AgeX Therapeutics(AGE) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides Serina Therapeutics, Inc.'s unaudited condensed consolidated financial statements and management's analysis of its financial condition and operations Item 1. Financial Statements Presents Serina Therapeutics, Inc.'s unaudited condensed consolidated financial statements and notes, highlighting a net loss and going concern doubt Condensed Consolidated Balance Sheets Provides a snapshot of the company's assets, liabilities, and equity at specific reporting dates Key Balance Sheet Metrics | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $6,041 | $3,672 | | Total current assets | $7,991 | $5,676 | | TOTAL ASSETS | $8,941 | $6,724 | | Total current liabilities | $3,561 | $2,366 | | Warrant liability | $3,549 | $3,582 | | TOTAL LIABILITIES | $7,295 | $6,216 | | Total stockholders' equity | $1,646 | $508 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $8,941 | $6,724 | - Total assets increased by $2,217 thousand from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents[17] - Total liabilities increased by $1,079 thousand, while total stockholders' equity increased by $1,138 thousand, largely due to the issuance of Series A convertible preferred stock[17][79] Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net loss or income over specific reporting periods Statements of Operations Highlights | Metric (in thousands, except per share data) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Grant revenues | $130 | $51 | $130 | $56 | | Research and development | $3,152 | $1,594 | $6,103 | $2,700 | | General and administrative | $2,543 | $2,323 | $5,450 | $3,543 | | Total operating expenses | $5,695 | $3,917 | $11,553 | $6,243 | | Loss from operations | $(5,565) | $(3,866) | $(11,423) | $(6,187) | | Total other (expense) income, net | $(897) | $9,043 | $139 | $(3,651) | | NET (LOSS) INCOME | $(6,462) | $5,177 | $(11,284) | $(9,838) | | NET (LOSS) INCOME ATTRIBUTABLE TO SERINA THERAPEUTICS, INC. | $(6,448) | $5,204 | $(11,261) | $(9,811) | | BASIC EPS | $(0.66) | $0.61 | $(1.15) | $(1.74) | | DILUTED EPS | $(0.66) | $0.51 | $(1.15) | $(1.74) | - Net loss for the three months ended June 30, 2025, was $(6,462) thousand, a significant decrease from the net income of $5,177 thousand in the same period of 2024, primarily due to a $9,900 thousand increase in other expenses, net, largely from changes in fair value of warrants[19][154] - For the six months ended June 30, 2025, net loss increased to $(11,284) thousand from $(9,838) thousand in 2024, driven by higher operating expenses, particularly R&D and G&A[19][147] Condensed Consolidated Statements of Stockholders' Equity Outlines changes in the company's equity, including stock issuances and net loss, over time - Total stockholders' equity increased from $508 thousand at December 31, 2024, to $1,646 thousand at June 30, 2025, primarily due to the issuance of Series A Convertible Preferred Stock for $4,940 thousand and common stock to Juvenescence for $4,916 thousand, offset by a net loss of $(11,261) thousand[20][19][157][158] - The company issued 965 shares of Series A Convertible Preferred Stock for $4,940 thousand and 124 shares of common stock under an at-the-market sales agreement for $629 thousand during the six months ended June 30, 2025[20][91] Condensed Consolidated Statements of Cash Flows Summarizes cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary | Cash Flow Activity (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(8,072) | $(9,586) | | Net cash used in investing activities | $(46) | $(14) | | Net cash provided by financing activities | $10,487 | $8,095 | | NET CHANGE IN CASH AND CASH EQUIVALENTS | $2,369 | $(1,505) | | Cash and cash equivalents at end of period | $6,041 | $6,114 | - Net cash used in operating activities decreased by $1,514 thousand, from $(9,586) thousand in 2024 to $(8,072) thousand in 2025, primarily due to changes in operating assets and liabilities[25][168][169] - Net cash provided by financing activities increased by $2,392 thousand, from $8,095 thousand in 2024 to $10,487 thousand in 2025, driven by proceeds from Series A preferred stock issuance and common stock sales[25][168][172] 1. Organization, Business Overview and Liquidity Describes the company's business, recent merger, and liquidity challenges, including going concern doubt - Serina Therapeutics, Inc. (formerly AgeX Therapeutics, Inc.) completed a reverse recapitalization merger with Legacy Serina on March 26, 2024, becoming a clinical-stage biotechnology company focused on neurological diseases and pain using its proprietary POZ drug delivery technology[27][28][29] - The company reported a net loss of $11,300 thousand and used $8,100 thousand in net cash from operating activities for the six months ended June 30, 2025, leading to substantial doubt about its ability to continue as a going concern[34][35] - Management believes its $6,000 thousand cash and cash equivalents as of June 30, 2025, are insufficient to cover anticipated operating and funding requirements for the next twelve months, necessitating additional capital through equity investors, ATM offerings, or licensing agreements[35][36] 2. Basis of Presentation and Summary of Significant Accounting Policies Explains the financial statement preparation basis, consolidation policies, and recent accounting pronouncements - The unaudited condensed consolidated interim financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting requirements, with certain information condensed or omitted[38] - The Company consolidates its wholly-owned subsidiaries (Legacy Serina) and NeuroAirmid (50% owned) due to contractual rights influencing decision-making, but deconsolidated UniverXome in December 2024 after its sale to Juvenescence[40][43][44][45] - Recently adopted accounting pronouncements (ASU 2023-07, ASU 2023-09, ASU 2024-02) effective January 1, 2025, did not have a material impact on the financial statements[53][54][55] 3. Recapitalization Details the reverse recapitalization merger, its accounting treatment, and adjustments to equity and liabilities - The Merger on March 26, 2024, was accounted for as a reverse recapitalization, with Legacy Serina considered the accounting acquirer due to its stockholders holding a majority of voting rights, designating board members, and its management team leading the combined company[57] - AgeX issued 5,913,277 shares of its common stock to Legacy Serina stockholders, and assumed Legacy Serina's 2017 Stock Option Plan, adjusting outstanding options and warrants[59][60] Acquired Assets and Liabilities | Acquired Assets and Liabilities (in thousands) | Amount | | :--------------------------------------------- | :----- | | Cash and cash equivalents | $337 | | Other current assets | $174 | | Intangible assets | $576 | | Accounts payable and accrued expenses | $(2,830) | | Loan payable to Juvenescence | $(8,017) | | Net liabilities acquired | $(9,760) | | Conversion of AgeX-Serina Note | $10,721 | | Total net increase in additional paid-in capital | $961 | 4. Selected Balance Sheet Components Provides detailed breakdowns of specific balance sheet accounts like prepaid expenses and accrued liabilities Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------------- | :------------ | :---------------- | | Prepaid technology access fee | $1,000 | $1,333 | | Prepaid insurance | $526 | $192 | | Other prepaid expenses | $247 | $402 | | Other current assets | $177 | $77 | | Total | $1,950 | $2,004 | Accrued Liabilities | Accrued liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Research program and services | $669 | $329 | | Accrued compensation | $517 | $559 | | Accrued severance | $12 | $304 | | Other accrued expenses | $112 | $237 | | Total | $1,310 | $1,429 | - Property and equipment, net, increased from $501 thousand at December 31, 2024, to $588 thousand at June 30, 2025[64] 5. Related Party Transactions Describes transactions with related parties, including asset transfers and debt assumptions with Juvenescence - AgeX transferred assets and liabilities related to its subsidiaries Reverse Bio and ReCyte to UniverXome, which then assumed AgeX's obligations under convertible notes to Juvenescence, releasing AgeX from these debts[67][68] - On December 23, 2024, the Company sold all outstanding shares of UniverXome to Juvenescence, which assumed approximately $11,300 thousand of secured debt, resulting in a $10,900 thousand capital contribution recognized by the Company[71] 6. Fair Value Measurements Discusses the valuation of financial instruments, particularly warrant liabilities, and their impact on earnings Liabilities | Liabilities (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------- | :------------ | :---------------- | | Warrant liability | $3,549 | $3,582 | - The Company classifies Merger Warrants as liabilities, with changes in fair value recognized in the consolidated statements of operations. A $1,000 thousand loss was recognized for the three months ended June 30, 2025, compared to a $9,300 thousand gain in the prior year period[73] - The AgeX-Serina Note, initially valued at $7,800 thousand, was remeasured to $10,700 thousand at the Merger date and converted into equity, resulting in a $7,000 thousand loss from change in fair value for the six months ended June 30, 2024[78] 7. Stockholders' Equity Covers changes in stockholders' equity, including preferred stock issuance, warrants, and at-the-market offerings - On April 8, 2025, the Company issued 965,250 shares of Series A Convertible Preferred Stock for net proceeds of $4,900 thousand, with an 8% cumulative annual dividend payable in PIK Shares[79] - As of June 30, 2025, 366,658 Post-Merger Warrants were outstanding, and Juvenescence held 377,865 Incentive Warrants and 755,728 Replacement Incentive Warrants, all classified as liabilities[83][88][89] - Through an at-the-market (ATM) program established on April 25, 2025, the Company sold 124,454 shares of common stock, generating net proceeds of $600 thousand as of June 30, 2025[91] 8. Stock-Based Awards Details the company's equity incentive plans and the recognition of stock-based compensation expense - The Company has four equity incentive plans: 2024 Inducement Equity Plan (1,000,000 shares reserved), 2024 Equity Incentive Plan (2,675,000 shares reserved), and assumed 2017 Stock Option Plan and 2017 Equity Incentive Plan from Legacy Serina/AgeX[92][93][94][95] - Total stock-based compensation expense for the six months ended June 30, 2025, was $1,846 thousand, significantly higher than $511 thousand in the same period of 2024[97] - As of June 30, 2025, total unrecognized compensation cost related to unvested stock option grants was $9,400 thousand, expected to be recognized over a weighted average period of 2.6 years[96] 9. Profit Sharing Plan Describes the company's 401(k) profit sharing plan and employer contribution policies - The Company maintains a 401(k) profit sharing plan for eligible employees, with discretionary employer matching and profit sharing contributions based on a graded vesting schedule[98][99] - No discretionary employer contributions were made for the three and six months ended June 30, 2025 and 2024[99] 10. Income Taxes Explains the company's income tax position, including the absence of tax provisions due to recurring losses - Due to recurring losses, the Company did not record a provision or benefit for income taxes for any periods presented[101] - A full valuation allowance has been established against all deferred tax assets due to the uncertainty of realizing future tax benefits[101] 11. Commitments and Contingencies Outlines lease obligations, development partnerships, and potential legal claims in the ordinary course of business - The Company leases lab and office facilities under non-cancelable operating lease agreements expiring between October 2025 and January 2028, with total undiscounted lease payments of $391 thousand as of June 30, 2025[103][108] - In May 2024, the Company partnered with Enable Injections, Inc. to develop and commercialize SER-252 (POZ-apomorphine) for Parkinson's disease, with an Investigational New Drug (IND) application anticipated in 2025[113] - The Company is subject to various claims and indemnification obligations in the ordinary course of business but is not aware of any claims likely to have a material adverse effect on its financial condition or results of operations[109][114] 12. Net (Loss) Income Per Common Share Presents basic and diluted earnings per share calculations, including anti-dilutive securities EPS Metric | EPS Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $(0.66) | $0.61 | $(1.15) | $(1.74) | | Diluted EPS | $(0.66) | $0.51 | $(1.15) | $(1.74) | - For periods with net loss (three and six months ended June 30, 2025, and six months ended June 30, 2024), most outstanding stock options and warrants were excluded from diluted EPS calculation as their inclusion would be anti-dilutive[115] Anti-Dilutive Securities | Anti-Dilutive Securities (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Series A preferred stock | 984 | — | 984 | — | | Stock options | 3,295 | 652 | 3,295 | 2,304 | | Warrants | 1,997 | 3,226 | 1,997 | 3,226 | | Total anti-dilutive securities | 6,276 | 3,878 | 6,276 | 5,530 | 13. Segment Reporting Identifies the company's single reportable segment and its primary revenue and expense components - The Company operates as one reportable segment focused on the research and development of its POZ platform, with revenues derived from Grant revenue[116][117] Segment Expenses | Segment Expenses (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $3,152 | $1,594 | $6,103 | $2,700 | | General and administrative | $2,543 | $2,323 | $5,450 | $3,543 | | Total operating expenses | $5,695 | $3,917 | $11,553 | $6,243 | | Loss from operations | $(5,565) | $(3,866) | $(11,423) | $(6,187) | | Segment and consolidated net (loss) income | $(6,462) | $5,177 | $(11,284) | $(9,838) | 14. Subsequent Events Reports significant events occurring after the reporting period, such as the establishment of a new subsidiary - On July 2, 2025, the Company established a new subsidiary, Serina Therapeutics Australia Pty Ltd, to conduct clinical research activities, which is not reflected in the current financial statements[121] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, and future outlook, emphasizing liquidity challenges Overview Provides a high-level summary of the company's business, financial performance, and going concern considerations - Serina Therapeutics is a clinical-stage biotechnology company developing drug candidates for neurological diseases and other indications, leveraging its POZ platform to improve drug efficacy and safety profiles[125] - The Company completed a merger on March 26, 2024, and has since incurred significant operating losses, with an accumulated deficit of $55,600 thousand and $6,000 thousand in cash and cash equivalents as of June 30, 2025[126] - Recurring losses and negative operating cash flows raise substantial doubt about the Company's ability to continue as a going concern, necessitating additional financing to fund future operations and product development[127][129] Critical Accounting Policies and Estimates Affirms no significant changes to critical accounting policies and estimates from the prior annual report - Management believes there have been no significant changes to the critical accounting policies and estimates disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[131] Components of Operating Results Explains the key drivers of grant revenues and operating expenses, including R&D and G&A costs - Grant revenues are recognized as allowable costs are incurred, and operating expenses primarily consist of research and development (R&D) and general and administrative (G&A) costs[132][133] - R&D expenses, which are expensed as incurred, are expected to increase substantially due to investments in clinical trials, manufacturing, and advancing product candidates, including SER 252[137][135] - G&A expenses are also projected to rise due to increased personnel costs, professional services, and compliance requirements associated with operating as a public company[143] Results of Operations Compares financial performance for the current and prior periods, detailing changes in revenues and expenses Financial Performance Summary | Metric (in thousands) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Grant revenues | $130 | $51 | $130 | $56 | | R&D expenses | $3,152 | $1,594 | $6,103 | $2,700 | | G&A expenses | $2,543 | $2,323 | $5,450 | $3,543 | | Loss from operations | $(5,565) | $(3,866) | $(11,423) | $(6,187) | | Other income (expense), net | $(897) | $9,043 | $139 | $(3,651) | | NET INCOME (LOSS) | $(6,462) | $5,177 | $(11,284) | $(9,838) | - Research and development expenses increased by $1,558 thousand for the three months and $3,403 thousand for the six months ended June 30, 2025, primarily due to higher outside research services, consultant spend, and compensation[149][150] - General and administrative expenses increased by $220 thousand for the three months and $1,907 thousand for the six months ended June 30, 2025, driven by increased stock-based compensation, consulting expenses, and salaries[152][153] - Other income (expense), net, shifted from a $9,043 thousand net income in Q2 2024 to a $(897) thousand net expense in Q2 2025, mainly due to a $10,300 thousand change in fair value of liability-classified warrants[154] Liquidity and Capital Resources Assesses the company's cash position, funding sources, and future capital requirements amidst going concern doubt - As of June 30, 2025, the Company had $6,000 thousand in cash and cash equivalents, primarily financed by prior stock and convertible note issuances, Post-Merger warrant exercises, and recent Series A preferred stock and ATM common stock sales[157][158][160] - The Company's recurring losses and negative cash flows raise substantial doubt about its ability to continue as a going concern, with current cash not expected to fund operations for the next twelve months[162][165] - Future funding requirements are significant and uncertain, depending on the progress of clinical trials, regulatory approvals, manufacturing, and intellectual property protection, necessitating additional capital through equity, debt, or collaborations[164][165][166][167] Cash Flows | Cash Flows (in thousands) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | $ Change | % Change | | :------------------------ | :----------------------------- | :----------------------------- | :------- | :------- | | Net cash used in operating activities | $(8,072) | $(9,586) | $1,514 | (15.8%) | | Net cash used in investing activities | $(46) | $(14) | $(32) | — % | | Net cash provided by financing activities | $10,487 | $8,095 | $2,392 | 29.5 % | | Net increase (decrease) in cash | $2,369 | $(1,505) | $3,874 | (257.4)% | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Serina Therapeutics, Inc. is exempt from providing market risk disclosures - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[174] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to material weaknesses, with remediation ongoing - Disclosure controls and procedures were deemed ineffective as of June 30, 2025, due to material weaknesses[175] - Material weaknesses include insufficient qualified accounting personnel, lack of data validation, inadequate segregation of duties, substantial reliance on manual reporting, and lack of experience in monitoring internal controls[178] - Remediation efforts include hiring finance professionals, leveraging third-party consultants, developing standardized processes, and implementing IT system improvements, with full remediation still in progress[180][181][184] PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal, risk, and equity matters Item 1. Legal Proceedings The Company is not currently a party to any material legal proceedings, though it may face ordinary claims - The Company is not currently a party to any material legal proceedings[186] Item 1A. Risk Factors No material changes to risk factors, except for new disclosures on ATM offerings and FDA approval unpredictability - No material changes to risk factors from the Annual Report on Form 10-K, except for new disclosures regarding potential stock price decline from 'at-the-market' offerings[187] - The FDA regulatory approval process is lengthy, unpredictable, and subject to delays, which could materially impact the Company's ability to commercialize product candidates[188][189] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Information regarding unregistered sales of equity securities and use of proceeds has been previously reported - Information on unregistered sales of equity securities and use of proceeds was previously reported[190] Item 3. Default Upon Senior Securities The Company has not defaulted upon any senior securities - There has been no default upon senior securities[191] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the Company's operations - Mine safety disclosures are not applicable[192] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[193] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certificates of designations, a securities purchase agreement, certifications of the CEO and CFO, and Inline XBRL documents - The report includes various exhibits such as Certificate of Designations, Securities Purchase Agreement, Rule 13a-14(a)/15d-14(a) Certifications, Section 1350 Certification, and Inline XBRL documents[194]