Reports third quarter total revenues of $702
thousand, representing more than 5x growth over the second quarter
of 2023, and positive gross margins of ~60% in the quarter
Company has filed EndeavorOTC with FDA as an
over-the-counter treatment for adults with ADHD
Akili, Inc. (Nasdaq: AKLI), a leading digital medicine company,
today reported its financial results for the quarter ended
September 30, 2023, and provided an update on business
progress.
“We are pleased with early results of our previously-announced
strategic shift from a prescription to a non-prescription business
model focused on EndeavorOTC. It’s clear that there is strong
demand from individuals struggling with ADHD, and that they are
actively seeking new treatment options. Our direct-to-consumer
strategy removes accessibility barriers to this
clinically-validated treatment,” said Matt Franklin, CEO of Akili.
“We’ve submitted EndeavorOTC for FDA review and authorization as an
over-the-counter medical product in the adult ADHD market, and
anticipate that these business model changes combined with our new
direct-to-consumer marketing efforts will accelerate the path to
profitability.”
Business Update
- On October 30, 2023, Akili submitted a 510(k) application to
FDA for EndeavorOTC as an over-the-counter treatment for adults
with ADHD. The submission was received by FDA on October 30, 2023
and is currently undergoing technical review by FDA.
- Pursuant to FDA guidance, Akili is continuing to make
EndeavorOTC available over-the-counter, without a prescription,
while its submission to FDA is under review.
- Akili also continues to seek FDA authorization for its
EndeavorRx label expansion to include adolescents ages 13-17 with
ADHD; this filing was accepted by FDA in May 2023 and remains under
review.
- As disclosed in September 2023, Akili plans to pursue
regulatory approval for over-the-counter labeling of both of its
treatment products and is planning to submit data to FDA in 2024 to
potentially convert its EndeavorRx product to over-the-counter
labeling.
- With respect to Akili’s ongoing partnership with Shionogi, the
Phase 3 study for pediatric ADHD in Japan, which includes both a
randomized phase and a longer term follow-up phase, is expected to
be complete by the end of the first quarter of 2024. Shionogi plans
to submit the results of this trial for regulatory approval to
Japan’s Pharmaceuticals and Medical Devices Agency in 2024.
- Effective October 16, 2023, Akili mutually agreed with TALi
Digital Limited to terminate the parties’ license, development and
commercialization agreement and Akili plans to focus its resources
on expanding adoption of its adult non-prescription product.
- EndeavorOTC metrics in the third quarter of 2023:
- 176,559 first-time app downloads in the period
- 7,535 active subscribers, defined as total users with a paid
subscription in the period
- $553 thousand in revenues and $533 thousand in billings (a
non-GAAP financial measure defined as EndeavorOTC revenues plus the
change in deferred revenue)
- $93 average revenue per paying user in the period (ARPU),
defined as revenues divided by subscribers who paid within the
period
Third Quarter 2023 Financial Highlights
- Cash position: Cash, cash equivalents, and short-term
investments as of September 30, 2023 were $86.3 million.
- Revenues: Total revenues for the third quarter of 2023
were $702 thousand compared to $114 thousand for the second quarter
of 2023, driven by the continued growth of EndeavorOTC in the adult
ADHD market.
- Total billings: Total billings, a non-GAAP financial
measure defined as revenues plus the change in deferred revenue,
were $699 thousand for the third quarter of 2023, compared to $170
thousand for the second quarter of 2023.
- Total Operating Expenses: GAAP total operating expenses
were $18.8 million for the third quarter of 2023, compared to $15.3
million for the second quarter of 2023, driven by increases in
EndeavorOTC marketing-related expenses and severance-related
charges associated with the headcount reduction announced in
September 2023. Non-GAAP total operating expenses were $14.7
million for the third quarter of 2023, compared to $13.1 million
for the second quarter of 2023, driven by an increase in
EndeavorOTC marketing-related expenses partially offset by the
savings associated with the headcount reduction announced in
September 2023.
- Gross Margins: Total gross margins were ~60% in the
third quarter of 2023 compared to ~-32% in the second quarter of
2023, driven by the impact of the June 2023 launch of EndeavorOTC
in the adult ADHD market.
- Net income (loss): GAAP net loss was $15.9 million for
the third quarter of 2023, compared to a GAAP net loss of $11.8
million for the second quarter of 2023. Non-GAAP net loss was $13.9
million for the third quarter of 2023, compared to a non-GAAP net
loss of $12.6 million for the second quarter of 2023.
Reiterating Financial Guidance
- Non-GAAP Total Operating Expenses
- 2023 Non-GAAP total operating expenses expected to be between
$55 million and $60 million, which excludes stock-based
compensation expense, an impairment loss on certain assets
associated with our sublease and severance and termination-related
costs associated with reductions to our workforce
- 2024 Non-GAAP total operating expenses expected to be between
$42 million and $47 million, which excludes stock-based
compensation expense
- Cash Runway
- Cash, cash equivalents, and short-term investments are expected
to be sufficient to fund current and planned operations into the
second half of 2025
- Gross Margins
- By late 2025, non-prescription business model expected to
operate at 60-70% gross margins
For additional information, please see the tables below, which
include a reconciliation of the historical non-GAAP financial
measures to GAAP financial measures.
Webcast and Conference Call
Akili will host a conference call and webcast today, Thursday,
November 9, 2023, at 4:30 p.m. ET. A live audio webcast of the
conference call and presentation will be available at
www.akiliinteractive.com under Investor Relations, Events &
Presentations, along with slides that may be referenced during the
call. An archived version of the webcast will be available on the
Company’s website following the event.
To access the call, dial 888-259-6580 (toll-free) or +1
206-962-3782 (international) and reference “Akili Third Quarter
2023 Earnings.”
Non-GAAP Financial Measures
In addition to financial information prepared and presented in
accordance with generally accepted accounting principles in the
United States (GAAP), this press release includes the following
non-GAAP financial measures: total billings on a historical basis,
non-GAAP total operating expenses on a historical basis, non-GAAP
net loss on a historical basis and non-GAAP total operating
expenses on a projected basis. Akili derives these non-GAAP
financial measures by excluding or adjusting certain expenses and
other items from the respective GAAP financial measure that is most
directly comparable to each non-GAAP financial measure.
Specifically, total billings is defined as revenues plus the change
in deferred revenue during the period; 2022 non-GAAP total
operating expenses on a historical basis excludes stock-based
compensation expense and transaction costs allocated to earn-out
shares; 2023 non-GAAP total operating expenses on a historical
basis excludes stock-based compensation expense, an impairment loss
on certain assets associated with our sublease and severance and
termination-related costs associated with the workforce reductions
during the year, and 2023 non-GAAP total operating expenses on a
projected basis excludes stock-based compensation expense, an
impairment loss on certain assets associated with our sublease and
severance and termination-related costs associated with the
workforce reductions during the year; 2024 non-GAAP total operating
expenses on a projected basis excludes stock-based compensation
expense; and non-GAAP net loss excludes transaction costs allocated
to earn-out shares, stock-based compensation expense, an impairment
loss on certain assets associated with our sublease, severance and
termination-related costs associated with the workforce reductions
announced during the year, and the change in estimated fair value
of earn-out liabilities. Akili’s management believes that these
non-GAAP financial measures are useful to both management and
investors in analyzing its ongoing business and operating
performance. Management does not intend the presentation of these
non-GAAP financial measures to be considered in isolation or as a
substitute for results prepared in accordance with GAAP, but as a
complement to provide greater transparency. In addition, these
non-GAAP financial measures may differ from similarly-named
measures used by other companies. A reconciliation of the
historical non-GAAP financial measures to GAAP financial measures
is included in the attached financial tables. However, a
quantitative reconciliation of projected non-GAAP total operating
expenses to projected GAAP operating expenses is not available, nor
is the probable significance of such reconciling information, due
to Akili’s inability to predict with reasonable certainty the
amount of future stock-based compensation expense at this time.
EndeavorOTC Indication and Overview
EndeavorOTC is a digital therapeutic indicated to improve
attention function, ADHD symptoms and quality of life in adults 18
years of age and older with primarily inattentive or combined-type
ADHD. EndeavorOTC utilizes the same proprietary technology
underlying EndeavorRx, a prescription digital therapeutic indicated
to improve attention function in children ages 8-12. EndeavorOTC is
available under the U.S. Food and Drug Administration’s current
Enforcement Policy for Digital Health Devices for Treating
Psychiatric Disorders During the Coronavirus Disease 2019
(COVID-19) Public Health Emergency. EndeavorOTC has not been
cleared or authorized by the U.S. Food and Drug Administration for
its indications. It is recommended that patients speak to their
health care provider before starting EndeavorOTC treatment. No
serious adverse events have been reported in any of our clinical
studies. To learn more, visit EndeavorOTC.com.
EndeavorRx Indication and Overview
EndeavorRx is the first-and-only FDA-authorized treatment
delivered through a video game experience. EndeavorRx is indicated
to improve attention function as measured by computer-based testing
in children ages 8 to 12 years old with primarily inattentive or
combined-type ADHD, who have a demonstrated attention issue.
Patients who engage with EndeavorRx demonstrate improvements in a
digitally assessed measure Test of Variables of Attention (TOVA®)
of sustained and selective attention and may not display benefits
in typical behavioral symptoms, such as hyperactivity. EndeavorRx
should be considered for use as part of a therapeutic program that
may include clinician-directed therapy, medication, and/or
educational programs, which further address symptoms of the
disorder. EndeavorRx is available by prescription only. It is not
intended to be used as a stand-alone therapeutic and is not a
substitution for a child’s medication. The most common side effect
observed in children in EndeavorRx’s clinical trials was a feeling
of frustration, as the game can be quite challenging at times. No
serious adverse events were associated with its use. EndeavorRx is
recommended to be used for approximately 25 minutes a day, 5 days a
week, over initially at least 4 consecutive weeks, or as
recommended by your child’s health care provider. To learn more
about EndeavorRx, please visit EndeavorRx.com.
About Akili
Akili is pioneering the development of cognitive treatments
through game-changing technologies. Akili’s approach of leveraging
technologies designed to directly target the brain establishes a
new category of medicine – medicine that is validated through
clinical trials like a drug or medical device but experienced like
entertainment. Akili’s platform is powered by proprietary
therapeutic engines designed to target cognitive impairment at its
source in the brain, informed by decades of research and validated
through rigorous clinical programs. Driven by Akili’s belief that
effective medicine can also be fun and engaging, Akili’s products
are delivered through captivating action video game experiences.
For more information, please visit www.akiliinteractive.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, as amended. These forward-looking statements generally are
identified by the words “believe,” “project,” “expect,”
“anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “prepare,” “pursue,” “may,” “should,”
“will,” “would,” “will be,” “will continue,” “will likely result,”
and similar expressions. Forward-looking statements are
predictions, projections and other statements about future events
that are based on current expectations and assumptions and, as a
result, are subject to risks and uncertainties. These
forward-looking statements include, without limitation, statements
in this press release related to: our use of the STARS-ADHD-Adult
study data in a regulatory submission with FDA to obtain regulatory
clearance for our over-the-counter product, EndeavorOTC; our
expectation regarding our ability to continue to be able to market
EndeavorOTC under the relevant FDA guidance; our expectation
regarding our ability to use EndeavorOTC to directly and
efficiently engage with adults struggling with attention issues and
ADHD; our expectation regarding the potential label expansion for
EndeavorRx to include adolescents ages 13-17 with ADHD; our plans
to request FDA approval of the conversion of both of our products
to over-the-counter labeling and to submit data to FDA in 2024; our
expectations regarding our partner Shionogi’s plans and timing
regarding their Phase 3 trial and regulatory submission in Japan;
our expectations regarding our path to profitability; our
expectations regarding our FY 2023 and FY 2024 non-GAAP total
operating expenses; our expectations regarding our future gross
margin percentage; our expectation that our existing cash, cash
equivalents, and short-term investments will be sufficient to fund
our current and planned operations into the second half of 2025;
and our expectations regarding our continued strong demand from
individuals struggling with ADHD. Any forward-looking statements in
this press release are based on management’s current expectations
and beliefs and are subject to a number of risks, uncertainties and
important factors that may cause actual events or results to differ
materially from those expressed or implied by any forward-looking
statements contained in this press release, including, without
limitation, risks and uncertainties related to: our ability to
obtain and maintain over-the-counter FDA authorization for
EndeavorOTC; our ability to continue to commercialize EndeavorOTC
under relevant FDA guidance; our ability to obtain regulatory
clearance from FDA for a label expansion for EndeavorRx and then to
obtain regulatory clearance from FDA to convert our products to
over-the-counter-labeling; our ability to successfully create, and
navigate, a new category of medicine and to achieve broad adoption
of digital therapeutics among customers and healthcare providers;
our ability to continue to advance our clinical development
pipeline; our ability to defend our intellectual property and
satisfy various FDA and other regulatory requirements in and
outside of the United States; the risk of adverse macroeconomic or
political changes and a changing regulatory landscape in the highly
competitive industry in which we operate; the timing and results
expected from our and our partners’ clinical trials and our
reliance on third parties for certain aspects of our business; our
ability to accurately estimate expenses, capital requirements, and
needs for additional financing; and other risks identified in our
current filings and any subsequent filings made with the Securities
and Exchange Commission (SEC). We caution you not to place undue
reliance on any forward-looking statements, which speak only as of
the date hereof and should not be relied upon as representing our
views as of any subsequent date. We disclaim any obligation to
publicly update or revise any such statements to reflect any change
in expectations or in events, conditions or circumstances on which
any such statements may be based, or that may affect the likelihood
that actual results will differ from those set forth in the
forward-looking statements.
Akili, Inc. Unaudited Condensed Consolidated Balance
Sheets
September 30,
June 30,
December 31,
2023
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
73,799
$
56,266
$
54,097
Restricted cash
305
305
305
Short-term investments
12,482
49,576
82,034
Accounts receivable
442
84
41
Prepaid expenses and other current
assets
3,608
2,493
4,565
Total current assets
90,636
108,724
141,042
Property and equipment, net
644
715
919
Operating lease right-of-use asset
1,753
1,929
2,596
Prepaid expenses and other long-term
assets
109
95
—
Total assets
$
93,142
$
111,463
$
144,557
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
1,217
$
1,457
$
2,681
Accrued expenses and other current
liabilities
3,385
3,227
5,616
Deferred revenue
173
176
106
Operating lease liability
774
791
826
Note payable, short term
7,500
7,500
4,375
Total current liabilities
13,049
13,151
13,604
Note payable, long term
5,209
6,965
10,442
Operating lease liability, net of current
portion
1,928
2,122
2,485
Corporate bond, net of bond discount
1,999
1,943
1,834
Earn-out liabilities
1,841
4,297
5,513
Other long-term liabilities
22
22
-
Total liabilities
24,048
28,500
33,878
Commitments and contingencies
Stockholders' equity
Common stock
8
8
8
Additional paid-in capital
357,720
355,738
350,980
Accumulated deficit
(288,634
)
(272,758
)
(240,288
)
Accumulated other comprehensive income
(loss)
-
(25
)
(21
)
Total stockholders' equity
69,094
82,963
110,679
Total liabilities and stockholders’
equity
$
93,142
$
111,463
$
144,557
Akili, Inc. Unaudited Condensed Consolidated Statements
of Operations
Three Months Ended September
30,
Nine Months Ended September
30,
Three Months Ended June
30,
2023
2022
2023
2022
2023
Revenues
$
702
$
82
$
929
$
212
$
114
Cost of revenues
280
123
567
316
150
Gross profit (loss)
422
(41
)
362
(104
)
(36
)
Operating expenses:
Research and development
4,912
7,554
15,629
21,216
4,633
Selling, general and administrative
13,936
16,911
37,595
47,250
10,648
Total operating expenses
18,848
24,465
53,224
68,466
15,281
Operating loss
(18,426
)
(24,506
)
(52,862
)
(68,570
)
(15,317
)
Other income, net
2,550
77,742
4,516
77,421
3,558
Net income (loss)
$
(15,876
)
$
53,236
$
(48,346
)
$
8,851
$
(11,759
)
Akili, Inc.
GAAP to Non-GAAP Reconciliation
Three Months Ended September
30,
Nine Months Ended September
30,
Three Months Ended June
30,
2023
2022
2023
2022
2023
GAAP Total Operating Expenses
$
18,848
$
24,465
$
53,224
$
68,466
$
15,281
Transaction costs allocated to earn-out
shares
-
(3,046
)
-
(3,046
)
-
Stock-based compensation
(1,655
)
(3,153
)
(6,251
)
(7,192
)
(1,837
)
Impairment loss on sublease
-
-
(384
)
-
(384
)
Expenses related to workforce
reduction
(2,461
)
-
(4,790
)
-
-
Non-GAAP Total Operating
Expenses
$
14,732
$
18,266
$
41,799
$
58,228
$
13,060
GAAP Net Income (Loss)
$
(15,876
)
$
53,236
$
(48,346
)
$
8,851
$
(11,759
)
Transaction costs allocated to earn-out
shares
-
3,046
-
3,046
-
Stock-based compensation
1,655
3,153
6,251
7,192
1,837
Impairment loss on sublease
-
-
384
-
384
Expenses related to workforce
reduction
2,461
-
4,790
-
-
Change in estimated fair value for earnout
liabilities
(2,128
)
(77,892
)
(3,182
)
(77,892
)
(3,067
)
Non-GAAP Net Loss
$
(13,888
)
$
(18,457
)
$
(40,103
)
$
(58,803
)
$
(12,605
)
Total Revenues
$
702
$
82
$
929
$
212
$
114
Deferred revenue, end of period
173
109
173
109
176
Deferred revenue, beginning of period
(176
)
(109
)
(106
)
(96
)
(120
)
Total Billings
$
699
$
82
$
996
$
225
$
170
EndeavorOTC Revenues
$
553
-
$
558
-
5
Deferred revenue, end of period
-
-
-
-
20
Deferred revenue, beginning of period
(20
)
-
-
-
-
EndeavorOTC Billings
$
533
-
$
558
-
$
25
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109115221/en/
Investors: Santosh Shanbhag Chief Financial Officer
InvestorRelations@akiliinteractive.com
Media: Caty Reid VP, Marketing & Communications
PR@akiliinteractive.com
Akili (NASDAQ:AKLI)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
Akili (NASDAQ:AKLI)
Historical Stock Chart
Von Mai 2023 bis Mai 2024