Full Press Release Details
AKARI PHARMACEUTICALS, Plc
Quarterly Report For the Period Ended
| Condensed Consolidated Financial Statements | |
| Condensed Consolidated Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015 | 2 |
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2016 and June 30, 2015 (Unaudited) | 3 |
| Condensed Consolidated Statement of Changes in Shareholders' Equity for the Six Months Ended June 30, 2016 (Unaudited) | 4 |
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and June 30, 2015 (Unaudited) | 5 |
| Notes to Condensed Consolidated Financial Statements - Unaudited | 6-18 |
| Management's Discussion and Analysis of Financial Condition and Results of Operations | 19-24 |
AKARI THERAPEUTICS, Plc
CONSOLIDATED BALANCE SHEETS
As of June 30, 2016 and December 31, 2015
(in U.S. Dollars, except share data)
| June 30, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 9,662,454 | $ | 68,919,995 | ||||
| Short-term investments | 46,120,172 | - | ||||||
| Prepaid expenses and other current assets | 1,580,915 | 728,126 | ||||||
| Receivable from related party | 10,502 | 10,366 | ||||||
| Total Current Assets | 57,374,043 | 69,658,487 | ||||||
| Restricted cash | 142,114 | 142,079 | ||||||
| Property and equipment, net | 71,236 | 40,513 | ||||||
| Patent acquisition costs, net | 45,770 | 52,483 | ||||||
| Total Assets | $ | 57,633,163 | $ | 69,893,562 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,917,984 | $ | 4,320,588 | ||||
| Accrued expenses | 360,679 | 408,222 | ||||||
| Liabilities related to options and warrants | 14,715,371 | 16,396,158 | ||||||
| Total Current Liabilities | 16, 994,034 | 21,124,968 | ||||||
| Other long-term liability | 55,131 | 49,069 | ||||||
| Total liabilities | 17,049,165 | 21,174,037 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity: | ||||||||
| Share capital of GBP 0.01 par value | ||||||||
| Authorized: 5,000,000,000 shares; issued and outstanding: 1,177,693,383 at June 30, 2016 and December 31, 2015 | 18,340,894 | 18,340,894 | ||||||
| Additional paid-in capital | 88,668,352 | 87,018,764 | ||||||
| Accumulated other comprehensive (loss) income | (191,873 | ) | 156,480 | |||||
| Accumulated deficit | (66,233,375 | ) | (56,796,613 | ) | ||||
| Total Shareholders' Equity | 40,583,998 | 48,719,525 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 57,633,163 | $ | 69,893,562 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - UNAUDITED
For the Three and Six Months Ended June
30, 2016 and June 30, 2015
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2016 | June 30, 2015 | June 30, 2016 | June 30, 2015 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development costs | $ | 5,443,105 | $ | 1,001,180 | $ | 6,942,648 | $ | 2,556,130 | ||||||||
| General and administrative expenses | 2,076,795 | 310,833 | 4,429,230 | 410,512 | ||||||||||||
| Total Operating Expenses | 7,519,900 | 1,312,013 | 11,371,878 | 2,966,642 | ||||||||||||
| Loss from Operations | (7,519,900 | ) | (1,312,013 | ) | (11,371,878 | ) | (2,966,642 | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest income | 17,307 | - | 48,111 | - | ||||||||||||
| Changes in fair value of option/warrant liabilities | 976,452 | - | 1,680,787 | - | ||||||||||||
| Foreign currency exchange gains/(losses) | 87,210 | (22 | ) | 241,641 | (37,623 | ) | ||||||||||
| Interest expense | - | (2,613 | ) | - | (7,169 | ) | ||||||||||
| Other expenses | (12,447 | ) | (26,120 | ) | (35,423 | ) | (26,120 | ) | ||||||||
| Total Other Income (Expense) | 1,068,522 | (28,755 | ) | 1,935,116 | (70,912 | ) | ||||||||||
| Net Loss | (6,451,378 | ) | (1,340,768 | ) | (9,436,762 | ) | (3,037,554 | ) | ||||||||
| Other Comprehensive Income (Loss): | ||||||||||||||||
| Foreign Currency Translation Adjustment | (155,409 | ) | 21,219 | (348,353 | ) | 45,074 | ||||||||||
| Comprehensive Loss | $ | (6,606,787 | ) | $ | (1,319,549 | ) | $ | (9,785,115 | ) | $ | (2,992,480 | ) | ||||
| Loss per common share (basic and diluted) | $ | (0.005 | ) | $ | (0.002 | ) | $ | (0.008 | ) | $ | (0.004 | ) | ||||
| Weighted average common shares (basic and diluted) | 1,177,693,383 | 722,345,600 | 1,177,693,383 | 722,345,600 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED
For The Six Months Ended June 30, 2016
| Akari Therapeutics, Plc | Accumulated | |||||||||||||||||||||||
| (Formerly Celsus Therapeutics) | Additional | Other | ||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||
| Shareholders' Equity, January 1, 2016 | 1,177,693,383 | $ | 18,340,894 | $ | 87,018,764 | $ | 156,480 | $ | (56,796,613 | ) | $ | 48,719,525 | ||||||||||||
| Stock-based compensation | - | - | 1,622,211 | - | - | 1,622,211 | ||||||||||||||||||
| Dissolution of subsidiary | - | - | 27,377 | - | - | 27,377 | ||||||||||||||||||
| Foreign Currency Translation Loss | - | - | - | (348,353 | ) | - | (348,353 | ) | ||||||||||||||||
| Net Loss | - | - | - | - | (9,436,762 | ) | (9,436,762 | ) | ||||||||||||||||
| Shareholders' Equity, June 30, 2016 | 1,177,693,383 | $ | 18,340,894 | $ | 88,668,352 | $ | (191,873 | ) | $ | (66,233,375 | ) | $ | 40,583,998 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
For The Six Months Ended June 30, 2016 and
| Six Months Ended | ||||||||
| June 30, 2016 | June 30, 2015 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (9,436,762 | ) | $ | (3,037,554 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 18,785 | 1,631 | ||||||
| Stock-based compensation | 1,622,211 | - | ||||||
| Changes in fair value of the liability for options and warrants | (1,680,787 | ) | - | |||||
| Foreign currency exchange gains | (356,954 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in assets: | ||||||||
| Prepaid expenses and other current assets | (852,418 | ) | (112,610 | ) | ||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable and accrued expenses | (2,452,151 | ) | 462,512 | |||||
| Other liabilities | 6,062 | - | ||||||
| Total adjustments | (3,695,252 | ) | 351,533 | |||||
| Net Cash Used in Operating Activities | (13,132,014 | ) | (2,686,021 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | (47,980 | ) | - | |||||
| Purchase of short-term investments | (46,120,172 | ) | - | |||||
| Net Cash Used in Investing Activities | (46,168,152 | ) | - | |||||
| Cash Flows from Financing Activities: | ||||||||
| Repayment of shareholder loans | - | (508,713 | ) | |||||
| Net Cash Used in Financing Activities | - | (508,713 | ) | |||||
| Effect of Exchange Rates on Cash and Cash Equivalents | 42,625 | 68,710 | ||||||
| Net Decrease in Cash and Cash Equivalents | (59,257,541 | ) | (3,126,024 | ) | ||||
| Cash and Cash Equivalents, beginning of period | 68,919,995 | 3,327,468 | ||||||
| Cash and Cash Equivalents, end of period | $ | 9,662,454 | $ | 201,444 | ||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | - | $ | 2,636 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(in U.S. Dollars, except share data)
Akari Pharmaceuticals, Plc, (the "Company"
or "Akari"), formerly Celsus Therapeutics Plc ("Celsus"), is incorporated in the United Kingdom. The Company
is a clinical stage biotechnology company, and is focused on developing anti-complement and anti-inflammatory molecules as treatments
for a wide range of rare and orphan conditions in the autoimmune and inflammatory diseases sectors.
On September 18, 2015, Celsus Therapeutics
Plc completed its acquisition of all of the capital stock of Volution Immuno Pharmaceuticals SA ("Volution"), from
RPC Pharma Limited ("RPC"), Volution's sole shareholder, in exchange for ordinary shares, par value 0.01,
("Ordinary Shares"), of Celsus (the "Acquisition"), in accordance with the terms of the Share Exchange
Agreement, dated as of July 10, 2015 (the "Agreement"), by and among Celsus and RPC. In connection with the Acquisition,
the name of the combined company was changed to Akari Therapeutics, Plc. The Company's American Depositary Shares ("ADSs"),
each representing 100 Ordinary Shares, began trading on The NASDAQ Capital Market under the symbol "AKTX" on September
In connection with the consummation of
the Acquisition, Celsus issued an aggregate of 722,345,600 Ordinary Shares to RPC, which represented, prior to giving effect to
the Financing (as defined below), 92.85% of Celsus's outstanding Ordinary Shares following the closing of the Acquisition
(or 91.68% of Celsus Ordinary Shares on a fully diluted basis). This yielded a share exchange ratio of approximately 721:1
of Akari Ordinary Shares to RPC Ordinary Shares. The Company's earnings per share have been retrospectively adjusted in the
statement of comprehensive loss to reflect this recapitalization. Since the Volution securityholders owned a majority of the capitalization
of the Company immediately following the closing of the Acquisition, Volution is considered to be the acquiring company for accounting
purposes, and the transaction has been accounted for as a reverse acquisition under the acquisition method of accounting for business
combinations in accordance with U.S. GAAP. Accordingly, the assets and liabilities of Celsus have been recorded as of the Acquisition
closing date at fair value and the condensed consolidated financial statements reflect the historical financial statements of Volution
as our historical financial statements.
The Company, as defined in the accompanying
notes to the condensed consolidated financial statements, refers to Volution prior to the Acquisition and Akari subsequent to the
completion of the Acquisition.
In addition, on September 18, 2015, the
Company completed a private placement of an aggregate of 3,958,811 restricted ADSs representing 395,881,100 Ordinary Shares for
gross proceeds of $75 million (the "Financing") at a price of $18.945 per restricted ADS, which represented approximately
33.3% of the outstanding Ordinary Shares of the Company after giving effect to the Acquisition and the Financing.
Volution was originally incorporated in
Switzerland as a private limited company and commenced business on October 9, 2013. On October 23, 2013, Varleigh Immuno Pharmaceuticals
Ltd ("Varleigh"), a UK limited company, transferred certain patent rights to Volution in exchange for a payment of
approximately $107,000, (GBP 65,000), which was the carrying value of the patents in accordance with local accounting standards.
Effective September 12, 2014, Varleigh ceased its operations and was dissolved. The transaction resulted in the transfer of the
business of Varleigh to Volution. On the date of transfer, the controlling/majority shareholders of Volution were also the controlling/majority
shareholders of Varleigh. Upon dissolution, there were no reported assets, liabilities, or accumulated comprehensive income remaining
in Varleigh, as such no gain or loss on dissolution was recognized.
On July 3, 2015, the shareholders of Volution
exchanged their shares for RPC shares with no changes in individual share ownerships. This qualified as a reorganization.
AKARI THERAPEUTICS, Plc
CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
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 operations, need for regulatory approval of products, risks associated with protection of intellectual
property, and competition with larger, better-capitalized companies. Successful completion of the Company's development program
and, ultimately, the attainment of profitable operations is dependent upon future events, including obtaining adequate financing
to fulfill its development activities and achieving a level of revenues adequate to support the Company's cost structure.
There are no assurances that the Company will be able to obtain additional financing on favorable terms, or at all or successfully
market its products.
Basis of Presentation
- The accompanying 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 U.S. Securities
and Exchange Commission ("SEC). Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP for complete financial statements. These financial statements have been prepared on the same basis as the Company's
annual 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 six months ended June 30, 2016, are not necessarily indicative of expected results for the full fiscal year or any
Principles of Consolidation -
The condensed consolidated financial statements include the accounts of the Company, Volution and Volution Immuno Pharmaceuticals
Ltd (a UK Ltd Company), its wholly-owned subsidiary, which was incorporated in London on August 22, 2014. On June 21, 2016, the
Company filed with Companies House in the UK to dissolve its inactive subsidiary Volution Immuno Pharmaceuticals Ltd.
All intercompany transactions
have been eliminated.
Foreign Currency - The functional
currency of the Company is U.S. dollars as that is 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 Company translated 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) income. Gains or losses from foreign currency transactions