- Sublicensed stem cell line ESI-053 to ImStem Biotechnology
for development of cell therapy candidate IMS001 for COVID-19 and
acute respiratory distress syndrome from other causes.
- Expanded agreement related to ESI clinical-grade pluripotent
stem cell lines to provide AgeX independence to sublicense ESI
lines to industry and academia for development of cellular
therapeutics.
AgeX Therapeutics, Inc. (“AgeX”; NYSE American: AGE), a
biotechnology company developing innovative regenerative
therapeutics to treat human diseases to increase healthspan and
combat the effects of aging, reported financial and operating
results for the third quarter ended September 30, 2020.
Q3 Highlights
- AgeX sublicensed stem cell line ESI-053 to ImStem
Biotechnology, Inc., a biopharmaceutical company developing
embryonic stem cell (ESC)-derived mesenchymal stem cells (MSCs),
for development of cell therapy candidate IMS001 for COVID-19 and
acute respiratory distress syndrome (ARDS). The sublicense grants
ImStem a non-exclusive, royalty-bearing sublicense to use AgeX’s
clinical-grade ESC line ESI-053 to derive ImStem’s investigational
MSC product candidate IMS001 for development of treatments for
COVID-19 and for ARDS from other causes. ImStem will endeavor to
file one or more investigational new drug (IND) applications for
IMS001 in COVID-19 and/or ARDS with the U.S. Food and Drug
Administration (FDA) or equivalent EU regulatory agency within 18
months. Under the agreement, AgeX will be entitled to receive
revenues in the form of royalties on the sale of IMS001, if
successfully developed by ImStem and approved for marketing by the
FDA or foreign regulatory authorities, as well as a share of
certain other revenues that ImStem may receive in connection with
the development or commercialization of IMS001 in COVID-19 and ARDS
treatment.
- AgeX, Lineage Cell Therapeutics and ES Cell International
amended their License Agreement regarding ESI clinical-grade
pluripotent stem cell lines for therapeutics purposes. The
amendment secures AgeX independence to license out ESI cell lines
as part of its collaboration and licensing model. The ESI stem cell
lines are distinguished as the first clinical-grade human
pluripotent stem cell lines created under current Good
Manufacturing Practice as described in Cell Stem Cell
(2007;1:490-4). They are listed on the National Institutes of
Health (NIH) Stem Cell Registry and are among the best
characterized and documented stem cell lines in the world. ESI
cells are among only a few pluripotent stem cell lines from which a
derived cell therapy product candidate has been granted FDA IND
clearance for human studies.
“This quarter, we continued to build upon our licensing and
collaboration model through our new agreement with ImStem that
provides us an avenue for participating financially in potential
treatments for COVID-19 and acute respiratory distress syndrome or
ARDS. Since the first of the year, AgeX has entered into six
agreements that could lead to the development of new cell therapies
by our licensees and collaborators, which utilize our core
technologies and cell lines with potential future income streams to
AgeX,” said Greg Bailey M.D., Chairman of AgeX. “In addition,
expansion of our agreement related to ESI clinical-grade
pluripotent stem cell lines will now allow us independence to build
ESI cell lines as a to-go-to source for deriving cell based
therapeutics across the industry.”
Liquidity and Capital Resources
AgeX is in need of additional capital to finance its operations.
On March 30, 2020, AgeX entered into a Secured Convertible Facility
Agreement (the “New Loan Agreement”) with Juvenescence Limited
pursuant to which AgeX may borrow funds from time to time. As of
November 16, 2020, AgeX has borrowed $5.5 million and may draw
additional funds from time to time subject to Juvenescence’s
discretion, prior to the contractual repayment date on March 30,
2023. AgeX may not draw down more than $1.0 million in any single
draw. More information about the New Loan Agreement can be found in
AgeX’s Annual Report on Form 10-K and Quarterly Reports on Form
10-Q for the periods ended March 31, 2020, June 30, 2020, and
September 30, 2020 filed with the Securities and Exchange
Commission on March 30, 2020, May 14, 2020, August 14, 2020, and
November 16, 2020, respectively.
Going Concern Considerations
As required under Accounting Standards Update 2014-15,
Presentation of Financial Statements-Going Concern (ASC 205-40),
AgeX evaluates whether conditions and/or events raise substantial
doubt about its ability to meet its future financial obligations as
they become due within one year after the date its financial
statements are issued. Based on AgeX’s most recent projected cash
flows, and considering that loans from Juvenescence under the New
Loan Agreement will be subject to Juvenescence’s discretion, AgeX
believes that its cash and cash equivalents, the remaining $2.5
million available under the New Loan Agreement and reduction in
staff in May 2020 would not be sufficient to satisfy its
anticipated operating and other funding requirements for the twelve
months following the filing of AgeX’s Quarterly Report on Form 10-Q
for the three and nine months ended September 30, 2020. These
factors raise substantial doubt regarding the ability of AgeX to
continue as a going concern.
Third Quarter 2020 Operating Results
Revenues: Total revenues for the third quarter of 2020 were
$434,000 as compared with $411,000 for the third quarter of 2019.
AgeX revenues are primarily generated from subscription and
advertising revenues from the GeneCards® online database through
its subsidiary LifeMap Sciences, Inc. Revenues in 2020 also
included approximately $40,000 of allowable expenses under AgeX’s
research grant from the NIH. Revenues from that grant were $41,000
in the same period in 2019.
Operating expenses: Operating expenses for the three months
ended September 30, 2020 were $2.8 million as compared to $3.6
million for the same period in 2019. Operating expenses are
comprised of research and development expense and general and
administrative expenses. On an as-adjusted basis, operating
expenses for the three months ended September 30, 2020 were $2.3
million as compared to $3.0 million for the same period in
2019.
The reconciliation between GAAP and non-GAAP operating expenses
is provided in the financial tables included with this earnings
release.
Research and development expenses were $0.8 million during the
three months ended September 30, 2020, a $0.6 million decrease from
$1.4 million during the same period in 2019. The decrease was
primarily attributable to the layoff of 11 research and development
personnel in May 2020 and the elimination of shared services
payments to Lineage Cell Therapeutics, Inc. (“Lineage”) with the
termination of our Shared Facilities and Services Agreement on
September 30, 2019.
General and administrative expenses decreased by $0.3 million to
$1.9 million during the three months ended September 30, 2020 from
$2.2 million during the same period in 2019 despite an increase in
head count resulting from the employment of AgeX’s own finance team
commencing in October 1, 2019. These increases were offset by a
decrease in noncash stock-based compensation expense, travel and
related expenses with the shelter in place mandates since March 15,
2020 resulting from the COVID-19 pandemic, and the elimination of
shared facilities and services fees from Lineage following the
termination of the Shared Facilities and Services Agreement on
September 30, 2019.
About AgeX Therapeutics
AgeX Therapeutics, Inc. (NYSE American: AGE) is focused on
developing and commercializing innovative therapeutics to treat
human diseases to increase healthspan and combat the effects of
aging. AgeX’s PureStem® and UniverCyte™ manufacturing and
immunotolerance technologies are designed to work together to
generate highly defined, universal, allogeneic, off-the-shelf
pluripotent stem cell-derived young cells of any type for
application in a variety of diseases with a high unmet medical
need. AgeX has two preclinical cell therapy programs: AGEX-VASC1
(vascular progenitor cells) for tissue ischemia and AGEX-BAT1
(brown fat cells) for Type II diabetes. AgeX’s revolutionary
longevity platform induced Tissue Regeneration (iTR™) aims to
unlock cellular immortality and regenerative capacity to reverse
age-related changes within tissues. HyStem® is AgeX’s delivery
technology to stably engraft PureStem or other cell therapies in
the body. AgeX is seeking opportunities to establish licensing and
collaboration arrangements around its broad IP estate and
proprietary technology platforms and therapy product
candidates.
For more information, please visit www.agexinc.com or connect
with the company on Twitter, LinkedIn, Facebook, and YouTube.
Forward-Looking Statements
Certain statements contained in this release are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that are
not historical fact including, but not limited to statements that
contain words such as “will,” “believes,” “plans,” “anticipates,”
“expects,” “estimates” should also be considered forward-looking
statements. Forward-looking statements involve risks and
uncertainties. Actual results may differ materially from the
results anticipated in these forward-looking statements and as such
should be evaluated together with the many uncertainties that
affect the business of AgeX Therapeutics, Inc. and its
subsidiaries, particularly those mentioned in the cautionary
statements found in more detail in the “Risk Factors” section of
AgeX’s most recent Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q filed with the Securities and Exchange Commissions
(copies of which may be obtained at www.sec.gov). Subsequent events
and developments may cause these forward-looking statements to
change. AgeX specifically disclaims any obligation or intention to
update or revise these forward-looking statements as a result of
changed events or circumstances that occur after the date of this
release, except as required by applicable law.
AGEX THERAPEUTICS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(IN THOUSANDS, EXCEPT PAR
VALUE AMOUNTS)
September 30, 2020
December 31, 2019
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
1,107
$
2,352
Accounts and grants receivable, net
241
363
Prepaid expenses and other current
assets
581
1,339
Total current assets
1,929
4,054
Property and equipment, net
442
1,126
Deposits and other long-term assets
100
111
Intangible assets, net
1,732
2,151
TOTAL ASSETS
$
4,203
$
7,442
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued
liabilities
$
1,806
$
1,582
Loan due to Juvenescence, net of debt
issuance cost, current portion
1,884
-
Related party payables, net
71
64
Deferred revenues
255
283
Right-of-use lease liability
109
428
Paycheck Protection Program Loan
435
-
Insurance premium liability and other
current liabilities
294
940
Total current liabilities
4,854
3,297
Loan due to Juvenescence, net of debt
issuance cost, net of current portion
3,095
1,528
TOTAL LIABILITIES
7,949
4,825
Commitments and contingencies
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.0001 par value,
authorized 5,000 shares; none issued and outstanding as of
September 30, 2020 and December 31, 2019
-
-
Common stock, $0.0001 par value, 100,000
shares authorized; 37,689 and 37,649 shares issued and outstanding
as of September 30, 2020 and December 31, 2019, respectively
4
4
Additional paid-in capital
90,880
88,353
Accumulated other comprehensive income
92
69
Accumulated deficit
(94,627
)
(86,208
)
AgeX Therapeutics, Inc. stockholders’
equity (deficit)
(3,651
)
2,218
Noncontrolling interest
(95
)
399
Total stockholders’ equity (deficit)
(3,746
)
2,617
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
$
4,203
$
7,442
AGEX THERAPEUTICS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(UNAUDITED)
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
REVENUES:
Subscription and advertisement
revenues
$
309
$
278
$
945
$
898
Grant revenues
40
41
162
103
Other revenues
85
92
256
178
Total revenues
434
411
1,363
1,179
Cost of sales
(50
)
(49
)
(120
)
(165
)
Gross profit
384
362
1,243
1,014
OPERATING EXPENSES:
Research and development
839
1,447
3,792
4,435
General and administrative
1,949
2,194
5,675
6,422
Total operating expenses
2,788
3,641
9,467
10,857
Loss from operations
(2,404
)
(3,279
)
(8,224
)
(9,843
)
OTHER INCOME/(EXPENSES):
Interest income (expense), net
(149
)
8
(288
)
53
Other income (expense), net
(12
)
48
(6
)
277
Total other income (expense), net
(161
)
56
(294
)
330
NET LOSS BEFORE INCOME TAXES
(2,565
)
(3,223
)
(8,518
)
(9,513
)
Income tax provision
-
(54
)
-
(130
)
NET LOSS
(2,565
)
(3,277
)
(8,518
)
(9,643
)
Net loss attributable to noncontrolling
interest
22
56
99
200
NET LOSS ATTRIBUTABLE TO AGEX
$
(2,543
)
$
(3,221
)
$
(8,419
)
$
(9,443
)
NET LOSS PER COMMON SHARE:
BASIC AND DILUTED
$
(0.07
)
$
(0.09
)
$
(0.22
)
$
(0.25
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
BASIC AND DILUTED
37,679
37,640
37,662
37,143
AGEX THERAPEUTICS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended September
30,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss attributable to AgeX
$
(8,419
)
$
(9,443
)
Net loss attributable to noncontrolling
interest
(99
)
(200
)
Adjustments to reconcile net loss
attributable to AgeX to net cash used in operating activities:
Gain on sale of equity method investment
in Ascendance
-
(354
)
Depreciation expense
370
38
Amortization of intangible assets
419
419
Amortization of right-of-use asset
316
200
Amortization of debt issuance cost
277
17
Stock-based compensation
751
1,487
Foreign currency remeasurement gain (loss)
and other
58
85
Changes in operating assets and
liabilities:
Accounts and grants receivable, net
94
(103
)
Prepaid expenses and other current
assets
767
331
Accounts payable and accrued
liabilities
237
319
Related party payables
16
187
Insurance premium liability
(713
)
(600
)
Deferred revenues and other
liabilities
(271
)
(132
)
Net cash used in operating activities
(6,197
)
(7,749
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from the sale of equity method
investment in Ascendance
-
354
Security deposit paid
-
(74
)
Purchase of equipment and other
(20
)
(346
)
Net cash used in investing activities
(20
)
(66
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise of warrants
-
4,500
Draw down on loan facility from
Juvenescence
4,700
500
Proceeds from Paycheck Protection Program
Loan
433
-
Payment of debt related costs
(149
)
-
Repayment of financing lease liability
(15
)
(22
)
Net cash provided by financing
activities
4,969
4,978
Effect of exchange rate changes on cash
and cash equivalents
3
(2
)
NET DECREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
(1,245
)
(2,839
)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH:
At beginning of the period
2,452
6,707
At end of the period
$
1,207
$
3,868
Non-GAAP Financial Measures
This press release includes operating expenses prepared in
accordance with accounting principles generally accepted in the
United States (GAAP) and, includes operating expenses, by entity,
prepared in accordance with GAAP. This press release also includes
certain historical non-GAAP operating expenses and non-GAAP
operating expenses, by entity. In particular, AgeX Therapeutics,
Inc. (“AgeX”) has provided both (a) non-GAAP total operating
expenses, adjusted to exclude noncash stock-based compensation
expense, depreciation and amortization expense, and acquired
in-process research and development expense, a nonrecurring item,
and (b) non-GAAP operating expenses, by entity, to exclude those
same charges by the respective entities for consistency. Non-GAAP
financial measures are not meant to be considered in isolation or
as a substitute for comparable financial measures prepared in
accordance with GAAP. However, AgeX believes the presentation of
non-GAAP total operating expenses and non-GAAP operating expenses,
by entity, when viewed in conjunction with our GAAP total operating
expenses, and GAAP operating expenses by entity, respectively, is
helpful in understanding AgeX’s ongoing operating expenses and its
programs and those of certain subsidiaries.
Furthermore, management uses these non-GAAP financial measures
in the aggregate and on an entity basis to establish budgets and
operational goals, to manage AgeX’s business and to evaluate its
performance and its programs in clinical development.
AGEX THERAPEUTICS, INC. AND
SUBSIDIARIES
Reconciliation of Non-GAAP
Financial Measure
Adjusted Operating Expenses
Amounts In Thousands and
Unaudited
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2020
2019
2020
2019
GAAP Operating Expenses - as
reported
$ 2,788
3,641
$ 9,467
$ 10,857
Stock-based compensation expense (1)
(232)
(491)
(751)
(1,487)
Depreciation and amortization expense
(1)
(263)
(156)
(789)
(457)
Non-GAAP Operating Expenses, as
adjusted
$ 2,293
$2,994
$ 7,927
$ 8,913
GAAP Operating Expenses - by
entity
AgeX and subsidiaries other than LifeMap
Sciences (2)
$ 2,449
$ 3,114
$ 7,955
$ 9,150
LifeMap Sciences, Inc. and subsidiary
(3)
339
527
1,512
1,707
GAAP Operating Expenses - by
entity
$ 2,788
$ 3,641
$ 9,467
$ 10,857
Non-GAAP Operating Expenses - as
adjusted, by entity
AgeX and subsidiaries other than LifeMap
Sciences
$ 2,066
$ 2,583
$ 6,755
$ 7,552
LifeMap Sciences, Inc. and subsidiary
227
411
1,172
1,361
Non-GAAP Operating Expenses - as adjusted,
by entity
$ 2,293
$ 2,994
$ 7,927
$ 8,913
(1)
Noncash charges
(2)
AgeX Therapeutics, Inc. includes ReCyte
Therapeutics, Inc., a majority-owned and consolidated
subsidiary.
(3)
LifeMap Sciences Inc. includes LifeMap
Sciences Ltd., both consolidated subsidiaries of AgeX Therapeutics,
Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201116005977/en/
Contact for AgeX: Andrea Park apark@agexinc.com (510)
671-8620
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