NEW YORK, June 05, 2024 (GLOBE NEWSWIRE) -- Halper Sadeh LLC, an investor rights law firm, is investigating the following companies for potential violations of the federal securities laws and/or breaches of fiduciary duties to shareholders relating to: Akili, Inc. (NASDAQ: AKLI)’s sale to Virtual Therapeutics for $0.4340 per share of common stock in cash. If you are an Akili shareholder, click here to learn more about your rights and options. Encore Wire Corporation (NASDAQ: WIRE)’s sale to Prysmian for $29 ...

NEW YORK, June 05, 2024 (GLOBE NEWSWIRE) -- Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report. We are headquartered at the Empire State Building in New York City and are investigating Akili, Inc. (NASDAQ: AKLI), relating to a tender offer from Vital Therapeutics Corporation. Under the terms of the agreement, Vital Therapeutics Corporation will acquire all the outstandi ...

NEW YORK, June 4, 2024 /PRNewswire/ -- Monteverde & Associates PC (the "M&A Class Action Firm"), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report. We are headquartered at the Empire State Building in New York City and are investigating Akili, Inc. (NASDAQ: AKLI), relating to a tender offer from Vital Therapeutics Corporation. Under the terms of the agreement, Vital Therapeutics Corporation will acquire all the outstanding sh ...

MILWAUKEE, May 29, 2024 /PRNewswire/ -- Ademi LLP is investigating Akili (Nasdaq: AKLI) for possible breaches of fiduciary duty and other violations of law in its transaction with Virtual Therapeutics.Click here to learn how to join the https://www.ademilaw.com/case/akili-inc or call Guri Ademi toll-free at 866-264-3995. There is no cost or obligation to you.In the transaction, Akili shareholders will receive only $0.4340 per share of common stock in cash. The transaction agreement unreasonably limits compe ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Common stock, $0.0001 par value per share AKLI Nasdaq Capital Market FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ | --- | --- | --- | --- | --- | --- | --- | --- | ...

[Executive Summary & Strategic Direction](index=1&type=section&id=Executive%20Summary%20%26%20Strategic%20Direction) Akili is undergoing a significant strategic review, including evaluating alternatives, restructuring debt, and refocusing operations [Strategic Initiatives and Business Update](index=1&type=section&id=Strategic%20Initiatives%20and%20Business%20Update) The company is evaluating strategic alternatives, has fully prepaid its debt, and is focusing on existing products and partnerships - Akili's board of directors has initiated an ongoing process to evaluate **potential strategic alternatives** to maximize shareholder value[2](index=2&type=chunk)[7](index=7&type=chunk) - On May 8, 2024, Akili **voluntarily prepaid its debt** and all outstanding obligations under its agreement with Silicon Valley Bank[5](index=5&type=chunk) - Following this repayment and a prior bond cancellation, the Company **no longer has any outstanding debt payment obligations**[5](index=5&type=chunk) - After recent restructuring, efforts are focused on supporting **Shionogi's regulatory and commercialization activities**[5](index=5&type=chunk) - The company is pursuing **regulatory authorization for EndeavorOTC** while exploring strategic alternatives[5](index=5&type=chunk) - The Company has **suspended financial guidance** until further notice due to the evaluation of strategic alternatives[7](index=7&type=chunk) - Akili will **no longer report certain commercial metrics** for EndeavorOTC, given reduced promotional activity[5](index=5&type=chunk) [Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) The company's Q1 2024 results show lower revenue but an improved net loss, with non-GAAP measures used to clarify performance [First Quarter 2024 Financial Highlights](index=1&type=section&id=First%20Quarter%202024%20Financial%20Highlights) Q1 2024 saw lower revenues and gross margins due to reduced ad spend, though net loss improved quarter-over-quarter Revenues and Gross Margins | Metric | Q1 2024 | Q4 2023 | | :----- | :------ | :------ | | Revenues | $383 thousand | $749 thousand | | Gross Margins | 55% | 66% | - The primary reason for the decrease in revenues was **reduced EndeavorOTC advertising spend**[9](index=9&type=chunk) - The decline in gross margins was primarily due to the impact of **lower product revenue against certain fixed costs**[9](index=9&type=chunk) Operating Expenses | Metric | Q1 2024 | Q4 2023 | | :---------------------- | :------ | :------ | | GAAP Total Operating Expenses | $11.1 million | $12.1 million | | Non-GAAP Total Operating Expenses | $9.8 million | $11.6 million | - The decrease in both GAAP and non-GAAP total operating expenses was driven by **reductions in EndeavorOTC advertising spend**[9](index=9&type=chunk) Net Loss | Metric | Q1 2024 | Q4 2023 | | :------------ | :------ | :------ | | GAAP Net Loss | $(9.8) million | $(11.1) million | | Non-GAAP Net Loss | $(9.3) million | $(10.8) million | Cash Position | Metric | March 31, 2024 | December 31, 2023 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $63.2 million | $75.2 million | [Non-GAAP Financial Measures Explanation](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Explanation) The company uses non-GAAP measures, excluding items like stock-based compensation, to provide a clearer view of ongoing business performance - Akili derives non-GAAP financial measures by excluding items such as **stock-based compensation expense**, severance costs, and changes in earn-out liabilities[8](index=8&type=chunk) - Management believes these non-GAAP measures offer a useful complement to GAAP results for analyzing **ongoing business and operating performance**[8](index=8&type=chunk) [Product Information](index=3&type=section&id=Product%20Information) This section details the company's digital therapeutic products, EndeavorOTC for adults and the prescription-based EndeavorRx for children [EndeavorOTC](index=3&type=section&id=EndeavorOTC) EndeavorOTC is a digital therapeutic for adults with ADHD, available under FDA's emergency policy but not yet fully cleared - EndeavorOTC is a digital therapeutic designed to improve attention function and ADHD symptoms in **adults 18 years and older**[11](index=11&type=chunk) - It is available under the FDA's current Enforcement Policy for Digital Health Devices but **has not been cleared or authorized by the FDA** for any indications[11](index=11&type=chunk) - **No serious adverse events** have been reported in any of its clinical studies[11](index=11&type=chunk) [EndeavorRx](index=3&type=section&id=EndeavorRx) EndeavorRx is a prescription digital therapeutic for improving attention function in children aged 8-17 with ADHD - EndeavorRx is a prescription digital therapeutic indicated to improve attention function in **children ages 8-17** with ADHD[12](index=12&type=chunk) - It is intended for use as **part of a broader therapeutic program** and is not a standalone treatment or medication substitute[12](index=12&type=chunk) - The most common side effect observed was frustration; **no serious adverse events** were associated with its use[12](index=12&type=chunk) [About Akili](index=3&type=section&id=About%20Akili) Akili is a digital medicine company developing cognitive treatments delivered through engaging video game experiences - Akili pioneers cognitive treatments through game-changing technologies, creating a new category of medicine **experienced like entertainment**[13](index=13&type=chunk) - Its platform is powered by proprietary therapeutic engines designed to **target cognitive impairment at its source** in the brain[13](index=13&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements subject to significant risks and uncertainties, and the company disclaims any obligation to update them - Forward-looking statements are subject to risks related to the evaluation of strategic alternatives, managing the business post-restructuring, and **obligations under the Shionogi agreement**[14](index=14&type=chunk)[15](index=15&type=chunk) - Additional risks include obtaining **FDA approval for EndeavorOTC**, generating revenue, defending intellectual property, and navigating regulatory requirements[15](index=15&type=chunk) - The Company **cautions against undue reliance** on these statements and disclaims any obligation to update them[15](index=15&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated balance sheets, statements of operations, and a GAAP to non-GAAP reconciliation [Unaudited Condensed Consolidated Balance Sheets](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show the company's financial position at March 31, 2024, compared to prior periods, highlighting changes in assets and liabilities Unaudited Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :-------------------------- | :------------- | :---------------- | :------------- | | Cash and cash equivalents | $63,161 | $75,150 | $87,869 | | Total current assets | $64,998 | $78,030 | $121,325 | | Total assets | $67,365 | $80,383 | $124,597 | | Total current liabilities | $11,212 | $12,967 | $11,420 | | Total liabilities | $17,157 | $21,851 | $32,157 | | Total stockholders' equity | $50,208 | $58,532 | $92,440 | [Unaudited Condensed Consolidated Statements of Operations](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations detail financial performance for Q1 2024, showing decreased revenues and a reduced net loss versus prior periods Unaudited Condensed Consolidated Statements of Operations (in thousands) | Metric | Q1 2024 | Q1 2023 | Q4 2023 | | :-------------------------- | :------ | :------ | :------ | | Revenues | $383 | $113 | $749 | | Cost of revenues | $173 | $137 | $252 | | Gross profit (loss) | $210 | $(24) | $497 | | 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) | | Net loss | $(9,763) | $(20,711) | $(11,147) | [GAAP to Non-GAAP Reconciliation](index=7&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) This table reconciles GAAP to non-GAAP operating expenses and net loss, adjusting for items like stock-based compensation and earn-out liabilities Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands) | Metric | Q1 2024 | Q1 2023 | Q4 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)** | [Investor and Media Contact](index=7&type=section&id=Investor%20and%20Media%20Contact) This section provides contact information for investor and media inquiries - Matt Franklin, President and Chief Executive Officer, is listed as the contact for investor and media inquiries[19](index=19&type=chunk)

Akili (NASDAQ:AKLI) stock is rocketing higher on Tuesday after the digital medicine company provided investors with a positive corporate update.According to this update, Shionogi has canceled and forgiven $5 million in debt that Akili owed it. The company has also agreed to make payments for Akili’s SDT-001. That includes a $10.5 million upfront payment to cancel future royalty payments and milestone payments.To go along with that, Akili is still eligible for up to $4.5 million in payments from Shionogi for ...

Exhibit 99.1 Akili Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Business Update 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 pos ...

[Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions that the Annual Report contains forward-looking statements, which are not guarantees of future performance and are subject to risks and uncertainties [Forward-Looking Statements Overview](index=3&type=section&id=Forward-Looking%20Statements%20Overview) This section highlights that the Annual Report contains forward-looking statements, which are not guarantees of future performance and are subject to various judgments, risks, and uncertainties - Forward-looking statements are **not guarantees of performance** and are based on current expectations, forecasts, and assumptions, involving judgments, risks, and uncertainties[9](index=9&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) - Key areas covered by forward-looking statements include the company's ability to **achieve profitability**, **manage strategic transitions** (prescription to non-prescription), **obtain regulatory authorizations** for products like EndeavorOTC, **achieve market acceptance**, **protect intellectual property**, **secure funding**, and **retain key talent**[10](index=10&type=chunk) [Risk Factors Summary](index=4&type=section&id=RISK%20FACTORS%20SUMMARY) This summary outlines critical risks that could negatively impact the company's business strategy, stock price, and investment value [Overview of Key Business Risks](index=4&type=section&id=Overview%20of%20Key%20Business%20Risks) This summary outlines critical risks that could negatively impact the company's business strategy, stock price, and investment value, including Nasdaq listing challenges and financial losses - The business faces numerous risks, including the ability to regain and maintain **Nasdaq listing compliance**[14](index=14&type=chunk)[15](index=15&type=chunk) - Significant financial risks include a history of losses, anticipated expense increases, and uncertainty in achieving or maintaining **profitability**[16](index=16&type=chunk) - Market-related risks involve the failure of digital therapeutics (EndeavorRx, EndeavorOTC) to achieve and maintain **market acceptance**, the new and rapidly evolving nature of the digital therapeutics market, and intense competition[16](index=16&type=chunk) - Operational and regulatory risks include challenges in developing and releasing new products, transitioning to an in-house distribution system, protecting intellectual property, and obtaining/maintaining **marketing authorizations**[16](index=16&type=chunk)[17](index=17&type=chunk) - Financial and market risks also encompass the need for substantial additional funding, potential fluctuations in operating results, and **stock price volatility**[17](index=17&type=chunk) [Part I](index=6&type=section&id=PART%20I) [Business Overview](index=6&type=section&id=Item%201.%20Business) Akili, Inc. is a digital medicine company focused on developing cognitive treatments through game-changing technologies, particularly for ADHD, transitioning to a non-prescription model - Akili is a digital medicine company pioneering cognitive treatments, transitioning from a prescription to a **non-prescription business model** since September 2023[20](index=20&type=chunk)[32](index=32&type=chunk) - EndeavorRx®, the first prescription video game treatment, received FDA marketing authorization in June 2020 for children aged 8-17 with ADHD, with an expanded label in December 2023 to include ages 13-17[24](index=24&type=chunk)[38](index=38&type=chunk) - EndeavorOTC® was released in June 2023 as an over-the-counter product for adults 18+ with ADHD, marketed under FDA's COVID-19 Guidance, with a marketing submission to FDA filed on October 30, 2023[26](index=26&type=chunk)[27](index=27&type=chunk) - The company's core technology, the Selective Stimulus Management Engine (SSME), targets the fronto-parietal cortex to improve attention function and has been evaluated in **over 20 clinical trials** across nine disease populations[29](index=29&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) - Akili conducted two restructurings in 2023, reducing its workforce by approximately **30% in January** and **40% in September**, to preserve capital and align with the non-prescription business model[32](index=32&type=chunk)[33](index=33&type=chunk) [Overview](index=6&type=section&id=Overview) Akili is a digital medicine company focused on cognitive treatments, transitioning from a prescription to a non-prescription model, with flagship products EndeavorRx and EndeavorOTC - Akili is pioneering digital medicine, developing cognitive treatments validated through clinical trials and experienced like entertainment[20](index=20&type=chunk) - The company announced a strategic plan in September 2023 to transition from a prescription to a **non-prescription business model**, focusing investments on EndeavorOTC and pursuing OTC regulatory authorization for its products[20](index=20&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - EndeavorRx, the first FDA-authorized prescription video game treatment, is indicated for children ages 8-17 with ADHD to improve attention function, with label expansion to older children (13-17) in December 2023[24](index=24&type=chunk) - EndeavorOTC was released in June 2023 as an over-the-counter product for adults 18+ with ADHD, marketed under FDA's COVID-19 Guidance, with a marketing submission filed on October 30, 2023[26](index=26&type=chunk)[27](index=27&type=chunk) - The U.S. ADHD market is estimated at **17 million people**, with **14.7 million** having inattention issues, representing a significant opportunity for non-drug treatments[30](index=30&type=chunk) - Workforce reductions of approximately **30% in January 2023** and **40% in September 2023** were implemented to preserve capital and align with the strategic shift to a non-prescription model[32](index=32&type=chunk)[33](index=33&type=chunk) [Our Proprietary Approach](index=8&type=section&id=Our%20Proprietary%20Approach) Akili's proprietary approach uses therapeutic engines like SSME to target brain physiology, offering personalized, clinically validated, and engaging video game-like treatments - Akili's platform uses proprietary therapeutic engines (e.g., SSME) to target cognitive impairment at its source in the brain, informed by decades of research and validated through rigorous clinical programs[35](index=35&type=chunk) - Treatments are personalized via closed-loop adaptive algorithms, continuously learning and adjusting to individual user needs and progress[36](index=36&type=chunk) - Akili's therapeutics have been studied in **over 20 clinical trials** with more than **2,600 patients** across nine disease populations, demonstrating efficacy in improving attention function[36](index=36&type=chunk) - Products are designed as high-quality video games, integrating entertainment with therapy to enhance user engagement and compliance, with the Focus Score™ feature tracking attention improvement[36](index=36&type=chunk) [EndeavorRx®: The First Prescription Video Game Treatment](index=10&type=section&id=EndeavorRx%C2%AE%3A%20The%20first%20prescription%20video%20game%20treatment) EndeavorRx is the first FDA-authorized prescription video game treatment for ADHD in children, now pursuing over-the-counter labeling - EndeavorRx was granted FDA marketing authorization in June 2020 as the first prescription video game treatment for cognitive impairment, specifically to improve attention function in children ages 8-17 with ADHD[38](index=38&type=chunk) - The product's label was expanded in December 2023 to include adolescents aged 13-17[38](index=38&type=chunk) - EndeavorRx also received CE Mark certification, allowing its marketing in European Economic Area (EEA) member countries[39](index=39&type=chunk) - The company is pursuing regulatory authorization for **over-the-counter labeling** for EndeavorRx as part of its strategic transition[40](index=40&type=chunk) [EndeavorRx Commercialization](index=10&type=section&id=EndeavorRx%20Commercialization) Akili's EndeavorRx commercial model uses a fully digital process, transitioning to an in-house direct distribution system in late 2023 for capital preservation - The commercial model for EndeavorRx utilizes a fully digital process, from prescription to fulfillment to treatment, to optimize the patient experience and potentially improve conversion and compliance[41](index=41&type=chunk) - In the second half of 2023, Akili transitioned from a third-party digital pharmacy to an internally developed **in-house direct distribution system** for EndeavorRx prescriptions to preserve capital[42](index=42&type=chunk) [EndeavorOTC Commercialization](index=10&type=section&id=EndeavorOTC%20Commercialization) EndeavorOTC's commercial strategy focuses on direct-to-consumer marketing, leveraging Akili's expertise to drive customer acquisition and advocacy - EndeavorOTC's commercial strategy employs **direct-to-consumer marketing** to reach target audience segments[43](index=43&type=chunk) - The strategy is built on Akili's expertise in medical and cognitive science, combined with customer needs, to drive adoption and advocacy through educational content and digital properties[43](index=43&type=chunk) [Our Clinical Pipeline](index=11&type=section&id=Our%20Clinical%20Pipeline) Akili's clinical pipeline prioritizes ADHD across all age groups, with further development outside ADHD contingent on capital and business development - Akili's clinical pipeline prioritizes pediatric, adolescent, and adult ADHD, with further development outside ADHD contingent on **capital raising and business development**[45](index=45&type=chunk)[48](index=48&type=chunk) - Top-line results from STARS-ADHD-Adolescents (ages 13-17) were reported in January 2023, leading to FDA marketing authorization for EndeavorRx label expansion in December 2023[53](index=53&type=chunk)[65](index=65&type=chunk) - Enrollment for STARS-ADHD-Adults was discontinued early to preserve capital, with data analysis leading to the June 2023 release of EndeavorOTC for adults[53](index=53&type=chunk)[66](index=66&type=chunk) - Japanese partner Shionogi submitted a marketing approval application for SDT-001 (localized AKL-T01) in Japan in February 2024, based on Phase 3 clinical trial results in pediatric ADHD[45](index=45&type=chunk)[67](index=67&type=chunk) - Collaborative research studies on cognitive dysfunction following COVID-19 infection were completed in 2023, with results pending presentation and publication[47](index=47&type=chunk) [Scalable and Repeatable Business Model](index=11&type=section&id=We%20expect%20our%20model%20to%20be%20scalable%20and%20repeatable.) Akili's platform and business model are designed for scalability and repeatability, offering a competitive advantage in developing and commercializing digital therapeutics - Akili's platform and business model are designed for **scalability and repeatability**, creating a competitive advantage through increased efficiency in product development, regulatory authorization, and commercial growth[49](index=49&type=chunk)[50](index=50&type=chunk) - The company has built the first platform specifically designed to leverage physiologically-targeting digital therapeutics, with potential to support future products in this growing field[51](index=51&type=chunk) [User-Centric Approach](index=11&type=section&id=We%20meet%20users%20on%20their%20own%20terms.) Akili employs a user-adaptive model, creating engaging, high-quality entertainment-like treatments that integrate seamlessly into users' lives, continuously refined by data - Akili aims to create prescribed treatments that feel like high-quality entertainment and fit seamlessly into users' lives, fostering strong relationships with users and caregivers[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) - The user-adaptive model involves collecting ongoing data and feedback (gameplay, playtesting, reviews) to refine products and communications, leading to enhancements like new quests, creatures, and the Focus Score™ measure[53](index=53&type=chunk)[54](index=54&type=chunk) [About Akili](index=13&type=section&id=About%20Akili) Founded in 2011, Akili aims to create safe, effective, and enjoyable cognitive medicine, supporting employees through robust compensation and wellness programs - Akili was founded in 2011 with the vision of pioneering safe, effective, and enjoyable cognitive medicine[56](index=56&type=chunk) - The company offers robust compensation and benefits, including equity and cash incentive plans, 401(k), healthcare, and flexible work options, to attract, retain, and reward employees[57](index=57&type=chunk)[58](index=58&type=chunk) [Our Facilities](index=13&type=section&id=Our%20facilities) Akili leases office space in Larkspur, California, and accesses office space in Boston, Massachusetts, through a membership agreement - Akili leases **43,600 square feet** of office space in Larkspur, California, with a sublease for **5,716 square feet**, expiring in November 2026[59](index=59&type=chunk) - The Boston, Massachusetts office lease expired in December 2023, replaced by a membership agreement for office access from January 2024 to December 2024[59](index=59&type=chunk) [Our Strategy](index=13&type=section&id=Our%20Strategy) Akili's strategy focuses on commercializing in pediatric ADHD, expanding to other ADHD populations, and applying its technology to other mental health conditions - Akili's strategy is to capitalize on the growing demand for non-drug cognitive solutions by directly targeting brain physiology with high-end video game interfaces[60](index=60&type=chunk) - The initial target market is pediatric ADHD, where EndeavorRx offers a significant safety advantage over traditional therapeutics and addresses a high unmet need[61](index=61&type=chunk) - Expansion into other ADHD populations is underway, with FDA authorization for EndeavorRx in adolescents (13-17) in December 2023 and the release of EndeavorOTC for adults in June 2023[65](index=65&type=chunk)[66](index=66&type=chunk) - Future plans include applying clinically-validated technology to other mental health and neurology conditions and developing new methods of cognitive assessment, contingent on capital and business development[68](index=68&type=chunk)[69](index=69&type=chunk) [Our Platform](index=16&type=section&id=Our%20Platform) Akili's proprietary platform uses therapeutic engines like SSME with self-adaptive algorithms to deliver personalized, engaging, and clinically meaningful cognitive treatments via video games - Akili's platform uses proprietary therapeutic engines (SSME, BBT, SNAV) to target and activate neural networks for cognitive function, with SSME being the most advanced and used in EndeavorRx and EndeavorOTC[70](index=70&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) - The platform features a self-adaptive closed-loop system that algorithmically customizes and adjusts the treatment experience in real-time to optimize engagement and effectiveness for each user[71](index=71&type=chunk)[90](index=90&type=chunk) - Products are delivered through population-specific video game interfaces (UX/UI) designed to be exciting and engaging, resembling 3D mobile action games, and are customized for different patient populations[72](index=72&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[94](index=94&type=chunk) - EndeavorRx and EndeavorOTC gameplay involves navigation, targeting, and multitasking, with complexity increasing across game worlds, and includes a Focus Score™ measure for tracking attention improvement[95](index=95&type=chunk)[96](index=96&type=chunk) - Akili's unique development capabilities, combining neuroscience and entertainment design, enable efficient creation of audience-specific products for commercialization[97](index=97&type=chunk)[98](index=98&type=chunk) [Market Opportunity](index=25&type=section&id=Market%20Opportunity) Akili targets the $10 billion U.S. ADHD market, addressing significant unmet needs with non-drug solutions for an estimated 14.7 million inattentive or combined-type ADHD patients - The U.S. ADHD market is a primary focus, representing a **$10 billion annual market** with over **70 million prescriptions** for traditional drugs[99](index=99&type=chunk)[100](index=100&type=chunk) Estimated U.S. ADHD Market Opportunity | Disease Area | Total U.S. Population with ADHD Diagnosis* | Initial Target ADHD Population Subset with Inattentive or Combined-Type ADHD* | | :------------ | :--------------------------------------- | :-------------------------------------------------------------------------- | | ADHD, all ages | ~17 million (ADHD + inattention) | ~14.7 million | | Adults (18+) | N/A | ~11 million | | Children (8-17) | N/A | ~3.7 million | - Current ADHD treatments are inadequate, with traditional medications having side effects (growth suppression, appetite suppression, sleep issues) and behavioral therapies teaching coping mechanisms rather than addressing underlying impairments[102](index=102&type=chunk) - There is a significant unmet need, with many children not well-controlled by medication and a large proportion of adults dissatisfied with current regimens or receiving no treatment[102](index=102&type=chunk) [Our Advantages](index=26&type=section&id=Our%20Advantages) Akili's advantages include disease-agnostic therapeutic engines, adaptive technology, rich data infrastructure, strong IP protection, and scalable commercial capabilities - Akili's therapeutic engines are **disease-agnostic**, allowing a single engine to power multiple products for various cognitive impairments, creating an efficient technology-centric model[105](index=105&type=chunk) - The technology is personalized and adaptive, continuously learning and adjusting to individual user progress for tailored therapeutic experiences[106](index=106&type=chunk) - A rich data infrastructure provides real-time access to de-identified user activity, enabling continuous innovation and rapid product iteration[107](index=107&type=chunk) - The company has strong intellectual property protection through patents, copyrights, trademarks, and trade secrets, safeguarding its algorithms and processes[109](index=109&type=chunk) - Akili has established scalable commercial capabilities, including flexible fulfillment infrastructure, marketing resources, and customer relationship management systems, leveraging its experience with EndeavorRx and EndeavorOTC[110](index=110&type=chunk)[113](index=113&type=chunk) [Product Portfolio Commercialization Strategy](index=28&type=section&id=Product%20Portfolio%20Commercialization%20Strategy) Akili uses distinct commercial strategies for EndeavorOTC (direct-to-consumer) and EndeavorRx (digital prescription, in-house distribution) to optimize market reach and capital efficiency - EndeavorOTC's commercial strategy focuses on **direct-to-consumer marketing**, using Akili's scientific and customer understanding to drive adoption and advocacy[114](index=114&type=chunk) - EndeavorRx's commercial model uses a fully digital process from prescription to treatment, leveraging platform data to optimize the patient experience[115](index=115&type=chunk) - In the second half of 2023, Akili transitioned to an internally developed **in-house direct distribution system** for EndeavorRx prescriptions to preserve capital[116](index=116&type=chunk) [Product Portfolio](index=28&type=section&id=Product%20Portfolio) Akili's portfolio includes U.S. commercial products EndeavorOTC and EndeavorRx for ADHD, and international partnerships for localized digital therapeutics - In the U.S., Akili commercially offers EndeavorOTC and EndeavorRx for ADHD treatment[117](index=117&type=chunk) - Outside the U.S., Akili seeks regional partnerships, exemplified by its collaboration with Shionogi in Japan and Taiwan for localized digital therapeutics[117](index=117&type=chunk) [Current Programs and Clinical Validation](index=28&type=section&id=Current%20Programs%20and%20Clinical%20Validation) Akili has validated its SSME technology in over 20 clinical studies for ADHD, with EndeavorRx and EndeavorOTC as commercial products, while other programs are deprioritized - Akili has completed **over 20 clinical studies** of its SSME technology, involving over **2,600 patients** across nine disease areas, with research published in leading peer-reviewed journals[118](index=118&type=chunk) - SSME is the therapeutic engine for EndeavorRx (pediatric ADHD) and EndeavorOTC (adult ADHD), with pilot/proof-of-concept studies achieved in MDD, MS, and ASD, but these programs are deprioritized to focus on ADHD[119](index=119&type=chunk) - The total ADHD population in the U.S. is approximately **17 million**, with **14.7 million** having inattention issues, and an estimated **11 million adults** with ADHD[121](index=121&type=chunk) - EndeavorRx is the first FDA-authorized game-based digital therapeutic to improve attention function in children ages 8-17 with ADHD, supported by data from five clinical trials[126](index=126&type=chunk)[127](index=127&type=chunk)[130](index=130&type=chunk) - Clinical trials for EndeavorRx (STARS-ADHD, STARS-Adjunct, ADHD-POC, SPD studies, EEG study) consistently showed improvements in objective attention measures (TOVA API) and parent/clinician-reported ADHD impairments[131](index=131&type=chunk)[138](index=138&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk) - The STARS-ADHD-Adolescents trial met its primary endpoint, leading to FDA label expansion for EndeavorRx to include ages 13-17 in December 2023[153](index=153&type=chunk)[154](index=154&type=chunk) - Shionogi submitted a marketing approval application for SDT-001 in Japan in February 2024, based on a Phase 3 trial showing statistically significant improvements in ADHD-RS-IV Inattention score in pediatric patients[159](index=159&type=chunk) - The STARS-ADHD-Adults trial demonstrated statistically significant improvement in attention functioning after six weeks, supporting the June 2023 release of EndeavorOTC for adults[161](index=161&type=chunk)[162](index=162&type=chunk) - Pilot studies in ASD, MDD, MS, TBI, and COVID fog showed potential for SSME technology, but further development is paused to focus on ADHD[166](index=166&type=chunk)[173](index=173&type=chunk)[179](index=179&type=chunk)[185](index=185&type=chunk)[191](index=191&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - Akili's SSME technology also shows potential for cognitive assessment, correlating with recognized measures and detecting cognitive differences in healthy older adults[198](index=198&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) [Additional Technology Engines](index=47&type=section&id=Additional%20technology%20engines) Beyond its primary SSME therapeutic engine, Akili has developed or licensed two other technology engines: Spatial Navigation Engine (SNAV) and Body Brain Trainer (BBT) - Akili has developed or licensed SNAV (Spatial Navigation Engine) and BBT (Body Brain Trainer) as additional therapeutic engines[203](index=203&type=chunk) - SNAV targets spatial navigation and episodic memory, while BBT targets attention, goal management, and working memory, with potential applications in Alzheimer's and Mild Cognitive Impairment[203](index=203&type=chunk) [Intellectual Property](index=47&type=section&id=Intellectual%20Property) Akili actively protects its proprietary platform and technologies through a robust intellectual property portfolio, including 21 utility patent families, three design patent families, copyrights, and trademarks - Akili protects its platform and technologies through patents, copyrights, trademarks, and trade secrets[204](index=204&type=chunk) - The company solely owns or exclusively licenses **21 utility patent families**, with **55 patents granted worldwide** (18 in U.S., 15 in Japan, etc.), expiring as early as 2031-2042[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - Akili also owns **three families of design patents** (over **40 granted**) related to logos and graphical user interfaces, expiring as early as 2027-2034[208](index=208&type=chunk) - Copyrights are held for PDTs and companion software apps, with federal registrations where appropriate, and trademarks are registered to protect brand recognition[209](index=209&type=chunk)[210](index=210&type=chunk) [Agreements/Third Parties](index=49&type=section&id=Agreements%2FThird%20Parties) Akili has strategic agreements with Shionogi for Japan/Taiwan commercialization and an exclusive license from UCSF for core technology, while a TALi agreement was terminated - Akili has an exclusive collaboration and license agreement with Shionogi & Co. Ltd. for development and commercialization of digital therapeutic products in Japan and Taiwan[215](index=215&type=chunk)[216](index=216&type=chunk) Shionogi Agreement Financials | Item | Amount (USD) | | :--- | :--- | | Aggregate received to date | $25.4 million | | Potential development and commercial milestones | Up to $110.0 million | | Royalties on annual net sales | 20-30% | | Corporate bond issued to Shionogi | $5.0 million | - Akili holds an exclusive, worldwide license from UCSF for patented technology (NeuroRacer Agreement) covering aspects of EndeavorRx and EndeavorOTC, with patents expiring as early as 2031-2032[222](index=222&type=chunk) UCSF NeuroRacer Agreement Financials (to date) | Item | Amount (USD) | | :--- | :--- | | License issue fee | $10,000 | | Aggregate license maintenance fee | $25,000 | | Total milestone payments | $185,000 | | Total royalty payments | $491,877 | | Total paid to UCSF | $711,877 | - The license agreement with TALi Digital Limited, focused on early childhood attention impairments, was mutually terminated on October 16, 2023, with no plans for further clinical or regulatory efforts in that area[229](index=229&type=chunk) [Government Regulation](index=52&type=section&id=Government%20Regulation) Akili operates in a highly regulated environment, subject to extensive U.S. and international healthcare laws, medical device regulations, data privacy, and pricing controls - Sales of Akili's products depend on coverage and reimbursement by third-party payers, which are increasingly reducing reimbursements and implementing cost-containment programs[230](index=230&type=chunk)[231](index=231&type=chunk) - Akili's operations are subject to broad healthcare laws, including the federal Anti-Kickback Statute, False Claims Act (FCA), HIPAA, and Physician Payment Sunshine Act, which regulate business and financial arrangements[233](index=233&type=chunk)[235](index=235&type=chunk) - Healthcare reform measures, such as the ACA and the Inflation Reduction Act of 2022 (IRA), impact drug pricing, Medicare payments, and manufacturer liabilities, potentially affecting product pricing and demand[239](index=239&type=chunk)[245](index=245&type=chunk) - The company is subject to rapidly evolving data privacy and security laws globally (e.g., CCPA, CPRA, GDPR, UK GDPR, APPI), which impose strict requirements on personal data collection, use, and disclosure, with potential for significant fines and liabilities for non-compliance[247](index=247&type=chunk)[252](index=252&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk)[260](index=260&type=chunk)[262](index=262&type=chunk) - Akili's products are Class II medical devices subject to extensive FDA regulation, requiring premarket review (510(k) clearance, de novo classification, or PMA) and ongoing compliance with Quality System Regulation (QSR) and post-market surveillance[266](index=266&type=chunk)[267](index=267&type=chunk)[269](index=269&type=chunk)[279](index=279&type=chunk)[281](index=281&type=chunk)[293](index=293&type=chunk) - International sales are subject to foreign government regulations, including CE Mark certification in Europe and country-specific approvals, which vary substantially and can be time-consuming[296](index=296&type=chunk)[297](index=297&type=chunk) [Employees and Human Capital](index=67&type=section&id=Employees%20and%20Human%20Capital) Akili fosters an inclusive culture, underwent two workforce reductions in 2023, and had 68 full-time employees as of February 1, 2024, focusing on talent retention - Akili's culture combines diverse backgrounds from biotech, medical device, entertainment, and engineering to foster innovation and creativity[299](index=299&type=chunk) - Workforce reductions of approximately **30% in January 2023** and **40% in September 2023** were implemented to improve capital efficiency and align with the strategic shift to a non-prescription model[300](index=300&type=chunk) - As of February 1, 2024, Akili had **68 full-time employees**, with 37 in R&D and 31 in commercial, business development, finance, and administration[301](index=301&type=chunk) - Human capital objectives include identifying, recruiting, retaining, motivating, and integrating employees through equity and cash incentive plans, competitive benefits, and a commitment to health, safety, and wellness[302](index=302&type=chunk) [Available Information](index=69&type=section&id=Available%20Information) Akili provides its SEC filings and other company information free of charge on its investor relations website - Akili makes its SEC filings (10-K, 10-Q, 8-K) available free of charge on its investor relations website (https://www.akiliinteractive.com/)[303](index=303&type=chunk) - The website also provides information on business, product development programs, and governance, and is encouraged as a source of information for investors[303](index=303&type=chunk) [Risk Factors](index=70&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks that could materially and adversely affect Akili's business, financial condition, and operating results, highlighting the speculative nature of investing - Akili is a technology company with a limited operating history, a history of significant losses (**$59.5 million net loss in 2023**), and negative operating cash flows, with no assurance of achieving or maintaining profitability[307](index=307&type=chunk)[308](index=308&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - The success of Akili's non-prescription business model is highly dependent on market acceptance and adoption of its digital therapeutics, which is uncertain in a new, rapidly evolving, and competitive market[312](index=312&type=chunk)[313](index=313&type=chunk)[323](index=323&type=chunk) - Regulatory risks include the potential failure to obtain or maintain marketing authorizations for EndeavorOTC and other products, the evolving regulatory framework for digital health, and the need for new clearances for material device modifications[309](index=309&type=chunk)[373](index=373&type=chunk)[414](index=414&type=chunk)[418](index=418&type=chunk) - Operational risks include reliance on third-party platforms (Apple App Store, Google Play) and cloud infrastructure, challenges in developing new products/enhancements, and the recent transition to an in-house distribution system for EndeavorRx[374](index=374&type=chunk)[377](index=377&type=chunk)[379](index=379&type=chunk)[388](index=388&type=chunk) - Intellectual property risks involve the ability to adequately protect and enforce patents, copyrights, and trade secrets, and potential claims of infringement from third parties[479](index=479&type=chunk)[480](index=480&type=chunk)[483](index=483&type=chunk) - Financial risks include the need for substantial additional funding, potential fluctuations in operating results, and the risk of delisting from Nasdaq due to non-compliance with listing requirements (e.g., Minimum Bid Price Rule)[504](index=504&type=chunk)[508](index=508&type=chunk)[512](index=512&type=chunk)[515](index=515&type=chunk) [Risks Related to our Business and Industry](index=70&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) Akili faces significant business risks, including a history of losses, uncertainty in achieving profitability, market acceptance challenges, intense competition, and talent retention issues - Akili has incurred net losses of **$59.5 million in 2023** and **$8.0 million in 2022**, with an accumulated deficit of **$299.8 million** as of December 31, 2023, and expects to continue incurring significant operating losses[310](index=310&type=chunk)[311](index=311&type=chunk) - Market acceptance and adoption of digital therapeutics, especially EndeavorOTC, are critical for success but face challenges from customer and healthcare provider skepticism, competition, and regulatory uncertainties[312](index=312&type=chunk)[313](index=313&type=chunk)[318](index=318&type=chunk) - The digital therapeutics market is new, rapidly evolving, and competitive, making demand forecasting difficult and all prospective financial information subject to change[323](index=323&type=chunk)[324](index=324&type=chunk)[325](index=325&type=chunk) - The company's development programs are novel, and negative public perception or regulatory inexperience with such technology could delay or prevent commercialization[327](index=327&type=chunk)[328](index=328&type=chunk)[330](index=330&type=chunk) - Clinical trials may fail or experience delays in patient enrollment/retention, impacting marketing authorization timelines and costs[331](index=331&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) - Akili depends on its senior management and highly skilled employees; loss of key personnel or inability to attract/retain talent could adversely affect the business[345](index=345&type=chunk)[346](index=346&type=chunk) - The company faces intense competition from both enterprise and private companies developing treatments for cognitive impairment, including non-regulated wellness apps[349](index=349&type=chunk)[351](index=351&type=chunk)[353](index=353&type=chunk) - Significant fluctuations in headcount, including reductions in January and September 2023, may affect the ability to attract and retain employees, impact culture, and hinder business strategy execution[356](index=356&type=chunk)[357](index=357&type=chunk) [Risks Relating to our Products and Product Candidates](index=85&type=section&id=Risks%20Relating%20to%20our%20Products%20and%20Product%20Candidates) Akili's products and candidates face risks including ongoing regulatory obligations post-authorization, potential development failures or delays, and dependence on third-party app stores and cloud infrastructure - Even with marketing authorizations (e.g., EndeavorRx), Akili is subject to ongoing regulatory obligations and review, which can result in significant additional expenses, restrictions, or even withdrawal of products[370](index=370&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) - Products and product candidates may fail in development or suffer delays, and failure to obtain/maintain marketing authorizations (including for EndeavorOTC) could materially affect the business[373](index=373&type=chunk) - EndeavorOTC and EndeavorRx rely on Apple App Store and Google Play for access, and disruptions or changes in their policies could materially affect distribution and operations[374](index=374&type=chunk)[375](index=375&type=chunk) - Reliance on third-party cloud infrastructure (e.g., Amazon Web Services) for the platform exposes the company to risks of service interruptions, outages, or delays[377](index=377&type=chunk)[378](index=378&type=chunk) - Failure to develop new products or enhancements, or issues with artificial intelligence integration, could make existing products obsolete and adversely affect the business[379](index=379&type=chunk)[382](index=382&type=chunk) - Security breaches, data loss, or other disruptions could compromise sensitive information, leading to liability, reputational harm, and operational disruptions[383](index=383&type=chunk)[384](index=384&type=chunk)[385](index=385&type=chunk) - The recent transition to an **in-house distribution system** for EndeavorRx introduces risks of disruption in fulfillment, regulatory non-compliance, and potential loss of customers[388](index=388&type=chunk)[389](index=389&type=chunk)[390](index=390&type=chunk) - Products may cause undesirable side effects, be misused off-label, or be subject to recalls, leading to significant negative consequences, including loss of marketing authorization, lawsuits, and reputational damage[392](index=392&type=chunk)[394](index=394&type=chunk)[397](index=397&type=chunk)[400](index=400&type=chunk) [Risks Related to our Regulatory Compliance and Legal Matters](index=97&type=section&id=Risks%20Related%20to%20our%20Regulatory%20Compliance%20and%20Legal%20Matters) Akili operates in a highly regulated industry, facing extensive laws on medical devices, fraud, data privacy, and marketing, with non-compliance leading to severe enforcement actions - Akili is subject to extensive U.S. and international regulations, including FDA requirements for medical devices and laws pertaining to healthcare fraud and abuse (e.g., Anti-Kickback Statute, False Claims Act)[406](index=406&type=chunk)[407](index=407&type=chunk)[409](index=409&type=chunk) - Failure to comply with these laws can result in severe enforcement actions, including fines, injunctions, product recalls, withdrawal of marketing authorizations, and criminal prosecution[407](index=407&type=chunk)[410](index=410&type=chunk)[413](index=413&type=chunk) - The regulatory framework for digital health products is constantly evolving, potentially creating barriers to new product development or increasing competition if requirements are lowered[414](index=414&type=chunk)[415](index=415&type=chunk) - Material modifications to devices may require new marketing authorizations, and failure to obtain them could lead to cessation of marketing or recalls[418](index=418&type=chunk)[419](index=419&type=chunk) - Obtaining marketing authorization in one jurisdiction does not guarantee success in others, and foreign market entry requires navigating diverse regulatory regimes[420](index=420&type=chunk)[421](index=421&type=chunk)[423](index=423&type=chunk)[424](index=424&type=chunk) - Uncertainty in insurance coverage and reimbursement, especially outside the U.S., could limit market access and revenue generation[427](index=427&type=chunk) - Akili is subject to governmental investigations, litigation (e.g., data privacy, intellectual property), and audits, which are costly and disruptive, with unpredictable outcomes[428](index=428&type=chunk)[429](index=429&type=chunk) - Compliance with global data privacy and security laws (e.g., GDPR, UK GDPR, APPI, CCPA) is complex and critical, with potential for significant penalties and reputational harm for non-compliance[444](index=444&type=chunk)[447](index=447&type=chunk)[450](index=450&type=chunk)[453](index=453&type=chunk)[458](index=458&type=chunk)[459](index=459&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk)[462](index=462&type=chunk)[463](index=463&type=chunk)[464](index=464&type=chunk)[465](index=465&type=chunk)[466](index=466&type=chunk)[467](index=467&type=chunk)[469](index=469&type=chunk)[470](index=470&type=chunk) - The company's use of text and voice calls for patient services is subject to laws like the TCPA, with potential for significant liabilities if not compliant[471](index=471&type=chunk) - Akili is subject to U.S. and foreign anti-corruption, anti-money laundering, export control, and sanctions laws, with violations leading to substantial penalties[472](index=472&type=chunk)[473](index=473&type=chunk) - Misconduct by employees or third parties, including non-compliance with regulatory standards or promotion of off-label uses, could lead to significant sanctions and reputational damage[474](index=474&type=chunk)[476](index=476&type=chunk) [Risks Related to our Intellectual Property and Technology](index=114&type=section&id=Risks%20Related%20to%20our%20Intellectual%20Property%20and%20Technology) Akili's commercial success relies heavily on its ability to protect and enforce intellectual property rights, facing challenges like patent complexity, infringement risks, and litigation - Akili's commercial success depends on its ability to obtain, maintain, protect, and enforce intellectual property rights (patents, copyrights, trademarks, trade secrets) for its products and technologies[479](index=479&type=chunk) - The patent process is expensive, time-consuming, and complex, with no assurance that applications will result in issued patents or provide competitive advantage[479](index=479&type=chunk) - Competitors may infringe IP rights, leading to costly and time-consuming litigation, with risks of patents being invalidated or narrowly interpreted[480](index=480&type=chunk)[481](index=481&type=chunk)[482](index=482&type=chunk) - Accusations of infringing third-party IP rights could lead to liability, prohibitions on product sales, or redesign requirements, materially affecting the business[483](index=483&type=chunk)[485](index=485&type=chunk)[486](index=486&type=chunk) - Failure to comply with obligations in collaboration or license agreements (e.g., with UCSF) could result in loss of rights critical to the business[488](index=488&type=chunk)[491](index=491&type=chunk) - Confidentiality agreements may not adequately prevent disclosure of trade secrets, and independent development by competitors could undermine proprietary technology[492](index=492&type=chunk) - Use of third-party open-source software carries risks of license non-compliance, potential litigation, and requirements to publicly release proprietary source code[493](index=493&type=chunk)[494](index=494&type=chunk)[495](index=495&type=chunk) - Changes to patent law (e.g., America Invents Act) and rulings by the U.S. Supreme Court could diminish patent value and impact enforceability[496](index=496&type=chunk)[497](index=497&type=chunk)[498](index=498&type=chunk) - Inadequate protection of trademarks and trade names could hinder brand recognition and competitive effectiveness[500](index=500&type=chunk) [Risks Related to our Financial Reporting and Position](index=121&type=section&id=Risks%20Related%20to%20our%20Financial%20Reporting%20and%20Position) Akili requires substantial additional funding, faces volatile financial results, risks Nasdaq delisting, and has limitations on utilizing net operating loss carryforwards - Akili will need substantial additional funding to finance operations and growth, with no certainty of availability on acceptable terms, potentially leading to delays or termination of product development[504](index=504&type=chunk)[506](index=506&type=chunk)[507](index=507&type=chunk) - The company's quarterly and annual operating results are highly uncertain and may fluctuate significantly due to various factors, potentially causing stock price decline[508](index=508&type=chunk)[511](index=511&type=chunk) - Akili received a Nasdaq noncompliance notification on October 24, 2023, for failing to meet the **$1.00 minimum bid price rule**, risking delisting which would adversely affect stock liquidity and capital raising[512](index=512&type=chunk)[515](index=515&type=chunk)[521](index=521&type=chunk) - Maintaining an effective system of internal control over financial reporting is critical; failure could lead to inaccurate financial reports and loss of investor confidence[522](index=522&type=chunk)[524](index=524&type=chunk) - The company relies on assumptions, estimates, and third-party data for financial reporting, which may differ from actual results or external estimates[525](index=525&type=chunk) - Akili has significant federal and state net operating loss (NOL) carryforwards (**$275.5 million federal**, **$163.0 million state** as of Dec 31, 2023) and R&D tax credits, but their utilization may be limited by ownership changes (Sections 382 and 383 of the Code) or regulatory changes[526](index=526&type=chunk)[527](index=527&type=chunk)[528](index=528&type=chunk) [Risks Related to the Business Combination](index=128&type=section&id=Risks%20Related%20to%20the%20Business%20Combination) As a former shell company, Akili faces SEC rule disadvantages, and past associations of Board members or changes in laws could negatively impact the business - As a former shell company, Akili faces disadvantages under SEC rules, including limitations on using Form S-3, qualifying as a 'well-known seasoned issuer,' and relying on Rule 144 for resales, increasing the cost and complexity of offering securities[529](index=529&type=chunk) - Current and former Board members' associations with negative media or legal proceedings unrelated to Akili's business could harm the company's reputation and stock price[530](index=530&type=chunk) - Changes in laws or regulations, or their interpretation, could adversely affect Akili's business and results of operations[531](index=531&type=chunk)[532](index=532&type=chunk) - Delaware law and company bylaws contain anti-takeover provisions and exclusive forum provisions that could discourage lawsuits against directors and officers, potentially limiting stockholder actions[533](index=533&type=chunk)[534](index=534&type=chunk)[535](index=535&type=chunk) [Risks Related to our Common Stock](index=130&type=section&id=Risks%20Related%20to%20our%20Common%20Stock) Akili's common stock is subject to significant price volatility, low trading volume, no dividend payments, and risks from unfavorable analyst reports or financial industry developments - The market price of Akili's common stock is volatile due to factors like industry changes, competitor performance, regulatory developments, and general economic conditions[536](index=536&type=chunk)[538](index=538&type=chunk) - Low trading volume on the Nasdaq Capital Market can increase price volatility and make it difficult for stockholders to readily liquidate their investment[539](index=539&type=chunk) - Akili does not intend to pay dividends on its common stock in the foreseeable future, retaining earnings for business development and expansion[540](index=540&type=chunk) - Unfavorable or inaccurate research reports from securities analysts, or a lack of coverage, could cause the stock price and trading volume to decline[541](index=541&type=chunk) - Recent significant volatility in growth-oriented companies, driven by inflationary pressures and interest rate increases, poses special risks to Akili's stock[542](index=542&type=chunk) - Adverse developments in the financial services industry, such as bank failures (e.g., SVB), could impact Akili's business operations and access to capital[543](index=543&type=chunk)[544](index=544&type=chunk) [Unresolved Staff Comments](index=134&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) Akili, Inc. reports that there are no unresolved staff comments from the SEC regarding its filed reports - There are no unresolved staff comments from the SEC[546](index=546&type=chunk) [Cybersecurity](index=134&type=section&id=Item%201C.%20Cybersecurity) Akili implements comprehensive information security processes to manage cybersecurity risks, overseen by the Board's audit committee, with no material impact from past incidents reported - Akili maintains information security processes to identify, assess, and manage cybersecurity threats to its critical Information Systems and Data, including intellectual property and sensitive information[547](index=547&type=chunk) - Risk management includes vulnerability scanning, monitoring, periodic testing, audits, and various technical, physical, and organizational measures (e.g., encryption, multi-factor authentication, training)[548](index=548&type=chunk)[549](index=549&type=chunk) - Cybersecurity risk is integrated into overall enterprise risk assessment, with management prioritizing mitigation efforts[550](index=550&type=chunk) - The Board's audit committee has primary oversight for cybersecurity risk, receiving periodic updates from the Security and Privacy Council, which comprises experienced personnel[553](index=553&type=chunk)[554](index=554&type=chunk)[556](index=556&type=chunk) - While no past incidents have materially affected business strategy or financial condition, significant successful attacks could cause substantial disruptions and costs[552](index=552&type=chunk) [Properties](index=136&type=section&id=Item%202.%20Properties) Akili leases office space in Larkspur, California, and accesses office space in Boston, Massachusetts, through a membership agreement, deemed adequate for current needs - Akili leases **43,600 square feet** of office space in Larkspur, California, expiring November 2026, with **5,716 square feet** subleased to a third party[559](index=559&type=chunk) - The Boston, Massachusetts office lease expired in December 2023, and the company now uses a membership agreement for office access from January 1, 2024, to December 31, 2024[559](index=559&type=chunk) - Facilities are used for finance, legal, HR, IT, engineering, product, sales, marketing, and administrative functions, and are considered sufficient for current requirements[559](index=559&type=chunk) [Legal Proceedings](index=136&type=section&id=Item%203.%20Legal%20Proceedings) Akili, Inc. is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial position - As of December 31, 2023, Akili does not believe any current legal claims or litigation will have a material adverse effect on its business, financial position, results of operations, or cash flows[561](index=561&type=chunk) [Mine Safety Disclosures](index=136&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Akili, Inc - This item is not applicable[562](index=562&type=chunk) [Part II](index=137&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=137&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Akili's common stock trades on Nasdaq under AKLI, with approximately 38 stockholders, no anticipated dividends, and equity compensation plan information incorporated by reference - Akili's common stock trades on The Nasdaq Capital Market under the symbol AKLI[565](index=565&type=chunk) - As of February 21, 2024, there were approximately **38 stockholders of record**[566](index=566&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[567](index=567&type=chunk) - Information on equity compensation plans is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[568](index=568&type=chunk) [Reserved](index=137&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and not applicable - This item is reserved and not applicable[571](index=571&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=138&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Akili's financial condition and operations, highlighting its transition to a non-prescription model, increased revenue, continued losses, and capital preservation efforts - Akili is transitioning from a prescription to a non-prescription model, focusing on EndeavorOTC for adult ADHD and seeking OTC regulatory authorization for its products[575](index=575&type=chunk)[576](index=576&type=chunk) - EndeavorRx label was expanded in December 2023 to include children ages 13-17 with ADHD[577](index=577&type=chunk) - Japanese partner Shionogi submitted a marketing approval application for SDT-001 in Japan in February 2024[577](index=577&type=chunk)[579](index=579&type=chunk) EndeavorOTC Key Commercial Metrics | ENDEAVOROTC METRIC | Q4 '23 | Q3 '23 | Q4 '23 vs. Q3 '23 | | :------------------- | :----- | :----- | :--------------- | | Active Subscribers | 11,571 | 7,535 | 54% | | ARPU | $88 | $93 | -5% | - First-time app downloads for EndeavorOTC decreased from **176,559 in Q3 2023** to **139,499 in Q4 2023**[582](index=582&type=chunk) EndeavorOTC Billings (in thousands) | Item | Three Months Ended Dec 31, 2023 | Three Months Ended Sep 30, 2023 | Q4 '23 vs. Q3 '23 | | :-------------------- | :------------------------------ | :------------------------------ | :--------------- | | EndeavorOTC GAAP Revenues | $596 | $553 | 8% | | EndeavorOTC Billings | $596 | $533 | 12% | - Workforce reductions in January 2023 (**31% of employees**, **$2.3 million charge**) and September 2023 (**40% of employees**, **$2.4 million charge**) were implemented to preserve capital and align with the non-prescription model[585](index=585&type=chunk)[587](index=587&type=chunk) - Edward Martucci II resigned as CEO in October 2023, becoming Chair of the Board; Matthew Franklin was appointed President and CEO, and Santosh Shanbhag resigned as CFO in January 2024, with Matthew Franklin assuming principal financial and accounting officer duties[588](index=588&type=chunk)[589](index=589&type=chunk) - The Business Combination in August 2022 was accounted for as a reverse recapitalization, with Akili as the accounting acquirer, generating **$164.3 million in gross proceeds** from SCS and PIPE investors[594](index=594&type=chunk)[596](index=596&type=chunk)[597](index=597&type=chunk) Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | $ Change | % Change | | :------------------------------------ | :---------------------- | :---------------------- | :------- | :------- | | Revenues | $1,678 | $323 | $1,355 | 420% | | Cost of revenues | $819 | $441 | $378 | 86% | | Gross profit (loss) | $859 | $(118) | $977 | * | | Research and development | $19,925 | $28,858 | $(8,933) | -31% | | Selling, general and administrative | $45,419 | $61,701 | $(16,282) | -26% | | Total operating expenses | $65,344 | $90,559 | $(25,215) | -28% | | Operating loss | $(64,485) | $(90,677) | $26,192 | -29% | | Other income | $4,040 | $1,482 | $2,558 | 173% | | Interest expense | $(2,358) | $(1,484) | $(874) | 59% | | Change in estimated fair value of earn-out liabilities | $3,363 | $82,734 | $(79,371) | -96% | | Total other income | $5,045 | $82,732 | $(77,687) | -94% | | Loss before income taxes | $(59,440) | $(7,945) | $(51,495) | 648% | | Income tax expense | $(53) | $(19) | $(34) | 179% | | Net loss | $(59,493) | $(7,964) | $(51,529) | 647% | | Comprehensive loss | $(59,472) | $(7,985) | $(51,487) | 645% | - Revenue increased by **420% to $1.7 million** in 2023, primarily driven by EndeavorOTC sales, while cost of revenue increased by **86% to $0.8 million** due to higher sales volume[623](index=623&type=chunk)[624](index=624&type=chunk) - R&D expenses decreased by **31% to $19.9 million** in 2023, mainly due to reduced clinical studies and personnel costs from restructurings, and SG&A expenses decreased by **26% to $45.4 million**, primarily due to lower consulting, legal, marketing, and advertising costs[625](index=625&type=chunk)[626](index=626&type=chunk)[627](index=627&type=chunk) - Other income increased by **173% to $4.0 million** in 2023 due to higher short-term investments and interest rates, while interest expense increased by **59% to $2.4 million** due to higher average outstanding debt and rising variable interest rates[628](index=628&type=chunk)[629](index=629&type=chunk) - Net loss increased by **647% to $59.5 million** in 2023, and the accumulated deficit reached **$299.8 million**[622](index=622&type=chunk)[633](index=633&type=chunk) Cash Flow Summary (in thousands) | Item | Year Ended Dec 31, 2023 | Year Ended Dec 31, 2022 | | :-------------------------------- | :---------------------- | :---------------------- | | Net cash used in operating activities | $(57,867) | $(83,521) | | Net cash provided by (used in) investing activities | $83,413 | $(81,216) | | Net cash provided by (used in) financing activities | $(4,493) | $141,935 | | Net increase (decrease) in cash | $21,053 | $(22,802) | - Net cash used in operating activities decreased to **$57.9 million** in 2023 from **$83.5 million** in 2022, primarily due to lower net loss adjusted for non-cash items and working capital changes[646](index=646&type=chunk)[647](index=647&type=chunk) - Net cash provided by investing activities was **$83.4 million** in 2023 (from short-term investment maturities) compared to **$81.2 million used** in 2022 (for short-term investment purchases)[648](index=648&type=chunk)[649](index=649&type=chunk) - Net cash used in financing activities was **$4.5 million** in 2023 (debt repayment, share settlements) compared to **$141.9 million provided** in 2022 (Business Combination proceeds, note payable)[650](index=650&type=chunk)[651](index=651&type=chunk) - Akili believes its **$75.2 million cash and cash equivalents** as of December 31, 2023, will fund operations into the second half of 2025, but substantial additional funding will be needed[633](index=633&type=chunk)[640](index=640&type=chunk)[652](index=652&type=chunk) - Outstanding debt includes a **$5.0 million corporate bond** with Shionogi (due 2031, 0% interest) and **$10.6 million** under the SVB Term Loan (due May 2025, **12.3% interest** as of Dec 31, 2023)[637](index=637&type=chunk)[654](index=654&type=chunk)[655](index=655&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=161&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Akili, Inc. is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk - Akili, Inc. is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[677](index=677&type=chunk) [Financial Statements and Supplementary Data](index=161&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Akili's consolidated financial statements, along with the independent registered public accounting firm's reports, are included starting on page F-1 of this Annual Report - Consolidated financial statements and reports of independent registered public accounting firms are presented starting on page F-1 of the Annual Report[678](index=678&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=161&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Akili, Inc. reports that there have been no changes in or disagreements with accountants on accounting and financial disclosure - There have been no changes in or disagreements with accountants on accounting and financial disclosure[679](index=679&type=chunk) [Controls and Procedures](index=161&type=section&id=Item%209A.%20Controls%20and%20Procedures) Akili's CEO concluded disclosure controls were effective, and management assessed internal control over financial reporting as effective, with no auditor attestation due to emerging growth company status - As of December 31, 2023, Akili's Chief Executive Officer (also principal executive, financial, and accounting officer) concluded that disclosure controls and procedures were effective at the reasonable assurance level[681](index=681&type=chunk) - Management assessed and concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework[682](index=682&type=chunk) - This Annual Report does not include an attestation report from the registered public accounting firm due to Akili's status as an 'emerging growth company' under the JOBS Act[683](index=683&type=chunk) - No material changes to internal control over financial reporting occurred during Q4 2023[683](index=683&type=chunk) - Management acknowledges the inherent limitations of control systems, which can only provide reasonable, not absolute, assurance against errors and fraud[684](index=684&type=chunk) [Other Information](index=163&type=section&id=Item%209B.%20Other%20Information) Akili, Inc. reports that there is no other information required to be disclosed under this item - No other information is required to be disclosed under this item[686](index=686&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=163&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Akili, Inc - This item is not applicable[687](index=687&type=chunk) [Part III](index=164&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=164&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding Akili's directors, executive officers, and corporate governance, including its Code of Ethics, is incorporated by reference from the definitive Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[690](index=690&type=chunk) - Akili has adopted a Code of Ethics applicable to all officers, directors, and employees, available on its investor relations website[691](index=691&type=chunk) [Executive Compensation](index=164&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from Akili's definitive Proxy Statement for the 2024 Annual Meeting of Stockholders - Information on executive compensation is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[693](index=693&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=164&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information concerning security ownership of certain beneficial owners and management, along with related stockholder matters, is incorporated by reference from Akili's definitive Proxy Statement - Information on security ownership of certain beneficial owners and management is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[694](index=694&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=164&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Details regarding certain r

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