Full Press Release Details
AKARI THERAPEUTICS, PLC
Quarterly Report For the Period Ended
Condensed Consolidated Financial Statements
| Page | |
| Condensed Consolidated Balance Sheets as of June 30, 2020 (Unaudited) and December 31, 2019 | 1 |
| Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2020 (Unaudited) and June 30, 2019 (Unaudited) | 2 |
| Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Three and Six Months Ended June 30, 2020 (Unaudited) and June 30, 2019 (Unaudited) | 3 |
| Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2020 (Unaudited) and June 30, 2019 (Unaudited) | 4 |
| Notes to Condensed Consolidated Financial Statements - Unaudited | 5-24 |
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, 2020 and December 31, 2019
(in U.S. Dollars, except share data)
| June 30, 2020 | December 31, 2019 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 12,746,266 | $ | 5,731,691 | ||||
| Prepaid expenses and other current assets | 1,679,425 | 712,975 | ||||||
| Deferred financing costs | - | 321,956 | ||||||
| Total Current Assets | 14,425,691 | 6,766,622 | ||||||
| Property and equipment, net | - | 5,013 | ||||||
| Patent acquisition costs, net | 26,489 | 30,163 | ||||||
| Total Assets | $ | 14,452,180 | $ | 6,801,798 | ||||
| Liabilities and Shareholders' Equity (Deficit) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 2,191,168 | $ | 1,228,772 | ||||
| Accrued expenses | 1,941,083 | 4,228,604 | ||||||
| Liabilities related to options and warrants | 6,981,022 | 3,116,880 | ||||||
| Total Liabilities | 11,113,273 | 8,574,256 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity (Deficit): | ||||||||
| Share capital of 0.01 par value | ||||||||
| Authorized: 10,000,000,000 ordinary shares; issued and outstanding: 3,386,573,113 and 2,245,865,913 at June 30, 2020 and December 31, 2019, respectively | 46,578,543 | 31,987,016 | ||||||
| Additional paid-in capital | 112,989,141 | 110,498,824 | ||||||
| Accumulated other comprehensive loss | (617,622 | ) | (348,860 | ) | ||||
| Accumulated deficit | (155,611,155 | ) | (143,909,438 | ) | ||||
| Total Shareholders' Equity (Deficit) | 3,338,907 | (1,772,458 | ) | |||||
| Total Liabilities and Shareholders' Equity (Deficit) | $ | 14,452,180 | $ | 6,801,798 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
For the Three and Six Months Ended June
30, 2020 and June 30, 2019
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development expenses | $ | 3,020,432 | $ | 3,593,341 | $ | 5,752,597 | $ | 1,274,981 | ||||||||
| General and administrative expenses | 2,891,177 | 2,438,106 | 5,085,986 | 4,744,504 | ||||||||||||
| Total Operating Expenses | 5,911,609 | 6,031,447 | 10,838,583 | 6,019,485 | ||||||||||||
| Loss from Operations | (5,911,609 | ) | (6,031,447 | ) | (10,838,583 | ) | (6,019,485 | ) | ||||||||
| Other Income (Expenses): | ||||||||||||||||
| Interest income | 1,152 | 449 | 2,162 | 1,735 | ||||||||||||
| Changes in fair value of option/warrant liabilities - (loss)/gain | (2,432,449 | ) | 1,830,689 | (1,122,648 | ) | (528,083 | ) | |||||||||
| Foreign currency exchange gains (losses) | 27,992 | 86,438 | 261,396 | (109,198 | ) | |||||||||||
| Other expenses | (1,741 | ) | (3,213 | ) | (4,044 | ) | (7,336 | ) | ||||||||
| Total Other Income (Expenses) | (2,405,046 | ) | 1,914,363 | (863,134 | ) | (642,882 | ) | |||||||||
| Net Loss | (8,316,655 | ) | (4,117,084 | ) | (11,701,717 | ) | (6,662,367 | ) | ||||||||
| Other Comprehensive (Loss) Income: | ||||||||||||||||
| Foreign Currency Translation Adjustment | (46,037 | ) | (160,116 | ) | (268,762 | ) | (52,948 | ) | ||||||||
| Comprehensive Loss | $ | (8,362,692 | ) | $ | (4,277,200 | ) | $ | (11,970,479 | ) | $ | (6,715,315 | ) | ||||
| Loss per ordinary share (basic and diluted) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | ||||
| Weighted average ordinary shares (basic and diluted) | 3,002,482,637 | 1,607,121,984 | 2,759,381,673 | 1,594,063,579 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' (DEFICIT) EQUITY -
As of and for the Three and Six Months Ended
June 30, 2020 and 2019
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2019 | 2,245,865,913 | $ | 31,987,016 | $ | 110,498,824 | $ | (348,860 | ) | $ | (143,909,438 | ) | $ | (1,772,458 | ) | ||||||||||
| Stock-based compensation | - | - | 100,504 | - | - | 100,504 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 627,029,600 | 8,098,632 | (1,003,264 | ) | - | - | 7,095,368 | |||||||||||||||||
| Comprehensive loss | - | - | - | (222,725 | ) | (3,385,062 | ) | (3,607,787 | ) | |||||||||||||||
| Balance, March 31, 2020 | 2,872,895,513 | $ | 40,085,648 | $ | 109,596,064 | $ | (571,585 | ) | $ | (147,294,500 | ) | $ | 1,815,627 | |||||||||||
| Stock-based compensation | - | - | 63,330 | - | - | 63,330 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 471,666,700 | 5,953,175 | 2,941,966 | - | - | 8,895,142 | ||||||||||||||||||
| Issuance of share capital for entering into 2020 Purchase Agreement with Aspire Capital | 40,760,900 | 523,778 | 376,222 | - | - | 900,000 | ||||||||||||||||||
| Issuance of share capital upon the exercise of warrants | 1,250,000 | 15,941 | 11,559 | 27,500 | ||||||||||||||||||||
| Comprehensive loss | - | - | - | (46,037 | ) | (8,316,655 | ) | (8,362,692 | ) | |||||||||||||||
| Balance, June 30, 2020 | 3,386,573,113 | $ | 46,578,543 | $ | 112,989,141 | $ | (617,622 | ) | $ | (155,611,155 | ) | $ | 3,338,907 |
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||
| Share Capital | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2018 | 1,580,693,413 | $ | 23,651,277 | $ | 106,616,083 | $ | (352,426 | ) | $ | (126,803,647 | ) | $ | 3,111,287 | |||||||||||
| Stock-based compensation | - | - | 394,439 | - | - | 394,439 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 5,000,000 | 65,598 | 86,955 | - | - | 152,553 | ||||||||||||||||||
| Comprehensive loss | - | - | - | 107,168 | ) | (2,545,283 | ) | (2,438,115 | ) | |||||||||||||||
| Balance, March 31, 2019 | 1,585,693,413 | $ | 23,716,875 | $ | 107,097,477 | $ | (245,258 | ) | $ | (129,348,930 | ) | $ | 1,220,164 | |||||||||||
| Stock-based compensation | - | - | 409,622 | - | - | 409,622 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 65,000,000 | 821,262 | 453,737 | ) | - | - | 1,274,999 | |||||||||||||||||
| Comprehensive loss | - | - | - | (160,116 | ) | (4,117,084 | ) | (4,277,200 | ) | |||||||||||||||
| Balance, June 30, 2019 | 1,650,693,413 | $ | 24,538,137 | $ | 107,960,836 | $ | (405,374 | ) | $ | (133,466,014 | ) | $ | (1,372,415 | ) |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS - UNAUDITED
For the Six Months Ended June 30, 2020 and
| Six Months Ended | ||||||||
| June 30, 2020 | June 30, 2019 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (11,701,717 | ) | $ | (6,662,367 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 6,921 | 10,266 | ||||||
| Stock-based compensation | 163,834 | 804,061 | ||||||
| Financing expense | 900,000 | - | ||||||
| Changes in fair value of the liability for options/warrants - losses (gains) | 1,122,648 | 528,083 | ||||||
| Foreign currency exchange (gains) losses | (210,896 | ) | 91,905 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in assets: | ||||||||
| Prepaid expenses and other current assets | (966,222 | ) | (324,111 | ) | ||||
| (Decrease) increase in liabilities: | ||||||||
| Accounts payable and accrued expenses | (1,327,686 | ) | 1,008,598 | |||||
| Total adjustments | (311,401 | ) | 2,118,802 | |||||
| Net Cash Used in Operating Activities | (12,013,118 | ) | (4,543,565 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from issuance of shares | 19,053,960 | 1,473,828 | ||||||
| Net proceeds from exercise of warrants to purchase shares | 27,500 | - | ||||||
| Net Cash Provided by Financing Activities | 19,081,460 | 1,473,828 | ||||||
| Effect of Exchange Rates on Cash | (53,767 | ) | (144,203 | ) | ||||
| Net Decrease in Cash | 7,014,575 | (3,213,940 | ) | |||||
| Cash, beginning of period | 5,731,691 | 5,967,967 | ||||||
| Cash, end of period | $ | 12,746,266 | $ | 2,754,027 | ||||
| Supplemental Disclosures of Non-Cash Financing Activities: | ||||||||
| Deferred financing costs recognized and included in Additional paid-in capital | $ | 321,956 | $ | 114,058 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS - UNAUDITED
Akari Therapeutics, Plc, (the
"Company" or "Akari"), 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
or leukotriene system and the bioamine system for the treatment of rare and orphan diseases. The Company's activities since
inception have consisted of performing research and development activities and raising capital.
As of June 30, 2020, the Company
has an accumulated deficit of $155,611,155 and cash of $12,746,266. On June 30, 2020, the Company entered into a securities purchase
agreement (the "2020 Purchase Agreement") with Aspire Capital Fund, LLC ("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 $30.0 million of the Company's ADSs over the 30-month term of the Purchase Agreement (See Note 4). As
of June 30, 2020, $30,000,000 remains available under the facility.
On September 26, 2018, the
Company also entered into a securities purchase agreement (the "2018 Purchase Agreement" and together with the
2020 Purchase Agreement, the "Purchase Agreements") with 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 2018 Purchase Agreement (See Note 4). As of June 30,
2020, $371,621 remains available under the facility.
The Company believes its current
capital resources are sufficient to support its operations through February 2021 without giving effect to the sale of additional
shares to Aspire Capital under the Purchase Agreements.
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 the outbreak of coronavirus, 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 an SEC investigation and the coronavirus outbreak.
For the three and six months
ended June 30, 2020, the Company reported a net loss of $8,316,655 and $11,701,717, respectively, 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 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
of commercial product. 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.
The global outbreak of the novel
strain of COVID-19, also known as coronavirus, and public health epidemics can adversely impact the Company's business as
a result of disruptions, such as travel bans, quarantines, and interruptions to access the trial sites and supply chains, which
could result in material delays and complications with respect to our research and development programs and clinical trials. Moreover,
as a result of coronavirus, there is a general unease of conducting unnecessary activities in medical centers. As a consequence,
the Company's ongoing trials have been halted or disrupted. It is too early to assess the full impact of the coronavirus
outbreak on trials for nomacopan, but coronavirus may affect our ability to complete recruitment in the original timeframe. For
example, the Phase I/II clinical trial in patients with AKC study has been halted and the Company expects that recruitment in the
Phase III clinical trial in pediatric patients with HSCT-TMA will be delayed until the fourth quarter of 2020. The extent to which
the coronavirus impacts operations will depend on future developments, which are highly uncertain and cannot be predicted with
confidence, including the duration and continued severity of the outbreak, and the actions that may be required to contain the
coronavirus or treat its impact. In particular, the continued spread of the coronavirus globally could adversely impact the Company's
operations and workforce, including research and clinical trials and the ability to raise capital, could affect the operations
of key governmental agencies, such as the FDA, which may delay the development of the Company's product candidates, and could
result in the inability of suppliers to deliver components or raw materials on a timely basis or at all, each of which in turn
could have an adverse impact on the Company's business, financial condition and results of operation.
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 SEC and assumes that the Company will continue to operate as a going concern. 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 six months ended June 30, 2020 and
June 30, 2019, are not necessarily indicative of expected results for the full fiscal year or any other period. These interim condensed
consolidated financial statements should be read in conjunction with the Company's audited financial statements as of December