Business context and reporting period
Entity mismatch: The supplied filing is AgeX Therapeutics, Inc.’s Form 10-Q for the quarter ended March 31, 2023, not a Serina Therapeutics filing. AgeX is a biotechnology company developing regenerative and cell-based therapies. The filing discusses a potential merger with Serina, but no definitive merger agreement had been negotiated or approved.
Financial results and position
Amounts below are in millions of dollars unless stated otherwise; the filing presents financial statements in thousands.
- Revenue: $0.010, compared with $0.005 in Q1 2022; gross profit was $0.009 versus $0.004.
- Operating costs and loss: Research and development expense was $0.174, down 56% year over year; general and administrative expense was $1.993, up 20%. Operating loss was $2.158, compared with $2.052.
- Net loss: $3.285, or $0.09 per share, versus $2.707, or $0.07 per share. Net interest expense rose to $1.100 from $0.571.
- Cash flow: Operating activities used $1.865, compared with $1.636. Investing activities used $10.000, entirely for the loan to Serina; financing provided $11.500 from Juvenescence. Cash, cash equivalents and restricted cash decreased $0.365 to $0.330.
- Liquidity and debt: At March 31, cash and cash equivalents were $0.280 and current liabilities were $22.525. Juvenescence loans were $30.053 net of debt issuance costs ($20.042 current and $10.011 non-current). Total liabilities were $32.536, and stockholders’ deficit was $20.005.
- Serina note receivable: AgeX lent Serina $10.000 in March at 7% annual interest, due March 15, 2026, with conversion provisions tied to future financing events. The note is a material asset relative to AgeX’s reported cash.
Changes versus the prior comparable period
Revenue increased by $0.005 from a very low base. Lower R&D expense was more than offset by higher G&A expense, including legal and consulting costs related to potential Serina merger due diligence. Net loss increased $0.578, primarily alongside higher interest expense and debt-cost amortization. Operating cash use increased $0.229. The $10.000 Serina loan and associated $10.000 Juvenescence borrowing were new in Q1 2023.
Outlook, risks and unusual items
- Going concern: Management said available cash, Juvenescence credit and potential ATM proceeds would not cover anticipated requirements for the next 12 months and concluded substantial doubt existed about AgeX’s ability to continue as a going concern. Additional capital is needed.
- Financing dependence: AgeX relies primarily on Juvenescence, its largest stockholder. Its loans are secured by substantially all AgeX assets and include covenants and restrictions; further borrowing is subject to Juvenescence’s discretion. Debt conversion and warrants could dilute shareholders.
- Subsequent financing: AgeX drew the remaining $1.000 then available under its secured facility on April 4, 2023. On May 9, Juvenescence agreed to make an additional $4.000 available, subject to its approval and funding of each draw.
- Restructuring uncertainty: The contemplated AgeX-Serina merger and Reverse Bio financing/spinoff were not definitive or approved; neither transaction was assured. AgeX’s $10.000 Serina loan was funded with a secured Juvenescence loan.
- Listing risk: AgeX disclosed an NYSE American deficiency notice received April 20, 2023, with a May 17, 2023 compliance deadline and possible delisting proceedings. AgeX said it intended to arrange quotation on an interdealer system if delisted.
- Development and financing risks: AgeX’s reduced workforce and outsourced R&D approach may slow development and make fundraising harder. The filing also cites regulatory, market, dilution and financing risks. No material litigation was reported.
Important facts for investors to verify
- Confirm the intended issuer: this filing is for AgeX Therapeutics, not Serina Therapeutics.
- Check subsequent filings for the status and terms of any AgeX-Serina merger, and whether the Serina note was converted, repaid or impaired.
- Verify actual Juvenescence facility draws, outstanding balances, maturities, collateral and any additional warrant or share issuance.
- Review AgeX’s cash runway, subsequent financing and progress toward resolving its NYSE American listing deficiencies.
- Assess whether the proposed Reverse Bio financing or spinoff proceeded and how it affected AgeX’s assets and ownership.