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AgeX Therapeutics, Inc. Reports Second Quarter 2019 Financial Results and Provides Business Update

17:16 EDT 14 Aug 2019 | Businesswire
AgeX Therapeutics, Inc.
  • Moves into new San Francisco Bay Area R&D facility, comprising approximately 15,700-square-feet of office and lab space, including cGMP-capable manufacturing suite.
  • Strengthens leadership at Board level by appointment of regenerative medicine leader Dr. Michael H. May, CEO of Canada’s Centre for Commercialization of Regenerative Medicine (CCRM).
  • Begins work using synthetic biology approach to engineer pluripotent stem cell lines with immune tolerance UniverCyte technology to generate hypoimmunogenic (universal) cells.
  • CEO Dr. Michael D. West featured in cover story Special Report in New Scientist magazine, “A Cure for Aging?”

AgeX Therapeutics, Inc. (“AgeX”; NYSE American: AGE), a biotechnology company focused on the development of therapeutics for human aging, reported financial and operating results for the second quarter ended June 30, 2019.

“In the second quarter we executed the complete relocation of our facilities including the construction of cGMP-capable therapeutics manufacturing space. We plan to utilize this new capability to produce clinical-grade master cell banks using our UniverCyte technology, as well as AGEX-BAT1 and AGEX-VASC1 that may be used in the future in clinical trials,” said Michael D. West, Ph.D., founder and Chief Executive Officer. “In addition, we have prioritized the advancement of our induced Tissue Regeneration (iTR) technology which is increasingly recognized by the industry as a potentially transformative platform technology for the treatment of human aging. Our appointment of Dr. Michael May to our Board of Directors will contribute to attaining our goal of leading the industry in the field of the biotechnology of aging. Lastly, we appreciate the support of our largest shareholder Juvenescence, Limited that provided a $2 million loan facility demonstrating their continued support of our product development. We are fortunate to have Juvenescence, which itself has raised over $110 million since 2017, as our key backer.”

“This is an exceptionally exciting time for us as we work toward our goal of becoming a leading biotechnology company in cellular therapies and human aging,” commented Greg Bailey, M.D., Chairperson of the Board of Directors. “Our commitment to this goal is demonstrated by us taking up residence in our new R&D facility as well as making progress in our work to engineer hypoimmunogenic cells and to move our other programs forward.”

Additional Recent Highlights

  • AgeX moved into a new San Francisco Bay Area R&D facility, comprising approximately 15,700-square-feet of office and lab space, located at 965 Atlantic Avenue Suite 101, Alameda, CA 94501. The new facility will house the company’s current staff and can accommodate for significant future growth. Good Manufacturing Practice (cGMP) production capability has been established at the new facility with two additional clean environmental space laboratories.
  • Dr. West and AgeX featured in a cover story in New Scientist magazine. The influential British science magazine’s Special Report, “A Cure for Aging?” ran in the April 27th issue.
  • The Company participated at three industry and investor conferences during the quarter. These included a presentation by Dr. West at Undoing Aging in Berlin, Germany, on AgeX’s regenerative medicine product development. At the conference, Dr. West also presented data relating to the central molecular clockwork mechanisms that AgeX is targeting with its induced iTR program. Additionally, during the quarter the company presented at Master Investor Show 2019 in London and Biotech Investing in Longevity in San Francisco.
  • AgeX entered into a Loan Facility Agreement with Juvenescence Limited, providing AgeX with a $2 million line of credit over the next 18 months to advance product development.

Balance Sheet Highlights

Cash, cash equivalents, and restricted cash totaled $5.9 million as of June 30, 2019, as compared with $8.6 million as of the end of the previous quarter.

Second Quarter 2019 Operating Results

Revenues: Total revenues for the three months ended June 30, 2019 were $380,000, as compared with $464,000 in the same period in 2018. AgeX revenues are primarily generated from subscription and advertising revenues from the GeneCards® online database through its subsidiary LifeMap Sciences, Inc. 2019 revenues also included approximately $47,000 of allowable expenses under its research grant from the NIH. AgeX had no grant revenues in the same period in 2018.

Operating expenses: Operating expenses for the three months ended June 30, 2019 were $3.8 million, as compared with $2.5 million for the same period in 2018. On an as-adjusted basis, operating expenses for the three months ended June 30, 2019 were $3.0 million as compared to $2.2 million for the same period in 2018.

The reconciliation between operating expenses determined in accordance with accounting principles generally accepted in the United States (GAAP) and operating expenses, as adjusted, a non-GAAP measure, is provided in the financial tables included at the end of this press release.

Research and development expenses for the three months ended June 30, 2019 were $1.7 million, as compared with $1.4 million in the same period in 2018. The increase was primarily attributable to an increase in expenses in AgeX programs utilizing PureStem® cell lines and iTR technology.

General and administrative expenses for the three months ended June 30, 2019 were $2.1 million, as compared with $1.1 million in the same period in 2018.

Net loss attributable to AgeX: The net loss attributable to AgeX for the three months ended June 30, 2019 was $3.1 million, or ($0.08) per share (basic and diluted) compared to $1.9 million, or ($0.06) per share (basic and diluted), for the same period in 2018.

About AgeX Therapeutics

AgeX Therapeutics, Inc. (NYSE American: AGE) is focused on developing and commercializing innovative therapeutics for human aging. Its PureStem® and UniverCytemanufacturing 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 is developing its core product pipeline for use in the clinic to extend human healthspan, and is seeking opportunities to establish licensing and collaboration arrangements around its broad IP estate and proprietary technology platforms.

For more information, please visit www.agexinc.com or connect with the company on Twitter, 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 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)

 

 

 

June 30, 2019

 

 

December 31, 2018

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

5,813

 

 

$

6,707

 

Accounts and grants receivable, net

 

 

208

 

 

 

131

 

Prepaid expenses and other current assets

 

 

659

 

 

 

1,015

 

Total current assets

 

 

6,680

 

 

 

7,853

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

951

 

 

 

90

 

Deposits and other long-term assets

 

 

196

 

 

 

19

 

Intangible assets, net

 

 

2,430

 

 

 

2,709

 

TOTAL ASSETS

 

$

10,257

 

 

$

10,671

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

1,584

 

 

$

1,366

 

Related party payables, net

 

 

62

 

 

 

132

 

Deferred revenues

 

 

266

 

 

 

317

 

Right-of-use lease liability, current portion

 

 

407

 

 

 

-

 

Insurance premium liability and other current liabilities

 

 

310

 

 

 

625

 

Total current liabilities

 

 

2,629

 

 

 

2,440

 

 

 

 

 

 

 

 

 

 

Right-of-use lease liability, net of current portion

 

 

221

 

 

 

-

 

TOTAL LIABILITIES

 

$

2,850

 

 

$

2,440

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, authorized 5,000 shares; none issued and outstanding as of June 30, 2019 and December 31, 2018

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value, 100,000 shares authorized; 37,630 and 35,830 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

86,975

 

 

 

81,499

 

Accumulated other comprehensive income (loss)

 

 

44

 

 

 

(2

)

Accumulated deficit

 

 

(80,276

)

 

 

(74,054

)

AgeX Therapeutics, Inc. stockholders’ equity

 

 

6,747

 

 

 

7,447

 

Noncontrolling interest

 

 

660

 

 

 

784

 

Total stockholders’ equity

 

 

7,407

 

 

 

8,231

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

10,257

 

 

$

10,671

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

(UNAUDITED)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

REVENUES:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and advertising revenues

 

$

305

 

 

$

333

 

 

$

650

 

 

$

572

 

Grant revenues

 

 

47

 

 

 

-

 

 

 

62

 

 

 

-

 

Other revenues

 

 

28

 

 

 

131

 

 

 

56

 

 

 

131

 

Total revenues

 

 

380

 

 

 

464

 

 

 

768

 

 

 

703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

(53

)

 

 

(79

)

 

 

(116

)

 

 

(188

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

327

 

 

 

385

 

 

 

652

 

 

 

515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(1,650

)

 

 

(1,384

)

 

 

(2,988

)

 

 

(2,975

)

Acquired in-process research and development

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(800

)

General and administrative

 

 

(2,119

)

 

 

(1,135

)

 

 

(4,228

)

 

 

(2,425

)

Total operating expenses

 

 

(3,769

)

 

 

(2,519

)

 

 

(7,216

)

 

 

(6,200

)

Loss from operations

 

 

(3,442

)

 

 

(2,134

)

 

 

(6,564

)

 

 

(5,685

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME/(EXPENSES):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

33

 

 

 

27

 

 

 

45

 

 

 

45

 

Gain on sale of equity method investment in Ascendance

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,215

 

Other income, net

 

 

257

 

 

 

156

 

 

 

229

 

 

 

153

 

Total other income, net

 

 

290

 

 

 

183

 

 

 

274

 

 

 

3,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE INCOME TAXES

 

 

(3,152

)

 

 

(1,951

)

 

 

(6,290

)

 

 

(2,272

)

Income tax provision

 

 

(3

)

 

 

-

 

 

 

(76

)

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

(3,155

)

 

 

(1,951

)

 

 

(6,366

)

 

 

(2,272

)

Net loss attributable to noncontrolling interest

 

 

66

 

 

 

21

 

 

 

144

 

 

 

107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS ATTRIBUTABLE TO AGEX

 

$

(3,089

)

 

$

(1,930

)

 

$

(6,222

)

 

$

(2,165

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER COMMON SHARE: BASIC AND DILUTED

 

$

(0.08

)

 

$

(0.06

)

 

$

(0.17

)

 

$

(0.06

)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED

 

 

37,630

 

 

 

34,225

 

 

 

36,891

 

 

 

34,004

 

AGEX THERAPEUTICS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

 

 

 

Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss attributable to AgeX

 

$

(6,222

)

 

$

(2,165

)

Net loss attributable to noncontrolling interest

 

 

(144

)

 

 

(107

)

Adjustments to reconcile net loss attributable to AgeX to net cash used in operating activities:

 

 

 

 

 

 

 

 

Gain on sale of equity method investment in Ascendance

 

 

(277

)

 

 

(3,215

)

Acquired in-process research and development

 

 

-

 

 

 

800

 

Depreciation expense

 

 

22

 

 

 

25

 

Amortization of intangible assets

 

 

279

 

 

 

214

 

Amortization of right-of-use asset

 

 

99

 

 

 

-

 

Stock-based compensation

 

 

996

 

 

 

312

 

Stock-based compensation allocated from BioTime

 

 

-

 

 

 

150

 

Subsidiary stock-based compensation

 

 

-

 

 

 

4

 

Foreign currency remeasurement gain (loss) and other

 

 

49

 

 

 

(51

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts and grants receivable, net

 

 

(77

)

 

 

(17

)

Prepaid expenses and other current assets

 

 

359

 

 

 

(92

)

Accounts payable and accrued liabilities

 

 

121

 

 

 

150

 

Related party payables

 

 

(71

)

 

 

(156

)

Insurance premium liability

 

 

(448

)

 

 

-

 

Deferred revenues and other current liabilities

 

 

(63

)

 

 

(18

)

Net cash used in operating activities

 

 

(5,377

)

 

 

(4,166

)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from the sale of equity method investment in Ascendance

 

 

277

 

 

 

3,215

 

Purchase of in-process research and development

 

 

-

 

 

 

(800

)

Security deposit paid

 

 

(77

)

 

 

-

 

Purchase of equipment and other

 

 

(109

)

 

 

(13

)

Net cash provided by investing activities

 

 

91

 

 

2,402

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common shares

 

 

-

 

 

 

5,000

 

Proceeds from exercise of warrants

 

 

4,500

 

 

 

-

 

Repayment of financing lease liabilities

 

 

(9

)

 

 

-

 

Proceeds from sale of warrants

 

 

-

 

 

 

737

 

Net cash provided by financing activities

 

 

4,491

 

 

 

5,737

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

1

 

 

 

7

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

 

(794

)

 

 

3,980

 

 

 

 

 

 

 

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

 

 

 

 

 

 

 

 

At beginning of the period

 

 

6,707

 

 

 

7,375

 

At end of the period

 

$

5,913

 

 

$

11,355

 

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

 

 

For the Three Months Ended
June 30,

For the Six Months Ended
June 30,

 

2019

(unaudited)

2018

(unaudited)

2019

(unaudited)

2018

(unaudited)

GAAP Operating Expenses - as reported

$

3,769

$

2,519

$

7,216

$

6,200

Stock-based and other noncash compensation expense (1)

 

(515)

 

(231)

 

(996)

 

(466)

Amortization of right-of-use assets (1)

 

(99)

 

-

 

(99)

 

-

Depreciation and amortization expense (1)

 

(152)

 

(117)

 

(301)

 

(239)

Acquired AgeX in-process research and development expense (2)

 

-

 

-

 

-

 

(800)

Non-GAAP Operating Expenses, as adjusted

$

3,003

$

2,171

$

5,820

$

4,695

 

 

 

 

 

 

 

GAAP Operating Expenses - by entity

 

 

 

 

 

 

 

AgeX and subsidiaries other than LifeMap Sciences (3)

$

3,176

$

1,929

$

6,036

$

5,023

LifeMap Sciences, Inc. and subsidiary (4)

 

593

 

590

 

1,180

 

1,177

GAAP Operating Expenses - by entity

$

3,769

$

2,519

$

7,216

$

6,200

 

 

 

 

 

 

 

Non-GAAP Operating Expenses - as adjusted, by entity

 

 

 

 

 

 

 

AgeX and subsidiaries other than LifeMap Sciences (3)

$

2,525

$

1,690

$

4,870

$

3,742

LifeMap Sciences, Inc. and subsidiary (4)

 

478

 

481

 

950

 

953

Non-GAAP Operating Expenses - as adjusted, by entity

$

3,003

$

2,171

$

5,820

$

4,695

(1)

Noncash charges

(2)

AgeX acquired and expensed certain in-process research and development technology in March 2018, considered to be a nonrecurring item.

(3)

AgeX Therapeutics, Inc. includes ReCyte Therapeutics, Inc., a majority-owned and consolidated subsidiary.

(4)

LifeMap Sciences Inc. includes LifeMap Sciences Ltd., both consolidated subsidiaries of AgeX Therapeutics, Inc.

 

Media Contact for AgeX:
Bill Douglass
Gotham Communications, LLC
bill@gothamcomm.com
(646) 504-0890

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