AgeX Therapeutics Reports Fourth Quarter and Annual 2023 Financial Results
- Stockholders approved merger with Serina Therapeutics, Inc.
- Obtained $4.4 million addition to line of credit from Juvenescence
- Issuance of Preferred Stock to eliminate $36 million of indebtedness
- Cash, cash equivalents, and restricted cash totaled $0.3 million as of December 31, 2023
- Operating expenses increased for Q4 and full year 2023
- Net loss attributable to AgeX was $14.8 million for 2023
- Increase in operating expenses
- Net loss of $14.8 million for 2023
- Cash balance of $0.3 million as of December 31, 2023
Insights
The financial restructuring through the conversion of preferred stock and the elimination of $36 million of indebtedness represents a significant alteration in AgeX's capital structure. This move effectively reduces the company's debt burden, potentially improving its balance sheet and financial ratios. However, the extension of the line of credit repayment date and the additional $4.4 million secured from Juvenescence Limited suggest a continued reliance on external funding, which could raise concerns about the company's liquidity and ongoing funding requirements. The reverse stock split is a strategic step that may be aimed at boosting the stock price to meet exchange listing requirements or to attract institutional investors, though it could also be interpreted as a measure to counteract previous stock price declines.
From a broader perspective, the increase in general and administrative expenses, particularly those associated with the planned merger with Serina Therapeutics, indicates strategic positioning but also reflects substantial cash outflows for corporate activities. The decrease in research and development expenses might raise questions about the company's commitment to innovation, which is critical in the biotechnology sector. Investors may view this as a red flag, given that R&D is the lifeblood of biotech companies. The reported net loss has widened compared to the previous year, which could negatively influence investor sentiment and AgeX's stock price in the short term.
AgeX's merger with Serina Therapeutics represents a pivotal move within the biotechnology industry, potentially combining resources and expertise to accelerate the development of therapies for human aging and regeneration. Mergers and acquisitions are common in this sector as companies strive to diversify their portfolios and enhance their competitive edge. However, the financial stability of the merged entity will be crucial, given the high costs and long timelines associated with bringing new therapies to market.
The reported decrease in R&D spending is somewhat atypical for a growth-phase biotech company. This could suggest a strategic pivot or resource allocation towards integration efforts with Serina Therapeutics. The biotechnology industry is heavily reliant on consistent investment in R&D to drive innovation and pipeline development. Therefore, stakeholders should monitor whether this decrease is a temporary measure or indicative of a longer-term trend, which could impact the company's future growth prospects.
The details surrounding AgeX's debt restructuring and additional line of credit highlight the complexities of debt financing in the biotech sector. The conversion of preferred stock to eliminate debt is a tool that can help manage a company's liabilities and potentially strengthen investor confidence by improving equity. However, the automatic conversion of preferred stock into common stock dilutes existing shareholders' equity, which could have a negative impact on share value. Furthermore, the reliance on a single creditor, Juvenescence Limited, for both the extinguishment of debt and the provision of additional credit lines, may introduce financial risk due to the concentration of credit exposure.
The extension of the line of credit repayment date suggests that AgeX is not generating sufficient cash flow to meet its original obligations, which is not uncommon in the biotech industry where revenues can be unpredictable and often hinge on successful clinical trials and regulatory approvals. The financial flexibility provided by Juvenescence is essential for AgeX's short-term operations, but it also signals the need for careful monitoring of the company's cash burn rate and the establishment of a clear path to profitability or additional funding sources.
ALAMEDA, Calif., March 22, 2024 (GLOBE NEWSWIRE) -- AgeX Therapeutics, Inc. (“AgeX”; NYSE American: AGE), a biotechnology company developing therapeutics for human aging and regeneration, reported its financial and operating results for fourth quarter and the full year ended December 31, 2023 and recent highlights.
Recent Highlights
| ● | Stockholders approved transactions for merger with Serina Therapeutics, Inc. | |
| ● | Obtained | |
| ● | Preferred Stock converted into Common Stock | |
| ● | Completed reverse stock split at a ratio of 1 for 35.17 | |
Liquidity and Capital Resources
Issuance of Preferred Stock to Eliminate
During July 2023, AgeX and Juvenescence Limited entered into an Exchange Agreement pursuant to which AgeX issued shares of Series A Preferred Stock and Series B Preferred Stock to Juvenescence in exchange for the extinguishment of a total of
Increase in Line of Credit
On November 8, 2023, AgeX’s secured, convertible line of credit from Juvenescence Limited was increased by
On February 9, 2024, the repayment date of AgeX’s borrowings under Juvenescence line of credit was extended from February 14, 2024 to May 9, 2024.
Balance Sheet Information
Cash, cash equivalents, and restricted cash totaled
Fourth Quarter and Annual 2023 Operating Results
Operating expenses: Operating expenses for the three months ended December 31, 2023 were
Research and development expenses for the year ended December 31, 2022 decreased by more than
General and administrative expenses for the year ended December 31, 2023 increased by
Other expense, net: Net other expense for the year ended December 31, 2023 consists primarily of
Net loss attributable to AgeX: The net loss attributable to AgeX for the year ended December 31, 2023 was
Going Concern Considerations
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, AgeX believes that its cash and cash equivalents and available sources of debt and equity capital would not be sufficient to satisfy AgeX’s anticipated operating and other funding requirements for the twelve months following the filing of AgeX’s Annual Report on Form 10-K for the year ended December 31, 2023. These factors raise substantial doubt regarding the ability of AgeX to continue as a going concern.
About AgeX Therapeutics
AgeX Therapeutics, Inc. (NYSE American: AGE) is focused on developing and commercializing innovative therapeutics to treat human diseases to increase healthspan and combat the effects of aging. For more information, please visit www.agexinc.com or connect with the company on Twitter, LinkedIn, Facebook, and YouTube.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this communication regarding matters that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. These include statements regarding the anticipated completion and effects of the planned merger with Serina (the “Merger”) and other statements regarding management’s intentions, plans, beliefs, expectations or forecasts for the future. All forward-looking statements are based on assumptions or judgments about future events and economic conditions that may or may not be correct or necessarily take place and that are by their nature subject to significant risks, uncertainties and contingencies. You are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Statements that contain words such as “anticipates,” “believes,” “plans,” “expects,” “projects,” “future,” “intends,” “may,” “will,” “should,” “could,” “estimates,” “predicts,” “potential,” “continue,” “guidance,” and similar expressions to identify these forward-looking statements that are intended to be covered by the safe-harbor provisions of the PSLRA.
There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication. With respect to the Merger, these risks and uncertainties include: one or more conditions to consummating the Merger may not be satisfied; one or more material agreements that may be entered into in connection with the Merger may be terminated by a party to the agreement; AgeX or the combined company after the Merger may be unable to obtain approval to list on the NYSE American the shares of AgeX common stock expected to be issued pursuant to the Merger; and the closing of the Merger might be delayed or not occur at all. In addition, the Merger could cause AgeX to face additional risks, including risks associated with conducting and financing Serina’s current or future research and product development programs, including risks that those research and development programs will not result in the development of products or technologies with the desired clinical utility, benefits, or market acceptance; risks associated with conducting clinical trials of Serina product candidates and obtaining Food and Drug Administration or other regulatory approvals to market product candidates, including risks with respect to the timing of initiation of Serina’s planned clinical trials, the timing of the availability of data or other results from clinical trials, and the timing of any planned investigational new drug application or new drug application; risks associated with the combined company’s ability to identify additional products or product candidates with significant commercial potential; risks associated with AgeX’s, Serina’s or the combined company’s ability to protect its intellectual property position; product liability risks; the risk that the cash balance of the combined company following the closing of the Merger will be lower than expected or reduced; the risk that the combined company’s anticipated sources and related timing of financing following the closing of the Merger will not provide proceeds necessary to fund the operations of the combined company for as long as anticipated; the risk that the transactions contemplated by the Side Letter entered into by AgeX, Serina and Juvenescence Limited on August 29, 2023 are not completed in a timely manner or at all; risks associated with AgeX’s or Serina’s estimates regarding future revenue, expenses, capital requirements, and need for additional financing following the Merger; risks associated with the ability of AgeX and the combined company to remain listed on the NYSE American; the risk that products may not be successfully commercialized or that the combined company might not otherwise be able to generate sufficient revenues to operate at a profit; potential adverse changes to business or employee relationships, including those resulting from the announcement or completion of the Merger; the risk that changes in AgeX’s capital structure, management, business, and governance following the Merger could have adverse effects on the market value of its common stock; the ability of AgeX and Serina to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers; risks associated with Serina’s or the combined company’s ability to successfully collaborate with Serina’s existing collaborators or enter into new collaborations, or to fulfill its obligations under any such collaboration agreements; risks associated with the combined company’s commercialization, marketing and manufacturing capabilities and strategy; the risk that pursuing and completing the Merger and related transactions could distract AgeX and Serina management from their respective ongoing business operations or cause AgeX and Serina to incur substantial costs; risks associated with competition and developments in the industry in which the combined company will operate; the impact of world health events and any related economic downturn; the risk of changes in governmental regulations or enforcement practices; AgeX’s and Serina’s ability to meet guidance, market expectations, and internal projections; the impact of AgeX stockholders having their percentage ownership interests in AgeX reduced by the issuance of AgeX common stock to Serina stockholders in the Merger and by the issuance of shares of AgeX common stock upon the exercise of pre-merger warrants by Juvenescence, and other important factors that could cause actual results to differ materially from those projected or expected by AgeX management or stockholders. The effects of many of such factors are difficult to predict and may be beyond AgeX’s or Serina’s control.
New factors emerge from time to time, and it is not possible for us to predict all such factors, nor can we assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Additional factors that could cause actual results to differ materially from the results anticipated in these forward-looking statements are contained in the AgeX’s Annual Report on Form 10-K for the twelve months ended December 31, 2023, in AgeX’s other periodic reports filed with the SEC, and in AgeX’s most recent Proxy Statement/Prospectus/Information Statement, under the heading “Risk Factors,” and in other filings that AgeX may make with the SEC. Forward-looking statements included in this communication are based on information available to AgeX and Serina as of the date of this communication. Undue reliance should not be placed on these forward-looking statements that speak only as of the date they are made, and except as required by law, AgeX and Serina each disclaims any intent or obligation to update these forward-looking statements.
Contact for AgeX:
Andrea E. Park
apark@agexinc.com
(510) 671-8620
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 345 | $ | 645 | ||||
| Accounts and grants receivable, net | 57 | 4 | ||||||
| Prepaid expenses and other current assets | 352 | 1,804 | ||||||
| Total current assets | 754 | 2,453 | ||||||
| Restricted cash | 50 | 50 | ||||||
| Intangible assets, net | 607 | 738 | ||||||
| Convertible note receivable | 10,554 | - | ||||||
| TOTAL ASSETS | $ | 11,965 | $ | 3,241 | ||||
| LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY/(DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 2,176 | $ | 1,034 | ||||
| Loans due to Juvenescence, net of debt issuance costs, current portion | 3,672 | 7,646 | ||||||
| Related party payables, net | 66 | 141 | ||||||
| Warrant liability | - | 180 | ||||||
| Insurance premium liability and other current liabilities | - | 1,077 | ||||||
| Total current liabilities | 5,914 | 10,078 | ||||||
| Loans due to Juvenescence, net of debt issuance costs, net of current portion | 693 | 10,478 | ||||||
| TOTAL LIABILITIES | 6,607 | 20,556 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity/(deficit): | ||||||||
| Preferred stock, | ||||||||
| Series A preferred stock; no par value; stated value | - | - | ||||||
| Series B preferred stock; no par value; stated value | - | - | ||||||
| Common stock, | - | - | ||||||
| Additional paid-in capital | 136,482 | 98,998 | ||||||
| Accumulated deficit | (131,013 | ) | (116,210 | ) | ||||
| Total AgeX Therapeutics, Inc. stockholders’ equity/(deficit) | 5,469 | (17,212 | ) | |||||
| Noncontrolling interest | (111 | ) | (103 | ) | ||||
| Total stockholders’ equity/(deficit) | 5,358 | (17,315 | ) | |||||
| TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY/(DEFICIT) | $ | 11,965 | $ | 3,241 | ||||
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| REVENUES | ||||||||
| Grant revenues | $ | 77 | $ | - | ||||
| Other revenues | 65 | 34 | ||||||
| Total revenues | 142 | 34 | ||||||
| Cost of sales | (40 | ) | (13 | ) | ||||
| Gross profit | 102 | 21 | ||||||
| OPERATING EXPENSES | ||||||||
| Research and development | 734 | 1,025 | ||||||
| General and administrative | 9,328 | 5,971 | ||||||
| Total operating expenses | 10,062 | 6,996 | ||||||
| Gain on disposition of fixed assets | 73 | - | ||||||
| Loss from operations | (9,887 | ) | (6,975 | ) | ||||
| OTHER EXPENSE, NET | ||||||||
| Interest expense, net | (4,900 | ) | (3,335 | ) | ||||
| Change in fair value of warrants | (35 | ) | (225 | ) | ||||
| Other income, net | 11 | 13 | ||||||
| Total other expense, net | (4,924 | ) | (3,547 | ) | ||||
| NET LOSS | (14,811 | ) | (10,522 | ) | ||||
| Net loss attributable to noncontrolling interest | 8 | 60 | ||||||
| NET LOSS ATTRIBUTABLE TO AGEX | $ | (14,803 | ) | $ | (10,462 | ) | ||
| NET LOSS PER COMMON SHARE: | ||||||||
| BASIC AND DILUTED | $ | (13.72 | ) | $ | (9.70 | ) | ||
| WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING: | ||||||||
| BASIC AND DILUTED | 1,079 | 1,079 | ||||||
AGEX THERAPEUTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net loss attributable to AgeX | $ | (14,803 | ) | $ | (10,462 | ) | ||
| Net loss attributable to noncontrolling interest | (8 | ) | (60 | ) | ||||
| Adjustments to reconcile net loss attributable to AgeX to net cash used in operating activities: | ||||||||
| Change in fair value of warrants | 35 | 225 | ||||||
| Amortization of intangible assets | 131 | 132 | ||||||
| Amortization of debt issuance costs | 5,285 | 3,137 | ||||||
| Stock-based compensation | 648 | 760 | ||||||
| Gain on disposition of fixed assets | (73 | ) | - | |||||
| Write off of prepaid shelf registration statement related expenses | 360 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts and grants receivable | (53 | ) | 21 | |||||
| Prepaid expenses and other current assets | 1,092 | 896 | ||||||
| Interest on convertible note receivable | (554 | ) | - | |||||
| Accounts payable and accrued liabilities | 1,150 | 144 | ||||||
| Related party payables | 69 | 255 | ||||||
| Insurance premium liability | (1,075 | ) | (983 | ) | ||||
| Other current liabilities | (4 | ) | (4 | ) | ||||
| Net cash used in operating activities | (7,800 | ) | (5,939 | ) | ||||
| INVESTING ACTIVITIES: | ||||||||
| Cash advanced on convertible note receivable | (10,000 | ) | - | |||||
| Net cash used in investing activities | (10,000 | ) | - | |||||
| FINANCING ACTIVITIES: | ||||||||
| Draw down on loan facilities from Juvenescence | 17,500 | 6,000 | ||||||
| Net cash provided by financing activities | 17,500 | 6,000 | ||||||
| NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (300 | ) | 61 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH: | ||||||||
| At beginning of the year | 695 | 634 | ||||||
| At end of the year | $ | 395 | $ | 695 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the year for interest | $ | 27 | $ | 14 | ||||
| SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING ACTIVITIES: | ||||||||
| Issuance of preferred stock in exchange for debt | $ | 36,000 | $ | - | ||||
| Issuance of common stock upon vesting of restricted stock units | $ | 2 | $ | 8 | ||||
| Issuance of warrants for debt issuance under the 2020 Loan Agreement | $ | - | $ | 178 | ||||
| Fair value of liability classified warrants at debt inception date | $ | 663 | $ | 4,148 | ||||
| Debt refinanced with new debt | $ | - | $ | 7,160 | ||||
FAQ
What were the recent highlights mentioned in the press release?
How did AgeX eliminate $36 million of indebtedness?
What was the cash balance of AgeX as of December 31, 2023?
What were the operating expenses for the full year 2023 compared to 2022?
What was the net loss attributable to AgeX for the year ended December 31, 2023?
