Business context and reporting period
Issuer mismatch: The request identifies Serina Therapeutics, Inc., but the supplied filing is AgeX Therapeutics, Inc.’s Form 10-Q for the quarter ended March 31, 2020. This summary covers the supplied AgeX filing.
AgeX is a biotechnology company developing therapeutics for aging and degenerative diseases, including brown-fat and induced tissue regeneration programs. It also earns subscription and advertising revenue through majority-owned LifeMap Sciences, which provides biomedical databases and tools.
Financial results and condition
Amounts below are in millions of dollars, except per-share data and percentages.
| Metric | Q1 2020 | Q1 2019 / prior date |
|---|---|---|
| Revenue | $0.515 | $0.388 |
| Gross profit / margin | $0.481 / 93.4% | $0.325 / 83.8% |
| Research and development | $1.603 | $1.338 |
| General and administrative | $2.073 | $2.109 |
| Operating loss | $(3.195) | $(3.122) |
| Net loss attributable to AgeX | $(3.187) | $(3.133) |
| Loss per share, basic and diluted | $(0.08) | $(0.09) |
| Operating cash used | $(2.064) | $(2.618) |
| Cash and cash equivalents, March 31 | $0.468 | $2.352 at Dec. 31, 2019 |
| Total assets / total liabilities, March 31 | $5.092 / $5.467 | $7.442 / $4.825 at Dec. 31, 2019 |
| Stockholders’ equity (deficit), March 31 | $(0.375) | $2.617 at Dec. 31, 2019 |
Q1 revenue growth reflected higher NIH grant revenue ($86,000 versus $15,000) and other revenue ($91,000 versus $28,000); subscription and advertising revenue was slightly lower ($338,000 versus $345,000). The $91,000 of other revenue was non-recurring service revenue. Cost of sales fell to $34,000 from $63,000, primarily due to lower fixed royalties.
R&D expense rose 19.8%, primarily from scientific consultants, laboratory costs, personnel, and depreciation and amortization; lower Lineage shared-service fees partly offset the increases. G&A decreased 1.7%. Cash used in operations improved year over year, but cash and cash equivalents fell by $1.884 million during the quarter. The cash-flow statement reports $0.568 million of cash, cash equivalents and restricted cash at quarter-end; the balance sheet separately reports $0.468 million of cash and cash equivalents.
Financing, outlook, and material risks
- Going concern: AgeX reported an accumulated deficit of $89.4 million and said available cash, the Juvenescence facility and PPP proceeds would not be sufficient for anticipated funding needs over the next 12 months. Management stated that substantial additional funding is needed; the filing identifies substantial doubt about the company’s ability to continue as a going concern.
- Juvenescence financing: AgeX had drawn $2.0 million under its August 2019 facility by March 31; the balance sheet classifies approximately $1.767 million, net of debt issuance costs, as current and $1.528 million as noncurrent at December 31, 2019. A new $8.0 million, 18-month facility was entered into March 30, 2020, but advances beyond the initial $500,000 are at Juvenescence’s discretion. AgeX drew $500,000 on April 1. Further draws can trigger security over substantially all assets, subsidiary guarantees, share issuance and warrants; the facility also restricts certain borrowing and transactions.
- Subsequent financing: AgeX obtained a $432,952 PPP loan on April 13, 2020, at 1% interest, with potential forgiveness subject to program requirements; forgiveness was not assured.
- Cost reductions and programs: Following a strategic review amid COVID-19-related capital-market conditions, AgeX initiated layoffs affecting 12 employees, primarily R&D personnel. It had paid about $105,000 in accrued payroll and benefits and expected approximately $194,800 of second-quarter restructuring charges. Management expected lower future operating expenses, but said the cuts defer in-house development work on product candidates and iTR technology pending funding.
- Other obligations and contingencies: The office and laboratory sublease expires December 31, 2020; future minimum lease payments were $333,000 before imputed interest. AgeX reported no material litigation known to it. It disclosed no off-balance-sheet arrangements.
Most important facts for investors to verify
- Confirm the issuer: the supplied filing is for AgeX Therapeutics, not Serina Therapeutics.
- Assess runway against the going-concern disclosure, including the difference between balance-sheet cash and cash-flow cash including restricted cash.
- Verify availability and conditions of further Juvenescence advances, collateral and guarantee triggers, repayment terms, and potential dilution from conversion shares and warrants.
- Track PPP loan forgiveness, second-quarter restructuring costs, and the timing and scope of deferred R&D programs.
- Evaluate whether recurring subscription revenue, grants, partnerships, licensing, or new capital can support operations beyond the stated funding horizon.