Akili Reports First Quarter 2024 Financial Results and Provides Business Update
Akili (Nasdaq: AKLI) reported Q1 2024 financial results. The company prepaid its debt and terminated its loan agreement with Silicon Valley Bank on May 8, 2024. Following recent restructuring and workforce reductions, Akili's focus is on supporting Shionogi’s regulatory activities and evaluating strategic alternatives. Cash and equivalents were $63.2M as of March 31, 2024, down from $75.2M at the end of 2023. Q1 revenue was $383K, a drop from $749K in Q4 2023. Total operating expenses decreased to $11.1M (GAAP) and $9.8M (non-GAAP) due to reduced advertising spend. Net loss narrowed to $9.8M (GAAP) and $9.3M (non-GAAP). The company will not provide financial guidance amid ongoing strategic evaluations.
- Full voluntary prepayment of all debt, eliminating outstanding obligations.
- Reduced GAAP total operating expenses to $11.1M from $12.1M in the previous quarter.
- Reduced non-GAAP total operating expenses to $9.8M from $11.6M in the previous quarter.
- Net loss narrowed to $9.8M (GAAP) and $9.3M (non-GAAP) from $11.1M and $10.8M respectively.
- Focus on strategic alternatives to maximize shareholder value.
- Revenue decreased to $383K in Q1 2024 from $749K in Q4 2023.
- Cash and cash equivalents dropped to $63.2M as of March 31, 2024, from $75.2M at the end of 2023.
- Gross margins declined to 55% from 66% in the previous quarter.
- Suspension of guidance due to ongoing strategic evaluations.
Insights
Evaluating Akili's latest financial results provides a mixed picture for investors. The
On the revenue front, the decline from
Net loss improvements from
Overall, while Akili's debt repayment and cost-cutting measures are positive steps, the revenue decline and lack of financial guidance pose risks. Investors should monitor the company's strategic moves closely.
Rating: 0 (Neutral)
Akili's focus on strategic alternatives and restructuring indicates a potential shift in market positioning. The strategic partnership with Shionogi and the emphasis on regulatory and commercialization efforts for EndeavorRx and EndeavorOTC are pivotal. Given the digital therapeutic market's growth, Akili's focus on regulatory approvals could open new revenue streams, but the halt in reporting commercial metrics for EndeavorOTC signals a reassessment of its market effectiveness.
The suspension of financial guidance and the board's evaluation of strategic alternatives suggest that Akili is exploring significant changes, potentially including mergers, acquisitions, or divestitures. Such moves could dramatically alter the company's market position and investor expectations.
It's essential for investors to consider the broader trends in digital therapeutics and the potential for Akili to realign its strategy for long-term gains. However, the immediate impact of restructuring and the uncertain outcomes of strategic reviews add layers of complexity.
Rating: 0 (Neutral)
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
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 $75.2 million -
Revenues: Total revenues for the first quarter of 2024 were
$383 thousand $749 thousand -
Total Operating Expenses: GAAP total operating expenses were
$11.1 million $12.1 million $9.8 million $11.6 million -
Gross Margins: Total gross margins were approximately
55% in the first quarter of 2024 compared to approximately66% 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 $11.1 million $9.3 million $10.8 million
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
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
| 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 Ended March 31, |
Three Months Ended December 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 Ended March 31, |
Three Months Ended December 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
Source: Akili, Inc.
FAQ
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