Filing identity and reporting period
This is AgeX Therapeutics, Inc.’s Form 10-Q for the quarter ended June 30, 2021, not a filing by Serina Therapeutics, Inc. The financial figures below are in thousands of dollars unless noted. AgeX is an early-stage biotechnology company developing cell-based therapies and regenerative technologies; its programs are preclinical.
Financial performance and liquidity
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| Revenue | $37 | $45 | $93 | $134 |
| Gross profit | $24 | $42 | $77 | $130 |
| Net loss | $(2,475) | $(2,731) | $(4,571) | $(5,953) |
| Net loss attributable to AgeX | $(2,474) | $(2,689) | $(4,562) | $(5,876) |
| Basic and diluted loss per share | $(0.07) | $(0.07) | $(0.12) | $(0.16) |
Gross margin was approximately 65% for Q2 2021 versus 93% in Q2 2020, and 83% for the first half of 2021 versus 97% for the first half of 2020. Grant revenue fell, while other revenue increased from a small base. The filing reports no Q2 2021 revenue from LifeMap Sciences, which was sold and deconsolidated in March.
For the first half of 2021, cash used in operating activities was $4.324 million, including $4.234 million from continuing operations. Investing activities provided $416,000 net, mainly from LifeMap sale proceeds; financing activities provided $3.996 million net. Cash and cash equivalents at June 30 were $615,000 ($665,000 including restricted cash), compared with $527,000 at December 31, 2020.
At June 30, total assets were $2.541 million and total liabilities were $10.835 million, with stockholders’ deficit of $8.294 million. Current assets of $1.556 million were below current liabilities of $5.271 million. Juvenescence loans were reported at $9.124 million net of debt issuance costs ($3.560 million current and $5.564 million long-term); the company stated it had drawn $11 million in principal under the loan facilities by June 30. The $433,000 PPP loan was forgiven in February, producing a reported gain of approximately $437,000 including accrued interest.
Material changes and unusual items
- AgeX completed the sale of LifeMap Sciences on March 15, 2021, received approximately $466,400 in merger proceeds, collected $250,000 of intercompany debt, and converted $1.761 million of LifeMap debt into LifeMap shares before closing. AgeX recorded a $106,000 deconsolidation gain. LifeMap results are presented as discontinued operations; its prior-period results affect comparability.
- Six-month R&D expense fell 62.7% to $805,000, primarily following the 2020 reduction of 11 R&D staff and the closure of the laboratory at lease expiry. Six-month G&A expense increased 12.5% to $3.770 million, including higher legal, consulting, patent and licensing, and insurance costs.
- AgeX raised approximately $496,000 gross ($481,000 net) through its at-the-market offering during the first half. It had an ATM authorization of up to $12.6 million; management cited up to $12.1 million of potential remaining proceeds.
- AgeX regained compliance with NYSE American continued-listing standards on April 15, 2021, but remained subject to monitoring.
Outlook, risks and contingencies
Management expects continued operating losses and negative cash flows and stated that available cash, potential Juvenescence advances, and potential ATM proceeds would not cover anticipated funding needs for the 12 months following the filing. The filing therefore identifies substantial doubt about AgeX’s ability to continue as a going concern. AgeX said it needs additional capital in the near term and has no other committed financing source. A further $1 million was borrowed from Juvenescence on July 12, 2021.
Further Juvenescence advances are discretionary, and the loan arrangements may restrict other borrowing and certain transactions; the lender may require security over company assets. Debt conversion, warrants, or additional equity financing could dilute existing shareholders. Management also cited risks from COVID-19, capital-market access, and delays to research: work under a University of California, Irvine sponsored research agreement was slowed, with initial work expected to conclude during 2022. The company reported no material litigation known to it. It changed its independent accounting firm following OUM & Co.’s practice combination with Withum in July 2021.
Key facts for investors to verify
- Confirm the intended issuer: the supplied filing is for AgeX Therapeutics, not Serina Therapeutics.
- Review the going-concern disclosure, cash runway assumptions, and availability and terms of additional Juvenescence funding.
- Verify debt maturities, including the amended 2019 facility’s February 2022 repayment date, and the effect of the July 2021 borrowing.
- Assess dilution exposure from the ATM offering, loan-conversion rights, and Juvenescence warrants.
- Account for the LifeMap disposition and discontinued-operations presentation when comparing periods and evaluating ongoing revenue sources.
- Check development-program progress and the operational consequences of staff reductions and laboratory closure.