Akili (AKLI) 10 Aug 232023 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Akili, Inc.

Second Quarter 2023 Earnings Conference Call. [Operator Instructions] This call is being recorded on Thursday, August 10, 2023. I would now like to turn the conference over to Julie DiCarlo, Senior Vice President of Communications. Please go ahead.

Chris. you, Thank welcome quarter and earnings for call Good XXXX. to second of the afternoon, Akili’s This and and Julie Officer, CEO, Matt is DiCarlo, and Santosh Eddie by today’s Franklin; Martucci; Akili’s Shanbhag. call our Chief President our Chief Officer, I’m Operating Financial joined on Chief Also us Akili’s Q&A Scott Kollins. today’s call portion joining Officer, of the is for Medical

We issued today. closed our earnings market release after the

during our today’s on on website, the today’s This a can release our that Investor we’ll section make slides access event. being reference with along our is of call. the call after we’ll recorded earnings You Relations website and shortly available replay

our include, as are with such XX-Q differences the of as call and – of today’s we’re financial SEC. upon any upon Information Form risks assumptions XX, reflects important provided that, During events, management the performance statements, subsequent as future company’s of regarding on materially in only today, views of our but while considered differ the any those estimates the and set filings The uncertainties. reasonable include forward-looking relied not QX XXXX certain a and those forward-looking representative as today’s results we’ll result based Factors limited call, by that today filing and such company. statements other involve might company’s are implied as may or subsequent actual expectations, various plans, expressed uncertainties prospects August factors. our by well views to, These should be make date. forward-looking that or not from forth risks statements of

non-GAAP financial non-GAAP our in reference A measures accordance to GAAP measures but or to considered obligation statements during of our the outlook. results for isolation as in is measures. of intend does non-GAAP in be any earnings disclaim not certain transparency. release. included Management today’s earnings these our greater with presentation forward-looking the in historic reconciliation complement call, financial our explicitly to or or financial measures and Also update revise as provide we’ll a GAAP, financial to substitute prepared slides a our We

following you’re the to his Eddie as over Slide slides, X prepared along please If with hand now call remarks. to for I turn Eddie? the

and two over-the-counter Julie, To with those The spoke, hello, with evolved now product, markets FDA-authorized in since let the in for has Slide everybody. turn slides, product U.S. market released X, Thanks, to prescription and everyone, orient operating we’re and business last pediatric with independent we now me our products. recently EndeavorOTC. EndeavorRx market ADHD the adult with our two ADHD the as

X been we’re For ages adolescents business, with as our with XX underway. the children, we’ve know, just over force pediatrics in over the quarters review to of looking X EndeavorRx FDA for live million our to expand current sales you just market addressable that’s and the and label three to include

the unique our market around has quarter-over-quarter this engage providers all now new market we is as in product, increasingly every with the to live which at EndeavorRx, In us patients. resonating for we’ve expected, to dynamics. a ADHD prescriptions, value than month. started a earlier And EndeavorRx market market EndeavorOTC, With directly our patients market continue adult pediatric This million a Xx than larger XX prescribers EndeavorRx issues. growth adult focusing entered and market, with see current is attention on we’ve market the and of refills we treatment enthusiasm for prescription see tells ADHD that so in

block said, access. patient to to was in continuing That due revenue flat, insurance large and part lag

see White House That but to in eventually sure our patients control. the pleased industry out take is assistance to than QX. we has as product health clearly to in an that’s can the number areas mental This play up growth We’re change, I’m the utilizing seeing we’re issue parity. patient for of this broader not recently substantially our program you’ve living seen and as bear market, continued task to insurance the insurance that increased

decided in Most quarter our past FDA’s adult by Policy. the June we consumer in initial our market. Apple clinical and It’s commercial our for the the allowed preparing and submission The product, treatment an need inform This tech and while EndeavorOTC FDA-approved into ADHD strategy. as release Store demand right and product on data us released the growing FDA under strong live direct because the the in exciting is adult built adults Discretion the document Enforcement to COVID market. of entry assess our our App in purchase now release with same ADHD. and adults as over-the-counter in went to We product regulatory

on sharing the plan on we in adult is regulatory during We time what will an in to continue pursue thus for the market and will OTC remain seen commercial have we And But as more optimize product the I to look once forward far, we to based share today the specific market data on we’ve path strategy EndeavorOTC the what market. that time, this FDA it. market.

the of the are validated on new the We designation. treatment over-the-counter safe. we’re if for are that significantly what, a think see large the OTC the This We reliance move clinically societal side seeking to digital of proud compared model right to with in also would and friction forefront actively to we our pursue significantly what model and believe here insurers. FDA-authorized prescription shift on scale and the places has with business products less market the innovation OTC us models less be efficiently first potential treatment at to approved,

carefully business which this manage our operations is our remain into current continue QX grow our capital and the to and macro believe current fund XXXX, level, we and to At able as operate important we we we business planned environment. in

through take the Santosh actual data. I’ll now to to you Matt it Matt? over turn and

top pediatric some insights an overview Thanks, our COVID in I’ll line start from up Alright. from our the of studies. then experience wrap share early our results and market ADHD with the first adult Eddie. with progress in market, update on Fog an then

Slide free by the given As rate increase a In continued our EndeavorRx. demand This coverage. qualified and X% dispense QX prescribers product under the caregivers we QX, added quarter overall offset assistance pediatric across by demand a of program. and product who XX% was XXX of decrease number during wasn’t the insurance XX-day new highlighted X.X-fold from and We unexpected our for for lack the in patient prescriptions for continued prescriptions saw to This grew new indicators X. over growth key QX. compared on of

progress regulatory the made on front. also We

submitted FDA reminder, XX we a to As label. the to EndeavorRx data to include XX-year-olds in

to forward EndeavorRx is alternative available looking review filing currently an for if treatment options. new as under Our for the successful, we FDA, adolescents and with making look

the market. Now effective – FDA increasingly treatments, attention The shortage the widespread experience especially ADHD safe to There million XX are are adult by impacted and the whose X let’s issues. and experience focus August statement continue as stimulant turn issued U.S. in was ADHD These our in DEA. approximately adults daily by to of in large early by joint they on individuals non-pharmaceutical Slide demanding the X, medication shortages. with are lives

for the our trial ADHD release of X adult of and need, with with EndeavorOTC STARS significant the adults strength the we clinical market data weeks patient adult ADHD. the entered With ago,

access of sooner adult shared to expected, us consumer gave viability an demand release the product This market model. and us consumers directly than to allowed through Eddie gauge as and reaching over-the-counter

OTC from to enables a subscription remove model intentionally to and App chose the it be directly manage make Store own can health their easy basic have Apple payers access. approach ability to intermediaries we prescriber care, adults our eligibility after As EndeavorOTC. downloaded questions. non-prescription extremely and to initiated The treatment use the few answering for and Today, us

made one mentioned, designation As Eddie clear. but what commercial device, the market. OTC the the questions and on with want does not EndeavorOTC far seen over-the-counter a decision for pursue designation medical and regulatory an received so to FDA-authorized strategy adult OTC we’ve an is about that require One note, a An number of we’ve to based prescription. we the be release,

over-the-counter We’re track authorization product submit this FDA on as an later to for year.

model. of business optimizing We’re the key now components

monthly annual For example, we’re and testing pricing plans. multiple

visuals We’re most and identifying and core the cost-effective refining promotional channels. messaging our

tailoring for experience users. also game adult the We’re

soon Again, it’s bit continue enhancements. We future to have market. like early, on feedback And to updates time more once gather coming have product from help a OTC but we product guide and model I forward the we sharing the adult users data will ADHD that detailed market. look this for

to identify been These to and randomized while technology of Cornell in for topic evaluating dysfunction top future we’re following controlled potential adults, infection. share Vanderbilt analysis adults COVID cognitive with has a update on Finally, completed. proof-of-principle I designed our trials line the were the studies independent on and want exploration signals brief

We did between and the groups see separation statistical measure. primary the outcome

attention of not We of that measures cognitive functional however, anxiety, broad-based cognition, specific with our are where of such direct control. secondary retentional assess observe as measures However, fatigue, in number treatment. these to the we’d see of as compelling expect life depression, to associated did, improvements effects a most measures control, outcomes as quality well

statistically and changes control the functional outcomes, to towards or were these when group. significant compared cognitive trending Across significance

area. opportunities in working an partners present these data discussions to with We’re And engaging encouraging with at data, be investigators research meeting. potential to in scientific advance upcoming study on this the these we’ll with

to it to over through walk the metrics. who like turn us Santosh? Santosh, now key I’d will financial

hello, Great. everyone. Matt, Thank you, and

to If you X. Slide turn

to label we reminder, address has here and United the close part reach of population the combined a this with large with in XX adult made potential incredible the an in States. to people progress million expanded to market ADHD, As a have EndeavorRx EndeavorOTC

perspective, compared #X. a Let’s quarter, flat of $XXX,XXX the which on financials our at approximately this to we second a were year. take recognized relatively when From quarter revenue the prior within Slide quarter look

the us the people Total billings new a essentially, second increase total actual a which added also that Total change non-GAAP metric, during first in quarter. over the period. better are the a billings product about plus of were what billings of year. quarter this deferred revenue, We XX% sense is this purchased give paid $XXX,XXX quarter, revenues is in to for

was expenses. non-GAAP primarily the $XX of down to the reduced our $XX expense The prior second compared approximately trials. million in million to total expenses incurred expenses total quarter G&A We and operating quarter. clinical in wind on and reduction the by of driven see GAAP you Moving of about expense operating

for to operating slide, this to expenses be for about to As total expect indicated million net non-GAAP earlier approximately our net a million we million first to on million compared and million of provided of was year, $XX GAAP loss the to of of about loss $XX year. XXXX in approximately $XX to range net loss quarter loss this a million within compared the the see quarter in $XX had first was non-GAAP the $XX the we quarter year. continue this $XX net

in Our GAAP available reconciliation non-GAAP the to is appendix.

the not quarter cash $XXX cash, and least, perspective, last cash second runway from but And we million short-term a with of investments. ended equivalents approximately

end As the that be quarter indicated and on our cash our to of XXXX. operations continue to at we first the position fund of current second slide, quarter planned into expect the the sufficient will

I’ll close capital, conditions. on these plan, expansion capital And on operating the reserves ADHD pediatrics. especially current financial two, the one, our into market update continued commercial that populations beyond by builds in current reiterating

that, I’ll to over Eddie. Eddie? With it hand

you if highlights here. wrap. just And Santosh. X, Slide see you our Everyone, Thanks, can to turn to

the we’re continued and a do we’re on We of we’ve to growth execute in excited in over have quarter, and strong business about developments seen, some to continue we seen model the believe goals. position upcoming our our that

the of to initiate turn to I’ll operator Q&A it back so the period. beginning And over the

Credit Your comes Frommer, Instructions] Judah question ahead. first Thank please [Operator Suisse. from go you. Judah,

progress taking Hi Thanks my guys. the on and Yes. here. congrats for questions

might guess designations. Store you largely FDA actually in the App for timeline anything related what’s you Just designation? there? on anticipate the when Health Emergency. looking profile we the Is Public is under assigning a I would else on stay, And receive what product, COVID do the couple And long think focused to the should How OTC safety designation? be anticipate you of and the it you the you the do largely

for Sure. question. Thanks Good Eddie. the This questions. is Judah

over it it’s CMO, So, turn more for Scott, details. answer, a will our brief and I then to

we there. as intend the the of timelines to the about submission, to do emergency, remain both guidelines health the will the this? and to market optimize do we out still That will be during for more And bit efficacy to product this the be with associated safety. review. dependency say emergency following a is and which a you continue health So, on still at have the it lot need we Scott, of want point

Eddie. Thanks Yes.

the timeline, COVID-related from the discretion for the FDA ends marketing So, November. enforcement in the

before be have to that add the time to it our application, plan it for clinical a is adolescent under said, the to safety And on our just Eddie then adult efficacy then what on observed trial. application is mainly which focused the terms our of similar we in said submission, the before submit XXX(k), we So, will in review basis our and had November. what as for and in Eddie that

a break one had Got Okay. just seeing they of are find the follow-up you refill, quick then do of I one trials it. in on you a your other trends in after break. timing you any are between, in that And one-month Thanks. taken had terms of one And of doing refills. like, think patients you have kind or

will go answer have ahead and Judah. one. Sure. that Thanks Matt, I

Yes.

I it and can each needs. EndeavorRx accommodate things flexible think be one individual of is about patient’s the beautiful

kind a patients get So, we majority wide refills variety who utilization. are actually a seeing of break. The will of take of typically

break study, kind we but of a a number also So, a growing see of second a that and active it month reinitiate the sequential use cycle to month-over-month. then in similar clinical a treatment,

wide So, of a range again, a little bit there.

Thanks. Great.

Thank you.

Your ahead. TD next Charles go Charles, from Cowen. question comes please Rhyee,

having you the sort could you Lucas be one, Would And of is guys seems I XXXX. running OTC Would it in you Charles. just it see to like available June. making two know on that is well. products. then given guys kind curious throughout This contribution doing Hi. started be what curious, two, Obviously, hear, of for are now product curious, parallel

focus are the on your product, product? kind but kind of adolescent to to Just you the resources ramping going just focus what what is marketing curious on to obviously, of want OTC see

it first Santosh the Lucas, a part Good for then to I take and pass Will that. bit. Sure. question, of will

the at point. So, contribution to in we level, this of a anything related not any are high guiding on at metrics

it’s We as model are continue to as into the the Store, and Matt App on about, talked optimizing to looking, more lean right. learning

I we market. had of think this here of a early point, on limited at weeks set have the kind

I is to a lot optimize learn. more continue and can there we think

And so, will we invest in that.

about, talked year. our we going not this As to we have are increase OpEx

And juggle optimize in so including across at some more way market, those and a various across we we and will we as optimization will path. this these look opportunities best, we investing in the ADHD OTC think earlier

Eddie. you, Thank Yes.

we guidance are you expense the to plan that balancing Just looking guidance don’t not at Rx revenues at to to current some our expense of $XX as live versus need to that, this and million We say keep From be investments for operating add and to to in the through an they time. in would business change year, the are total remain do continue marketing like expenses said, well. see what contribution in million we Eddie perspective, But mind, I in we obviously are the current providing on point we our so will support know. EndeavorOTC $XX revenues, expect total of reiterating OTC. as market we to

you I guys with are for real-world appreciate that. conversations sense you with get in last payers. progress are Curious of guys Okay. members. guys across you payers, that data. that where then other their coverage Kroger’s at to payers terms health Do And hear plan waiting noted with adopted the evidence call,

kind update that. hear Just on curious to of an

Sure. Matt?

Matt. Yes. Yes. Hi it’s

saw White process disparities question of some highlighting challenges new longer the mental than Akili. is want. On unfortunately, highlighted we necessarily a are released unique no to Eddie And front, to interesting, taking in the report memo, news House that We of there. the not this the insurance healthcare. some is It’s no there

to continue the answer We question, to your payer. engage thanks it’s with payers. unique really to And of kind each

We through are them with their working process.

are continuing we families. to as as to and our work for aggressively their patients We access can expand

clearly. say very will Yes. I

why continue my about It’s the from to perspective, this data access about This on specific for EndeavorRx. I to is important product. patients. it perspective, is engage. think this because for which is This an to in it’s a about is we push not continue from we why clear system, is our inertia additional factor not

And out. to is has that think so process play I a this just

adolescent the you one, And Okay. earlier, it then you maybe you May for the for submitted Xth, said timeline when you Yes, – that? expansion timeline have understood. us given on get population. know might of I guys last you label have guess guys could believe you have you remind for an the can I expected

Sure.

clock to in regulatory MDUFA explicit of date. – no has kind timeline no type, own in and there There is no there terms The is want is But stated. no of date. how guidance FDA there their internal PDUFA, they is review. So, this

we it And can’t review. say – under is it’s so actively

are We final the reached. decision with we an but on FDA, when working would guide can’t be exact timeframe

good. Okay. Thanks questions. for It sounds the

Okay. Thanks.

you. Thank

comes next go Vikram ahead. Your Stanley. please question Vikram, Morgan Purohit, from

on This everyone. Gus for Congrats Vikram. quarter. on Hi Paul, the is

have receiving? is, have Endeavor? you been the areas And some are the the key question. of based We key been on on one team working currently what through feedback have is And user the what question that updates feedback product of your

Vikram, Are or to you EndeavorRx? – referring does are you EndeavorOTC matter? it

EndeavorRx.

it EndeavorRx. Or general? is

let’s I then. mean mean it I guess I make general –

Yes. problem. Okay. No

address what an we Yes. I your in just right. are want I need, think to unmet clinical specific mean is question. hearing I incredible make sure I general,

saw in both products I think demand, increase we you are seeing right. as

clinician format, we over game time so… pediatric video data progress they and rigorous perspective, also right. unmet with in science out The in well, data, comfort think clinical the market, From that patient need and there. is the find as there seen clinical continued also rigorous perspective, an a I So, from products improvement a have particularly these engaging maintaining entertainment backs the

to Eddie. just – in things of and add a on good terms features engagement, We – question. tracking people that asking are this to that add continuing that believe add for Yes, It’s data to like is features. will continuing

All because able markets of and our feedback. of that in we our these volumes lot to different in and actually up of come this volume a grow, are are feedback now two get to actually are continue things we

we of areas, and release and those product the that all roadmap on features have and timely so And to really engagement to data add a is these digital features lot and on about areas in a are kind one, latitude have therapeutics we great what’s tracking, directly two, potential cadence. and of

we near-term updates said, as well So, definitely aimed Rx to at have Matt intend as updates coming, as in updates OTC these areas. in

Yes. And then just adult are market, we started. specifically in getting

the excited, evergreen of actively continue So, mentioned, one product of be as the – that we And the of are that kind that can that process in for and updates. it unique advantages engaged refreshed of product we optimizing of can with. adult users are specific we is that cadence Eddie our to

very you Thank much. Awesome.

you. Thank

LifeSci Instructions] from [Operator next question Your comes Rahul, Rahul please Capital. go Rakhit, ahead.

of my guys. OTC the just or helpful. kind I wondering subscriptions would of color early, pretty more I opting see know about pretty year? of in you here – patients for but leaning if you any two-month one-month product trends terms the Thanks kind versus are in for taking seeing be it’s full – questions. it Is Hey patients subscriptions? was are where going Any

Rahul. question, Great Thanks. Sure.

a of leaned lot we it’s thing And that in with EndeavorOTC actually, testing. is a into have one think early these I really weeks mix.

pricing, of of what you a very right. etcetera, us much a different note, range may will while you every day. and so on point. single not at are gathering testing exercise be is packages, And we going optimization types This for different data But this devices

a and do of so is is the mix, really best see we say and we that we monthly subscriptions. see annual there do packages, And kind can

those of There we are both that are the not So, of in to. thing actively that singular relating is a things actually see marketplace. kind people

as will options what we finalize – patients. think when about that’s available we keep for pricing, in that so mind we And keep will we

it. Got

the answer. kind of percentage are of off little a in terms are as treatment? and this of people just they or of And two-month be Okay. that what knowing back harder through – who kind one-month that to are kind well Of full courses prescriptions the going of might opting as trends the it for of making percentage what one coming

Rahul, Hey early. pretty Yes, it’s mean I Matt.

here We for in in are only the market QX. weeks three

OTC we do right future, in metrics like plan that. early help set the days a us full on, But providing address of for model. to questions again, So, the early, now with

Got guys. the taking Thanks for it. Understand. questions,

Thank you.

no proceed. are time. at There Please questions you. Thank further this

Alright. engagement talk will attention and Thank the you for and call, you Thanks for your questions, future. quarterly to this for everyone. in and the thanks Thanks. we

gentlemen, participating call Ladies Thank and disconnect you for that thank today. for this conference lines. We you concludes ask your you. please and your