Akari Therapeutics, Plc

For Q4 2017, research and development expense was 7.1 million versus 6.6 million in Q4 2016, general and administrative expense was 3.7 million versus 3.3 million, and net loss was 9.3 million versus 8.3 million; basic and diluted net loss per share was $0.01 in both periods. For full year 2017, R&D expense was 23.3 million versus 17.3 million in 2016, G&A expense was 11.7 million versus 9.9 million, and net loss was 32.6 million versus 18.1 million; basic and diluted loss per share was $0.03 versus $0.02. The company used 31.6 million of cash in operations during 2017 and ended the year with 28.1 million in cash and cash equivalents. It also raised approximately 15.7 million of net proceeds from a fourth-quarter underwritten offering of 3.48 million ADSs. Management said current cash is sufficient to fund operations into Q2 2019, but also said the balance sheet alone is probably not sufficient to complete CAPSTONE and that additional financing mechanisms will be needed.

David Solomon’s main message was that Akari made real clinical and regulatory progress across its lead program. He highlighted the Phase 2 PNH readout, the FDA end-of-Phase-2 agreement on Phase 3 design, clearance to open the first European site for CAPSTONE, and initiation of a Phase 2 aHUS study. His tone was constructive and upbeat, with repeated emphasis on Coversin’s subcutaneous convenience, dual mechanism, and potential differentiation from Soliris.

Dov Elefant walked through a wider 2017 loss profile driven by higher development and corporate spending. He cited Q4 2017 R&D of 7.1 million and G&A of 3.7 million, with full-year R&D at 23.3 million and G&A at 11.7 million, both above 2016 due mainly to PNH and aHUS trial activity, hiring, consulting, and professional fees. Cash used in operations was 31.6 million in 2017, ending cash was 28.1 million, and the quarter included 15.7 million of net proceeds from an underwritten ADS offering; he said the company expects cash to last into Q2 2019.

Analysts focused heavily on whether Akari had enough cash to run CAPSTONE to completion. Management said there is enough cash and drug supply to start CAPSTONE, but probably not enough on the current balance sheet to finish it, so the company plans to use financing mechanisms to bridge the gap. Questions also probed CAPSTONE design, with Solomon saying the study will enroll pre-screened patients at qualified sites, use transfusion reduction/avoidance and hemoglobin as primary endpoints, and keep ASSET for later. On COBALT, he said the apparent LDH drift later in the study may reflect common compliance issues in self-injection trials and that the company is putting compliance programs in place, including possible text reminders.