AgeX Therapeutics Reports Fourth Quarter and Annual 2019 Financial Results and Provides Business Update

• Entered research collaboration with Japanese biopharma company to generate hypoimmunogenic cells
• Formed collaboration with UC Irvine on neural stem cell research program for Huntington’s disease and other neurological disorders
• First ever clearance of cell therapy derived from AgeX’s embryonic stem cells by FDA to enter clinical trials
• Published data in an Elsevier journal on successful age reprogramming of super-centenarian cells

ALAMEDA, Calif.--(BUSINESS WIRE)--Mar. 30, 2020-- AgeX Therapeutics, Inc. (“AgeX”; NYSE American: AGE), a biotechnology company developing therapeutics for human aging and regeneration, reported its financial and operating results for the fourth quarter and year-end results for 2019.

Additional Recent Highlights

• AgeX entered into a research collaboration with a Japanese biopharma company to generate hypoimmunogenic cells. This represents the first research collaboration for AgeX’s immunotolerance UniverCyte^TM technology platform, marking the launch of its new business development and collaboration strategy. UniverCyte has the potential to deliver therapeutic cells without the need for immunosuppressive therapy.
• AgeX entered into a sponsored research agreement with the University of California at Irvine for the derivation of neural stem cells using AgeX’s PureStem technology for Huntington’s Disease and potentially other neurological conditions. The collaboration builds on UC Irvine’s research in neural stem cell transplantation for Huntington’s disease, including safety and efficacy animal data, which may support an IND submission as early as 2021.
• AgeX’s embryonic stem cell line ESI-053 has been used by ImStem Biotechnology for the derivation of mesenchymal stem cells (MSCs). ImStem received FDA IND clearance to begin a clinical trial of MSCs in multiple sclerosis. This marks the first-ever clearance of a cell therapy derived from AgeX’s embryonic stem cells by the FDA to enter human studies.
• AgeX researchers and others published a scientific paper on the age reprogramming of super-centenarian cells in the peer-reviewed scientific journal Biochemical and Biophysical Research Communications from Elsevier, describing the conversion of cells of one of the longest-lived people in history, a deceased 114-year-old American woman, to a young pluripotent state. The research helps pave the way to understanding how “extreme agers” manage to avoid the major chronic illnesses of aging.
• U.S. Patent number 10,501,723 was issued for generating induced pluripotent stem (iPS) cells. The patent broadly describes multiple techniques for reprogramming cells of the body back to the all-powerful stem cell state.

Balance Sheet Information

Cash, and cash equivalents, and restricted cash totaled $2.5 million as of December 31, 2019, as compared with $6.7 million as of December 31, 2018.

AgeX is in need of additional capital to finance its operations. On March 30, 2020, AgeX entered into a Secured Convertible Facility Agreement (the “Loan Facility”) with Juvenescence Limited pursuant to which AgeX may borrow funds from time to time. Loans from Juvenescence in excess of an initial $500,000 advance will be subject to Juvenescence’s discretion. If AgeX makes a second $500,000 draw under the Loan Facility, it will be required to implement a cost reduction plan that will entail significant reductions in staffing and research and development activities, and if a third advance of funds is approved by Juvenescence, AgeX and certain of its subsidiaries will be required to enter into a Security and Pledge Agreement pursuant to which they will pledge substantially all of their assets to collateralize all loans drawn under the Loan Facility. AgeX will issue stock purchase warrants to Juvenescence based on the amount of loans Juvenescence makes, and will issue 28,500 shares of AgeX common stock to Juvenescence if Juvenescence lends AgeX $3 million in the aggregate. Juvenescence will also have the right to convert outstanding loan balances into shares of AgeX common stock at market prices. More information about the Loan Facility can be found in AgeX’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

As required under Accounting Standards Update 2014-15, Presentation of Financial Statements-Going Concern (ASC 205-40), AgeX evaluates whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date its financial statements are issued. Based on AgeX’s most recent projected cash flows, and considering that loans from Juvenescence in excess of an initial $500,000 advance under the Loan Facility will be subject to Juvenescence’s discretion, AgeX believes that its cash and cash equivalents and a $500,000 loan under the Loan Facility would not be sufficient to satisfy its anticipated operating and other funding requirements for the twelve months following the filing of the Form 10-K. These factors raise substantial doubt regarding the ability of AgeX to continue as a going concern, and the report of AgeX’s independent registered public accountants accompanying the audited financial statements in AgeX’s Annual Report on Form 10-K contains a qualification to such effect.

Fourth Quarter and Annual 2019 Operating Results

Revenues: Total Revenues for the fourth quarter of 2019 were $0.5 million as compared to $0.3 million in the comparable quarter in 2018. Total revenues for the year ended December 31, 2019 were $1.73 million, as compared with $1.4 million in the same period in 2018, representing an increase of approximately 24%. AgeX revenue is primarily generated from subscription and advertising revenues from the GeneCards^® online database through its subsidiary LifeMap Sciences, Inc. Revenues for the year ended December 31, 2019 also included approximately $180,000 of allowable expenses under its research grant from the NIH as compared with $20,000 in the same period in 2018.

Operating expenses: Operating expenses for the three months ended December 31, 2019, were $3.2 million, as reported, which was comprised of $2.7 million for AgeX and $0.5 million for LifeMap Sciences, and were $2.5 million, as adjusted, comprised of $2.1 million for AgeX and $0.4 million for LifeMap Sciences.

Operating expenses for the full year 2019 were $14.0 million, as reported, which was comprised of $11.8 million for AgeX and $2.2 million for LifeMap Sciences, and were $11.2 million, as adjusted, comprised of $9.4 million for AgeX and $1.8 million for LifeMap Sciences.

Research and development expenses for the year ended December 31, 2019 decreased by $0.7 million to $5.9 million compared to $6.6 million in 2018. The decrease was mainly attributable to a nonrecurring expense of $800,000 to acquire certain in-process R&D in 2018.

General and administrative expenses for the year ended December 31, 2019 increased by $2.5 million to $8.1 million as compared with $5.6 million for 2018. The increases were mainly attributable to increased professional fees for consulting and accounting, insurance premiums, facilities related expenses, and non-cash stock-based compensation expense due to increased stock option grants. In April 2019 AgeX moved into its own facilities and terminated its shared facilities and services arrangement with Lineage Cell Therapeutics, Inc. (formerly BioTime, Inc.). Consequently AgeX now incurs the full cost of its facilities and finance and administrative personnel.

The reconciliation between operating expenses determined in accordance with accounting principles generally accepted in the United States (GAAP) and operating expenses, as adjusted, a non-GAAP measure, is provided in the financial tables included at the end of this press release.

Other income, net: Other income for the year ended December 31, 2019 was $0.3 million, as compared with $3.5 million in the same period in 2018. The decrease is entirely attributable to a nonrecurring $3.2 million gain on sale of our ownership interest in Ascendance Biotechnology, Inc. when that company was acquired by a third party in 2018.

Net loss attributable to AgeX: The net loss attributable to AgeX for the year ended December 31, 2019 was $12.2 million, or ($0.33) per share (basic and diluted) compared to $7.5 million, or ($0.21) per share (basic and diluted), for the same period in 2018.

About AgeX Therapeutics

AgeX Therapeutics, Inc. (NYSE American: AGE) is focused on developing and commercializing innovative therapeutics for human aging. Its PureStem^® and UniverCyte^™ manufacturing and immunotolerance technologies are designed to work together to generate highly defined, universal, allogeneic, off-the-shelf pluripotent stem cell-derived young cells of any type for application in a variety of diseases with a high unmet medical need. AgeX has two preclinical cell therapy programs: AGEX-VASC1 (vascular progenitor cells) for tissue ischemia and AGEX-BAT1 (brown fat cells) for Type II diabetes. AgeX’s revolutionary longevity platform induced Tissue Regeneration (iTR™) aims to unlock cellular immortality and regenerative capacity to reverse age-related changes within tissues. AGEX-iTR1547 is an iTR-based formulation in preclinical development. HyStem^® is AgeX’s delivery technology to stably engraft PureStem cell therapies in the body. AgeX is developing its core product pipeline for use in the clinic to extend human healthspan, and is seeking opportunities to establish licensing and collaboration arrangements around its broad IP estate and proprietary technology platforms.

For more information, please visit www.agexinc.com or connect with the company on Twitter, LinkedIn, Facebook, and YouTube.

Forward-Looking Statements

Certain statements contained in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not historical fact including, but not limited to statements that contain words such as “will,” “believes,” “plans,” “anticipates,” “expects,” “estimates” should also be considered forward-looking statements. Forward-looking statements involve risks and uncertainties. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the business of AgeX Therapeutics, Inc. and its subsidiaries, particularly those mentioned in the cautionary statements found in more detail in the “Risk Factors” section of AgeX’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commissions (copies of which may be obtained at www.sec.gov). Subsequent events and developments may cause these forward-looking statements to change. AgeX specifically disclaims any obligation or intention to update or revise these forward-looking statements as a result of changed events or circumstances that occur after the date of this release, except as required by applicable law.

Non-GAAP Financial Measures

This press release includes operating expenses prepared in accordance with accounting principles generally accepted in the United States (GAAP) and, includes operating expenses, by entity, prepared in accordance with GAAP. This press release also includes certain historical non-GAAP operating expenses and non-GAAP operating expenses, by entity. In particular, AgeX Therapeutics, Inc. (“AgeX”) has provided both (a) non-GAAP total operating expenses, adjusted to exclude noncash stock-based compensation expense, depreciation and amortization expense, and acquired in-process research and development expense, a nonrecurring item, and (b) non-GAAP operating expenses, by entity, to exclude those same charges by the respective entities for consistency. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP. However, AgeX believes the presentation of non-GAAP total operating expenses and non-GAAP operating expenses, by entity, when viewed in conjunction with our GAAP total operating expenses, and GAAP operating expenses by entity, respectively, is helpful in understanding AgeX’s ongoing operating expenses and its programs and those of certain subsidiaries.

Furthermore, management uses these non-GAAP financial measures in the aggregate and on an entity basis to establish budgets and operational goals, to manage AgeX’s business and to evaluate its performance and its programs in clinical development.

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Media Contact for AgeX:
Bill Douglass
Gotham Communications, LLC
bill@gothamcomm.com
(646) 504-0890

Source: AgeX Therapeutics, Inc.