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AgeX Therapeutics Reports First Quarter 2019 Financial Results and Provides Business Update

  • Published data in peer-reviewed scientific journal to advance
    potential cell therapy AgeX-BAT1 for Type II Diabetes and obesity
  • Received $4.5 million from the exercise of warrants in March 2019
  • Presented at four industry and investor conferences

ALAMEDA, Calif.–(BUSINESS WIRE)–AgeX
Therapeutics
, Inc. (“AgeX”: NYSE American: AGE), a biotechnology
company focused on therapeutics for human aging, reported financial and
operating results for the first quarter ended March 31, 2019.

“We are building AgeX into what we believe will be a leading company
focused on extending human healthspan, and we continued to make solid
progress toward that goal in the first quarter of the year,” said
Michael D. West, Ph.D., founder and Chief Executive Officer. “Among
other accomplishments, we published data in the peer-reviewed journal Stem
Cell Research & Therapy
relating to our product in
development for Type II diabetes designated AgeX-BAT1. Our paper
disclosed data on the purity and identity of the product manufactured
using our proprietary PureStem® technology. In addition, our
presentation of induced Tissue Regeneration (iTRTM)
technology in meetings around the world is generating excitement in the
aging research community as a novel strategy to not only restore
functionality to aged tissues, but also to reverse molecular markers of
aging.”

Additional Recent Highlights

  • Dr. West participated at four industry and investor conferences during
    the quarter. These included presentations at the Emerging
    Therapeutics Showcase
    at Precision Medicine World Congress (PMWC),
    January 20-23 in Silicon Valley, in a session chaired by MIT’s Feng
    Zhang; the Longevity
    Leaders Conference
    , February 4 in London, England; Undoing
    Aging
    , March 28-30 in Berlin, Germany; Master
    Investor Show
    , April 6, in London, England.
  • AgeX’s subsidiary LifeMap Sciences announced that Tianjin Novogene
    Medical Laboratory and Shanghai Shanyi have become distributors of
    LifeMap Sciences genomics technology software products in China.
  • AgeX received $4.5 million from the exercise of AgeX common stock
    warrants. Warrant holders purchased a total of 1,800,000 shares of
    AgeX common stock through the exercise of warrants.
  • Signed sublease for an office and research facility where AgeX will
    construct a modern, cGMP compliant, laboratory facility for the
    manufacture of cell lines and its cell-based product candidates.

Balance Sheet Highlights

Cash and cash equivalents totaled $8.6 million as of March 31, 2019, as
compared with $6.7 million as of December 31, 2018. AgeX strengthened
its balance sheet by $4.5 million in proceeds from warrant exercises in
March 2019.

First Quarter 2019 Operating Results

Revenues: Total Revenues for the first quarter of 2019 were
$388,000, as compared with $239,000 for the first quarter of 2018. AgeX
revenues are primarily generated by its subsidiary LifeMap Sciences,
Inc. as subscription and advertising revenues from its GeneCards®
online database.

Operating expenses: Operating expenses reported for the three
months ended March 31, 2019 were $3.4 million as compared to $3.7
million for the same period in 2018. On an as-adjusted basis, operating
expenses for the three months ended March 31, 2019 were $2.8 million as
compared to $2.5 million for the same period in 2018.

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

Research and development expenses and acquired in-process research and
development (“IPR&D”) decreased by $1.1 million to $1.3 million during
the three months ended March 31, 2019 from $2.4 million during the same
period in 2018. The decrease was primarily attributable to a decrease of
$0.3 million for programs utilizing PureStem® cell lines and
iTR technology and also the non-recurrence of in-process research and
development expense that was incurred during March 2018 in connection
with the purchase of certain assets primarily related to stem cell
derived cardiomyocytes (heart muscle cells) to be developed by us.

General and administrative expenses for the three months ended March 31,
2019 increased by $0.8 million to $2.1 million as compared to $1.3
million during the same period in 2018. This increase was primarily
attributable to the following increases in expenses: a $0.3 million of
noncash stock-based compensation expense; $0.2 million in insurance
premiums; $0.1 million in consulting, travel and related expenses; $0.1
million in legal and accounting expenses; and $0.1 million in patent and
license filing and maintenance related expenses.

Other Income, net: Other income in the first quarter of 2018 was
$3.2 million compared to an insignificant amount in the current quarter.
We received $3.2 million and recognized a gain on sale of our ownership
interest in Ascendance Biotechnology, Inc. when that company was
acquired by a third party 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 other reports 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, 2019 December 31, 2018
(Unaudited)
 
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 8,586 $ 6,707
Accounts and grants receivable, net 206 131
Prepaid expenses and other current assets   856     1,015  
Total current assets 9,648 7,853
 
Equipment and furniture, net 84 90
Deposits and other long-term assets 19 19
Intangible assets, net   2,570     2,709  
TOTAL ASSETS $ 12,321   $ 10,671  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,316 $ 1,366
Related party payables, net 140 132
Deferred revenues 361 317
Other current liabilities   477     625  
TOTAL LIABILITIES   2,294     2,440  
 
Commitments and contingencies
 
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, authorized 5,000 shares; none
issued and outstanding as of March 31, 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 March 31, 2019 and
December 31, 2018, respectively
4 4
Additional paid-in capital 86,480 81,499
Accumulated other comprehensive income (loss) 24 (2 )
Accumulated deficit   (77,187 )   (74,054 )
AgeX Therapeutics, Inc. stockholders’ equity 9,321 7,447
Noncontrolling interest   706     784  
Total stockholders’ equity   10,027     8,231  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 12,321   $ 10,671  
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
  Three Months Ended
March 31,
2019     2018
REVENUES:
Subscription and advertising revenues $ 345 $ 239
Grant and other revenues   43      
Total revenues 388 239
 
Cost of sales   (63 )   (109 )
 
Gross profit   325     130  
 
OPERATING EXPENSES:
Research and development (1,338 ) (1,591 )
Acquired in-process research and development (800 )
General and administrative   (2,109 )   (1,290 )
Total operating expenses   (3,447 )   (3,681 )
Loss from operations   (3,122 )   (3,551 )
 
OTHER INCOME/(EXPENSES):
Interest income, net 12 18
Gain on sale of equity method investment in Ascendance 3,215
Other expense, net   (28 )   (3 )
Total other income (expense), net   (16 )   3,230  
 
NET LOSS BEFORE INCOME TAXES (3,138 ) (321 )
Income tax provision   (73 )    
 
NET LOSS (3,211 ) (321 )
Net loss attributable to noncontrolling interest   78     86  
 
NET LOSS ATTRIBUTABLE TO AGEX $ (3,133 ) $ (235 )
 
NET LOSS PER COMMON SHARE: BASIC AND DILUTED $ (0.09 ) $ (0.01 )
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND
DILUTED
  36,143     33,750  
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
     
Three Months Ended
March 31,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss attributable to AgeX $ (3,133 ) $ (235 )
Net loss attributable to noncontrolling interest (78 ) (86 )
Adjustments to reconcile net loss attributable to AgeX to net cash
used in operating activities:
Gain on sale of equity method investment in Ascendance (3,215 )
Acquired in-process research and development 800
Depreciation expense 10 15
Amortization of intangible assets 139 107
Stock-based compensation 481 145
Stock-based compensation allocated from BioTime 88
Subsidiary stock-based compensation 2
Income tax provision 73
Foreign currency remeasurement loss and other 29
Changes in operating assets and liabilities:
Accounts and grants receivable, net (75 ) 53
Prepaid expenses and other current assets (64 ) (29 )
Accounts payable and accrued liabilities (52 ) 282
Related party payables 8 (150 )
Deferred revenues 44 150
Other current liabilities       68  
Net cash used in operating activities   (2,618 )   (2,005 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of equity method investment in Ascendance 3,215
Purchase of in-process research and development (800 )
Purchase of equipment and other   (3 )   (1 )
Net cash (used in) provided by investing activities   (3 )   2,414  
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants 4,500
Proceeds from sale of warrants       737  
Net cash provided by financing activities   4,500     737  
 
Effect of exchange rate changes on cash and cash equivalents       (1 )
 
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,879 1,145
 
CASH AND CASH EQUIVALENTS:
At beginning of the period   6,707     7,375  
At end of the period $ 8,586   $ 8,520  

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,
2019   2018
GAAP Operating Expenses – as reported $ 3,447   $ 3,681
Stock-based compensation expense (1) (481 ) (235 )
Depreciation and amortization expense (1) (149 ) (122 )
Acquired in-process research and development expense (2)         (800 )
Non-GAAP Operating Expenses, as adjusted $ 2,817     $ 2,524  
 
GAAP Operating Expenses – by entity
AgeX and subsidiaries other than LifeMap Sciences (3) $ 2,860 $ 3,094
LifeMap Sciences, Inc. and subsidiary (4)   587       587  
GAAP Operating Expenses – by entity $ 3,447     $ 3,681  
 
Non-GAAP Operating Expenses – as adjusted, by entity
AgeX and subsidiaries other than LifeMap Sciences $ 2,345 $ 2,052
LifeMap Sciences, Inc. and subsidiary   472       472  
Non-GAAP Operating Expenses – as adjusted, by entity $ 2,817     $ 2,524  
(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.

Contacts

Media Contact for AgeX:
Bill
Douglass

Gotham
Communications
, LLC
[email protected]
(646)
504-0890

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