ALAMEDA, Calif.--(BUSINESS WIRE)--AgeX Therapeutics, Inc. (“AgeX”: NYSE American: AGE), a biotechnology company focused on developing and commercializing innovative cellular and regenerative therapeutics for diseases of old age, reported financial and operating results for the fourth quarter and year ended December 31, 2018.
“2018 has been a transformative year for AgeX. We became a public company, listed on the NYSE American, and made progress toward becoming a leader in the cell therapy and longevity sectors,” said Michael D. West, Ph.D., Chief Executive Officer. “One highlight was that we acquired an immune tolerance technology, UniverCyte™, with the potential to produce hypoimmunogenic cells for new therapies. Considering the number of high-profile publications and deals in this space, we would expect this platform to hold us in good stead for both our current product development programs and the potential for third party collaborations. We think this technology could help us deliver nearer and longer term value to our stockholders.”
“AgeX has both exciting cell- and iTR™-based platforms. Using UniverCyte™ in combination with our pluripotent stem cell-based PureStem® cell derivation and manufacturing technology, we aim to generate universal, off-the-shelf cells for therapeutic products with reduced COGS,” said Greg Bailey, M.D., Chairman of the AgeX Board of Directors. “Our goal is to overcome key industry barriers to successful development and commercialization of cellular therapies, including immune rejection, high manufacturing costs, and a service-based business model.”
Additional Recent Highlights
- Secured $5M strategic investment from Juvenescence in June 2018.
- Received approximately $3.2M from the sale of Ascendance Biotechnology, a non-core asset.
- Received $4.5M from the exercise of warrants in March 2019.
- Secured $386,000 in non-dilutive funding in the form of a grant award from the National Institutes of Health.
- Made progress in moving our preclinical cellular and iTR™ programs forward, as reflected in part by our papers published in peer-reviewed scientific journals: Stem Cell Research & Therapy, related to our brown adipose tissue cell therapy program AGEX-BAT1 for metabolic disorders such as Type II Diabetes and obesity, and Oncotarget, identifying genes implicated in tissue regeneration and cancer, in support of our iTR™ program
- Appointed seasoned biotech investor Gregory Bailey, M.D., as Chairman of the Board. Dr. Bailey is the CEO of Juvenescence, AgeX’s largest shareholder, and was an initial financier and board member of Medivation, Inc. which went public and later was acquired by Pfizer for $14.3Bn.
- Appointed experienced life science thought leader, Dr. Annalisa Jenkins, to the Board. Dr. Jenkins previously served as President and CEO of Dimension Therapeutics, a leading gene therapy company, and had prior global R&D leadership roles at Merck Serono and Bristol Myers-Squibb.
- Appointed John F. Mauldin to the Board, a well-known financial writer, publisher, and New York Times best-selling author. Mr. Mauldin appears regularly on CNBC, Yahoo Tech Ticker, and Bloomberg TV. Mr. Mauldin serves as Chairman of Mauldin Economics, an investment newsletter and information publishing firm.
- Appointed Dr. Nafees Malik, a specialist in the strategy, execution and commercialization of cell therapies as Chief Operating Officer. Dr. Malik also serves as the Head of Cellular Therapy at Juvenescence. His prior roles have spanned clinical medicine, healthcare investment banking and biopharmaceutical companies.
Balance Sheet Highlights
Cash and cash equivalents totaled $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.
Fourth Quarter and Annual 2018 Operating Results
Revenues: Total Revenues for the fourth quarter of 2018 were $0.3 million as compared to $0.5 million in the comparable quarter in 2017. Total revenues for the year ended 2018 were $1.4 million, relatively unchanged as compared to 2017. AgeX revenues were primarily generated by its subsidiary LifeMap Sciences, Inc. as subscription and advertising revenues from its GeneCards® online database.
Operating expenses: Operating expenses for the three months ended December 31, 2018, were $3.5 million, as reported, which was comprised of $2.9 million for AgeX and $0.6 million for LifeMap Sciences, and were $2.5 million, as adjusted, comprised of $2.0 million for AgeX and $0.5 million for LifeMap Sciences.
Operating expenses for 2018 were $12.3 million, as reported, which was comprised of $10.0 million for AgeX and $2.3 million for LifeMap Sciences, and were $9.5 million, as adjusted, comprised of $7.6 million for AgeX and $1.9 million for LifeMap Sciences.
The reconciliation between GAAP and non-GAAP operating expenses is provided in the financial tables included with this earnings release.
R&D Expenses: R&D expenses for the year ended December 31, 2018 were $6.6 million, compared to $5.8 million for 2017. The increase was mainly attributable to an increase in our R&D spending in our PureStem progenitor cell lines, brown adipose fat, iTR technology programs and a nonrecurring expense of $800,000 to acquire certain in-process R&D.
G&A Expenses: General and administrative expenses for the three months ended December 31, 2018 increased by $1.3 million to $2.0 million as compared to $0.7 million in 2017. General and administrative expenses for the year ended December 31, 2018 increased by $1.7 million to $5.6 million as compared to $3.9 million in 2017. The increases were mainly attributable to financial reporting, compliance, legal and other expenses incurred in becoming a public company, and increase in non-cash stock-based compensation expense due to increased stock option grants.
Other Income, net: We received approximately $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 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 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 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.
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AGEX THERAPEUTICS, INC. AND SUBSIDIARIES |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(IN THOUSANDS) |
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| December 31, | ||||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 6,707 | $ | 7,375 | ||||
| Accounts and grants receivable, net | 131 | 107 | ||||||
| Prepaid expenses and other current assets | 1,015 | 111 | ||||||
| Total current assets | 7,853 | 7,593 | ||||||
| Equipment and furniture, net | 90 | 129 | ||||||
| Deposits and other long-term assets | 19 | 35 | ||||||
| Intangible assets, net | 2,709 | 1,874 | ||||||
| TOTAL ASSETS | $ | 10,671 | $ | 9,631 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued liabilities | $ | 1,416 | $ | 768 | ||||
| Related party payables to BioTime and Juvenescence | 82 | 210 | ||||||
| Deferred revenues | 317 | 180 | ||||||
| Other current liabilities | 625 | 154 | ||||||
| TOTAL LIABILITIES | 2,440 | 1,312 | ||||||
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Commitments and contingencies |
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| STOCKHOLDERS’ EQUITY | ||||||||
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Preferred stock, $0.0001 par value, authorized 5,000 shares; none issued and outstanding as of December 31, 2018 and 2017 |
- | - | ||||||
| Common shares, $0.0001 par value, 100,000 shares authorized; 35,830 and 33,750 shares issued and outstanding as of December 31, 2018 and 2017, respectively | 4 | 3 | ||||||
| Additional paid-in capital | 81,499 | 73,761 | ||||||
| Accumulated other comprehensive income (loss) | (2 | ) | 68 | |||||
| Accumulated deficit | (74,054 | ) | (66,552 | ) | ||||
| AgeX Therapeutics, Inc. stockholders’ equity | 7,447 | 7,280 | ||||||
| Noncontrolling interest | 784 | 1,039 | ||||||
| Total stockholders’ equity | 8,231 | 8,319 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 10,671 | $ | 9,631 | ||||
| AGEX THERAPEUTICS, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (IN THOUSANDS, EXCEPT PER SHARE DATA) | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| REVENUES: | ||||||||||||||||
| Subscription and advertisement revenues | $ | 282 | $ | 455 | $ | 1,227 | $ | 1,399 | ||||||||
| Service and other revenues | 11 | 3 | 149 | 5 | ||||||||||||
| Grant revenues | 20 | - | 20 | - | ||||||||||||
| Total revenues | 313 | 458 | 1,396 | 1,404 | ||||||||||||
| Cost of sales | (180 | ) | (54 | ) | (364 | ) | (168 | ) | ||||||||
| Gross profit | 133 | 404 | 1,032 | 1,236 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Research and development | (1,523 | ) | (1,267 | ) | (5,830 | ) | (5,784 | ) | ||||||||
| Acquired in-proces research and development | - | - | (800 | ) | - | |||||||||||
| General and administrative | (1,968 | ) | (695 | ) | (5,647 | ) | (3,869 | ) | ||||||||
| Total operating expenses | (3,491 | ) | (1,962 | ) | (12,277 | ) | (9,653 | ) | ||||||||
| Gain on sale of assets | - | - | - | 1,754 | ||||||||||||
| Loss from operations | (3,358 | ) | (1,558 | ) | (11,245 | ) | (6,663 | ) | ||||||||
| OTHER INCOME/(EXPENSES): | ||||||||||||||||
| Interest income (expense), net | 32 | 16 | 116 | (12 | ) | |||||||||||
| Gain on sale of equity method investment in Ascendance | - | - | 3,215 | - | ||||||||||||
| Other income (expense), net | 52 | (2 | ) | 183 | 38 | |||||||||||
| Total other income, net | 84 | 14 | 3,514 | 26 | ||||||||||||
| NET LOSS | (3,274 | ) | (1,544 | ) | (7,731 | ) | (6,637 | ) | ||||||||
| Net loss attributable to noncontrolling interest | 88 | 37 | 229 | 57 | ||||||||||||
| NET LOSS ATTRIBUTABLE TO AGEX | $ | (3,186 | ) | $ | (1,507 | ) | $ | (7,502 | ) | $ | (6,580 | ) | ||||
| NET LOSS PER COMMON SHARE: BASIC AND DILUTED | $ | (0.09 | ) | $ | (0.04 | ) | $ | (0.21 | ) | $ | (0.21 | ) | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: BASIC AND DILUTED | 35,830 | 33,750 | 34,914 | 30,644 | ||||||||||||
| AGEX THERAPEUTICS, INC. AND SUBSIDIARIES | ||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(IN THOUSANDS) |
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| Year Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss attributable to AgeX | $ | (7,502 | ) | $ | (6,580 | ) | ||
| Net loss attributable to noncontrolling interest | (229 | ) | (57 | ) | ||||
| 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 | ) |
- |
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| Acquired in-process research and development | 800 |
- |
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| Depreciation expense | 58 | 165 | ||||||
| Amortization of intangible assets | 477 | 517 | ||||||
| Amortization of deferred license fees | - | 17 | ||||||
| Gain on sale of assets | - | (1,754 | ) | |||||
| Stock-based compensation | 1,285 | 114 | ||||||
| Stock-based compensation allocated from BioTime | 184 | 411 | ||||||
| Subsidiary stock-based compensation | 4 | 227 | ||||||
| Bad debt expense | - | (121 | ) | |||||
| Foreign currency remeasurement (gain) and other | (68 | ) | - | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and other receivables | (24 | ) | 322 | |||||
| Prepaid expenses and other current assets | (293 | ) | 10 | |||||
| Accounts payable and accrued liabilities | 648 | 267 | ||||||
| Related party payable to BioTime | (128 | ) | - | |||||
| Deferred revenues | 137 | (84 | ) | |||||
| Other | (129 | ) | 261 | |||||
| Net cash used in operating activities | (7,995 | ) | (6,285 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Proceeds from the sale of equity method investment in Ascendance | 3,215 | - | ||||||
| Purchase of in-process research and development | (1,872 | ) | - | |||||
| Purchase of equipment and other assets | (21 | ) | (1 | ) | ||||
| Removal of cash upon deconsolidation of LifeMap Solutions | - | (3 | ) | |||||
| Security deposit received and other, net | 5 | 9 | ||||||
| Net cash provided by investing activities | 1,327 | 5 | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Contributions from BioTime | - | 1,971 | ||||||
| Advances from BioTime | - | 1,304 | ||||||
| Proceeds from sale of common shares | 5,000 | 10,000 | ||||||
| Proceeds from sale of warrants | 1,000 | - | ||||||
| Net cash provided by financing activities | 6,000 | 13,275 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | - | 121 | ||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (668 | ) | 7,116 | |||||
| CASH AND CASH EQUIVALENTS: | ||||||||
| Beginning of year | 7,375 | 259 | ||||||
| End of year | $ | 6,707 | $ | 7,375 | ||||
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.
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AGEX THERAPEUTICS, INC. AND SUBSIDIARIES |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURE |
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ADJUSTED OPERATING EXPENSES |
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Amounts In Thousands | |||||||
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For the Three Months Ended |
For the Year Ended |
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| GAAP Operating Expenses - as reported | $ | 3,491 | $ | 12,277 | ||||
| Stock-based compensation expense (1) | (797 | ) | (1,473 | ) | ||||
| Depreciation and amortization expense (1) | (150 | ) | (535 | ) | ||||
| Acquired in-process research and development expense (2) | - | (800 | ) | |||||
| Non-GAAP Operating Expenses, as adjusted | $ | 2,544 | $ | 9,469 | ||||
| GAAP Operating Expenses - by entity | ||||||||
| AgeX and subsidiaries other than LifeMap Sciences (3) | $ | 2,897 | $ | 9,946 | ||||
| LifeMap Sciences, Inc. and subsidiary (4) | 594 | 2,331 | ||||||
| GAAP Operating Expenses - by entity | $ | 3,491 | $ | 12,277 | ||||
| Non-GAAP Operating Expenses - as adjusted, by entity | ||||||||
| AgeX and subsidiaries other than LifeMap Sciences | $ | 2,066 | $ | 7,589 | ||||
| LifeMap Sciences, Inc. and subsidiary | 478 | 1,880 | ||||||
| Non-GAAP Operating Expenses - as adjusted, by entity | $ | 2,544 | $ | 9,469 | ||||
| (1) | Noncash charges | |
| (2) | AgeX acquired certain in-process research and development 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. | |
