AgeX Therapeutics , Inc. (“AgeX”: NYSE American: AGE), a
biotechnology company developing therapeutics for human aging and
regeneration, reported financial and operating results for the
first quarter ended March 31, 2020.
“The human tragedy of this pandemic has long tentacles that
effect numerous businesses including AgeX,” said Greg Bailey M.D.,
Chairman. “Given the current global economic landscape, and the
changes that businesses will need to make to accommodate to a post
pandemic world, we feel that new business model aligns well to be
able to function in this new environment. We see enormous
opportunity to license and joint venture PureStem® and HLA-G while
implementing a definitive plan to begin preclinical trials on
tissue regeneration under the leadership of Michael West and
Michael May. We will update you in the future as these plans
progress.”
AgeX has completed a company restructuring to help set it up for
success in the future. The combination of company priorities, cash
position and the COVID-19 pandemic led to employee lay-offs
designed to support the evolution of AgeX's current team to execute
on strategic business goals going forward and to ensure cash is
directed at near-term priorities to deliver maximum shareholder
value. AgeX has a dual business strategy to diversify risk and
maximize opportunities. It plans to continue to pursue its
licensing and collaboration strategy for its two primary technology
platforms, UniverCyte™ immunotolerance technology for the
generation of universal cells, and PureStem® cell derivation and
manufacturing technology for the production of therapeutic cells
with potential advantages, including industrial scalability and
lower manufacturing costs. Since the launch of its licensing and
collaboration strategy in January 2020, AgeX has delivered a
research collaboration in Japan focused on developing universally
transplantable cells for therapeutic use based on UniverCyte™,
entered into a neural stem cell therapy research collaboration for
neurological disorders utilizing PureStem® at a California
University, and AgeX licensee ImStem Biotechnology received the
first-ever clearance of a cell therapy derived from AgeX’s
embryonic stem cells by the FDA to enter human studies.
In addition, AgeX remains committed to pursuing in-house cell
therapy product development and plans to raise money to build the
optimal team to deliver on its products, AGEX-BAT1 for metabolic
diseases such as type II diabetes and AGEX-VASC1 for tissue
ischaemia. AgeX’s budgetary and personnel adjustments will result
in the deferral of in-house product development and may also lead
to AgeX seeking arrangements with other companies in the cell
therapy or biopharma industry for the development of its product
candidates and technology, or outsourcing of some of that work to
service providers until further funding can be obtained to rebuild
in-house research and development staff for one or more of those
programs. Development of AgeX’s iTR technology may be done at
AgeX’s subsidiary Reverse Bioengineering, Inc. subject to
successful financing of the subsidiary.
“Upwards of 80% of healthcare expenditures in the United States
relates to chronic degenerative disease and aging is a principle
underlying cause of such conditions,” said Michael D. West, Ph.D.,
AgeX’s Chief Executive Officer. “Therefore, the ability to
manufacture to scale young clinical-grade cells capable of
regenerating functionality in diverse tissues of the body has the
potential to transform healthcare as we know it today. Perhaps even
more noteworthy is the potential of reversing developmental aging
in the body itself through AgeX’s iTR technology. Our goal in the
coming year is to advance the development of our intellectual
property with the goal of bringing value to our shareholders.”
Q1 Highlights
- AgeX entered into a research collaboration with a Japanese
biopharma company to generate hypoimmunogenic cells, representing
the first research collaboration for AgeX’s immunotolerance
UniverCyteTM technology platform.
- AgeX entered into a sponsored research agreement with a
California University for the derivation of neural stem cells using
AgeX’s PureStem technology for Huntington’s Disease and potentially
other neurological conditions.
- AgeX’s embryonic stem cell line ESI-053 has been used by ImStem
Biotechnology for the derivation of mesenchymal stem cells (MSCs).
ImStem received FDA IND clearance to begin a clinical trial of MSCs
in multiple sclerosis. This marks the first-ever clearance of a
cell therapy derived from AgeX’s embryonic stem cells by the FDA to
enter human studies.
- AgeX researchers and others published a scientific paper on the
age reprogramming of super-centenarian cells in the peer-reviewed
scientific journal Biochemical and Biophysical Research
Communications from Elsevier, describing the conversion of cells of
one of the longest-lived people in history, a deceased 114-year-old
American woman, to a young pluripotent state.
- U.S. Patent number 10,501,723 was issued for generating induced
pluripotent stem (iPS) cells. The patent broadly describes multiple
techniques for reprogramming cells of the body back to the
all-powerful stem cell state.
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. On April
1, 2020 AgeX drew the initial $500,000, 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 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 Report on Form 10-Q filed with the
Securities and Exchange Commission on March 30, 2020 and May 14,
2020, respectively.
On April 13, 2020, AgeX obtained a loan in the amount of
$432,952 from Axos Bank under the Paycheck Protection Program (the
“PPP Loan”). The PPP Loan will bear interest at a rate of 1% per
annum. No payments will be due on the PPP Loan during a six month
deferral period commencing on the date of the promissory note.
Commencing one month after the expiration of the deferral period,
and continuing on the same day of each month thereafter until the
maturity date of the PPP Loan, monthly payments of principal and
interest will be due, in an amount required to fully amortize the
principal amount outstanding on the PPP Loan by the maturity date.
The maturity date is April 13, 2022. The principal amount of the
PPP Loan is subject to forgiveness under the PPP to the extent that
PPP Loan proceeds are used to pay expense permitted by the PPP,
including payroll, rent, and utilities (collectively, “Qualifying
Expenses”), during the time frame permitted by the PPP. AgeX
intends to use the PPP Loan amount for Qualifying Expenses.
However, no assurance is provided that AgeX will obtain forgiveness
of the PPP Loan in whole or in part.
Staff Reductions
During April 2020, AgeX initiated staff layoffs that affected 12
employees, primarily research and development personnel. AgeX has
paid approximately $105,000 in accrued payroll and unused paid time
off and other benefits and expects to recognize approximately
$194,800 in restructuring charges in connection with the reduction
in staffing, consisting of contractual severance and other employee
termination benefits, substantially all of which are expected to be
settled in cash. The staff reductions followed AgeX’s strategic
review of its operations, giving consideration to the status of its
product development programs, human resources, capital needs and
resources, and current conditions in the capital markets resulting
from the COVID-19 pandemic.
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 in excess of an
initial $500,000 advance under the New Loan Agreement will be
subject to Juvenescence’s discretion, AgeX believes that its cash
and cash equivalents, the $500,000 loan under the New Loan
Agreement, the PPP Loan 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 months ended
March 31, 2020. These factors raise substantial doubt regarding the
ability of AgeX to continue as a going concern.
First Quarter 2020 Operating Results
Revenues: Total Revenues for the first quarter of 2020 were
$515,000 as compared with $388,000 for the first quarter of 2019.
AgeX revenue is primarily generated from subscription and
advertising revenues from the GeneCards® online database through
its subsidiary LifeMap Sciences, Inc. Revenues in 2020 also
included approximately $86,000 of allowable expenses under its
research grant from the NIH as compared with $15,000 in the same
period in 2019.
Operating expenses: Operating expenses reported for the three
months ended March 31, 2020 were $3.7 million as compared to $3.4
million for the same period in 2019. On an as-adjusted basis,
operating expenses for the three months ended March 31, 2020 were
$3.2 million as compared to $2.8 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 increased by $0.3 million to
$1.6 million during the three months ended March 31, 2020 from $1.3
million during the same period in 2019. The increase was primarily
attributable to an increase of $0.2 million in scientific
consultants, $0.2 million in laboratory facilities and equipment
related expenses and maintenance, $0.1 million in personnel related
expenses allocable to research and development, and $0.1 million in
depreciation and amortization of laboratory equipment and
improvements. These increases were offset to some extent by a
decrease of $0.3 million in shared services from Lineage Cell
Therapeutics, Inc. (“Lineage”) with the termination of the Shared
Facilities and Services Agreement on September 30, 2019.
General and administrative expenses for the three months ended
March 31, 2020 remained consistent with the same period in 2019 of
$2.1 million despite bearing the full lease and facilities related
costs since April 2019, and an increase in head count with the
employment of AgeX’s own finance team since October 1, 2019. These
increases were offset by a decrease in 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 for human
aging. Its 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. AGEX-iTR1547 is an iTR-based
formulation in preclinical development. HyStem® is AgeX’s delivery
technology to stably engraft PureStem cell therapies in the body.
AgeX’s core product pipeline is intended to extend human
healthspan. 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 Report
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)
March 31,
2020
December 31,
2019
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
468
$
2,352
Accounts and grants receivable, net
366
363
Prepaid expenses and other current
assets
1,238
1,339
Total current assets
2,072
4,054
Property and equipment, net
898
1,126
Deposits and other long-term assets
111
111
Intangible assets, net
2,011
2,151
TOTAL ASSETS
$
5,092
$
7,442
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued
liabilities
$
2,184
$
1,582
Loan due to Juvenescence, net of debt
issuance cost
1,767
-
Related party payables, net
181
64
Deferred revenues
407
283
Right-of-use lease liability
325
428
Insurance premium liability and other
current liabilities
603
940
Total current liabilities
5,467
3,297
Loan due to Juvenescence, net of debt
issuance cost
-
1,528
TOTAL LIABILITIES
$
5,467
$
4,825
Commitments and contingencies
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.0001 par value,
authorized 5,000 shares; none issued and outstanding as of March
31, 2020 and December 31, 2019
-
-
Common stock, $0.0001 par value, 100,000
shares authorized; 37,656 and 37,649 shares issued and outstanding
as of March 31, 2020 and December 31, 2019, respectively
4
4
Additional paid-in capital
88,608
88,353
Accumulated other comprehensive income
44
69
Accumulated deficit
(89,395
)
(86,208
)
AgeX Therapeutics, Inc. stockholders’
equity (deficit)
(739
)
2,218
Noncontrolling interest
364
399
Total stockholders’ equity (deficit)
(375
)
2,617
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
$
5,092
$
7,442
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
2020
2019
REVENUES:
Subscription and advertisement
revenues
$
338
$
345
Grant revenues
86
15
Other revenues
91
28
Total revenues
515
388
Cost of sales
(34
)
(63
)
Gross profit
481
325
OPERATING EXPENSES:
Research and development
1,603
1,338
General and administrative
2,073
2,109
Total operating expenses
3,676
3,447
Loss from operations
(3,195
)
(3,122
)
OTHER INCOME/(EXPENSES):
Interest income (expense), net
(52
)
12
Other income (expense), net
25
(28
)
Total other income (expense), net
(27
)
(16
)
NET LOSS BEFORE INCOME TAXES
(3,222
)
(3,138
)
Income tax provision
-
(73
)
NET LOSS
(3,222
)
(3,211
)
Net loss attributable to noncontrolling
interest
35
78
NET LOSS ATTRIBUTABLE TO AGEX
$
(3,187
)
$
(3,133
)
NET LOSS PER COMMON SHARE:
BASIC AND DILUTED
$
(0.08
)
$
(0.09
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
BASIC AND DILUTED
37,651
36,143
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss attributable to AgeX
$
(3,187
)
$
(3,133
)
Net loss attributable to noncontrolling
interest
(35
)
(78
)
Adjustments to reconcile net loss
attributable to AgeX to net cash used in operating activities:
Depreciation expense
123
10
Amortization of intangible assets
140
139
Amortization of right-of-use asset
104
-
Amortization of debt issuance cost
47
-
Stock-based compensation
260
481
Income tax provision
-
73
Foreign currency remeasurement gain (loss)
and other
5
29
Changes in operating assets and
liabilities:
Accounts and grants receivable, net
(28
)
(75
)
Prepaid expenses and other current
assets
195
(64
)
Accounts payable and accrued
liabilities
494
(52
)
Related party payables
117
8
Insurance premium liability
(314
)
-
Deferred revenues and other current
liabilities
15
44
Net cash used in operating activities
(2,064
)
(2,618
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of equipment and other
(4
)
(3
)
Net cash used in investing activities
(4
)
(3
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise of warrants
-
4,500
Draw down on loan facility from
Juvenescence
200
-
Repayment of financing lease liability
(15
)
-
Net cash provided by financing
activities
185
4,500
Effect of exchange rate changes on cash
and cash equivalents
(1
)
-
NET (DECREASE) INCREASE IN CASH, CASH
EQUIVALENTS AND RESTRICTED CASH
(1,884
)
1,879
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH:
At beginning of the period
2,452
6,707
At end of the period
$
568
$
8,586
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
March 31,
2020
2019
GAAP Operating Expenses - as
reported
$
3,676
$
3,447
Stock-based compensation expense (1)
(260
)
(481
)
Depreciation and amortization expense
(1)
(263
)
(149
)
Non-GAAP Operating Expenses, as
adjusted
$
3,153
$
2,817
GAAP Operating Expenses - by
entity
AgeX and subsidiaries other than LifeMap
Sciences (2)
$
3,096
$
2,860
LifeMap Sciences, Inc. and subsidiary
(3)
580
587
GAAP Operating Expenses - by
entity
$
3,676
$
3,447
Non-GAAP Operating Expenses - as adjusted,
by entity
AgeX and subsidiaries other than LifeMap
Sciences
$
2,688
$
2,345
LifeMap Sciences, Inc. and subsidiary
465
472
Non-GAAP Operating Expenses - as adjusted,
by entity
$
3,153
$
2,817
(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/20200514005835/en/
Contact for AgeX: Russell Skibsted rskibsted@agexinc.com (510)
671-8370
AgeX Therapeutics (AMEX:AGE)
Historical Stock Chart
From Mar 2024 to Apr 2024
AgeX Therapeutics (AMEX:AGE)
Historical Stock Chart
From Apr 2023 to Apr 2024