements are issued by the FASB and rules are issued by the SEC that the Company has or will adopt as of a specified date. Unless otherwise noted, management does not believe that any other recently issued accounting pronouncements issued by the FASB or guidance issued by the SEC had, or is expected to have, a material impact on the Company’s present or future consolidated financial statements.
Recently Issued (Not Yet Adopted) Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures. This ASU modified the disclosure and presentation requirements
10
primarily through enhanced disclosures of significant segment expenses and clarified that single reportable segment entities must apply Topic 280 in its entirety. This guidance is effective for the Company for the year beginning January 1, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statement. The Company is currently assessing the impact of this guidance on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU improves the transparency of income tax disclosure by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. This guidance is effective for the Company for the year beginning January 1, 2025, with early adoption permitted. The amendments should be applied on a prospective basis, with retrospective application permitted. The Company is currently assessing the impact of this guidance on its consolidated financial statements and related disclosures.
Note 3. Agreement and Plan of Merger
Agreement and Plan of Merger
On March 4, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Peak Bio and Pegasus Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Akari (“Pegasus Merger Sub”), pursuant to which, upon the terms and subject to the conditions thereof, Pegasus Merger Sub will be merged with and into Peak Bio (the “Merger”), with Peak Bio surviving the Merger as a wholly-owned subsidiary of Akari.
Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of Peak Bio common stock, par value $
The board of directors of each of Akari and Peak has unanimously approved the Merger Agreement and the transactions contemplated thereby. Consummation of the Merger is subject to various conditions, including, among others, (i) approval of the Merger Agreement and Merger by Peak Bio stockholders, (ii) Akari’s shareholders authorizing Akari’s board of directors to allot all Akari ordinary shares to be issued in connection with the Merger (to be represented by Akari ADSs), (iii) the absence of any law or order prohibiting consummation of the Merger, (iv) Akari’s Registration Statement on Form S-4 (to be issued in connection with the Merger) having been declared effective, (v) the Akari ADSs issuable to Peak Bio stockholders having been authorized for listing on Nasdaq, (vi) accuracy of the other party’s representations and warranties (subject to certain materiality standards set forth in the Merger Agreement), (vii) compliance by the other party in all material respects with such other party’s obligations under the Merger Agreement; (viii) the absence of a material adverse effect on the other party, (ix) the other party’s net cash being greater than negative $
11
Merger Agreement) shall have been consummated simultaneously with, and conditioned only upon, the occurrence of the closing, and shall result in net proceeds to Akari of at least $
Either Akari or Peak Bio may terminate the Merger Agreement under certain circumstances, including if (i) the Merger is not completed by September 4, 2024, (ii) the other party's board of directors withdraws, modifies or qualifies its recommendation in favor of the transactions contemplated by the Merger Agreement or approves or recommends an alternative transaction or (iii) Akari’s or Peak Bio’s board of directors, as applicable, resolves to enter into a definitive agreement with respect to a superior proposal prior to obtaining approval of the Akari ADS issuance or Merger, as applicable, from Akari’s shareholders or Peak Bio’s stockholders, as applicable. The Merger Agreement also provides that under certain specified circumstances of termination described in the Merger Agreement, Akari or Peak Bio, as applicable, will be required to pay a termination fee equal to $
Concurrently with the Merger Agreement, Akari and Peak Bio entered into voting and support agreements (the “Voting Agreements”) with certain shareholders of Akari (the “Akari Shareholders”), and certain stockholders of Peak Bio (the “Peak Stockholders” and, together with the Akari Shareholders, the “Supporting Holders”). The Supporting Holders have agreed to, among other things, vote their shares in favor of the Merger Agreement and the Merger or the issuance of Akari Ordinary Shares in connection therewith, as applicable, in accordance with the recommendation of the respective boards of directors of Akari and Peak Bio.
The Voting Agreements will terminate at the earliest to occur of (a) the Effective Time, (b) receipt of approval of the Supporting Holders, as applicable, and (c) such date and time as the Merger Agreement is validly terminated.
Note 4. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s financial liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy used to determine such values:
|
|
March 31, 2024 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability - Series A |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Warrant liability - Series B |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
|
|
December 31, 2023 |
|
|||||||||||||
(In thousands) |
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrant liability - Series A |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Warrant liability - Series B |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
The Company’s Level 3 liabilities consist of the September 2022 Warrants (defined below), which were determined to be liability-classified instruments. There were no transfers between Level 1, Level 2, and Level 3 during the three months ended March 31, 2024 and 2023.
12
Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis
The following table summarizes the activity in the warrant liability measured at fair value on a recurring basis using unobservable inputs (Level 3) during the three months ended March 31, 2024:
|
|
Warrant Liability |
|
|||||||||
(In thousands) |
|
Series A |
|
|
Series B |
|
|
Total |
|
|||
Balance, December 31, 2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Change in the fair value of liability |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance, March 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Assumptions Used in Determining Fair Value of Liability-Classified Warrants
The fair value of the warrant liability is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The fair value of both the Series A Warrants and the Series B Warrants (each defined below) was determined using the Black-Scholes Option Pricing Model, which uses various assumptions, including (i) fair value of the Company’s ADSs, (ii) exercise price of the warrant, (iii) expected term of the warrant, (iv) expected volatility and (v) expected risk-free interest rate.
Below are the assumptions used for the fair value calculations of the Series A Warrants and Series B Warrants (each defined below), as of March 31, 2024 and December 31, 2023:
|
|
March 31, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Series A |
|
|
Series B |
|
|
Series A |
|
|
Series B |
|
||||
Stock (ADS) price |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Exercise price |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Expected term (in years) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected volatility |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Risk-free interest rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Expected dividend yield |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Note 5. Accrued Expenses
Accrued expenses consisted of the following as of March 31, 2024 and December 31, 2023:
|
|
March 31, |
|
|
December 31, |
|
||
($ in thousands) |
|
2024 |
|
|
2023 |
|
||
Employee compensation and benefits |
|
$ |
|
|
$ |
|
||
External research and development expenses |
|
|
|
|
|
|
||
Professional and consulting fees |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
13
Note 6. Shareholders’ (Deficit) Equity
Ordinary Shares
On June 30, 2023, the Company’s shareholders approved an increase to the number of authorized ordinary shares, par value $
Currently, each ADS represents
March 2024 Private Placement
In March 2024, the Company entered into a definitive purchase agreement with certain existing investors, pursuant to which the Company sold and issued in a private placement an aggregate of
At close of the March 2024 Private Placement, the Company issued to Paulson Investment Company, LLC (“Paulson”), as placement agent for the March 2024 Private Placement, warrants to purchase
The Company determined that the March 2024 Placement Agent Warrants met all of the criteria for equity classification. Accordingly, upon closing of the March 2024 Private Placement, each of the March 2024 Placement Agent Warrants were recorded as a component of additional paid-in capital.
December 2023 Private Placement
In December 2023, the Company entered into purchase agreements to sell, in a private placement, to existing investors, Dr. Ray Prudo, M.D., the Company’s Chairman, and Dr. Samir Patel, M.D., director, (the “December 2023 Private Placement”) an aggregate of
September 2023 Private Placement
In September 2023, the Company entered into purchase agreements to sell in a private placement to existing investors and directors, including Dr. Prudo and Ms. Rachelle Jacques, the Company’s then President and Chief Executive Officer (the “September 2023 Private Placement”) an aggregate of
At close of the September 2023 Private Placement, the Company issued to Paulson, as placement agent for the September 2023 Private Placement, warrants to purchase
14
The Company determined that the Pre-Funded Warrants and October 2023 Placement Agent Warrants met all of the criteria for equity classification. Accordingly, upon closing of the September 2023 Private Placement, each of the Pre-Funded Warrants and October 2023 Placement Agent Warrants were recorded as a component of additional paid-in capital.
March 2023 Registered Direct Offering
On March 31, 2023, the Company entered into securities purchase agreements with certain accredited and institutional investors, including Dr. Prudo (the “March Registered Direct Offering”) providing for the issuance of an aggregate of
Warrants
In connection with various financing transactions, the Company has issued warrants to purchase the Company’s ordinary shares represented by ADSs. The Company accounts for such warrants as equity instruments or liabilities, depending on the specific terms of the warrant agreement. See Note 2 for further details on accounting policies related to the Company’s warrants.
The following table summarizes the Company’s outstanding warrants as of March 31, 2024 and December 31, 2023:
|
|
Number of Warrant ADSs |
|
|
|
|
|
|
|
|||||||
|
|
March 31, |
|
|
December 31, |
|
|
Weighted-Average |
|
|
|
|
||||
|
|
2024 |
|
|
2023 |
|
|
Exercise Price |
|
|
Expiration Date |
|
||||
Equity-classified Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2019 Investor Warrants |
|
|
|
|
|
|
|
$ |
|
|
7/1/2024 |
|
||||
2019 Placement Warrants |
|
|
|
|
|
|
|
$ |
|
|
6/28/2024 |
|
||||
2020 Investor Warrants |
|
|
|
|
|
|
|
$ |
|
|
Feb-Mar 2025 |
|
||||
2020 Placement Warrants |
|
|
|
|
|
|
|
$ |
|
|
Feb-Mar 2025 |
|
||||
July 2021 Placement Agent Warrants |
|
|
|
|
|
|
|
$ |
|
|
7/7/2026 |
|
||||
December 2021 Investor Warrants |
|
|
|
|
|
|
|
$ |
|
|
1/4/2027 |
|
||||
December 2021 Placement Agent |
|
|
|
|
|
|
|
$ |
|
|
12/29/2026 |
|
||||
March 2022 Investor Warrants |
|
|
|
|
|
|
|
$ |
|
|
3/10/2027 |
|
||||
March 2022 Placement Agent Warrants |
|
|
|
|
|
|
|
$ |
|
|
3/10/2027 |
|
||||
October 2023 Investor Prefunded |
|
|
|
|
|
|
|
$ |
|
|
|
— |
|
|||
October 2023 Placement Agent Warrants |
|
|
|
|
|
|
|
$ |
|
|
10/6/2028 |
|
||||
March 2024 Placement Agent Warrants |
|
|
|
|
|
— |
|
|
$ |
|
|
3/27/2029 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liability-classified Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
September 2022 Series A Investor |
|
|
|
|
|
|
|
$ |
|
|
9/14/2024 |
|
||||
September 2022 Series B Investor |
|
|
|
|
|
|
|
$ |
|
|
9/14/2029 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
15
The following table summarizes the Company’s warrants activity for the three months ended March 31, 2024:
|
|
Number of |
|
|
Weighted-Average |
|
||
($ in thousands, except per share data) |
|
Warrants |
|
|
Exercise Price |
|
||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
||
Issued |
|
|
|
|
|
|
||
Exercised |
|
|
— |
|
|
|
— |
|
Expired |
|
|
— |
|
|
|
— |
|
Outstanding at March 31, 2024 |
|
|
|
|
$ |
|
||
Capital Redemption Reserve
In December 2020, for the purposes of changing the nominal value of the Company's ordinary shares from £
Amounts transferred from share capital on the redemption of the Deferred Shares of $
Note 7. Share-Based Compensation
2023 Equity Incentive Plan
On June 30, 2023, the Company’s shareholders approved the 2023 Equity Incentive Plan (the “2023 Plan”), which provides for the grant of stock options, both incentive stock options and nonqualified stock options, stock, with and without vesting restrictions, restricted stock units and stock appreciation rights, to be granted to employees, directors and consultants. The Company is permitted to grant up to
All outstanding ordinary shares under the 2014 Equity Incentive Plan (the “2014 Plan”) relating to stock options and restricted stock units may be issued under the 2023 Plan if such awards are forfeited, cancelled or expire unexercised. Accordingly, the total number of ordinary shares that may ultimately be issued under rights granted under the 2023 Plan, including up to
The 2023 and 2014 Plans provide that they be administered by the compensation committee of the board of directors. The exercise price for stock option awards may not be less than
16
2014 Equity Incentive Plan
Under the 2014 Plan the Company was authorized to grant stock options, restricted stock units and other awards, to employees, members of the board of directors and consultants. Upon effectiveness of the 2023 Plan no further awards were available to be issued under the 2014 Plan. As of March 31, 2024, the Company had
Stock Options
The following is a summary of the Company’s stock option activity under the 2014 Plan and the 2023 Plan for the three months ended March 31, 2024:
($ in thousands, except share and per share data) |
|
Stock |
|
|
Weighted- |
|
|
Weighted-Average |
|
|
Aggregate |
|
||||
Outstanding at December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
Granted |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Exercised |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Forfeited |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at March 31, 2024 (1) |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
Exercisable at March 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
— |
|
|||
___________
The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the Company’s ordinary shares for those options that had exercise prices lower than the fair value of the Company’s ordinary shares.
The weighted-average grant-date fair value per share of options granted during each of the three months ended March 31, 2024 and 2023 was less than $
Option Valuation
The weighted-average assumptions that the Company used to determine the fair value of share options granted were as follows, presented on a weighted average basis:
|
|
2024 |
|
|
2023 |
|
||
Expected volatility |
|
|
— |
|
|
|
% |
|
Risk-free interest rate |
|
|
— |
|
|
|
% |
|
Expected dividend yield |
|
|
— |
|
|
|
— |
|
Expected term (in years) |
|
|
— |
|
|
|
|
|
Restricted Stock Units
The 2014 Plan provided, and the 2023 Plan provides, for the award of restricted stock units (“RSUs”). RSUs are granted to employees that are subject to time-based vesting conditions that lapse between
17
The following table summarizes the Company’s restricted stock activity for the three months ended March 31, 2024:
|
|
Time-based Awards |
|
|||||
($ in thousands, except per share data) |
|
Number of Shares |
|
|
Weighted-Average |
|
||
Nonvested shares at December 31, 2023 |
|
|
|
|
$ |
|
||
Granted |
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
Vested |
|
|
( |
) |
|
|
|
|
Nonvested shares at March 31, 2024 |
|
|
|
|
$ |
|
||
The fair value of time-based RSUs that vested during the three months ended March 31, 2024 was approximately $
As of March 31, 2024,
Share-Based Compensation Expense
The Company classifies share-based compensation expense in the statement of operations in the same manner in which the award recipients’ payroll costs are classified or in which the award recipients’ service payments are classified.
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
($ in thousands) |
|
2024 |
|
|
2023 |
|
||
Research and development |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Total share-based compensation expense |
|
$ |
|
|
$ |
|
||
As of March 31, 2024, total unrecognized compensation cost related to unvested stock options and time-based RSUs was $
Note 8. Related Party Transactions
The Doctors Laboratory
The Company leases office space for its U.K. headquarters in London from The Doctors Laboratory (“TDL”) and has incurred expenses of less than $
The Company received certain laboratory testing services for its clinical trials provided by TDL, including certain administrative services, and incurred expenses of less than $
The Company recorded payable balances owed to TDL of less than $
18
Note 9. Commitments and Contingencies
Leases
The Company leases office space for its U.S headquarters on a month-to-month basis and is party to a short-term lease with TDL for its London offices, which expires in August 2024. The Company is not party to any material lease agreements.
For each of the three months ended March 31, 2024 and 2023, the Company incurred lease costs of less than $
Employee Benefit Plans
The Company adopted an employee benefit plan under Section 401(k) of the Internal Revenue Code for its U.S.-based employees. The plan allows employees to make contributions up to a specified percentage of their compensation.
During each of the three months ended March 31, 2024 and 2023, the Company charged less than $
Note 10. Subsequent Events
Restructuring and Reduction-in-Force
On May 1, 2024, the Company began to implement a reduction-in-force of approximately
The Company currently expects expenses related to the reduction-in-force, consisting primarily of cash severance and termination benefits and related costs, to be in the range of approximately $
May 2024 Convertible Notes
On May 10, 2024, the Company entered into convertible promissory notes with existing investors and directors, Dr. Prudo and Dr. Patel (the “May 2024 Notes”) for an aggregate of $
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with:
In addition to historical information, this discussion and analysis contains forward-looking statements that are subject to risks and uncertainties, including those discussed in the section titled “Risk Factors,” set forth in Item 1A of our Form 10-K and this Form 10-Q, that could cause actual results to differ materially from historical results or anticipated results.
Overview
We are a clinical-stage biotechnology company focused on developing advanced therapies for autoimmune and inflammatory diseases involving the C5 and LTB4 pathways. Each of these pathways has scientifically well-supported causative roles in the diseases we are targeting. We believe that blocking early mediators of inflammation will prevent initiation and continual amplification of the processes that cause certain diseases. Our activities since inception have consisted of performing research and development activities and raising capital.
Our lead product candidate, nomacopan, is a recombinant small protein (16,769 Da) derived from a protein originally discovered in the saliva of the Ornithodoros moubata tick, which modulates the host immune system to allow the parasite to feed without alerting the host to its presence or provoking an immune response. Nomacopan is a second-generation complement inhibitor which has been shown to act on complement C5, preventing release of C5a and formation of C5b–9 (also known as the membrane attack complex (“MAC”)), and also independently and specifically inhibit LTB4 activity, both elements that are often co-located as part of the immune/inflammatory response. We believe the importance of nomacopan’s therapeutic potential is twofold. First, its dual inhibitory action may be able to prevent inflammatory and prothrombotic activities of two key pathways, and second, nomacopan’s bio-physical properties may allow it to be used in a variety of formulations and routes of administration, including subcutaneous, intravenous, topical to eye, inhaled and intravitreous.
Up until May 2024, we were conducting a clinical trial of subcutaneous nomacopan for the treatment of hematopoietic stem cell transplant-related thrombotic microangiopathy (“HSCT-TMA”) in pediatrics. Following completion of a portfolio prioritization review, we announced that our HSCT-TMA program will be suspended, as more fully described below. We are currently investigating long-acting PASylated-nomacopan (“PAS-nomacopan”) for treatment of Geographic Atrophy (“GA”) secondary to dry age-related macular degeneration (“dry AMD”) in preclinical studies and expect to hold a pre-investigational new drug application meeting in the third quarter of 2024.
Recent Developments
Pipeline Prioritization
On May 1, 2024, we announced the completion of a joint portfolio prioritization review pursuant to which the anticipated combined entity, following completion of the previously announced Merger (as defined below), will focus on Peak Bio’s antibody drug conjugate (“ADC”) platform technology and our PAS-nomacopan GA program. As a result, our HSCT-TMA program will be suspended, with enrollment in its currently active pediatric clinical study discontinued due to cost and timeline. Following closing of the Merger, we plan to work closely with the U.S. Food and Drug Administration to define the best path for this technology and consider the opportunity for partnership and licensing, specifically as it relates to the potential eligibility for a priority review voucher in connection with future marketing applications for nomacopan, including as a treatment for pediatric HSCT-TMA.
20
Restructuring and Reduction-in-Force
On May 1, 2024, we began to implement a reduction-in-force of approximately 67% of our total workforce, as a result of the recently announced program prioritization under which our HSCT-TMA program was suspended. The reduction-in-force is part of an operational restructuring plan and includes the elimination of certain senior management positions. The purpose of the restructuring plan, including the reduction-in-force, is to reduce HSCT-TMA related operating costs, while supporting the execution of our long-term strategic plan.
We currently expect expenses related to the reduction-in-force, consisting primarily of cash severance and termination benefits and related costs, to be in the range of approximately $3.1 million to $3.2 million, which includes approximately $1.6 million of non-cash expenses related to vesting of equity awards. We expect these costs to be payable through the fourth quarter of 2024. These estimates are subject to a number of assumptions, and actual results may differ. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the operational restructuring plan, including the reduction-in-force.
Merger Agreement
As previously disclosed in our Current Report on Form 8-K filed with the SEC on March 11, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Peak Bio, Inc. (“Peak Bio”) and Pegasus Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Akari (“Pegasus Merger Sub”), pursuant to which, upon the terms and subject to the conditions thereof, Pegasus Merger Sub will be merged with and into Peak Bio (the “Merger”), with Peak Bio surviving the Merger as a wholly-owned subsidiary of Akari.
For additional information on the Merger, refer to Note 3 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q.
21
Results of Operations
Three Months Ended March 31, 2024 and 2023
Overview
During the three months ended March 31, 2024, our loss from operations totaled $6.0 million, a 30% increase, compared to a loss from operations of $4.6 million for the three months ended March 31, 2023. General and administrative expenses comprise the majority of our total operating expenses, as shown in the table below:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
March 31, |
|
|
Change |
|
||||||||||
($ in thousands) |
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
$ |
2,279 |
|
|
$ |
1,731 |
|
|
$ |
548 |
|
|
|
32 |
% |
General and administrative |
|
|
3,710 |
|
|
|
2,863 |
|
|
|
847 |
|
|
|
30 |
% |
Total operating expenses |
|
|
5,989 |
|
|
|
4,594 |
|
|
|
1,395 |
|
|
|
30 |
% |
Loss from operations |
|
$ |
(5,989 |
) |
|
$ |
(4,594 |
) |
|
$ |
(1,395 |
) |
|
|
30 |
% |
Research and development expenses
Our research and development expenses are charged to operations as incurred and we incur both direct and indirect expenses for each of our programs. We track direct research and development expenses by preclinical and clinical programs, which may include third-party costs such as CROs, contract laboratories, consulting, and clinical trial costs. We do not allocate indirect research and development expenses, which may include product development and manufacturing, clinical, medical, regulatory, laboratory (equipment and supplies), personnel, facility and other overhead costs, to specific programs.
During the three months ended March 31, 2024, total research and development expenses increased by approximately $0.5 million, or 32%, as compared to the three months ended March 31, 2023. The following sets forth research and development expenses for the three months ended March 31, 2024 and 2023 by category:
|
|
Three Months Ended |
|
|
|
|
|
|
|
|||||||
|
|
March 31, |
|
|
Change |
|
||||||||||
($ in thousands) |
|
2024 |
|
|
2023 |
|
|
$ |
|
|
% |
|
||||
Clinical Trials: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
HSCT-TMA clinical development (AK901) |
|
$ |
633 |
|
|
$ |
190 |
|
|
$ |
443 |
|
|
|
233 |
% |
Chemistry, manufacturing and control |
|
|
711 |
|
|
|
279 |
|
|
|
432 |
|
|
|
155 |
% |
Other external development expenses |
|
|
305 |
|
|
|
570 |
|
|
|
(265 |
) |
|
|
-46 |
% |
Personnel costs |
|
|
630 |
|
|
|
692 |
|
|
|
(62 |
) |
|
|
-9 |
% |
Total research and development expenses |
|
$ |
2,279 |
|
|
$ |
1,731 |
|
|
$ |
548 |
|
|
|
32 |
% |
HSCT-TMA clinical development (AK901)
These expenses include external expenses that we have incurred in connection with the development of nomacopan for the treatment of pediatric HSCT-TMA and primarily consist of payments to CROs and other vendors. The $0.4 million, or 233%, increase in expenses incurred during the 2024 period, as compared to 2023, is primarily due to increases in patient enrollment and related clinical trial costs. In May 2024, following the completion of a pipeline prioritization review, we determined to suspend our HSCT-TMA program. Accordingly, we expect future HSCT-TMA costs to decrease reflecting the winddown and closeout of the clinical study.
22
Chemistry, manufacturing and control
These expenses include external expenses incurred related to the development and manufacturing of nomacopan for use in clinical trials and development of PAS-nomacopan. Such expenses primarily consist of payments to CMOs and other vendors for manufacturing of drug substances (including raw materials), drug product, supplies, and validation, quality assurance and manufacturing development activities. The $0.4 million, or 155%, increase in expenses incurred during the 2024 period, as compared to 2023, is primarily due to timing of manufacturing and development activities, including increased spending on the development of and preparation for manufacturing of PAS-nomacopan.
Other external development expenses
These expenses include external expenses, such as payments to contract vendors, which may be related to preclinical development activities and other unallocated expenses. The $0.3 million, or 46%, decrease in expenses incurred during the 2024 period, as compared to 2023, is primarily related to lower costs incurred related to preclinical studies and other development work investigating PAS-nomacopan for the treatment of GA.
Personnel costs
These expenses include compensation and related costs associated with employees, independent consultants and staffing firms. The less than $0.1 million, or 9% decrease during the 2024 period, as compared to 2023, is primarily due to lower costs incurred with independent consultants.
The extent of our future research and development expenditures will be determined based on future funding and closing of the Merger.
General and administrative expenses
During the three months ended March 31, 2024, total general and administrative costs increased by approximately $0.8 million, or 30%, as compared to the three months ended March 31, 2023, primarily due to increases in legal and professional fees of approximately $1.0 million (primarily related to the proposed Merger), partially offset by a net decrease in other expenses, including decreases in personnel costs (including directors and consultants) of approximately $0.2 million.
Interest income
During each of the three months ended March 31, 2024 and 2023, interest income was less than $0.1 million and not material. Amounts may fluctuate from period to period due to changes in average cash balances and prevailing interest rates.
Change in fair value of warrant liability
During the three months ended March 31, 2024 and 2023, we recorded a change in the fair value of warrant liability, representing a non-cash warrant revaluation gain of approximately $0.6 million and $5.6 million, respectively, related to our liability-classified September 2022 Warrants, as more fully described in Note 4 and Note 6 of the notes to the condensed consolidated financial statements appearing elsewhere in this Form 10-Q. Due to the nature of and inputs in the model used to assess the fair value of our outstanding September 2022 Warrants, it is not abnormal to experience significant fluctuations during each remeasurement period. These fluctuations may be due to a variety of factors, including changes in our stock price and changes in estimated stock price volatility over the remaining life of the warrants. Changes in the fair value of the warrant liability and resulting warrant revaluation gains for each of the three months ended March 31, 2024 and 2023 was driven primarily by the decrease in our stock price of approximately 40% and 62% during each of the reporting periods, respectively.
23
Foreign currency exchange loss, net
During the three months ended March 31, 2024 and 2023, we recorded a net foreign currency exchange loss of $0.2 million and less than $0.1 million, respectively. Exchange gains and losses can fluctuate significantly from period to period due to changes in exchange rates as well as the volume and timing of expenditures and related payments denominated in foreign currencies.
Other expense, net
During the three months ended March 31, 2024 and 2023, net other expense was less than $0.1 million and not material. Such expenses are not expected to be material to our future results of operations.
Net (Loss) Income Applicable to Ordinary Shareholders
As a result of the factors discussed above, net loss applicable to ordinary shareholders for the three months ended March 31, 2024 was $5.6 million, compared to net income applicable to ordinary shareholders for the three months ended March 31, 2023 of $1.0 million.
24
Financial Condition, Liquidity and Capital Resources
Sources of Liquidity
Since inception, we have incurred substantial losses, and we have primarily funded our operations with proceeds from the sale of equity securities, including ordinary shares, warrants and pre-funded warrants. At March 31, 2024, we had $1.3 million in cash and an accumulated deficit of $233.0 million. To date, we have not generated any revenue.
We have devoted substantially all of our efforts to research and development, including clinical trials, and we have not commercialized any products. Our research and development activities, together with our general and administrative expenses, are expected to continue to result in substantial operating losses for the foreseeable future. These losses, among other things, have had and will continue to have an adverse effect on our shareholders’ equity, total assets and working capital. Due to the numerous risks and uncertainties associated with developing drug candidates and, if approved, commercial products, we are unable to predict the extent of any future losses, whether or when any of our drug candidates will become commercially available or when we will become profitable, if at all. Our future capital requirements will depend on many factors, including:
Following the issuance of the May 2024 Notes, we currently do not have any firm commitments for future external funding. We will need to raise additional funds, and we may decide to raise additional funds even before we need such funds if the conditions for raising capital are favorable. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financings, credit facilities or by out-licensing applications of our product candidates. The sale of equity or convertible debt securities may result in dilution to our existing shareholders. The incurrence of indebtedness would result in increased fixed obligations and could also subject us to covenants that restrict our operations. We cannot be certain that additional funding, whether through grants, financings, credit facilities or out-licensing arrangements, will be available to us on acceptable terms, if at all. If sufficient funds are not available, we may be required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our product candidates, or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain potential products that we might otherwise seek to develop or commercialize independently.
25
May 2024 Convertible Notes
As discussed in Note 10 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, in May 2024, we entered into convertible promissory notes with existing investors and directors, Dr. Prudo and Dr. Patel for an aggregate of $1.0 million (the “May 2024 Notes”).
March 2024 Private Placement
As discussed in Note 6 to our notes to unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, in March 2024, we entered into a definitive purchase agreement with certain existing investors, pursuant to which we sold and issued in a private placement an aggregate of 1,320,614 ADSs at $1.48 per ADS, for aggregate gross proceeds of approximately $2.0 million. Net proceeds from the March 2024 Private Placement were approximately $1.7 million after deducting placement agent fees and other expenses.
Funding Requirements
As of the date of this report, our existing cash, which includes $1.0 million in gross proceeds received from the May 2024 Notes, is sufficient to fund our operations to the end of May 2024. Our Board has approved that we raise additional capital, and, with anticipated insider support, we intend to close a financing which we expect will enable us to fund our operations through the anticipated closing of the Merger in the third quarter of 2024. Further, closing of the Merger is contingent on the PIPE Investment (as defined in the Merger Agreement) which shall have been consummated simultaneously with, and conditioned only upon, the occurrence of the closing, and shall result in net proceeds to us of at least $10 million. If we are unable to raise additional capital when needed, we will not be able to continue as a going concern. We do not currently have any products approved for sale and do not generate any revenue from product sales. We are currently seeking and expect to continue to seek additional funding through financings of equity and/or debt securities. We may also engage in strategic research and development collaborations, clinical funding arrangements, the sale or license of technology assets, and/or other strategic alternatives.
Financing may not be available to us when we need it, or on favorable or acceptable terms, or at all. We could be required to seek funds through means that may require us to relinquish rights to some of our technologies, drug candidates or drugs that we would otherwise pursue on our own. In addition, if we raise additional funds by issuing equity securities, our then existing shareholders may experience dilution. The terms of any financing may adversely affect the holdings or the rights of existing shareholders. An equity financing that involves existing shareholders may cause a concentration of ownership. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, and are likely to include rights that are senior to the holders of our ordinary shares. Any additional debt or equity financing may contain terms which are not favorable to us or to our shareholders, such as liquidation and other preferences, or liens or other restrictions on our assets. As discussed in Note 9 to the consolidated financial statements included in the 2023 Form 10-K, additional equity financings may also result in cumulative changes in ownership over a three-year period in excess of 50% which would limit the amount of net operating loss and tax credit carryforwards that we may utilize in any one year.
If we are unable to raise additional capital when required, or on acceptable terms, we may be required to:
26
Any of these events could have a material adverse effect on our business, operating results, and prospects.
We believe the key factors which will affect our ability to obtain funding are:
anticipated benefits of the Merger;
In addition, increases in expenses or delays in clinical development may adversely impact our cash position and require additional funds or cost reductions.
Based on our recurring losses from operations incurred since inception, our expectation of continuing operating losses for the foreseeable future, negative operating cash flows for the foreseeable future, and the need to raise additional capital to finance its future operations, we have concluded that there is substantial doubt regarding our ability to continue as a going concern within one year after the date that our condensed consolidated financial statements, included elsewhere in this Form 10-Q (such condensed consolidated financial statements, the “consolidated financial statements”) are issued. Because of these uncertainties, the accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As such, the accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary if we are unable to continue as a going concern.
27
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
|
|
Three Months Ended |
|
|||||
|
|
March 31, |
|
|||||
(In thousands) |
|
2024 |
|
|
2023 |
|
||
Net cash (used in) provided by: |
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
(4,044 |
) |
|
$ |
(4,880 |
) |
Net cash provided by financing activities |
|
|
1,514 |
|
|
|
3,212 |
|
Effect of exchange rates on cash |
|
|
(5 |
) |
|
|
— |
|
Net decrease in cash |
|
$ |
(2,535 |
) |
|
$ |
(1,668 |
) |
Operating Activities. The net cash used in operating activities for the periods presented consists primarily of our net loss adjusted for non-cash charges and changes in components of working capital. The decrease in cash used in operating activities during the three months ended March 31, 2024, as compared to the 2023 period, was primarily due to deferrals of payables in order to preserve cash until additional capital is raised for working capital purposes.
Investment Activities. There were no investing activities during the three months ended March 31, 2024 and 2023.
Financing Activities. Net cash provided by financing activities primarily consisted of the following:
Material Cash Requirements
During the three months ended March 31, 2024, there were no material changes outside the ordinary course of our business to our contractual obligations and cash requirements, as disclosed in our Form 10-K.
28
Critical Accounting Estimates
This management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. In doing so, we must make estimates and assumptions that affect our reported amounts of assets, liabilities and expenses, as well as related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates and judgments, including, but not limited to, those related to (i) share-based compensation, (ii) fair value of warrants classified as liabilities, (iii) research and development prepayments, accruals and related expenses, and (iv) the valuation allowance for deferred income taxes. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We regard an accounting estimate or assumption underlying our financial statements as a “critical accounting estimate” if:
There have been no material changes to our critical accounting policies and estimates since December 31, 2023. See ”Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates” of our Form 10-K, for a discussion of significant estimates and assumptions made by our management as part of the preparation of this management's discussion and analysis of financial condition and results of operations and accompanying condensed consolidated financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.
29
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2024. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of March 31, 2024, our disclosure controls and procedures were (1) designed to ensure that material information relating to us is made known to our principal executive officer and principal financial officer by others, particularly during the period in which this report was prepared, and (2) effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business. We are not currently a party to any material legal proceedings, and are not aware of any pending or threatened legal proceeding against us that we believe could have an adverse effect on our business, operating results or financial condition.
Item 1A. Risk Factors.
Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties discussed within “Item 1A. Risk Factors” of our Form 10-K, together with all of the other information in this Form 10-Q, including the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited condensed consolidated financial statements and related notes, before deciding whether to purchase any of our ADSs.
Except as discussed below, there have been no material changes to the risk factors from those previously disclosed in our Form 10-K.
Our recent reduction in force undertaken to better align our workforce with the needs of our business and product pipeline prioritization may not achieve our intended outcome.
In May 2024, we implemented a reduction in force (the “RIF”) that affected approximately 67% of our workforce, as part of an operation restructuring plan, to reduce HSCT-TMA related operating costs given the Company's suspension of its HSCT-TMA program, while also supporting the execution of the Company’s long-term strategic plan. The RIF may result in unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the RIF. In addition, while we have key talent necessary to run our operations, we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees. The RIF could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives. If we are unable to realize the anticipated benefits from the RIF, or if we experience significant adverse consequences from the RIF, our business, financial condition, and results of operations may be materially adversely affected.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2024, we did not have any sales of unregistered securities, other than as previously disclosed in a Current Report on Form 8-K filed with the SEC on March 11, 2024.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
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Item 5. Other Information.
None of our directors or “officers,” as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934,
May 2024 Convertible Notes
On May 10, 2024, the Company issued unsecured convertible promissory notes to Samir R. Patel, M.D., the Company’s interim President and Chief Executive Officer, and Ray Prudo, M.D., the Company’s Chairman of the Board, each in the amount of $500,000 (the “Notes”), to provide operating cash to the Company, as unanimously approved by the Company’s board of directors (the “Board”), including a majority of disinterested directors of the Board. The Notes bear interest at an annual rate of 15%, which may be increased to 17% upon the occurrence of certain events of default as described therein. The Notes are repayable in full upon the earlier of (i) ten business days after the Company receives payment in respect of a research and development tax credit from HM Revenue and Customs, and (ii) November 10, 2024. The Notes are prepayable by the Company at any time, without premium or other penalty. In addition, at the election of the holder, at any time but not later than ten (10) Business Days prior to the closing of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of March 4, 2024, by and between the Company, Pegasus Merger Sub, Inc., and Peak Bio, Inc., all or any portion of each Note may be converted into American Depository Shares of the Company at a conversion price equal to $1.59 (which is not less than the “Minimum Price” as specified by Nasdaq Rule 5635(d) as of the execution date of the Notes).
The Notes contain customary events of default that would allow each of Drs. Patel and Prudo to declare the Notes that they hold immediately due and payable or, on the occurrence of certain specified customary defaults, the Notes will immediately and automatically become due and payable without and action or election by either of Drs. Patel and Prudo.
The issuance of the Notes was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
The description of the Notes is qualified in its entirety by reference to the Notes, which the Company intends to file with its Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.
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Item 6. Exhibits.
Exhibit Number |
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Description |
2.1 |
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10.1† |
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10.2 |
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10.3 |
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31.1* |
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31.2* |
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32.1** |
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32.2** |
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101.INS |
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Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
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lnline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Filed herewith.
** This certification is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates it by reference.
† Indicates management contract or compensatory arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Akari Therapeutics, Plc |
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By: |
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Date: May 15, 2024 |
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/s/ Samir R. Patel, M.D. |
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Samir R. Patel, M.D. |
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Interim President, Chief Executive Officer and Director |
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By: |
/s/ Wendy DiCicco |
Date: May 15, 2024 |
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Wendy DiCicco |
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Interim Chief Financial Officer |
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Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
I, Samir R. Patel, certify that:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: May 15, 2024
/s/ Samir R. Patel, M.D. |
Samir R. Patel, M.D. |
Interim President and Chief Executive Officer, and Director |
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER UNDER
SECTION 302 OF THE SARBANES-OXLEY ACT
I, Wendy DiCicco, certify that:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: May 15, 2024
/s/ Wendy DiCicco |
Wendy DiCicco |
Interim Chief Financial Officer |
(Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Akari Therapeutics, Plc (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:
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Date: May 15, 2024 |
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/s/ Samir R. Patel, M.D. |
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Samir R. Patel, M.D. |
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Interim President and Chief Executive Officer, and Director |
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(Principal Executive Officer) |
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Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Akari Therapeutics, Plc (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:
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Date: May 15, 2024 |
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/s/ Wendy DiCicco |
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Wendy DiCicco |
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Interim Chief Financial Officer |
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(Principal Financial Officer) |
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