Filing summary
Issuer discrepancy: The supplied filing is AgeX Therapeutics, Inc.’s Form 10-Q for the quarter ended March 31, 2022; it does not identify Serina Therapeutics, Inc. as the issuer.
Business context and reporting period
AgeX is a preclinical biotechnology company developing cell-based and regenerative therapies for age-related and degenerative diseases. Its platforms and programs include PureStem, UniverCyte, AGEX-BAT1, AGEX-VASC1 and induced tissue regeneration (iTR). The filing covers the three months ended March 31, 2022; financial statement amounts below are in thousands of dollars unless stated otherwise.
AgeX reduced its workforce and closed its laboratory facilities, relying instead on outsourced research and development and pursuing licensing arrangements. LifeMap Sciences was sold and deconsolidated in March 2021, so the prior-year comparison includes its results through March 15, 2021 in discontinued operations and is not fully comparable.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $5 | $56 |
| Gross profit | $4 | $53 |
| Research and development expense | $396 | $324 |
| General and administrative expense | $1,660 | $2,022 |
| Net loss attributable to AgeX | $2,706 | $2,088 |
| Basic and diluted loss per share | $0.07 | $0.06 |
| Net cash used in operating activities | $1,636 | $2,630 |
Revenue fell mainly because the NIH grant was fully expended by year-end 2021; AgeX recognized no grant revenue in Q1 2022 versus $46 in Q1 2021. R&D expense increased 22%, primarily from scientific consulting and university-sponsored research. G&A fell 18%, principally due to lower legal and consulting fees. Net loss increased, reflecting higher interest expense and the prior-year PPP loan-forgiveness gain; the 2021 period also included a $106 gain on LifeMap deconsolidation and $103 loss from discontinued operations.
At March 31, 2022, cash and cash equivalents were $448, down from $584 at December 31, 2021; cash, cash equivalents and restricted cash totaled $498. Total assets were $2,716, total liabilities $14,307, and stockholders’ deficit $11,591. The balance sheet reported Juvenescence loans, net of debt issuance costs, of $6,657 current and $4,208 noncurrent. Operating cash use was partly funded by $1,500 of financing cash inflow; investing cash flow was zero. The filing does not provide a meaningful operating margin given the very small revenue base and continuing operating losses.
Debt, liquidity and material changes
On February 14, 2022, AgeX refinanced its 2019 Juvenescence facility and entered a secured convertible note facility of up to $13,160. It initially drew $8,160, including $7,160 used to repay the prior facility and its origination fee; the remaining commitment was subject to Juvenescence’s approval. At March 31, the company reported $5,000 of remaining availability. The note matures February 14, 2024, carries origination fees in lieu of interest, is secured by substantially all AgeX assets, and includes debt, use-of-proceeds and other restrictions. Juvenescence also holds conversion rights and warrants; 5,230,768 warrants had been issued by quarter-end.
After quarter-end, on April 4, AgeX borrowed another $1,000 and issued warrants for 568,440 shares at $0.88 per share. The filing says $4,000 of facility availability remained after that draw. AgeX also had $8,000 drawn under its 2020 Juvenescence loan agreement, due March 30, 2023.
Management states that available cash, potential remaining Juvenescence borrowings and possible ATM proceeds would not cover anticipated funding needs for the next 12 months. The filing therefore identifies substantial doubt about the company’s ability to continue as a going concern and says additional capital is needed. AgeX had an ATM facility, but sold no shares under it in Q1 2022. Equity or debt financing could dilute shareholders, impose restrictive terms, or be unavailable; the Juvenescence security interest and restrictions may also constrain financing options.
Outlook, risks and unusual items
- No quantified revenue, earnings or cash-flow guidance is provided. AgeX expects continuing operating losses and negative cash flows and says it needs near-term additional funding.
- AgeX expects initial work under its University of California, Irvine sponsored research agreement to conclude during 2022; the work had been slowed by COVID-19 safety procedures.
- Management warns that reduced internal R&D staffing and reliance on outsourced work may slow development and make financing more difficult. COVID-19, capital-market conditions, development risks and potential dilution are also cited risks.
- AgeX reported a $1,615 Level 3 warrant liability at quarter-end and an $87 loss from fair-value changes during the quarter.
- NYSE American had accepted AgeX’s compliance plan addressing listing-standard deficiencies, with a stated deadline of June 17, 2023; the exchange reviews progress quarterly. The filing says failure to meet listing standards could lead to delisting proceedings.
- The company reported no material litigation, no off-balance-sheet arrangements, and no material changes to its risk factors beyond the added financing and going-concern discussion.
Most important facts to verify
- Confirm the intended issuer: the provided filing is for AgeX Therapeutics, not Serina Therapeutics.
- Review the going-concern disclosure, cash runway assumptions and any subsequent financing or liquidity updates.
- Confirm the current Juvenescence loan balance, remaining availability, collateral terms, covenants, and conversion and warrant-related dilution exposure.
- Check progress against the NYSE American compliance plan and any subsequent listing-status notices.
- Account for the LifeMap Sciences deconsolidation when comparing Q1 2022 results with Q1 2021.