Akili, Inc. (Nasdaq: AKLI), a leading digital medicine company, today reported its financial results for the quarter and full year ended December 31, 2022, and provided an update on business progress.
"We have established a focused and efficient operating model that I believe best allows us to realize our goal of making EndeavorRx part of routine clinical care," said Eddie Martucci, chief executive officer of Akili. "We are seeing the positive impact of our commercial efforts in our initial 8-12-year-old market, and we are expanding our U.S. sales force and working to pursue an expanded label for EndeavorRx so that we can also help older children with ADHD impacted by inattention."
Business Update
FY 2022 Financial Highlights
Fourth Quarter 2022 Financial Highlights
2023 Operating Plan and Financial Guidance
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, Tuesday, March 7, 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 An archived version of the webcast will be available on the Company's website following the event.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 877-407-8029 (toll-free) or 201-689-8029 (international) and reference "Akili Q4 2022 Earnings." International toll-free numbers are available here.
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, 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 certain expenses and other items from the respective GAAP financial measure that is most directly comparable to each non-GAAP financial measure. Specifically, the non-GAAP total operating expenses, and non-GAAP total operating expenses on a projected basis exclude stock-based compensation expense and severance and termination related costs associated with the workforce reduction announced in January 2023, and non-GAAP net loss excludes stock-based compensation expense, transaction costs allocated to earnout shares, 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.
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," "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 goal of making EndeavorRx part of routine clinical care; our vision for EndeavorRx and plans to further prioritize resources on the expansion of our commercial organization and commercialization efforts; our plans for a regulatory submission to FDA to seek a potential label expansion for EndeavorRx in ADHD; our 2023 budget and operating plan and updates to our plans for our pipeline of digital therapeutics products and product candidates in ADHD and other indications and patient populations; our projections for 2023 non-GAAP total operating expenses; and our expectation that our existing cash, cash equivalents, and short-term investments will be sufficient to fund our current and planned operations into the first quarter of 2025. 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 successfully further commercialize EndeavorRx; our 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; our ability to obtain and maintain adequate coverage and reimbursement for our digital therapeutics; 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 impact of the COVID-19 pandemic on our business; the risk of downturns 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 | ||||||||||||
December 31, | September 30, | December 31, | ||||||||||
2022 |
|
2022 |
|
2021 |
||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ |
54,097 |
|
$ |
89,661 |
|
$ |
76,899 |
|
|||
Restricted cash |
|
305 |
|
|
305 |
|
|
305 |
|
|||
Short-term investments |
|
82,034 |
|
|
66,696 |
|
|
- |
|
|||
Accounts receivable |
|
41 |
|
|
30 |
|
|
29 |
|
|||
Prepaid expenses and other current assets |
|
4,565 |
|
|
4,586 |
|
|
2,500 |
|
|||
Total current assets |
|
141,042 |
|
|
161,278 |
|
|
79,733 |
|
|||
Property and equipment, net |
|
919 |
|
|
996 |
|
|
1,193 |
|
|||
Operating lease right-of-use asset |
|
2,596 |
|
|
2,760 |
|
|
- |
|
|||
Prepaid expenses and other long-term assets |
|
- |
|
|
- |
|
|
11 |
|
|||
Total assets | $ |
144,557 |
|
$ |
165,034 |
|
$ |
80,937 |
|
|||
Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ |
2,681 |
|
$ |
3,486 |
|
$ |
2,345 |
|
|||
Accrued expenses and other current liabilities |
|
5,616 |
|
|
6,240 |
|
|
5,477 |
|
|||
Deferred revenue |
|
106 |
|
|
109 |
|
|
96 |
|
|||
Deferred rent, short term |
|
- |
|
|
2 |
|
|
123 |
|
|||
Operating lease liability |
|
826 |
|
|
803 |
|
|
- |
|
|||
Note payable, short term |
|
4,375 |
|
|
2,500 |
|
|
- |
|
|||
Total current liabilities |
|
13,604 |
|
|
13,140 |
|
|
8,041 |
|
|||
Note payable, long term |
|
10,442 |
|
|
12,436 |
|
|
4,784 |
|
|||
Operating lease liability, net of current portion |
|
2,485 |
|
|
2,701 |
|
|
- |
|
|||
Corporate bond, net of bond discount |
|
1,834 |
|
|
1,785 |
|
|
1,638 |
|
|||
Earn-out liabilities |
|
5,513 |
|
|
11,100 |
|
|
- |
|
|||
Deferred rent, long term |
|
- |
|
|
- |
|
|
712 |
|
|||
Total liabilities |
|
33,878 |
|
|
41,162 |
|
|
15,175 |
|
|||
Commitments and contingencies | ||||||||||||
Redeemable convertible preferred stock |
|
- |
|
|
- |
|
|
291,876 |
|
|||
Stockholders' equity (deficit) | ||||||||||||
Common stock |
|
8 |
|
|
8 |
|
|
- |
|
|||
Additional paid-in capital |
|
350,980 |
|
|
347,330 |
|
|
- |
|
|||
Accumulated deficit |
|
(240,288 |
) |
|
(223,473 |
) |
|
(226,114 |
) |
|||
Accumulated other comprehensive gain (loss) |
|
(21 |
) |
|
7 |
|
|
- |
|
|||
Total stockholders' equity (deficit) |
|
110,679 |
|
|
123,872 |
|
|
(226,114 |
) |
|||
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | $ |
144,557 |
|
$ |
165,034 |
|
$ |
80,937 |
|
|||
Akili, Inc. | ||||||||||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||||||||||
Three Months Ended December 31, |
Years Ended December 31, |
Three Months Ended September 30, |
||||||||||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
|
2022 |
||||||||||||
Revenues | $ |
111 |
|
$ |
161 |
|
$ |
323 |
|
$ |
538 |
|
$ |
82 |
|
|||||
Cost of revenues |
|
125 |
|
|
112 |
|
|
441 |
|
|
355 |
|
|
123 |
|
|||||
Gross profit (loss) |
|
(14 |
) |
|
49 |
|
|
(118 |
) |
|
183 |
|
|
(41 |
) |
|||||
Operating expenses: | ||||||||||||||||||||
Research and development |
|
7,642 |
|
|
5,495 |
|
|
28,858 |
|
|
18,234 |
|
|
7,554 |
|
|||||
Selling, general and administrative |
|
14,451 |
|
|
13,993 |
|
|
61,701 |
|
|
42,668 |
|
|
16,911 |
|
|||||
Total operating expenses |
|
22,093 |
|
|
19,488 |
|
|
90,559 |
|
|
60,902 |
|
|
24,465 |
|
|||||
Operating loss |
|
(22,107 |
) |
|
(19,439 |
) |
|
(90,677 |
) |
|
(60,719 |
) |
|
(24,506 |
) |
|||||
Other income (expense), net |
|
5,311 |
|
|
(172 |
) |
|
82,732 |
|
|
(629 |
) |
|
77,742 |
|
|||||
Income tax expense |
|
(19 |
) |
|
- |
|
|
(19 |
) |
|
- |
|
|
- |
|
|||||
Net income (loss) | $ |
(16,815 |
) |
$ |
(19,611 |
) |
$ |
(7,964 |
) |
$ |
(61,348 |
) |
$ |
53,236 |
|
|||||
Akili, Inc. | ||||||||||||||||||||
GAAP to Non-GAAP Reconciliation | ||||||||||||||||||||
Three Months Ended December 31, |
Years Ended December 31, |
Three Months Ended September 30, |
||||||||||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
|
2022 |
||||||||||||
GAAP Total Operating Expenses | $ |
22,093 |
|
$ |
19,488 |
|
$ |
90,559 |
|
$ |
60,902 |
|
$ |
24,465 |
|
|||||
Less Transaction Costs Allocated to Earnout Shares |
|
- |
|
|
- |
|
|
(3,046 |
) |
|
- |
|
|
(3,046 |
) |
|||||
Less Stock-Based Compensation |
|
(2,117 |
) |
|
(1,365 |
) |
|
(9,309 |
) |
|
(4,913 |
) |
|
(3,153 |
) |
|||||
Non-GAAP Total Operating Expenses | $ |
19,976 |
|
$ |
18,123 |
|
$ |
78,204 |
|
$ |
55,989 |
|
$ |
18,266 |
|
|||||
GAAP Net Income (Loss) | $ |
(16,815 |
) |
$ |
(19,611 |
) |
$ |
(7,964 |
) |
$ |
(61,348 |
) |
$ |
53,236 |
|
|||||
Less Transaction Costs Allocated to Earnout Shares |
|
- |
|
|
- |
|
|
3,046 |
|
|
- |
|
|
3,046 |
|
|||||
Less Stock-Based Compensation |
|
2,117 |
|
|
1,365 |
|
|
9,309 |
|
|
4,913 |
|
|
3,153 |
|
|||||
Less Change in Estimated Fair Value for Earnout Liabilities |
|
(4,842 |
) |
|
- |
|
|
(82,734 |
) |
|
- |
|
|
(77,892 |
) |
|||||
Non-GAAP Net Income (Loss) | $ |
(19,540 |
) |
$ |
(18,246 |
) |
$ |
(78,343 |
) |
$ |
(56,435 |
) |
$ |
(18,457 |
) |
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