BioTime Reports Fourth Quarter and Fiscal 2017 Results

“2017 was a successful year for BioTime, capped by our recent European CE Mark submission of Renevia^® and approval by the DSMB to proceed with the initiation of Cohort 4 of the OpRegen^® clinical trial,” said Adi Mohanty, Co-Chief Executive Officer of BioTime. “We remain committed and focused on BioTime’s core pillars of clinical progress, simplification and unlocking value for our shareholders as we progress towards becoming a commercial stage company.”

Clinical Progress

Renevia^® (Facial Lipoatrophy)

• Submitted Renevia^® for CE Marking in Europe.
• Renevia^® met its primary endpoint in a European pivotal trial of HIV-associated lipoatrophy, which is a severe form of facial lipoatrophy. The primary endpoint was the change in hemifacial volume at six months in the treated patients compared to patients in the delayed treatment arm as measured by 3-D photographic volumetric assessment. On average, 5.1cc of hemifacial volume was measured after six months, which represents an approximate 100% retention of transplanted volume. There were no device-related serious adverse events noted during the trial.
• Additional Renevia^® data were presented from the successful pivotal trial at the International Federation for Adipose Therapeutics and Science conference. The Renevia^® data were presented by primary investigator Ramon Llull, MD, PhD, Director of Stem Europe Mallorca Center, Mallorca, Spain. As well as successfully meeting the primary endpoint, treated patients retained an average 70% of the transplanted volume at 12 months and 64% at 18 months.

OpRegen^® (dry-AMD)

• The independent Data Safety Monitoring Board (DSMB) approved initiation of the fourth cohort for the OpRegen^® clinical trial in patients in the advanced stage of the dry form of age-related macular degeneration or “dry-AMD.”
• BioTime completed enrollment of the third cohort of the OpRegen^® clinical trial.
• Positive OpRegen^® clinical trial data were presented at the Annual Meeting of the Association for Research in Vision and Ophthalmology in Baltimore, Maryland, by Eyal Banin, MD, PhD. Images presented at the meeting appeared to indicate that the transplanted OpRegen^® cells engrafted in an area of the scar that was completely depleted of retinal pigment epithelium cells. There were also some areas that appeared to show structural improvement suggesting possible evidence of a biological response, without any signs of retinal edema, a fluid build-up that can further compromise vision.
• BioTime expanded the OpRegen^® clinical trial to sites in the U.S., including Los Angeles and San Francisco, headed by two well-renowned physicians, David S. Boyer, MD of Retina-Vitreous Associates, and Dr. H. Richard McDonald of the West Coast Retina Medical Group.
• BioTime established an innovative cell therapy manufacturing facility in Jerusalem, Israel. This state-of-the-art cGMP manufacturing facility is located in the Jerusalem Bio Park on the campus of the Hadassah University Hospital. It is equipped to produce OpRegen^® and a range of cell therapy products for human use in clinical trials as well as at a grade suitable for commercial production.
• BioTime was awarded a new $2 million grant from the Israel Innovation Authority (IIA) for further development of OpRegen^®. To date, the IIA has provided grants to BioTime totaling approximately $12 million.

Retinal Restoration

• BioTime was awarded a grant of up to $1.56 million from the Small Business Innovation Research program of the National Institutes of Health for the development of next generation vision restoration therapies.
• BioTime expanded its ophthalmology portfolio with technology for next generation retinal disease therapies, including composition and methodologies to develop 3-D retinal tissue from human pluripotent stem cells for implantation in patients with advanced stages of retinal degeneration.

Corporate Highlights

• BioTime formed a new subsidiary, AgeX Therapeutics, Inc., to advance programs focused on degenerative diseases of aging. AgeX consolidated certain BioTime and subsidiary programs in the field of interventional gerontology. The formation of AgeX is a further step toward the implementation of BioTime’s strategy to simplify its corporate structure and operations as well as focus resources on the continued clinical development of its two lead programs: Renevia^® and OpRegen^®.
• AgeX raised net proceeds of $10 million, valuing AgeX at approximately $68 million post-money. BioTime now owns approximately 85% of the outstanding shares of AgeX. The financing is expected to fund AgeX’s general operations and product development well into 2019. BioTime had previously planned to spend more than $5 million annually on these programs and associated operational expenses.
• The BioTime Board of Directors agreed in principle to distribute some or all of the AgeX shares to BioTime shareholders. BioTime is working with investment banks and other financial institutions to finalize and implement the strategy for taking AgeX public, which may include a potential tax-free pro rata distribution of all of our AgeX shares to BioTime shareholders.
• BioTime increased its ownership of OpRegen^® through an equity swap that allowed BioTime to increase its ownership of its Israeli subsidiary, Cell Cure Neurosciences, Ltd. that leads the OpRegen^® development program. By acquiring the Cell Cure shares held by other Cell Cure shareholders, BioTime now owns nearly 99% of Cell Cure.
• BioTime successfully raised $49 million in gross proceeds from new and previous investors in two underwritten public offerings of its common shares.

Patent Portfolio

• BioTime successfully defended two key patents providing protection to OpRegen^®. The European Patent Office, in an opposition proceeding, ruled that two patents related to OpRegen^® are valid and remain in force as granted.
• BioTime was issued 41 new patents to expand and bolster its patent estate, including the patent estate covering OpRegen^® through 2031. These new patents add to the over 800 issued patents or pending patent applications that BioTime and its subsidiaries have invented or licensed worldwide. The patents have potential uses in many of BioTime’s programs, including therapeutic programs such as, OpRegen^®, or in processes such as cell culture methods being designed to enable robust manufacturing of pluripotent cells used in our therapeutic programs.

Fourth Quarter and Year-End Financial Results

Cash Position and Marketable Securities: Cash, cash equivalents and available-for-sale securities totaled $38.2 million as of December 31, 2017, compared to $18.2 million as of September 30, 2017. On October 17, 2017, BioTime completed a public offering of its common shares in which it issued 11,057,693 shares for aggregate net cash proceeds of $26.7 million, after deducting commissions, discounts and estimated offering expenses.

Value of Holdings in Public Affiliates: At March 14, 2018, BioTime held common stock in publicly-traded affiliates valued at approximately $75 million. This amount was the market value of BioTime’s 21.7 million shares in Asterias Biotherapeutics (NYSE American: AST) and 14.7 million shares in OncoCyte (NYSE American: OCX).

Revenues: BioTime’s revenue is generated primarily from research grants, licensing fees and royalties, and subscription and advertising from the marketing of online database products. Total revenue was $1.0 million for the fourth quarter of 2017, compared to $1.1 million in the fourth quarter of 2016. Total revenues for 2017 were $3.5 million compared to $5.9 million for 2016, with $2.3 million of the decrease being attributable to the deconsolidation of Asterias.

Operating Expenses: Total operating expenses for the fourth quarter of 2017 were $10.5 million. On an adjusted basis, operating expenses were $7.8 million, of which $6.2 million was mainly attributable to BioTime clinical programs, while $1.7 million in expenses were related to AgeX. Total operating expenses for 2017 were $43.9 million. Adjusted operating expenses were $34.6 million for this period, including $24.4 million spent on BioTime clinical programs, while $7.9 million in expenses were related to AgeX.

R&D Expenses: Fourth quarter research and development expenses were $4.7 million, compared to $7.0 million for the comparable period in 2016, with $1.4 million of the decrease being attributable to the deconsolidation of OncoCyte, and $0.7 million of the decrease being attributable to the wind-down of LifeMap Solutions operations, which ceased conducting its mobile health software application business, after certain assets were sold and the corporate entity was subsequently dissolved. Total research and development expenses for 2017 were $24.0 million compared to $36.1 million for 2016, a decrease of $12.1 million primarily attributable to the deconsolidation of Asterias and OncoCyte. The decrease in research and development expenses was partially offset by an increase in OpRegen^® and Renevia^® related expenses.

G&A Expenses: Fourth quarter general and administrative expenses were $5.8 million compared to $5.3 million for the comparable period in 2016. Total general and administrative expenses for 2017 were $19.9 million compared to $28.4 million for 2016. The year over year decrease in general and administrative expenses is primarily attributable to the deconsolidation of Asterias and OncoCyte. The total decrease was offset by an increase in BioTime general and administrative expenses primarily related to increases in compensation and related expenses, including stock-based compensation, from the hire of additional key personnel, increased public company compliance costs, and other general operating expenses.

The reconciliation between GAAP and non-GAAP operating expenses by entity, is provided in the financial tables included with this earnings release.

Net Income or loss attributable to BioTime: Fourth quarter net loss attributable to BioTime was $71.9 million, or $0.58 per share compared to net loss of $5.1 million, or $0.05 per share for the fourth quarter of 2016. For 2017, net loss attributable to BioTime was $20.0 million, or $0.17 per share, compared to net income of $33.6 million, or $0.35 per basic common share for 2016. Results in each period were primarily driven by noncash deconsolidation gains and noncash gains and losses in the changes in market values of the Asterias and OncoCyte shares held by BioTime.

Conference Call and Webcast Details

BioTime will host a conference call and webcast today, March 15, 2018 at 1:30pm PT/4:30pm ET to discuss results and corporate developments. The conference call dial-in number in the U.S./Canada is 1-866-888-8633. For international participants outside the U.S./Canada, the dial-in number is 1-636-812-6629. For all callers, please refer to Conference ID number 5878807. The live webcast can be accessed on the “Events & Presentations” page of the “Investors & Media” section on the company’s website.

A replay of the conference call will be available for seven business days beginning about two hours after the conclusion of the live call, by calling toll-free from U.S./Canada: 1-855-859-2056; international callers dial 1-404-537-3406. Use the Conference ID number 5878807. Additionally, the archived webcast will be available on the “Events & Presentations” page of the “Investors & Media” section on the company’s website.