FY 2023 total revenues of $1.7M, a 420%
increase over FY 2022 as EndeavorOTCⓇ gained traction in the market
following June 2023 product release
Reports fourth quarter 2023 total revenues of
$749 thousand, representing 7% growth over the third quarter of
2023, and positive gross margins of 66%, representing a 6
percentage point increase over the third quarter of 2023
Akili partner Shionogi releases positive Phase
3 trial results and submits Akili’s digital therapeutic SDT-001 for
marketing approval in Japan
Company lowers FY 2024 non-GAAP total operating
expense guidance to between $38 million and $43 million and
reaffirms gross margins guidance of 60-70% by late 2025; ends FY
2023 with $75.2 million in cash and cash equivalents and reaffirms
cash runway into 2H 2025
Akili, Inc. (Nasdaq: AKLI), a leading digital medicine company,
today reported its financial results for the quarter and full year
ended December 31, 2023, and provided an update on business
progress.
“We continue to see clear demand for our innovative, digital
therapeutics, particularly amidst the ongoing mental health crisis
and increasing awareness of adult ADHD prevalence,” said Matt
Franklin, Chief Executive Officer at Akili. “Our mid-year shift to
a leaner, customer-centric model has yielded strong initial
results, with revenue growth and gross margin improvement in 2023,
that we believe will strengthen our ability to achieve
profitability over time.”
Business Update
- The company continued to see growth in demand for EndeavorOTC
in the fourth quarter. Key metrics in the fourth quarter of 2023
include:
- Active subscribers increased to 11,571 in Q4, despite a
decrease in first-time app downloads (139,499 in Q4), due to
improved conversion and strong renewals as a result of optimized
customer targeting and acquisition. Active subscribers is defined
as total users with a paid subscription in the period.
- $596 thousand in EndeavorOTC revenues and $596 thousand in
EndeavorOTC billings (a non-GAAP financial measure defined as
EndeavorOTC revenues plus the change in deferred revenue).
- Q4 average revenue per paying user (ARPU) was $88, as
adjustments continued to be made to optimize pricing and
subscription options for customers. ARPU is defined as EndeavorOTC
revenues divided by active subscribers within the period.
- In December 2023, Akili announced FDA authorization for the
label expansion of EndeavorRxⓇ from 8 - 12 year-old patients with
primarily inattentive or combined-type ADHD who have a demonstrated
attention issue to include children aged 13 - 17. This increased
age range is expected to more than double the number of pediatric
patients with ADHD who are now eligible for EndeavorRx with a
prescription or order from a healthcare provider.
- Akili continues to work interactively with FDA on the review of
its marketing submission for EndeavorOTC and expects to provide a
status update by the end of the second quarter of 2024.
- 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.
- Earlier this week, Akili’s partner Shionogi & Co. Ltd
announced its submission of a marketing approval application for
SDT-001, the Japanese localized version of Akili’s AKL-T01 digital
therapeutic, to Japan’s Ministry of Health, Labour, and Welfare,
for commercialization and sale in Japan. The submission for
marketing approval in Japan follows the positive results of the
Phase 3 clinical trial of SDT-001 conducted by SHIONOGI in Japan in
pediatric ADHD patients, also announced earlier this week.
FY 2023 Financial Highlights
- Cash Position: Cash and cash equivalents as of December
31, 2023 were $75.2 million. The decrease of cash and cash
equivalents and short-term investments of approximately $61.0
million compared to December 31, 2022 was primarily to fund 2023
operations, including commercializing EndeavorRx and
EndeavorOTC.
- Revenues: Total revenues for full year 2023 were $1.7
million, which was comprised of $1.2 million of EndeavorOTC product
revenue and $0.5 million of EndeavorRx product revenue, compared to
$0.3 million for full year 2022, which was comprised solely of
EndeavorRx product revenue.
- Total Operating Expenses: GAAP total operating expenses
were $65.3 million for full year 2023, compared to $90.6 million
for full year 2022. Non-GAAP total operating expenses were reduced
to $53.4 million for full year 2023, compared to $78.2 million for
full year 2022. The decrease in 2023 compared to 2022 was primarily
driven by a decrease in personnel costs across the organization,
clinical trial costs, and costs associated with the August 2022
business combination.
- Net Loss: GAAP net loss was $59.5 million in full year
2023 compared to a GAAP net loss of $8.0 million in full year 2022.
The increase in year over year GAAP net loss was primarily
attributable to a smaller gain recognized on the Company’s earnout
shares in 2023 ($3.4 million) versus 2022 ($82.7 million). Non-GAAP
net loss was $50.9 million in full year 2023 compared to a non-GAAP
net loss of $78.3 million in full year 2022. The decrease in
non-GAAP net loss in 2023 was driven primarily by lower non-GAAP
total operating expenses compared to 2022.
Fourth Quarter 2023 Financial Highlights
- Revenues: Total revenues for the fourth quarter of 2023
were $749 thousand compared to $702 thousand for the third quarter
of 2023, driven by the continued growth of EndeavorOTC in the adult
ADHD market in the fourth quarter.
- Total Billings: Total billings, a non-GAAP financial
measure defined as revenues plus the change in deferred revenue,
were $676 thousand for the fourth quarter of 2023, compared to $699
thousand for the third quarter of 2023. This decrease in quarter
over quarter total billings was due to a reduction in the number of
EndeavorRx prescriptions as Akili continued to scale up the
EndeavorOTC business.
- Total Operating Expenses: GAAP total operating expenses
were $12.1 million for the fourth quarter of 2023, compared to
$18.8 million for the third quarter of 2023, driven by a reduction
in stock-based compensation expense in the fourth quarter and
severance-related charges in the third quarter associated with the
headcount reduction announced in September 2023. Non-GAAP total
operating expenses were $11.6 million for the fourth quarter of
2023, compared to $14.7 million for the third quarter of 2023,
driven primarily by headcount savings and a reduction in customer
acquisition costs.
- Gross Margins: Total gross margins were 66% in the
fourth quarter of 2023 compared to 60% in the third quarter of
2023, largely driven by a transition from a third-party digital
pharmacy to an in-house distribution system for EndeavorRx order
fulfillment.
- Net Loss: GAAP net loss was $11.1 million for the fourth
quarter of 2023, compared to a GAAP net loss of $15.9 million for
the third quarter of 2023. Non-GAAP net loss was $10.8 million for
the fourth quarter of 2023, compared to a non-GAAP net loss of
$13.9 million for the third quarter of 2023.
Financial Guidance
- Non-GAAP Total Operating Expenses (updated): 2024
non-GAAP total operating expenses are expected to be between $38
million and $43 million (down from prior guidance of between $42
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, the non-prescription
business model is 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.
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: EndeavorOTC billings on a historical
basis, 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, EndeavorOTC
billings is defined as EndeavorOTC revenues plus the change in
deferred revenue; total billings is defined as total 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; 2022 non-GAAP net loss excludes transaction costs
allocated to earn-out shares, stock based compensation expense, and
the change in estimated fair value of earn-out liabilities; 2023
non-GAAP net loss excludes 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; and 2024 non-GAAP
total operating expenses on a projected basis excludes stock-based
compensation expense. 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 - 17. 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 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,” “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
authorization for our over-the-counter product, EndeavorOTC; our
expectations regarding our ability to continue to be able to market
EndeavorOTC under the relevant FDA guidance; our expectations
regarding our ability to use EndeavorOTC to directly and
efficiently engage with adults struggling with attention issues and
ADHD; our expectation that the label expansion of EndeavorRx will
more than double the number of pediatric patients who are now
eligible for EndeavorRx; our plans to request FDA authorization of
the conversion of EndeavorRx to over-the-counter labeling and to
submit data to FDA in 2024; our expectations regarding our partner
SHIONOGI’s Phase 3 clinical trial results and its plans and timing
regarding its regulatory submission in Japan of our SDT-001 product
for pediatric ADHD patients; our expectations regarding our ability
to achieve profitability; our expectations regarding our FY 2024
non-GAAP total operating expenses; our expectations regarding our
future gross margin percentage; our expectations that our 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 authorization from FDA to convert our
EndeavorRx product 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
December 31,
September 30,
December 31,
2023
2023
2022
Assets
Current assets:
Cash and cash equivalents
$75,150
$73,799
$54,097
Restricted cash
305
305
305
Short-term investments
-
12,482
82,034
Accounts receivable
300
442
41
Prepaid expenses and other current
assets
2,275
3,608
4,565
Total current assets
78,030
90,636
141,042
Property and equipment, net
680
644
919
Operating lease right-of-use asset
1,577
1,753
2,596
Prepaid expenses and other long-term
assets
96
109
—
Total assets
$80,383
$93,142
$144,557
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$1,285
$1,217
$2,681
Accrued expenses and other current
liabilities
3,326
3,385
5,616
Deferred revenue
100
173
106
Operating lease liability
756
774
826
Note payable, short term
7,500
7,500
4,375
Total current liabilities
12,967
13,049
13,604
Note payable, long term
3,445
5,209
10,442
Operating lease liability, net of current
portion
1,730
1,928
2,485
Corporate bond, net of bond discount
2,054
1,999
1,834
Earn-out liabilities
1,632
1,841
5,513
Other long-term liabilities
23
22
-
Total liabilities
21,851
24,048
33,878
Commitments and contingencies
Stockholders' equity
Common stock
8
8
8
Additional paid-in capital
358,305
357,720
350,980
Accumulated deficit
(299,781)
(288,634)
(240,288)
Accumulated other comprehensive loss
-
-
(21)
Total stockholders' equity
58,532
69,094
110,679
Total liabilities and stockholders’
equity
$80,383
$93,142
$144,557
Akili, Inc.
Unaudited Condensed Consolidated
Statements of Operations
Three Months Ended December
31,
Years Ended December
31,
Three Months Ended September
30,
2023
2022
2023
2022
2023
Revenues
$749
$111
$1,678
$323
$702
Cost of revenues
252
125
819
441
280
Gross profit (loss)
497
(14)
859
(118)
422
Operating expenses:
Research and development
4,296
7,642
19,925
28,858
4,912
Selling, general and administrative
7,824
14,451
45,419
61,701
13,936
Total operating expenses
12,120
22,093
65,344
90,559
18,848
Operating loss
(11,623)
(22,107)
(64,485)
(90,677)
(18,426)
Other income, net
529
5,311
5,045
82,732
2,550
Income tax expense
(53)
(19)
(53)
(19)
-
Net loss
$(11,147)
$(16,815)
$(59,493)
$(7,964)
$(15,876)
Akili, Inc.
GAAP to Non-GAAP Reconciliation
Three Months Ended December
31,
Years Ended December
31,
Three Months Ended September
30,
2023
2022
2023
2022
2023
GAAP Total Operating Expenses
$12,120
$22,093
$65,344
$90,559
$18,848
Transaction costs allocated to earn-out
shares
-
-
-
(3,046)
-
Stock-based compensation
(556)
(2,117)
(6,807)
(9,309)
(1,655)
Impairment loss on sublease
-
-
(384)
-
-
Expenses related to workforce
reduction
-
-
(4,730)
-
(2,461)
Non-GAAP Total Operating
Expenses
$11,564
$19,976
$53,423
$78,204
$14,732
GAAP Net Loss
$(11,147)
$(16,815)
$(59,493)
$(7,964)
$(15,876)
Transaction costs allocated to earn-out
shares
-
-
-
3,046
-
Stock-based compensation
556
2,117
6,807
9,309
1,655
Impairment loss on sublease
-
-
384
-
-
Expenses related to workforce
reduction
-
-
4,730
-
2,461
Change in estimated fair value for
earn-out liabilities
(181)
(4,842)
(3,363)
(82,734)
(2,128)
Non-GAAP Net Loss
$(10,772)
$(19,540)
$(50,935)
$(78,343)
$(13,888)
Total Revenues
$749
$111
$1,678
$323
$702
Deferred revenue, end of period
100
106
100
106
173
Deferred revenue, beginning of period
(173)
(109)
(106)
(96)
(176)
Total Billings
$676
$108
$1,672
$333
$699
EndeavorOTC Revenues
$596
$ -
$1,155
$ -
$553
Deferred revenue, end of period
-
-
-
-
-
Deferred revenue, beginning of period
-
-
-
-
(20)
EndeavorOTC Billings
$596
$ -
$1,155
$ -
$533
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240229955450/en/
Investor Contact: Matt Franklin Chief Executive Officer
InvestorRelations@akiliinteractive.com
Media Contact: Caty Reid VP, Marketing &
Communications PR@akiliinteractive.com
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