Akili Reports Fourth Quarter and Full Year 2022 Financial Results and Provides Business Update

March 7, 2023

EndeavorRx prescriptions increased 37% in Q4 2022 over Q3 2022 and 166% in FY 2022 over FY 2021; initial sales force gaining traction and Company is expanding to new U.S. territories

Strong clinical data in adolescents with ADHD supports potential for EndeavorRx label expansion; regulatory submission to FDA expected in 2023

Company reaffirms FY 2023 expense guidance of $55M - $60M of non-GAAP total operating expenses and cash runway extended into Q1 2025

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

  • As of the end of the fourth quarter, sales force covering 13 priority territories across the U.S. (roughly 20% of the estimated U.S. market opportunity for EndeavorRx) is gaining traction, with growth outpacing non-sales territories. Building on early results, the Company expects to expand the sales presence to approximately 15 additional U.S. territories by the end of the first quarter of 2023.
  • Prescription growth in the fourth quarter was driven by a focus on increased depth of prescribing across sales territories. 1,801 prescriptions for EndeavorRx were written in the fourth quarter of 2022, representing a 37% increase over the third quarter of 2022 and a 176% increase over the fourth quarter of 2021.
  • Prescriptions were written by 801 unique prescribers in the fourth quarter of 2022, a 2% increase over the third quarter of 2022 and 88% growth over the fourth quarter of 2021. Repeat prescribers were up 60% over the third quarter of 2022 and grew by 156% over the fourth quarter of 2021.
  • The number of prescription refills written for EndeavorRx increased 201% in the fourth quarter of 2022 over the third quarter of 2022 and grew by 434% over the fourth quarter of 2021.
  • On January 5, 2023, the Company announced topline results from STARS-ADHD-Adolescents, its pivotal trial of EndeavorRx (AKL-T01) in adolescents ages 13-17 with ADHD. The study showed robust improvements in attention and broader clinical outcomes, including attention improvements that were nearly three times as large as those seen in the Company’s pivotal trial that served as the basis for EndeavorRx’s FDA authorization for children with ADHD ages 8-12. The Company plans to use the STARS-ADHD-Adolescents study data in its regulatory submission to FDA in 2023 to seek an expanded label for EndeavorRx.
  • On December 1, 2022, Akili announced the appointment of Scott Kollins, Ph.D., as chief medical officer. A highly respected key opinion leader in the field of ADHD research and adjunct professor in the Department of Psychiatry and Behavioral Sciences at Duke University School of Medicine, Dr. Kollins has published more than 200 papers in peer-reviewed medical journals and led the pivotal studies of EndeavorRx in children ages 8-12 with ADHD.

FY 2022 Financial Highlights

  • Cash position: Cash, cash equivalents and short-term investments as of December 31, 2022 were $136.1 million. The increase of approximately $59.2 million compared to December 31, 2021, was primarily driven by the proceeds from the business combination in August of 2022.
  • Revenues: Total revenues for full year 2022 were $323 thousand, comprised solely of EndeavorRx product revenue, compared to $538 thousand for full year 2021, which was comprised of $186 thousand of EndeavorRx product revenue and $352 thousand of collaboration revenue associated with the Shionogi collaboration.
  • Total Operating Expenses: GAAP total operating expenses were $90.6 million for full year 2022, compared to $60.9 million for full year 2021. Non-GAAP total operating expenses were $78.2 million for full year 2022, compared to $56.0 million for full year 2021. The growth in 2022 compared to 2021 was primarily driven by an increase in personnel costs across the organization, ADHD pivotal trial costs, and costs associated with the business combination in August of 2022 and operating as a public company.
  • Net income (loss): GAAP net loss was $8.0 million in full year 2022 compared to a net loss of $61.3 million in full year 2021. The decrease in year over year GAAP net loss was primarily attributable to the reduction of liabilities relating to the Company’s earnout shares.Non-GAAP net loss was $78.3 million in full year 2022 compared to a net loss of $56.4 million in full year 2021. The increase in non-GAAP net loss in 2022 was driven by higher non-GAAP total operating expenses compared to 2021.

Fourth Quarter 2022 Financial Highlights

  • Revenues: Total revenues for the fourth quarter of 2022 grew to $111 thousand from $82 thousand for the third quarter of 2022. Revenues from both quarters were composed solely of EndeavorRx product revenue, and the growth reflected the impact of the deployment of the first wave of the Company’s sales force into priority territories.
  • Total Operating Expenses: GAAP total operating expenses were $22.1 million for the fourth quarter of 2022, compared to $24.5 million for the third quarter of 2022. The decrease was primarily driven by the impact of stock-based compensation costs associated with the business combination in August of 2022. Non-GAAP total operating expenses were $20.0 million for the fourth quarter, compared to $18.3 million for the third quarter of 2022. The increase in non-GAAP total operating expenses was primarily driven by growth in personnel-related expenses related to the commercialization of EndeavorRx.
  • Net income (loss): GAAP net loss was $16.8 million for the fourth quarter of 2022 compared to a net income of $53.2 million in the third quarter of 2022. The income in the third quarter of 2022 was due to the reduction of liabilities relating to the Company’s earnout shares.Non-GAAP net loss was $19.5 million for the fourth quarter of 2022 compared to a net loss of $18.5 million in the third quarter of 2022. The increase in loss was driven by higher non-GAAP total operating expenses compared to the third quarter of 2022.

2023 Operating Plan and Financial Guidance

  • On January 12, 2023, Akili announced its 2023 operating plan to focus the Company's resources primarily on supporting the commercialization and growth of EndeavorRx as well as efforts related to the potential label expansion for EndeavorRx in broader ADHD populations. This resulted in a reduction of expenses, including a reduction in the Company’s workforce by approximately 30% and pipeline reprioritization.
  • 2023 Non-GAAP Total Operating Expenses: Expected to be between $55.0 million and $60.0 million, which excludes stock-based compensation expense and severance and termination related costs associated with the workforce reduction announced in January 2023.
  • Cash Runway: The Company’s cash, cash equivalents, and short-term investments as of December 31, 2022, of $136.1 million are expected to be sufficient to fund current and planned operations into the first quarter of 2025.

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

)

 

Investor Contact:
Santosh Shanbhag
Chief Financial Officer
InvestorRelations@akiliinteractive.com

Media Contact:
Julie DiCarlo
SVP, Communications
PR@akiliinteractive.com

Source: Akili, Inc.