AgeX Therapeutics(US:AGE)2024-11-12 21:03Part I – FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion, market risk disclosures, and controls and procedures Financial Statements The financial statements for the period ended September 30, 2024, reflect the company's post-merger status, showing a net loss of $8.5 million, significant liabilities of $21.3 million, and a going concern issue Condensed Consolidated Balance Sheets As of September 30, 2024, total assets were $7.4 million, total liabilities significantly increased to $21.3 million, leading to a $13.8 million stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $3,185 | $7,619 | | Total current assets | $5,423 | $7,619 | | Total Assets | $7,435 | $8,968 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $13,514 | $1,413 | | Warrant liability | $6,744 | $— | | Total Liabilities | $21,263 | $4,858 | | Total stockholders' deficit | ($13,828) | ($32,294) | | Total Liabilities and Stockholders' Deficit | $7,435 | $8,968 | Condensed Consolidated Statements of Operations For the nine months ended September 30, 2024, the company reported an $8.5 million net loss, driven by increased operating expenses, a significant shift from prior year's net income Statement of Operations Summary (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Total revenues | $70 | $66 | | Research and development | $5,115 | $1,481 | | General and administrative | $6,454 | $1,955 | | Loss from operations | ($11,499) | ($3,370) | | Total other income, net | $3,044 | $7,588 | | Net Income (Loss) | ($8,455) | $4,218 | | Net Loss per Share (Basic & Diluted) | ($1.24) | $1.94 (Basic), $0.57 (Diluted) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash used in operating activities significantly increased to $12.5 million, resulting in a $4.4 million net decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,548) | ($2,597) | | Net cash used in investing activities | ($17) | ($434) | | Net cash provided by financing activities | $8,181 | $10,080 | | Net change in cash | ($4,384) | $7,049 | | Cash at end of period | $3,235 | $7,581 | Notes to Condensed Consolidated Interim Financial Statements The notes detail the reverse merger, the company's POZ drug delivery technology, significant going concern issues, related-party transactions, and a new partnership with Enable Injections - On March 26, 2024, AgeX Therapeutics, Inc. completed a reverse merger with Legacy Serina, and changed its name to Serina Therapeutics, Inc. Legacy Serina was deemed the accounting acquirer35 - Management has substantial doubt about the Company's ability to continue as a going concern, as cash of $3.2 million as of September 30, 2024, plus an expected $10 million from warrant exercises, are not sufficient to fund operations for the next twelve months4446 - The company is a clinical-stage biotech firm focused on its proprietary POZ drug delivery technology, which uses a poly(2-oxazoline) polymer to improve the pharmacokinetic profiles of existing drugs for neurological diseases and pain3839 - In May 2024, the company partnered with Enable Injections, Inc. to develop and commercialize SER-252 (POZ-apomorphine) with enFuse® for Parkinson's disease, paying $2.0 million for the arrangement176 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting increased operating losses to $11.5 million, critical liquidity concerns with cash of $3.2 million, and substantial doubt about its ability to continue as a going concern Overview Serina is a clinical-stage biotech company using its POZ drug delivery technology to develop treatments for neurological diseases and pain, facing significant financial challenges post-merger, with an accumulated deficit of $13.8 million and substantial doubt about its ability to continue as a going concern - The company's POZ technology is based on a synthetic, water-soluble polymer designed to improve the efficacy and safety of existing drugs by controlling drug loading and release rates186 - As of September 30, 2024, the company had an accumulated deficit of $13.8 million and cash and cash equivalents of $3.2 million, with operating losses of $11.5 million for the first nine months of the year189 - Losses from operations and negative cash flows raise substantial doubt about the company's ability to continue as a going concern190 Results of Operations Operating expenses significantly increased for the three and nine months ended September 30, 2024, compared to 2023, with R&D expenses rising to $5.1 million and G&A expenses to $6.5 million, while other income decreased by $4.6 million Operating Expense Comparison (Nine Months Ended Sep 30, in thousands) | Expense Category | 2024 | 2023 | Increase/(Decrease) | | :--- | :--- | :--- | :--- | | Research and development | $5,115 | $1,481 | $3,634 | | General and administrative | $6,454 | $1,955 | $4,499 | - The $3.6 million increase in nine-month R&D expenses was driven by a $1.2 million rise in salaries, $0.9 million in professional fees for IP maintenance, and $0.9 million in outside research services214 - The $4.5 million increase in nine-month G&A expenses was primarily due to $1.2 million in stock-based compensation, $0.9 million in merger-related professional fees, $0.8 million in consulting, and $0.5 million in salaries218 - The $4.6 million decrease in nine-month 'Other income, net' was mainly caused by a $13.7 million loss from the change in fair value of convertible notes, partially offset by a $9.3 million gain from the change in fair value of liability-classified warrants220 Liquidity and Capital Resources The company's liquidity is critically low at $3.2 million, dependent on related-party funding, and insufficient to fund operations through 2025, raising substantial doubt about its going concern - As of September 30, 2024, the company had $3.2 million in cash and cash equivalents222 - The company is dependent on its controlling shareholder, Juvenescence, for funding. Juvenescence is committed to exercising warrants that will provide an additional $10.0 million in proceeds by June 30, 2025222224 - Management believes that current cash plus the expected $10.0 million from warrant exercises will not be sufficient to fund operations through calendar year 2025, necessitating additional capital raises228 Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,548) | ($2,597) | | Net cash provided by financing activities | $8,181 | $10,080 | Quantitative and Qualitative Disclosures About Market Risk The company is exempt from this disclosure requirement due to its status as a smaller reporting company - The company is exempt from this disclosure requirement due to its status as a smaller reporting company238 Controls and Procedures Management concluded that disclosure controls and procedures were not effective as of September 30, 2024, due to material weaknesses, with a remediation plan underway - Management determined that disclosure controls and procedures were not effective as of September 30, 2024239 - Material weaknesses were identified, including: - Lack of sufficient in-house qualified accounting staff - Inadequate controls and segregation of duties due to limited resources - Substantial reliance on manual reporting processes and spreadsheets - Lack of experience in monitoring internal controls242 - A remediation plan is underway, including the engagement of financial operations consultants and the appointment of a new Controller in July 2024244 Part II – OTHER INFORMATION This section covers legal proceedings, updated risk factors, unregistered sales of equity securities, other information, and exhibits Legal Proceedings The company may be party to litigation and claims in the ordinary course of business, but management is not aware of any material adverse effects - The company is not currently aware of any legal proceedings that would have a material adverse effect on its financials173249 Risk Factors A new key risk factor highlights the critical need for additional financing to execute the operating plan and continue as a going concern, as current funds are insufficient to last beyond the next twelve months - A key risk factor is the company's need for additional financing to continue as a going concern. Current cash and expected proceeds from warrant exercises are not sufficient to fund operations for the next twelve months250 - The company's accumulated deficit of $21.8 million as of September 30, 2024, and continued operating losses increase the difficulty of obtaining necessary capital251 Unregistered Sales of Equity Securities and Use of Proceeds No new information is provided under this item - No new information is provided under this item252 Other Information No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended September 30, 2024 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended September 30, 2024253 Exhibits This section lists the exhibits filed with the Form 10-Q, including new employment and consulting agreements, and standard certifications