425: Akari Therapeutics Announces Leadership Changes and Portfolio Prioritization Following Peak Bio Merger Agreement

Akari Therapeutics announces leadership changes, including the departure of the CEO and COO, and a portfolio prioritization plan focusing on Peak Bio's ADC platform and Akari's PAS-nomacopan for Geographic Atrophy following the merger agreement with Peak Bio Inc.

Summary

• Akari Therapeutics announced that Rachelle Jacques stepped down as President and CEO, effective May 1, 2024.
• Samir R. Patel, M.D., a member of the Board, has been appointed as Interim President and CEO, effective May 1, 2024.
• Melissa Bradford-Klug was terminated without cause as Chief Operating Officer, effective May 1, 2024.
• The company has initiated a search for a new President and CEO.
• Dr. Patel will be compensated with RSUs having a fair market value of $50,000 per month.
• Akari entered into an amendment to the Consulting Services Agreement with Wendy DiCicco, the interim CFO, providing for a $40,000 per month fee for services up to 80 hours per month.
• DiCicco is eligible for a 2024 target bonus of 45% of the Consulting Base Pay and a transaction bonus of 10% of the Consulting Base Pay upon the successful closing of the merger with Peak Bio Inc.
• DiCicco will receive a one-time grant of RSUs totaling 1% of the company's outstanding ordinary shares, vesting on May 1, 2025.
• Akari and Peak Bio announced a portfolio prioritization plan focusing on Peak's ADC platform technology and Akari's PAS-nomacopan for Geographic Atrophy (GA).
• The HSCT-TMA program will be suspended, and enrollment in the pediatric clinical study will be discontinued.
• Peak Bio's Phase II ready PHP 303 program for Alpha 1 anti trypsin deficiency (AATD) will be discontinued.
• The merger between Akari and Peak Bio is expected to close by the third quarter of this year, subject to customary closing conditions.

Sentiment

Score: 4

Explanation: The announcement includes both positive and negative elements. The portfolio prioritization and merger progress are positive, but the leadership changes and program discontinuations create uncertainty. The sentiment is therefore cautiously negative.

Positives

• Appointment of Samir R. Patel, M.D., as Interim President and CEO brings experience in life sciences and investment.
• Portfolio prioritization focuses resources on promising ADC and PAS-nomacopan programs.
• PAS-nomacopan has shown prolonged biologic residence in the eye in animal models, suggesting potential for less frequent dosing.
• The merger with Peak Bio is expected to close by the third quarter of this year.

Negatives

• Departure of the President and CEO and Chief Operating Officer creates uncertainty in leadership.
• Suspension of the HSCT-TMA program and discontinuation of the PHP 303 program may impact the pipeline.
• The company is incurring costs associated with executive severance and interim leadership compensation.
• The company is incurring costs associated with the consulting agreement with the interim CFO.

Risks

• The company faces risks related to the search for a new President and CEO.
• Cost reduction efforts may have an adverse impact on the company's development activities.
• The company's actual costs may be greater than anticipated.
• The workforce and operating expense reductions may have an adverse impact on the company's development activities.
• The merger with Peak Bio is subject to customary closing conditions, and there is no guarantee that the merger will be completed.
• The company's forward-looking statements are subject to risks and uncertainties.

Future Outlook

The combined company will focus on Peak Bio's ADC platform and Akari's PAS-nomacopan for Geographic Atrophy, seeking business development opportunities and funding to advance these programs. The merger is expected to close by the third quarter of this year.

Management Comments

• Hoyoung Huh, M.D., Ph.D. Chairman, Peak Bio, and Ray Prudo, M.D. Chairman, Akari Therapeutics, stated that prioritizing the ADC and PAS-nomacopan GA programs will put the post-closing combined company in the best position to secure business development opportunities and funding.

Industry Context

The prioritization of an ADC platform reflects the growing interest and investment in antibody-drug conjugates for cancer therapy. The focus on Geographic Atrophy aligns with recent approvals of complement inhibitors for this indication, suggesting a competitive market landscape.

Comparison to Industry Standards

• ADC technology is being pursued by companies like Seagen (acquired by Pfizer), ImmunoGen (acquired by AbbVie), and Daiichi Sankyo, all of whom have approved ADC products or advanced pipelines.
• The development of PAS-nomacopan for Geographic Atrophy puts Akari in competition with companies like Apellis Pharmaceuticals and Iveric Bio, which have recently launched complement inhibitors for GA.
• The discontinuation of the HSCT-TMA program is not uncommon in the biotech industry, as companies often need to prioritize their pipelines based on cost, timeline, and potential for success.

Management Changes

Stakeholder Impact

• Shareholders may experience uncertainty due to leadership changes and program discontinuations.
• Employees may be affected by cost reduction efforts and workforce reductions.
• Patients may be impacted by the discontinuation of the HSCT-TMA and PHP 303 programs.
• The focus on ADC and PAS-nomacopan may benefit patients with cancer and geographic atrophy in the long term.

Next Steps

• Complete the merger with Peak Bio Inc.
• Continue IND enabling development of PAS-nomacopan for Geographic Atrophy.
• Continue IND enabling development of ADC candidate targeting TROP-2.
• Seek partnership and licensing opportunities for Nomacopan.
• Work with the FDA to define the best path forward for the HSCT-TMA technology.
• Continue ongoing business development discussions around the PHP 303 technology.
• Find a new President and Chief Executive Officer.

Key Dates