AgeX Therapeutics Reports Third Quarter 2020 Financial Results and Provides Business Update

Nov. 16, 2020 21:05 UTC

 

  • 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.
 

ALAMEDA, Calif.--(BUSINESS WIRE)-- 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.

 

Contacts

Contact for AgeX:
Andrea Park
apark@agexinc.com
(510) 671-8620

 
 

Source: AgeX Therapeutics, Inc.

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