AgeX Therapeutics, Inc. (“AgeX”; NYSE American: AGE), a
biotechnology company developing therapeutics for human aging and
regeneration, reported financial and operating results for the
second quarter ended June 30, 2020.
AgeX made strides with respect to its newly established
licensing and collaboration model, which aims to embed its
technology platforms across the cell therapy industry. AgeX has
entered into a research license for the use of its immunotolerance
UniverCyteTM technology by Sernova Corp. (“Sernova”), a
publicly-listed Canadian regenerative medicine therapeutics
company. It also entered a Manufacturing, Marketing, and
Distribution Agreement with Pluristyx, Inc. (“Pluristyx”), an
advanced therapy tools and services company serving customers in
the fields of regenerative medicine and cellular and gene
therapies. In addition, AgeX signed a letter of intent with ImStem
Biotechnology (“ImStem”), for ImStem to utilize AgeX’s ESI-brand
pluripotent stem cells to derive a cell therapy product for
potential use in the treatment of COVID-19 and as well acute
respiratory distress syndrome (ARDS) from non-COVID-19 causes.
“We are working diligently to position our subsidiary Reverse
Bioengineering to optimize the potential of induced tissue
regeneration (iTR) technology,” said Michael West, CEO of AgeX. “We
believe this technology offers a powerful new modality to treat
age-related degenerative diseases by reversing developmental aging
in a tissue, thereby unlocking an innate capacity of tissues to
regenerate scarlessly.”
AgeX completed its restructuring to streamline its operations to
allow efficient usage of capital in the current pandemic
environment as well to meet near-term strategic company priorities
of deriving value and generating preclinical and ultimately
clinical data from our technology platforms through external
licensing and collaboration agreements. In the longer-term, AgeX
remains committed to in-house product development of AgeX-BAT1 and
AgeX-VASC1. AgeX is considering options to bring capital into the
company.
“AgeX has made excellent progress in terms of its collaboration
and licensing model, closing five deals since the beginning of the
year so far,” said Greg Bailey M.D., Chairman of AgeX. “The deals
have spanned all three of our technology platforms of UniverCyte
for the generation of universal cells, PureStem for the derivation
and manufacturing of therapeutic cells, and AgeX ESI pluripotent
stem cells to act as a source material for cellular therapies. All
these deals show the value industry and academia see in our
offerings.”
Q2 Highlights
- AgeX entered into a research license with Sernova Corp. in
which Sernova will utilize AgeX’s UniverCyteTM gene technology to
generate immune-protected universal therapeutic cells for use in
combination with Sernova’s Cell PouchTM for the treatment of type I
diabetes and hemophilia A. The goal is to eliminate the need for
immunosuppressive medications following cellular transplantation.
Sernova has been granted a time-limited, non-exclusive research
license by AgeX. A commercial license for Sernova to utilize
UniverCyte for therapeutic and commercial purposes may be
negotiated pending successful study outcomes. UniverCyte uses a
proprietary, novel, modified form of HLA-G, a potent
immunomodulatory molecule, which protects an unborn child from
their mother’s immune system. In almost all human cells, native
HLA-G expression is silenced after birth. AgeX’s modified HLA-G
shows evidence of being resistant to this silencing, hence
potentially allowing for long-term, stable and high expression.
Sernova is a Canadian regenerative medicine therapeutics
company.
- AgeX and ImStem Biotechnology, Inc. signed a non-binding letter
of intent for ImStem to obtain from AgeX a non-exclusive license to
use AgeX’s embryonic stem cell line ESI 053 to derive ImStem’s
investigational mesenchymal stem cell (MSC) product IMS001 for
development in COVID-19 as well as ARDS due to other causes. AgeX
and ImStem are cooperating to finalize financial terms and other
provisions of a license agreement. ImStem has previously used AgeX
ESI 053 to derive its IMS001 product. Earlier this year, the U.S.
Food and Drug Administration (FDA) cleared IMS001 to begin a Phase
1 clinical study in patients with multiple sclerosis. This is
believed to be the first MSC product derived from human embryonic
stem cells to be accepted for a clinical trial by the FDA. ImStem
is a biopharmaceutical company developing human embryonic stem
cell-derived mesenchymal stem cells.
- AgeX entered into a Manufacturing, Marketing and Distribution
Agreement with Pluristyx, Inc. under which Pluristyx will perform
certain services to manufacture, market and distribute on AgeX’s
behalf, research-grade and clinical-grade AgeX ESI brand human
pluripotent stem cells for therapeutic applications. This agreement
allows industry and academia access to current Good Manufacturing
Practice (cGMP)-grade, National Institutes of Health
(NIH)-registered AgeX ESI cell lines. AgeX ESI cells are among only
a few pluripotent stem cell lines from which derived cell therapy
candidates have been granted FDA investigational new drug (IND)
clearance to begin human trials. Academic and biopharma
organizations will need to obtain separate commercial licenses from
AgeX in order to advance their cellular product candidates
generated from AgeX ESI cell lines into human clinical trials and
commercialization. Pluristyx is an advanced therapy tools and
services company serving customers in the fields of regenerative
medicine and cellular and gene therapies.
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
August 14, 2020, AgeX has borrowed $3.5 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 and June 30, 2020 filed
with the Securities and Exchange Commission on March 30, 2020, May
14, 2020, and August 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 bears 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 Paycheck Protection
Program (“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 believes that it has used 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
In May 2020, AgeX laid off 11 research and development personnel
and consequently paid approximately $105,000 in accrued payroll and
unused paid time off and other benefits and recognized
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
have been 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 under the New
Loan Agreement will be subject to Juvenescence’s discretion, AgeX
believes that its cash and cash equivalents, the remaining $5.5
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 six months ended June 30, 2020. These factors
raise substantial doubt regarding the ability of AgeX to continue
as a going concern.
Second Quarter 2020 Operating Results
Revenues: Total revenues for the second quarter of 2020 were
$414,000 as compared with $380,000 for the second 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 $36,000 of allowable expenses under its
research grant from the NIH as compared with $47,000 in the same
period in 2019.
Operating expenses: Operating expenses for the three months
ended June 30, 2020 were $3.0 million as compared to $3.8 million
for the same period in 2019. On an as-adjusted basis, operating
expenses for the three months ended June 30, 2020 were $2.5 million
as compared to $3.1 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 decreased by $0.3 million to
$1.4 million during the three months ended June 30, 2020 from $1.7
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 decrease in shared services from 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 $0.4 million to
$1.7 million during the three months ended June 30, 2020 from $2.1
million during the same period in 2019 despite 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 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 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 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. In addition, with respect to AgeX’s Manufacturing,
Marketing and Distribution Agreement with Pluristyx there is no
assurance that (i) Pluristyx will generate significant sales of
AgeX ESI hESC lines, or (ii) AgeX will derive significant revenue
from sales of ESI hESC lines by Pluristyx. 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, 2020
December 31, 2019
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
1,033
$
2,352
Accounts and grants receivable, net
235
363
Prepaid expenses and other current
assets
836
1,339
Total current assets
2,104
4,054
Property and equipment, net
681
1,126
Deposits and other long-term assets
100
111
Intangible assets, net
1,872
2,151
TOTAL ASSETS
$
4,757
$
7,442
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued
liabilities
$
1,771
$
1,582
Loan due to Juvenescence, net of debt
issuance cost, current portion
1,821
-
Related party payables, net
142
64
Deferred revenues
328
283
Right-of-use lease liability
218
428
Paycheck Protection Program Loan
434
-
Insurance premium liability and other
current liabilities
433
940
Total current liabilities
5,147
3,297
Loan due to Juvenescence, net of debt
issuance cost, net of current portion
1,732
1,528
TOTAL LIABILITIES
6,879
4,825
Commitments and contingencies (Note 9)
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, $0.0001 par value,
authorized 5,000 shares; none issued and outstanding as of June 30,
2020 and December 31, 2019
-
-
Common stock, $0.0001 par value, 100,000
shares authorized; 37,658 and 37,649 shares issued and outstanding
as of June 30, 2020 and December 31, 2019, respectively
4
4
Additional paid-in capital
89,555
88,353
Accumulated other comprehensive income
81
69
Accumulated deficit
(92,084
)
(86,208
)
AgeX Therapeutics, Inc. stockholders’
equity (deficit)
(2,444
)
2,218
Noncontrolling interest
322
399
Total stockholders’ equity (deficit)
(2,122
)
2,617
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
$
4,757
$
7,442
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,
2020
2019
2020
2019
REVENUES:
Subscription and advertisement
revenues
$
298
$
275
$
636
$
620
Grant revenues
36
47
122
62
Other revenues
80
58
171
86
Total revenues
414
380
929
768
Cost of sales
(36
)
(53
)
(70
)
(116
)
Gross profit
378
327
859
652
OPERATING EXPENSES:
Research and development
1,350
1,650
2,953
2,988
General and administrative
1,653
2,119
3,726
4,228
Total operating expenses
3,003
3,769
6,679
7,216
Loss from operations
(2,625
)
(3,442
)
(5,820
)
(6,564
)
OTHER INCOME/(EXPENSES):
Interest income (expense), net
(87
)
33
(139
)
45
Other income (expense), net
(19
)
257
6
229
Total other income (expense), net
(106
)
290
(133
)
274
NET LOSS BEFORE INCOME TAXES
(2,731
)
(3,152
)
(5,953
)
(6,290
)
Income tax provision
-
(3
)
-
(76
)
NET LOSS
(2,731
)
(3,155
)
(5,953
)
(6,366
)
Net loss attributable to noncontrolling
interest
42
66
77
144
NET LOSS ATTRIBUTABLE TO AGEX
$
(2,689
)
$
(3,089
)
$
(5,876
)
$
(6,222
)
NET LOSS PER COMMON SHARE:
BASIC AND DILUTED
$
(0.07
)
$
(0.08
)
$
(0.16
)
$
(0.17
)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
BASIC AND DILUTED
37,657
37,630
37,654
36,891
AGEX THERAPEUTICS, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended June
30,
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss attributable to AgeX
$
(5,876
)
$
(6,222
)
Net loss attributable to noncontrolling
interest
(77
)
(144
)
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
)
Depreciation expense
247
22
Amortization of intangible assets
279
279
Amortization of right-of-use asset
209
99
Amortization of debt issuance cost
130
-
Stock-based compensation
519
996
Foreign currency remeasurement gain (loss)
and other
44
49
Changes in operating assets and
liabilities:
Accounts and grants receivable, net
103
(77
)
Prepaid expenses and other current
assets
511
359
Accounts payable and accrued
liabilities
186
121
Related party payables
78
(71
)
Insurance premium liability
(473
)
(448
)
Deferred revenues and other
liabilities
(188
)
(63
)
Net cash used in operating activities
(4,308
)
(5,377
)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from the sale of equity method
investment in Ascendance
-
277
Security deposit paid
-
(77
)
Purchase of equipment and other
(8
)
(109
)
Net cash provided by (used in) investing
activities
(8
)
91
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from exercise of warrants
-
4,500
Draw down on loan facility from
Juvenescence
2,700
-
Proceeds from Paycheck Protection Program
Loan
433
-
Payment of debt related costs
(126
)
-
Repayment of financing lease liability
(15
)
(9
)
Net cash provided by financing
activities
2,992
4,491
Effect of exchange rate changes on cash
and cash equivalents
5
1
NET DECREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
(1,319
)
(794
)
CASH, CASH EQUIVALENTS AND RESTRICTED
CASH:
At beginning of the period
2,452
6,707
At end of the period
$
1,133
$
5,913
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
June 30,
For the Six Months Ended June
30,
2020
2019
2020
2019
GAAP Operating Expenses - as
reported
$ 3,003
3,769
$ 6,679
$ 7,216
Stock-based compensation expense (1)
(259)
(515)
(519)
(996)
Depreciation and amortization expense
(1)
(263)
(152)
(526)
(301)
Non-GAAP Operating Expenses, as
adjusted
$ 2,481
$ 3,102
$ 5,634
$ 5,919
GAAP Operating Expenses - by
entity
AgeX and subsidiaries other than LifeMap
Sciences (2)
$ 2,410
$ 3,176
$ 5,506
$ 6,036
LifeMap Sciences, Inc. and subsidiary
(3)
593
593
1,173
1,180
GAAP Operating Expenses - by
entity
$ 3,003
$ 3,769
$ 6,679
$ 7,216
Non-GAAP Operating Expenses - as
adjusted, by entity
AgeX and subsidiaries other than LifeMap
Sciences
$ 2,001
$ 2,624
$ 4,689
$ 4,969
LifeMap Sciences, Inc. and subsidiary
480
478
945
950
Non-GAAP Operating Expenses - as
adjusted, by entity
$ 2,481
$ 3,102
$ 5,634
$ 5,919
(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/20200814005442/en/
Contact for AgeX: Andrea Park apark@agexinc.com (510)
671-8620
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