AKTX Akari Therapeutics PLC

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________

Commission File Number 001-36288

 

Akari Therapeutics, Plc

(Exact name of Registrant as specified in its Charter)

 

 

England and Wales	98-1034922
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
22 Boston Wharf Road, FL 7 Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (929) 274-7510

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
American Depository Shares, each representing 2,000 Ordinary Shares, par value $0.0001 per share		AKTX		The Nasdaq Capital Market
Ordinary Shares, $0.0001 par value per share*				The Nasdaq Capital Market

* Trading, but only in connection with the American Depository Shares.

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☒
Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The number of shares of Registrant’s Ordinary Shares outstanding as of August 9, 2024 was 23,906,899,523.

 

 

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TABLE OF CONTENTS

 

		Page
PART I	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Shareholders' (Deficit) Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	67
Item 6.	Exhibits	68
	SIGNATURES	69

 

 

 

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GENERAL INFORMATION

 

Unless otherwise stated or the context requires otherwise, references in this Quarterly Report on Form 10-Q ("Form 10-Q") to “Akari,” the “company,” the “Company,” “we,” “us,” “our” or similar designations refer to Akari Therapeutics, Plc and its subsidiaries, taken together. All trademarks, service marks, trade names and registered marks used in this report are trademarks, trade names or registered marks of their respective owners.

 

Statements made in this Quarterly Report on Form 10-Q concerning the contents of any agreement, contract or other document are summaries of such agreements, contracts or documents and are not complete description of all of their terms. If we filed any of these agreements, contracts or documents as exhibits to this Quarterly Report on Form 10-Q or to any previous filing with the Securities and Exchange Commission (“SEC”), you may read the document itself for a complete understanding of its terms.

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and the documents we incorporate by reference contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, included or incorporated in this report regarding, among other things, our cash resources and projected cash runway, financial position, our strategy, strategic alternatives, future operations, clinical trials (including, without limitation, the anticipated timing enrollment, and results thereof), collaborations, intellectual property, future revenues, projected costs, fundraising and/or financing plans, prospects, developments relating to our competitors and our industry, the timing or likelihood of regulatory actions, filings and approvals for our current and future drug candidates, and the benefits related to the Merger Agreement (as defined below) and the plans and objectives of management are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,” “potential,” “likely,” “projects,” “intend,” “continue,” “will,” “schedule,” “would,” “aim,” “contemplate,” “estimate,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we will actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements.

There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These important factors include those set forth under Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (our “Form 10-K”) and Part II “Item 1A. Risk Factors” of this Form 10-Q and in our other disclosures and filings we have made with the SEC. These factors and the other cautionary statements made in this Form 10-Q and the documents we incorporate by reference should be read as being applicable to all related forward-looking statements whenever they appear in this Form 10-Q and the documents we incorporate by reference.

In addition, any forward-looking statements represent our estimates only as of the date that this Form 10-Q is filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. All forward-looking statements included in this Form 10-Q are made as of the date hereof and are expressly qualified in their entirety by this cautionary notice. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as may be required by law.

 

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AKARI THERAPEUTICS, PLC

 

Condensed Consolidated Balance Sheets

(Unaudited, in U.S. dollars)

 

		June 30,				December 31,
(In thousands, except share and per share amounts)		2024				2023*
ASSETS
Current assets:
Cash		$	4,177			$	3,845
Prepaid expenses			805				299
Other current assets			94				197
Total current assets			5,076				4,341
Patent acquisition costs, net			—				14
Total assets		$	5,076			$	4,355
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable		$	4,686			$	1,671
Accrued expenses			1,685				1,566
Convertible notes, related party			1,000				—
Warrant liability			755				1,253
Other current liabilities			653				94
Total current liabilities			8,779				4,584
Commitments and contingencies (Note 9)
Shareholders’ deficit:
Share capital of $0.0001 par value
Authorized: 45,122,321,523 ordinary shares at    June 30, 2024 and December 31, 2023, respectively;    issued and outstanding: 24,289,232,698 and 13,234,315,298 at    June 30, 2024 and December 31, 2023, respectively			2,430				1,324
Additional paid-in capital			183,007				174,754
Capital redemption reserve			52,194				52,194
Accumulated other comprehensive loss			(749	)			(1,040	)
Accumulated deficit			(240,585	)			(227,461	)
Total shareholders’ deficit			(3,703	)			(229	)
Total liabilities and shareholders' deficit		$	5,076			$	4,355

 

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* The condensed balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date.

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AKARI THERAPEUTICS, PLC

 

Condensed Consolidated Statements of Operations

and Comprehensive Loss

(Unaudited, in U.S. dollars)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(In thousands, except share and per share amounts)		2024				2023				2024				2023
Operating expenses:
Research and development		$	3,314			$	1,524			$	5,593			$	3,255
General and administrative			2,241				3,091				4,907				5,954
Merger-related costs			254				—				1,298				—
Restructuring and other costs			1,640				—				1,640				—
Loss from operations			(7,449	)			(4,615	)			(13,438	)			(9,209	)
Other income (expense):
Interest income			2				29				4				59
Interest expense			(51	)			—				(51	)			—
Change in fair value of warrant liability			(151	)			560				498				6,147
Foreign currency exchange gain (loss), net			91				39				(135	)			28
Other expense, net			—				(13	)			(2	)			(24	)
Total other income (expense), net			(109	)			615				314				6,210
Net loss		$	(7,558	)		$	(4,000	)		$	(13,124	)		$	(2,999	)
Net loss per share –– basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted-average number of ordinary shares used in computing net loss per share –– basic and diluted			18,836,478,977				10,115,005,727				16,144,813,478				8,787,337,361
Comprehensive loss:
Net loss		$	(7,558	)		$	(4,000	)		$	(13,124	)		$	(2,999	)
Other comprehensive income, net of tax:
Foreign currency translation adjustment			12				(57	)			291				(55	)
Total other comprehensive income, net of tax			12				(57	)			291				(55	)
Total comprehensive loss		$	(7,546	)		$	(4,057	)		$	(12,833	)		$	(3,054	)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AKARI THERAPEUTICS, PLC

 

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(Unaudited, in U.S. dollars)

 

		Six Months Ended June 30, 2024
																		Accumulated
										Additional				Capital				Other								Total
		Share Capital $0.0001 par value								Paid-in-				Redemption				Comprehensive				Accumulated				Shareholders'
(In thousands, except share amounts)		Shares				Amount				Capital				Reserve				Loss				Deficit				Deficit
Balance, December 31, 2023			13,234,315,298			$	1,324			$	174,754			$	52,194			$	(1,040	)		$	(227,461	)		$	(229	)
Issuance of share capital related to    financing, net of issuance costs			2,641,228,000				264				1,400				—				—				—				1,664
Vesting of restricted shares			97,578,000				10				(7	)			—				—				—				3
Share-based compensation			—				—				296				—				—				—				296
Foreign currency translation			—				—				—				—				279				—				279
Net loss			—				—				—				—				—				(5,566	)			(5,566	)
Balance, March 31, 2024			15,973,121,298			$	1,598			$	176,443			$	52,194			$	(761	)		$	(233,027	)		$	(3,553	)
Issuance of share capital related to    financing, net of issuance costs			8,059,508,000				806				6,145				—				—				—				6,951
Issuance of share capital for services			91,396,000				9				(9	)			—				—				—				—
Vesting of restricted shares			285,697,400				29				(29	)			—				—				—				—
Shares withheld for payroll taxes			(120,490,000	)			(12	)			12				—				—				—				—
Share-based compensation			—				—				445				—				—				—				445
Foreign currency translation			—				—				—				—				12				—				12
Net loss			—				—				—				—				—				(7,558	)			(7,558	)
Balance, June 30, 2024			24,289,232,698			$	2,430			$	183,007			$	52,194			$	(749	)		$	(240,585	)		$	(3,703	)

 

 

		Six Months Ended June 30, 2023
																		Accumulated
										Additional				Capital				Other								Total
		Share Capital $0.0001 par value								Paid-in-				Redemption				Comprehensive				Accumulated				Shareholders'
(In thousands, except share amounts)		Shares				Amount				Capital				Reserve				Loss				Deficit				Equity
Balance, December 31, 2022			7,444,917,123			$	745			$	167,076			$	52,194			$	(771	)		$	(217,453	)		$	1,791
Issuance of share capital related to    financing, net of issuance costs			2,666,666,700				267				3,235				—				—				—				3,502
Share-based compensation			—				—				265				—				—				—				265
Foreign currency translation			—				—				—				—				2				—				2
Net income			—				—				—				—				—				1,001				1,001
Balance, March 31, 2023			10,111,583,823			$	1,012			$	170,576			$	52,194			$	(769	)		$	(216,452	)		$	6,561
Vesting of restricted shares			10,737,700				1				—				—				—				—				1
Share-based compensation			—				—				276				—				—				—				276
Foreign currency translation			—				—				—				—				(57	)			—				(57	)
Net loss			—				—				—				—				—				(4,000	)			(4,000	)
Balance, June 30, 2023			10,122,321,523			$	1,013			$	170,852			$	52,194			$	(826	)		$	(220,452	)		$	2,781

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AKARI THERAPEUTICS, PLC

 

Condensed Consolidated Statements of Cash Flows

(Unaudited, in U.S. dollars)

 

		Six Months Ended
		June 30,
(In thousands)		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(13,124	)		$	(2,999	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			13				2
Share-based compensation			741				541
Change in fair value of warrant liability			(498	)			(6,147	)
Foreign currency exchange losses (gains)			280				(34	)
Change in assets and liabilities:
Prepaid expenses and other current assets			702				(269	)
Accounts payable and accrued expenses			2,948				(668	)
Net cash used in operating activities			(8,938	)			(9,574	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares, net of issuance costs			8,820				3,502
Proceeds from issuance of convertible notes			1,000				—
Proceeds from employee vesting of restricted shares			3				1
Payments on short-term financing arrangement			(546	)			—
Net cash provided by financing activities			9,277				3,503
Effect of exchange rates on cash			(7	)			2
Net increase (decrease) in cash			332				(6,069	)
Cash at beginning of period			3,845				13,250
Cash at end of period		$	4,177			$	7,181
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
Financing costs in accrued expenses		$	205			$	—
Non-cash seller-financed purchases		$	1,105			$	—
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFO:
Cash paid during the period for interest		$	51			$	—

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

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AKARI THERAPEUTICS, PLC

 

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

 

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