Company announces full voluntary prepayment of
debt and termination of Amended & Restated Loan and Security
Agreement with Silicon Valley Bank
Following recent restructuring, focusing
efforts primarily on supporting existing customers, executing the
amended agreement with Shionogi, and evaluating potential strategic
alternatives
Akili, Inc. (Nasdaq: AKLI), a leading digital medicine company,
today reported its financial results for the quarter ended March
31, 2024 and provided an update on business progress.
As announced in late April 2024, the Company’s board of
directors has initiated a process that is currently ongoing to
evaluate potential strategic alternatives to maximize shareholder
value. “We are working expeditiously with our board of directors
and our external advisors and look forward to providing an update
on this process in the future when appropriate,” said Matt
Franklin, President and Chief Executive Officer at Akili.
Business Update
- On May 8, 2024, the Company voluntarily prepaid its debt and
all outstanding obligations under the Amended and Restated Loan and
Security Agreement with Silicon Valley Bank (SVB) and SVB
Innovation Credit Fund VIII, L.P., which was terminated in full in
connection with the voluntary prepayment. Following the Company’s
repayment of its loan from SVB and the previously announced
cancellation and forgiveness of the Company’s corporate bond issued
to Shionogi & Co., Ltd. (Shionogi), the Company no longer has
any outstanding debt payment obligations.
- Amid the recent restructuring and related workforce reduction
announced in late April 2024, the Company’s efforts are primarily
focused on supporting Shionogi’s regulatory and commercialization
activities, continuing to support current users of its EndeavorRx
and EndeavorOTC products and make its products available for
purchase, and continuing to pursue regulatory authorization for
EndeavorOTC, in parallel with exploration of potential strategic
alternatives.
- The Company has historically reported certain commercial
metrics for EndeavorOTC. In light of the Company’s recently
announced restructuring and substantially reduced promotional
activity for its products, and the Company’s and its board of
directors’ exploration of potential strategic alternatives, the
Company no longer intends to report these metrics for EndeavorOTC
as it no longer believes that they provide useful information to
investors and others in understanding and evaluating its business
and results of operations.
First Quarter 2024 Financial Highlights
- Cash Position: Cash and cash equivalents as of March 31,
2024 were $63.2 million compared to $75.2 million as of December
31, 2023.
- Revenues: Total revenues for the first quarter of 2024
were $383 thousand compared to $749 thousand for the fourth quarter
of 2023, primarily due to reduced EndeavorOTC advertising
spend.
- Total Operating Expenses: GAAP total operating expenses
were $11.1 million for the first quarter of 2024, compared to $12.1
million for the fourth quarter of 2023, and non-GAAP total
operating expenses were $9.8 million for the first quarter of 2024,
compared to $11.6 million for the fourth quarter of 2023, in each
case driven by reductions in EndeavorOTC advertising spend.
- Gross Margins: Total gross margins were approximately
55% in the first quarter of 2024 compared to approximately 66% in
the fourth quarter of 2023, primarily due to the impact of lower
product revenue against certain fixed costs needed to deliver the
Company’s products.
- Net Income (Loss): GAAP net loss was $9.8 million for
the first quarter of 2024, compared to a GAAP net loss of $11.1
million for the fourth quarter of 2023. Non-GAAP net loss was $9.3
million for the first quarter of 2024, compared to a non-GAAP net
loss of $10.8 million for the fourth quarter of 2023.
For additional information, please see the tables below, which
include a reconciliation of the historical non-GAAP financial
measures to GAAP financial measures.
Suspension of Guidance and Business Update
As announced in late April 2024, the Company’s board of
directors has initiated a process that is currently ongoing to
evaluate potential strategic alternatives to maximize shareholder
value. The board of directors’ evaluation is ongoing and it expects
to make an announcement regarding the outcome of its review upon
completion. In light of the board of directors’ evaluation of
potential strategic alternatives, the Company will not provide
financial guidance until further notice.
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: non-GAAP total operating expenses on a
historical basis and non-GAAP net loss on a historical 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, first quarter 2024 and fourth quarter 2023
non-GAAP total operating expenses on a historical basis exclude
stock-based compensation expense; first quarter 2023 non-GAAP total
operating expenses on a historical basis excludes stock-based
compensation expense and severance and termination-related costs
associated with the workforce reduction during the period; first
quarter 2024 and fourth quarter 2023 non-GAAP net loss exclude
stock-based compensation expense and the change in estimated fair
value of earn-out liabilities; and first quarter 2023 non-GAAP net
loss excludes stock-based compensation expense, severance and
termination-related costs associated with the workforce reduction
announced during the period, 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.
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 - 17. EndeavorOTC
is available under the FDA’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 FDA for any
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 a digital therapeutic indicated to improve
attention function as measured by computer-based testing in
children ages 8-17 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,” “evaluate,” “intend,” “strategy,”
“future,” “opportunity,” “plan,” “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: the Company’s shift in corporate strategy and
related restructuring including a significant workforce reduction;
the Company and Board’s exploration of potential strategic
alternatives; the Company’s expectations regarding its ability to
obtain and provide additional information from FDA re the status of
its submission of a 510(k) application to FDA for EndeavorOTC; and
the Company’s expectation that its cash and cash equivalents as of
March 31, 2024 will be sufficient to fund its planned operations
and existing obligations for at least one year after the date of
this press release. 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: the Company’s
ability to complete the evaluation of potential strategic
alternatives and to identify, pursue, and complete a transaction on
terms that are in the best interests of and favorable to the
Company and its stockholders, if at all; the Company’s ability to
manage its business as a result of the workforce reduction; the
Company’s ability to successfully perform its obligations and
achieve the milestones under the amended agreement with Shionogi
and Shionogi’s ability to successfully obtain regulatory approval
of the SDT-001 product; the Company’s ability to successfully
obtain approval from FDA for EndeavorOTC; the Company’s ability to
successfully support and generate revenue from its EndeavorOTC and
EndeavorRx products and its partnerships; the Company’s ability to
successfully create, and navigate, a new category of medicine and
to achieve broad adoption of digital therapeutics among healthcare
providers, caregivers, and patients; the Company’s ability to
defend its intellectual property and satisfy various FDA and other
regulatory requirements in and outside of the United States; the
risk of downturns and a changing regulatory landscape in the highly
competitive industry in which the Company operates; the timing and
results expected from the Company’s and its partners’ clinical
trials and its reliance on third parties for certain aspects of its
business; the Company’s ability to accurately estimate expenses,
capital requirements, and needs for additional financing; and other
risks identified in the Company’s current filings and any
subsequent filings made with the Securities and Exchange
Commission. The Company cautions 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 the Company’s
views as of any subsequent date. The Company disclaims 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 March 31, December 31, March
31,
2024
2023
2023
Assets Current assets: Cash and cash equivalents
$
63,161
$
75,150
$
87,869
Restricted cash
180
305
305
Short-term investments
-
-
29,571
Accounts receivable
144
300
49
Prepaid expenses and other current assets
1,513
2,275
3,531
Total current assets
64,998
78,030
121,325
Property and equipment, net
835
680
844
Operating lease right-of-use asset
1,442
1,577
2,427
Prepaid expenses and other long-term assets
90
96
1
Total assets
$
67,365
$
80,383
$
124,597
Liabilities and stockholders’ equity Current liabilities:
Accounts payable
$
1,101
$
1,285
$
1,413
Accrued expenses and other current liabilities
1,794
3,326
2,828
Deferred revenue
38
100
120
Operating lease liability
779
756
809
Note payable, short term
7,500
7,500
6,250
Total current liabilities
11,212
12,967
11,420
Note payable, long term
1,671
3,445
8,706
Operating lease liability, net of current portion
1,528
1,730
2,307
Corporate bond, net of bond discount
2,115
2,054
1,888
Earn-out liabilities
608
1,632
7,836
Other long-term liabilities
23
23
-
Total liabilities
17,157
21,851
32,157
Commitments and contingencies Stockholders' equity Common stock
8
8
8
Additional paid-in capital
359,744
358,305
353,429
Accumulated deficit
(309,544
)
(299,781
)
(260,999
)
Accumulated other comprehensive income
-
-
2
Total stockholders' equity
50,208
58,532
92,440
Total liabilities and stockholders’ equity
$
67,365
$
80,383
$
124,597
Akili, Inc. Unaudited Condensed Consolidated
Statements of Operations Three Months EndedMarch
31, Three Months EndedDecember 31,
2024
2023
2023
Revenues
$
383
$
113
$
749
Cost of revenues
173
137
252
Gross profit (loss)
210
(24
)
497
Operating expenses: Research and development
4,183
6,084
4,296
Selling, general and administrative
6,892
13,011
7,824
Total operating expenses
11,075
19,095
12,120
Operating loss
(10,865
)
(19,119
)
(11,623
)
Other income (expense), net
1,102
(1,592
)
529
Income tax expense
-
-
(53
)
Net loss
$
(9,763
)
$
(20,711
)
$
(11,147
)
Akili, Inc. GAAP to Non-GAAP Reconciliation
Three Months EndedMarch 31, Three Months
EndedDecember 31,
2024
2023
2023
GAAP Total Operating Expenses
$
11,075
$
19,095
$
12,120
Stock-based compensation
(1,302
)
(2,759
)
(556
)
Expenses related to workforce reduction
-
(2,329
)
-
Non-GAAP Total Operating Expenses
$
9,773
$
14,007
$
11,564
GAAP Net Loss
$
(9,763
)
$
(20,711
)
$
(11,147
)
Stock-based compensation
1,302
2,759
556
Expenses related to workforce reduction
-
2,329
-
Change in estimated fair value for earn-out liabilities
(888
)
2,013
(181
)
Non-GAAP Net Loss
$
(9,349
)
$
(13,610
)
$
(10,772
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240514206940/en/
Investor and Media Contact Matt Franklin President and
Chief Executive Officer InvestorRelations@akiliinteractive.com or
PR@akiliinteractive.com
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