Full Press Release Details
AKARI THERAPEUTICS, PLC
Quarterly Report For The Period Ended
Condensed Consolidated Financial Statements
| Page | |
| Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019 | 1 |
| Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2020 (Unaudited) and September 30, 2019 (Unaudited) | 2 |
| Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the Three and Nine Months Ended September 30, 2020 (Unaudited) and September 30, 2019 (Unaudited) | 3 |
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 (Unaudited) and September 30, 2019 (Unaudited) | 4 |
| Notes to Condensed Consolidated Financial Statements - Unaudited | 5-21 |
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2020 and December 31,
(in U.S. Dollars, except share data)
| September 30, 2020 | December 31, 2019 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 12,317,798 | $ | 5,731,691 | ||||
| Prepaid expenses and other current assets | 1,349,244 | 712,975 | ||||||
| Deferred financing costs | - | 321,956 | ||||||
| Total Current Assets | 13,667,042 | 6,766,622 | ||||||
| Property and equipment, net | - | 5,013 | ||||||
| Patent acquisition costs, net | 26,674 | 30,163 | ||||||
| Total Assets | $ | 13,693,716 | $ | 6,801,798 | ||||
| Liabilities and Shareholders' Equity (Deficit) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 2,410,530 | $ | 1,228,772 | ||||
| Accrued expenses | 975,893 | 4,228,604 | ||||||
| Liabilities related to options and warrants | 5,448,995 | 3,116,880 | ||||||
| Total Liabilities | 8,835,418 | 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 September 30, 2020 and December 31, 2019, respectively | 46,578,543 | 31,987,016 | ||||||
| Additional paid-in capital | 113,070,248 | 110,498,824 | ||||||
| Accumulated other comprehensive loss | (621,298 | ) | (348,860 | ) | ||||
| Accumulated deficit | (154,169,195 | ) | (143,909,438 | ) | ||||
| Total Shareholders' Equity (Deficit) | 4,858,298 | (1,772,458 | ) | |||||
| Total Liabilities and Shareholders' Equity (Deficit) | $ | 13,693,716 | $ | 6,801,798 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (LOSS) - UNAUDITED
For the Three and Nine Months Ended September
30, 2020 and September 30, 2019
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||
| Operating (Income) Expenses: | ||||||||||||||||
| Research and development (income) expenses | $ | (1,592,531 | ) | $ | 1,763,057 | $ | 4,160,066 | $ | 3,038,038 | |||||||
| General and administrative expenses | 1,839,414 | 1,354,263 | 6,925,400 | 6,098,767 | ||||||||||||
| Total Operating Expenses | 246,883 | 3,117,320 | 11,085,466 | 9,136,805 | ||||||||||||
| Loss from Operations | (246,883 | ) | (3,117,320 | ) | (11,085,466 | ) | (9,136,805 | ) | ||||||||
| Other Income (Expenses): | ||||||||||||||||
| Interest income | 6,132 | 2,057 | 8,294 | 3,792 | ||||||||||||
| Changes in fair value of option/warrant liabilities - gain (loss) | 1,532,027 | 515,489 | 409,379 | (12,594 | ) | |||||||||||
| Foreign currency exchange gains (losses) | 156,360 | 37,209 | 417,756 | (71,989 | ) | |||||||||||
| Other expenses | (5,676 | ) | (2,788 | ) | (9,720 | ) | (10,124 | ) | ||||||||
| Total Other Income (Expenses) | 1,688,843 | 551,967 | 825,709 | (90,915 | ) | |||||||||||
| Net Income (Loss) | 1,441,960 | (2,565,353 | ) | (10,259,757 | ) | (9,227,720 | ) | |||||||||
| Other Comprehensive (Loss) Income: | ||||||||||||||||
| Foreign Currency Translation Adjustment | (3,676 | ) | 3,281 | (272,438 | ) | (49,667 | ) | |||||||||
| Comprehensive Income (Loss) | $ | 1,438,284 | $ | (2,562,072 | ) | $ | (10,532,195 | ) | $ | (9,277,387 | ) | |||||
| Income (Loss) per ordinary share (basic and diluted) | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | |||||
| Weighted average ordinary shares (basic and diluted) | 3,386,573,113 | 1,971,025,222 | 3,336,002,895 | 1,721,098,272 |
See notes to condensed consolidated financial
AKARI THERAPEUTICS, Plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (DEFICIT) -
As of and for the Three and Nine Months
Ended September 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 | 5,953,176 | 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 | ||||||||||||||||
| Stock-based compensation | - | - | 81,107 | - | - | 81,107 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | - | - | - | - | - | - | ||||||||||||||||||
| Comprehensive (loss) income | - | - | - | (3,676 | ) | 1,441,960 | 1,438,284 | |||||||||||||||||
| Balance, September 30, 2020 | 3,386,573,113 | $ | 46,578,543 | $ | 113,070,248 | $ | (621,298 | ) | $ | (154,169,195 | ) | $ | 4,858,298 |
| 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 | ) | |||||||||||||||
| Stock-based compensation | - | - | 137,385 | - | - | 137,385 | ||||||||||||||||||
| Issuance of share capital related to financing, net of issuance costs | 450,172,500 | 5,585,564 | 1,461,996 | - | - | 7,047,560 | ||||||||||||||||||
| Comprehensive income (loss) | - | - | - | 3,281 | (2,565,354 | ) | (2,562,073 | ) | ||||||||||||||||
| Balance, September 30, 2019 | 2,100,865,913 | $ | 30,123,701 | $ | 109,560,217 | $ | (402,093 | ) | $ | (136,031,368 | ) | $ | 3,250,457 |
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, 2020 | September 30, 2019 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (10,259,757 | ) | $ | (9,227,720 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 7,907 | 14,892 | ||||||
| Stock-based compensation | 244,941 | 941,446 | ||||||
| Financing expense | 900,000 | - | ||||||
| Changes in fair value of the liability for options/warrants - (gains) losses | (409,379 | ) | 12,594 | |||||
| Foreign currency exchange (gains) losses | (488,532 | ) | 67,922 | |||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in assets: | ||||||||
| Tax credit receivable | - | (2,902,987 | ) | |||||
| Prepaid expenses and other current assets | (635,758 | ) | 364,594 | |||||
| (Decrease) increase in liabilities: | ||||||||
| Accounts payable and accrued expenses | (2,076,709 | ) | 1,275,245 | |||||
| Total adjustments | (2,457,530 | ) | (226,294 | ) | ||||
| Net Cash Used in Operating Activities | (12,717,287 | ) | (9,454,014 | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Net proceeds from issuance of shares | 19,053,960 | 9,871,886 | ||||||
| Net proceeds from exercise of warrants to purchase shares | 27,500 | - | ||||||
| Net Cash Provided by Financing Activities | 19,081,460 | 9,871,886 | ||||||
| Effect of Exchange Rates on Cash | 221,934 | (117,172 | ) | |||||
| Net Decrease in Cash | 6,586,107 | 300,700 | ||||||
| Cash, beginning of period | 5,731,691 | 5,967,967 | ||||||
| Cash, end of period | $ | 12,317,798 | $ | 6,268,667 | ||||
| Supplemental Disclosures of Non-Cash Financing Activities: | ||||||||
| Deferred financing costs recognized and included in Additional paid-in capital | $ | - | $ | 182,958 |
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 treatments for autoinflammatory diseases involving the complement (C5) and leukotriene (LTB4) pathways.
The Company's activities since inception have consisted of performing research and development activities and raising capital.
As of September 30, 2020, the
Company has an accumulated deficit of $154,169,195 and cash of $12,317,798. 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 September 30, 2020, $30,000,000 remains available under the facility.
The Company believes its current
capital resources, including the additional approximately $6,000,000 received in October 2020 (See Note 8), are sufficient to support
its operations through May 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 nine months
ended September 30, 2020, the Company reported a net income of $1,441,960 and net loss of $10,259,757, 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 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 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 the
coronavirus, there is a general unease of conducting unnecessary activities in medical centers. As a consequence, during 2020 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 COVID-19 may affect the Company's 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 recruitment in the Phase III
clinical trial in pediatric patients with HSCT-TMA was 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 unaudited 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 income (loss) for the
three and nine months ended September 30, 2020 and September 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 31, 2019 and notes thereto included in the 2019 Form 20-F.
Principles of Consolidation -
The unaudited Condensed Consolidated Financial Statements include the accounts of the Company, Volution Immuno Pharmaceuticals
SA, a private Swiss company, and Akari Malta Limited, both 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 primary economic environment in which the Company operates as well as the