Filing summary
Entity identification: The supplied filing is AgeX Therapeutics, Inc.’s Form 10-Q for the quarter ended September 30, 2020—not a filing identified as Serina Therapeutics, Inc. The figures below summarize the filing actually provided. Dollar amounts are in thousands unless stated otherwise.
Business context and reporting period
AgeX is a biotechnology company developing cell-based and regenerative therapies for age-associated and degenerative diseases. Its platforms include PureStem, UniverCyte, AGEX-BAT1, AGEX-VASC1 and induced tissue regeneration technology. Its largest revenue source was LifeMap Sciences’ biomedical research databases and related services. The report covers the three and nine months ended September 30, 2020; the financial statements are unaudited.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $434 | $411 | $1,363 | $1,179 |
| Gross profit | $384 | $362 | $1,243 | $1,014 |
| Gross margin | 88.5% | 88.1% | 91.2% | 86.0% |
| Operating expenses | $2,788 | $3,641 | $9,467 | $10,857 |
| Operating loss | $(2,404) | $(3,279) | $(8,224) | $(9,843) |
| Net loss attributable to AgeX | $(2,543) | $(3,221) | $(8,419) | $(9,443) |
| Basic and diluted loss per share | $(0.07) | $(0.09) | $(0.22) | $(0.25) |
- Nine-month operating cash used was $6,197, versus $7,749 in 2019. Investing cash used was $20; financing cash provided was $4,969. Cash, cash equivalents and restricted cash ended the period at $1,207. The balance sheet separately reports cash and cash equivalents of $1,107.
- At September 30, cash and cash equivalents were $1,107, current assets $1,929, and current liabilities $4,854. Total assets were $4,203, total liabilities $7,949, and stockholders’ deficit $3,746. The filing reports Juvenescence loans, net of issuance costs, totaling $4,979 on the balance sheet; the PPP loan balance was $435.
- The company reported an accumulated deficit of $94.6 million. Management said cash and potential Juvenescence borrowing available at the time would not cover anticipated funding requirements for the next 12 months, raising substantial doubt about the company’s ability to continue as a going concern.
Material changes versus the prior comparable period
- Nine-month revenue increased 15.6%, driven by higher grant revenue and other revenue; subscription and advertising revenue rose 5.2%. Q3 revenue increased 5.6%.
- Nine-month operating expenses declined 12.8%, with research and development down 14.5% and general and administrative expenses down 11.6%. Management attributed reductions in part to staff cuts and the end of Lineage shared-facility services. The nine-month net loss attributable to AgeX narrowed to $8,419 from $9,443, although Q3 net loss attributable to AgeX increased to $2,543 from $3,221? The filing’s statements show Q3 2019 attributable loss of $3,221, so Q3 loss narrowed in 2020.
- Interest expense increased: net interest expense was $288 for the first nine months, compared with $53 of net interest income in 2019. Gross profit improved, reflecting increased revenue and lower nine-month cost of sales, including lower fixed GeneCards royalties.
- Cash declined from $2,352 at December 31, 2019 to $1,107 at September 30, 2020. Total liabilities rose from $4,825 to $7,949, while stockholders’ equity of $2,617 became a deficit of $3,746.
Outlook, risks, contingencies and unusual items
- Funding and going concern: AgeX expects continuing operating losses and negative cash flows and said it needs additional capital in the near term. Further advances under the Juvenescence facility are discretionary, and the company reported no other committed financing source. Funding shortfalls could force it to reduce, delay or suspend operations or research and development.
- Borrowings and dilution: The March 2020 Juvenescence facility provides for up to $8 million, subject to conditions and lender discretion. AgeX had drawn $4.5 million by September 30 and issued warrants and shares as part of the financing. On November 9, it borrowed a further $1 million, bringing facility borrowings to $5.5 million, and issued warrants to purchase 280,898 shares. The filing describes potential dilution and the possibility of Juvenescence acquiring majority ownership if stockholders approve specified conversions or warrant exercises.
- Cost reductions and programs: April 2020 staff reductions affected 11 research and development employees. Management said the lower spending would extend available resources but would require deferring some development work. Restructuring charges were approximately $195, with substantially all expected to be settled in cash.
- COVID-19: Remote work, social-distancing measures and possible employee absences could disrupt operations. Management said the pandemic’s financial effects were uncertain and could also impair access to capital.
- NYSE American listing: The exchange notified AgeX that it failed continued-listing standards based on stockholders’ equity below $2 million and recent losses. The exchange accepted a compliance plan with a deadline of December 1, 2021, subject to quarterly review; failure to show progress or meet the standards could lead to delisting. AgeX said it intended to arrange OTC quotation if delisted.
- LifeMap: LifeMap had not generated sufficient revenue to cover operating expenses, terminated its TGex software license and was exploring a sale of the company or its assets. No sale or proceeds were assured.
- Other items: The PPP loan was $435 at period-end, bears 1% interest and may be forgiven in whole or part, but forgiveness was not assured. The office and laboratory sublease expired December 31, 2020; a subsequent filing note reports a small office lease beginning January 1, 2021. AgeX said it knew of no claims likely to materially adversely affect its financial condition or results.
Most important facts for investors to verify
- Confirm the intended issuer: the provided 10-Q is for AgeX Therapeutics, not Serina Therapeutics.
- Review subsequent financing, remaining Juvenescence facility availability and conditions, debt maturities, and the dilution and control implications of shares and warrants.
- Assess cash runway against management’s explicit going-concern warning and the stated need for additional funding.
- Track NYSE American compliance-plan progress and any delisting developments.
- Verify whether the PPP loan was forgiven and whether LifeMap’s proposed sale or asset disposition generated proceeds.
- Evaluate how staffing reductions and deferred development work affect product-candidate timelines and the company’s operating plan.