Akili, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Achillea Interactive Labs third quarter 2023 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 9th, 2023. I'd now like to turn the call over to Katie Reid. Please go ahead.

Thank you, Andrew. Good afternoon, and welcome to Akili's earnings call for the third quarter of 2023. This is Katie Reed, Vice President of Marketing and Communications for Akili, and I am joined on today's call by Akili's CEO, Matt Franklin, our Chief Medical Officer, Dr. Scott Collins, and our Chief Financial Officer, Shantos Shanbag. We issued our earnings release after the market closed today. You can access the release on the Investor Relations section of our website, along with the earnings slides that we'll reference during today's call. This call is being recorded and we'll make a replay available on our website shortly after today's event. During today's call, we'll make forward-looking statements regarding future events, expectations, plans, prospects, and the financial performance of the company. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the company's management, involve certain risks and uncertainties. The company's actual results may differ materially from those expressed or implied by any such forward-looking statement as a result of various important factors. Factors that might cause such differences include, but are not limited to, those risks and uncertainties set forth in our Q3 2023 Form 10-Q that we're filing today, as well as other subsequent filings with the SEC. Information provided on today's call reflects our views only as of today, November 9th, and should not be relied upon as representative of our views as of any subsequent date. We explicitly disclaim any obligation to update or revise any forward-looking statements or our outlook. Also during today's call, we will refer to certain non-GAAP financial measures. Management does not intend the presentation of these non-GAAP financial measures to be considered in isolation or as a substitute for results prepared in accordance with the GAAP, but as a complement to provide greater transparency. A reconciliation of the historical non-GAAP financial measures toward GAAP financial measures is included in our earnings slides and in our earnings release. If you're following along with the slides, please turn now to slide three. as I hand the call over to Matt for his prepared remarks. Matt?

Thank you, Katie, and thanks to those joining us on the call. Before I highlight some of the key accomplishments from Q3, I wanted to take a moment to step back and touch on the reason why we do what we do. It's not widely appreciated, but it's estimated that 11 million adults or nearly 1 in 20 adults in the U.S. are affected with ADHD. For decades, ADHD was considered a childhood condition, leaving adults with ADHD struggling to understand and find resources for their symptoms, or not even realizing that there was a label for their daily challenges. Thankfully, over the past several years, there's been growing awareness of the individual and public health burden of adult ADHD. In addition to being a risk factor for a host of other psychiatric conditions like depression, substance abuse, and suicide, ADHD is also associated with a wide range of other vocational and social challenges, such as chronic employment issues, lower average salaries, high rates of divorce, and greater risk for incarceration. These outcomes are real and devastating to individuals and their families. ADHD treatment has traditionally involved medication and concomitant behavioral therapy, or CBT. Each of these treatments has particular strengths. Whereas medications, such as stimulants, help to manage the core symptoms of distractibility and impulsivity, CBT targets the habits and skills needed for executive functioning, as well as the emotional and interpersonal self-regulation. Each of these treatments also has significant limitations, such as medication side effects or the variable quality of CBT in routine clinical practice. Despite the clear need for effective treatment, it's estimated that only 13% of its 13% of adults with ADHD are receiving any professional treatment. These gaps in care stem from a wide range of factors, from the ongoing stimulant shortage to the many barriers to behavioral treatment, such as limited reimbursement and chronic specialty provider shortages. These barriers to care underscore the critical need for scalable, evidence-based mental health solutions. To address this treatment gap in ADHD, in June, we launched Endeavor OTC as a non-prescription subscription-based treatment for adults who have been struggling with ADHD. What's exciting about Endeavor OTC is that we believe it combines the best parts of each of these leading treatments. Like a medication, Endeavor OTC delivers the same high-quality treatment each time. And like a behavioral therapy, Endeavor OTC targets the core mechanisms of attention dysfunction in the brain in order to drive sustained change. Now, with more than a full quarter on the market, it's clear that the launch of Endeavor OTC has fundamentally changed the trajectory of our business. You can see on slide four, in Q3 2023, Endeavor OTC was downloaded by about 177,000 individuals, contributing just over 530,000 of the more than 700,000 in total Q3 revenues, a 500% increase in total revenues over Q2 2023. This gives us confidence that the clinical need is real and that there is strong demand from adults with ADHD. By removing the prescription requirement and engaging individuals struggling with ADHD directly, we've also been able to transform our business economics. Q3 saw a dramatic improvement in our gross margins, crossing from negative gross margins in Q2 2023 to positive gross margins in Q3 2023. Santos will provide additional detail on our expectations for gross margins during his update in a few moments. These gross margin improvements coupled with operating expense reductions announced with our September restructure have allowed us to extend our cash runway from the first quarter of 2025 into the second half of 2025 while continuing to fund focused regulatory product development and promotional activities. Going forward, Armed with the confidence that the clinical need is real, the demand from consumers is there, and that we have the ability to drive revenue with our direct marketing efforts, our focus in 2024 will be on accelerating profitability. First, this means continuing to drive down user acquisition costs by optimizing our marketing mix. Here, we've made solid progress and will continue to utilize our data science capabilities to optimize our messaging and channel effectiveness. In parallel, we'll work to systematically improve free trial conversion and monthly retention. The product and engineering teams have identified a roadmap of enhancements based directly on user feedback and have prioritized a regular cadence of product updates to tailor Endeavor OTC for the adult audience and to improve the overall treatment experience. Stated even more plainly, in 2024, we'll be focusing on conserving our cash balance while we optimize our consumer funnel. which will enable us to spend more aggressively on profitable revenue growth in the future. Now I'll hand it over to Scott to provide more detail on our regulatory activities.