Full Press Release Details
AKARI THERAPEUTICS, PLC
Quarterly Report For the Period Ended
Condensed Consolidated Financial Statements
| Condensed Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017 | 2 |
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2018 (Unaudited) and September 30, 2017 (Unaudited) | 3 |
| Condensed Consolidated Statement of Changes in Shareholders' Equity for the Nine Months Ended September 30, 2018 (Unaudited) | 4 |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 (Unaudited) and September 30, 2017 (Unaudited) | 5 |
| Notes to Condensed Consolidated Financial Statements - Unaudited | 6-20 |
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2018 and December 31,
(in U.S. Dollars, except share data)
| September 30, 2018 | December 31, 2017 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 10,073,345 | $ | 28,106,671 | ||||
| Prepaid expenses and other current assets | 1,382,472 | 706,415 | ||||||
| Deferred financing costs | 585,000 | - | ||||||
| Total Current Assets | 12,040,817 | 28,813,086 | ||||||
| Restricted cash | 521,620 | 142,235 | ||||||
| Property and equipment, net | 29,955 | 55,898 | ||||||
| Patent acquisition costs, net | 34,839 | 39,124 | ||||||
| Total Assets | $ | 12,627,231 | $ | 29,050,343 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,404,496 | $ | 1,971,161 | ||||
| Accrued expenses | 1,710,693 | 4,795,873 | ||||||
| Liabilities related to options and warrants | 3,004,207 | 5,081,335 | ||||||
| Other current liabilities | 29,792 | - | ||||||
| Total Current Liabilities | 6,149,188 | 11,848,369 | ||||||
| Other long-term liabilities | 175,055 | 48,003 | ||||||
| Total liabilities | 6,324,243 | 11,896,372 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity: | ||||||||
| Share capital of GBP .01 par value | ||||||||
| Authorized: 10,000,000,000 ordinary shares; issued and outstanding: 1,580,693,413 at September 30, 2018 and 1,525,693,393 at December 31, 2017, respectively | 23,651,277 | 22,927,534 | ||||||
| Additional paid-in capital | 106,239,087 | 104,799,550 | ||||||
| Accumulated other comprehensive loss | (296,483 | ) | (236,246 | ) | ||||
| Accumulated deficit | (123,290,893 | ) | (110,336,867 | ) | ||||
| Total Shareholders' Equity | 6,302,988 | 17,153,971 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 12,627,231 | $ | 29,050,343 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
For the Three and Nine Months Ended September
30, 2018 and September 30, 2017
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2018 | September 30, 2017 | September 30, 2018 | September 30, 2017 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development costs | $ | 3,303,790 | $ | 6,382,542 | $ | 9,433,018 | $ | 16,167,426 | ||||||||
| General and administrative expenses | 2,382,153 | 2,158,656 | 8,537,191 | 8,006,097 | ||||||||||||
| Litigation settlement gain | (2,700,000 | ) | - | (2,700,000 | ) | - | ||||||||||
| Total Operating Expenses | 2,985,943 | 8,541,198 | 15,270,209 | 24,173,523 | ||||||||||||
| Loss from Operations | (2,985,943 | ) | (8,541,198 | ) | (15,270,209 | ) | (24,173,523 | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest income | 66,073 | 46,906 | 198,146 | 124,357 | ||||||||||||
| Changes in fair value of option and warrant liabilities - (loss) gain | (715,846 | ) | (1,657,783 | ) | 2,077,128 | 1,010,005 | ||||||||||
| Foreign currency exchange gain (loss) | 36,036 | (218,274 | ) | 42,481 | (231,326 | ) | ||||||||||
| Other expenses (income) | 6,425 | (6,226 | ) | (1,572 | ) | (10,615 | ) | |||||||||
| Total Other Income (Expense) | (607,312 | ) | (1,835,377 | ) | 2,316,183 | 892,421 | ||||||||||
| Net Loss | (3,593,255 | ) | (10,376,575 | ) | (12,954,026 | ) | (23,281,102 | ) | ||||||||
| Other Comprehensive Loss: | ||||||||||||||||
| Foreign Currency Translation Adjustment | (65,848 | ) | 85,428 | (60,237 | ) | (8,302 | ) | |||||||||
| Comprehensive Loss | $ | (3,659,103 | ) | $ | (10,291,147 | ) | $ | (13,014,263 | ) | $ | (23,289,404 | ) | ||||
| Loss per common share (basic and diluted) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Weighted average common shares (basic and diluted) | 1,528,682,540 | 1,177,693,393 | 1,526,700,724 | 1,177,693,386 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY - UNAUDITED
As of and for the Nine Months Ended September
| Akari Therapeutics, Plc | Additional | Accumulated Other | ||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||
| Shareholders' Equity, January 1, 2018 | 1,525,693,393 | $ | 22,927,534 | $ | 104,799,550 | $ | (236,246 | ) | $ | (110,336,867 | ) | $ | 17,153,971 | |||||||||||
| Stock-based compensation | - | - | 1,231,708 | - | - | 1,231,708 | ||||||||||||||||||
| Issuance of share capital to directors | 20 | - | - | - | - | - | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 55,000,000 | 723,743 | 207,829 | - | - | 931,572 | ||||||||||||||||||
| Comprehensive income loss | - | - | - | (60,237 | ) | (12,954,026 | ) | (13,014,263 | ) | |||||||||||||||
| Shareholders' Equity, September 30, 2018 | 1,580,693,413 | $ | 23,651,277 | $ | 106,239,087 | $ | (296,483 | ) | $ | (123,290,893 | ) | $ | 6,302,988 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS - UNAUDITED
For the Nine Months Ended September 30,
| Nine Months Ended | ||||||||
| September 30, 2018 | September 30, 2017 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (12,954,026 | ) | $ | (23,281,102 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 28,230 | 32,897 | ||||||
| Stock-based compensation | 1,231,708 | 2,229,008 | ||||||
| Changes in fair value of the liability for options and warrants | (2,077,128 | ) | (1,010,005 | ) | ||||
| Foreign currency exchange (gains) loss | (71,500 | ) | 33,463 | |||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in assets: | ||||||||
| Prepaid expenses and other current assets | (676,120 | ) | 293,492 | |||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable and accrued expenses | (3,650,919 | ) | (1,375,854 | ) | ||||
| Other liabilities | 156,844 | (3,265 | ) | |||||
| Total adjustments | (5,058,885 | ) | 199,736 | |||||
| Net Cash Used in Operating Activities | (18,012,911 | ) | (23,081,366 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Purchase of property and equipment | - | (36,885 | ) | |||||
| Redemption of short-term investments | - | 10,021,963 | ||||||
| Purchase of letter of credit | (379,075 | ) | - | |||||
| Net Cash (Used in) Provided by Investing Activities | (379,075 | ) | 9,985,078 | |||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from issuance of shares | 346,572 | - | ||||||
| Net Cash Provided by Financing Activities | 346,572 | - | ||||||
| Effect of Exchange Rates on Cash | 12,088 | (28,584 | ) | |||||
| Net Decrease in Cash | (18,033,326 | ) | (13,124,872 | ) | ||||
| Cash, beginning of period | 28,106,671 | 34,098,812 | ||||||
| Cash, end of period | $ | 10,073,345 | $ | 20,973,940 | ||||
| Supplemental disclosure of non-cash financing activities: | ||||||||
| Deferred financing costs | $ | 585,000 | $ | - |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS - UNAUDITED
Akari Therapeutics, Plc, (the "Company"
or "Akari"), formerly Celsus Therapeutics Plc ("Celsus"), is incorporated in the United Kingdom. The Company
is a clinical-stage biopharmaceutical company focused on developing inhibitors of acute and chronic inflammation, specifically
the complement system, the eicosanoid system and the bioamine system for the treatment of rare and orphan diseases.
The accompanying financial statements have
been prepared in conformity with U.S. GAAP, assuming that the Company will continue to operate as a going concern. As of September
30, 2018, the Company has an accumulated deficit of $123,290,893, cash of $10,073,345 and negative cash flows from operating activities
in the amount of $18,012,911. On October 20, 2017, the Company sold an aggregate of 3,480,000 American Depositary Shares ("ADSs")
representing 348,000,000 ordinary shares, par value 0.01 ("Ordinary Shares") for gross proceeds of $17.4 million
at $5.00 per ADS with issuance costs of approximately $1.7 million. On September 26, 2018, the Company entered into a securities
purchase agreement (the "Purchase Agreement") with Aspire Capital Fund, LLC, an Illinois limited liability company
("Aspire Capital"), which provides that, upon the terms and subject to the conditions and limitations set forth therein,
Aspire Capital is committed to purchase up to an aggregate of $20.0 million of the Company's ADSs over the 30-month term
of the Purchase Agreement. In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase
Agreement, the Company issued 30,000,000 Ordinary Shares to Aspire Capital and sold to Aspire Capital 25,000,000 Ordinary Shares
for $0.02 per share (equivalent to $2.00 per ADS) (See Note 4). The Company believes its current capital resources are sufficient
to support its operations through the end of the second quarter of 2019 without giving effect to the sale of additional shares
to Aspire Capital under the Purchase Agreement.
The Company's activities since inception
have consisted of raising capital and performing research and development activities. As of September 30, 2018, principal commercial
operations have not commenced. 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. In addition, the Company is subject to risks related to a putative class action lawsuit and an SEC investigation.
For the three and nine months ended September
30, 2018, the Company reported a net loss of $3,593,255 and $12,954,026, respectively, and expects to continue to incur substantial
losses over the next several years during its development phase. 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 or there is not a favorable resolution
of the putative class action or SEC investigation it could delay, limit, reduce or terminate preclinical studies, clinical trials
or other research and development activities. To fund its capital needs, the Company plans to raise funds through equity or debt
financings or other sources, such as strategic partnerships and alliance and licensing arrangements, and in the long term, from
the proceeds from sales. Additional funds may not be available when the Company needs them, on terms that are acceptable to it,
or at all. These matters raise substantial doubt about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that would result
if the Company was unable to continue as a going concern.
AKARI THERAPEUTICS, Plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS - UNAUDITED
Basis of Presentation
- The accompanying condensed consolidated financial statements have been prepared in accordance with 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 three and nine months ended September 30, 2018
and September 30, 2017, are not necessarily indicative of expected results for the full fiscal year or any other period.
Principles of Consolidation -
The condensed consolidated financial statements include the accounts of the Company and Volution Immuno Pharmaceuticals SA, a private
Swiss company, ("Volution"), its wholly-owned subsidiary. 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. Gains or losses from foreign currency transactions
are included in foreign currency exchange gains/(losses).
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that may
affect the reported amounts of assets, liabilities, equity, revenue, expenses and related disclosure of contingent assets and liabilities.
Management's estimates and judgments include assumptions used in the evaluation of impairment and useful lives of intangible
assets (patents), accrued liabilities, deferred income taxes, liabilities related to stock options and warrants, stock-based compensation
and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those
estimates under different assumptions or conditions.
Fair Value Measurements
- The carrying amounts of financial instruments, including cash, restricted cash, accounts payable and accrued expenses approximate