On March 14, 2019 BioTime, Inc. (NYSE American and TASE: BTX), a clinical-stage biotechnology company focused on degenerative diseases, reported financial and operating results for the fourth quarter and full year ended December 31, 2018. BioTime management will host a conference call and webcast today at 4:30 p.m. Eastern Time/1:30 p.m. Pacific Time to provide a business update (Press release, BioTime, MAR 14, 2019, View Source [SID1234534350]).
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"BioTime has been moving rapidly towards building a pioneering cell therapy company through strategic transactions on the corporate development, clinical, and operational fronts," stated Brian M. Culley, Chief Executive Officer of BioTime. "We have broadened our pipeline through the acquisition of Asterias, adding two innovative product candidates that we believe can substantially impact diseases in need of innovative therapeutic approaches. Moreover, we entered into an exclusive agreement with Orbit Biomedical Ltd. which will allow us access to its recently 510(k)-approved device for the sub-retinal delivery of OpRegen for the treatment of dry-AMD. We also completed the distribution of AgeX Therapeutics, Inc. shares to BioTime shareholders, following the sale of half of our ownership in AgeX to Juvenescence Ltd. for a total of $43.2 million. Importantly, we have continued to streamline BioTime’s corporate structure and priorities with a focus on creating value from our most compelling clinical opportunities. Executing on our stated milestones at each stage of corporate and clinical development and increasing our visibility within the investment, medical, and patient communities are vital activities which we believe will help drive the company’s success."
Recent Highlights
Completed acquisition of Asterias Therapeutics, Inc. BioTime acquired all of the remaining outstanding common stock of Asterias not previously owned by BioTime, and the operations of BioTime and Asterias were combined. BioTime is now advancing three clinical stage product candidates for the potential treatment of degenerative retinal diseases and neurological conditions associated with demyelination, and to potentially aid the body in detecting and combating cancer.
Announced exclusive agreement with Orbit Biomedical Ltd. (Orbit) under which BioTime and Orbit will collaborate on the use of Orbit’s proprietary injection technology to deliver OpRegen for the treatment of dry age-related macular degeneration (dry-AMD) in BioTime’s ongoing Phase I/IIa clinical study.
Completed the distribution of approximately 12.7 million shares of AgeX common stock owned by BioTime on a pro rata basis to eligible BioTime shareholders. BioTime retained an equity position in AgeX of 1.7 million shares, or approximately 5% of AgeX’s common stock. As of March 13, 2019, the value of BioTime’s AgeX share position was approximately $7.2 million.
Presented encouraging data on BioTime’s proprietary pluripotent stem cell technology as a platform to address the retinal degeneration disease continuum presented at the 14th Annual Scientific Meeting of the Association For Ocular Pharmacology and Therapeutics (AOPT 2019).
BioTime affiliate OncoCyte Corporation (NYSE American: OCX) recently reported positive results from an R&D validation study of DetermaVu, its non-invasive liquid biopsy test intended to facilitate clinical decision making in lung cancer diagnosis. Following a recently completed $40.25 million public offering by OncoCyte, BioTime owns approximately 28% of OncoCyte’s common stock, or 14.7 million shares. As of March 13, 2019, the value of BioTime’s OncoCyte share position was approximately $55.9 million.
Plans for 2019
Present updated results from the ongoing Phase I/IIa clinical study of OpRegen for the treatment of dry-AMD and the Vision Restoration Program at the 2019 Association for Research in Vision and Ophthalmology Annual Meeting on May 2, 2019 and April 30, 2019, respectively.
Pursuant to an exclusive collaboration with Orbit Biomedical Ltd. for the use of Orbit’s proprietary injection technology, initiate dosing of the first patient with the Orbit device and a new thaw and inject formulation in the ongoing Phase I/IIa clinical study of OpRegen for the treatment of dry-AMD, anticipated in Q2 2019.
Advance the OPC1 program and meet with the FDA to discuss plans for next steps in the clinical development of the program, anticipated in 2019.
Strengthen and expand existing partnerships with the California Institute for Regenerative Medicine and Cancer Research UK, for the ongoing support of the development of the OPC1 and VAC2 programs.
Complete patient enrollment in the ongoing Phase I/IIa clinical study of OpRegen for the treatment of dry-AMD, anticipated by year end 2019.
Evaluate the development of OPC1 as a candidate for the potential treatment of multiple sclerosis (MS) and ischemic stroke through ongoing research collaborations with major universities.
Announce decision on BioTime’s CE Mark application for Renevia, an investigational medical device being developed as an alternative for whole adipose tissue transfer procedures, expected in the second half of 2019.
Balance Sheet Highlights
Cash, cash equivalents and marketable securities totaled $30.7 million as of December 31, 2018.
BioTime’s investment in OncoCyte was valued at $20.3 million as of December 31, 2018 and at $55.9 million as of March 13, 2019, under the equity method of accounting.
BioTime’s promissory note from Juvenescence was valued at $22.1 million as of December 31, 2018. If Juvenescence completes an initial public offering (IPO) resulting in gross proceeds of not less than $50,000,000, the promissory note converts into Juvenescence ordinary shares based on the per-share price to the public in the IPO, subject to an upward adjustment in the number of shares that would be issued to BioTime upon such conversion if the 20-day volume-weighted average trading price of one share of AgeX’s common stock before the IPO is priced is above $3.00. If the promissory note is converted, the Juvenescence ordinary shares will be a marketable security that BioTime may use to supplement its liquidity, as needed. If the promissory note is not converted, it is payable in cash, plus accrued interest at 7% per year, at maturity in August 2020.
Fourth Quarter Operating Results
Revenues: BioTime’s revenue is generated primarily from research grants, licensing fees and royalties. Total revenues for the three months ended December 31, 2018 were $0.8 million, a decrease of $0.2 million, compared to $1.0 million for the same period in 2017. The decrease was primarily related to a reduction of $0.4 million attributable to the deconsolidation of AgeX operations from BioTime’s financial results in August 2018, offset by an increase of $0.2 million attributable to an increase in grant revenues.
Operating Expenses: Operating expenses are comprised of research and development ("R&D") expenses and general and administrative ("G&A) expenses. Total operating expenses for the three months ended December 31, 2018 were $10.8 million, as reported, and $8.1 million, as adjusted. AgeX was deconsolidated from BioTime on August 30, 2018, and beginning on that date, AgeX’s operating expenses are not included in BioTime’s operating expenses.
The reconciliation between GAAP and non-GAAP operating expenses, by entity, is provided in the financial tables included with this earnings release.
R&D Expenses: Beginning on August 30, 2018, BioTime ceased recognizing R&D expenses related to AgeX and its programs due to the AgeX deconsolidation on that date.
R&D expenses for the three months ended December 31, 2018 were $3.8 million, a decrease of $0.9 million, compared to $4.7 million for the same period in 2017. The decrease was primarily related to a $0.8 million decrease from the AgeX deconsolidation and the absence of AgeX research and development expenses incurred after August 30, 2018.
G&A Expenses: Beginning on August 30, 2018, BioTime ceased recognizing G&A expenses related to AgeX and its subsidiaries due to the AgeX deconsolidation on that date.
G&A expenses for the three months ended December 31, 2018 were $7.0 million, an increase of $1.2 million, compared to $5.8 million for the same period in 2017. The increase was primarily attributable to increases of $1.0 million in legal and related costs related to the Asterias merger announced in November 2018 and completed on March 8, 2019, and $0.8 million in noncash stock-based compensation expense due to additional equity award grants and vesting of certain restricted stock units for meeting performance milestones. These increases were partially offset by a decrease of $0.8 million from the AgeX deconsolidation and the absence of AgeX research and development expenses incurred after August 30, 2018.
Other Income/(Expenses), Net: Other expenses, net for the three months ended December 31, 2018 were $35.2 million, a decrease of $32.1 million, compared to $67.3 million for the same period in 2017. The decrease was primarily related to changes in the value of equity investments in OncoCyte, Asterias and AgeX for the applicable periods.
Net loss attributable to BioTime: The net loss attributable to BioTime for the three months ended December 31, 2018 was $45.0 million, or $0.35 per share (basic and diluted), compared to a net loss attributable to BioTime of $71.9 million, or $0.58 per share (basic and diluted), for the same period in 2017.
Year-to-Date Operating Results
Revenues: Total revenues for the year ended December 31, 2018 were $5.0 million, an increase of $1.5 million, compared to $3.5 million for 2017. The increase was primarily related to an increase in grant revenues of $1.9 million, offset by a reduction of $0.4 million in subscription and research related revenues attributable to the deconsolidation of AgeX operations from BioTime’s financial results in August 2018.
BioTime receives two types of grant revenues: one is for the development of OpRegen and is received through BioTime’s Israeli subsidiary, Cell Cure, from the Israeli Innovation Authority (IIA), and the second is for BioTime’s vision restoration program and is a Small Business Innovation Research grant from the National Institutes of Health (NIH). Revenues from the IIA grant and the NIH grant were $2.5 million and $1.1 million for the year ended December 31, 2018, respectively, compared to revenues from the IIA grant and the NIH grant of $1.5 million and $0.2 million, respectively, for 2017.
Operating Expenses: Total operating expenses for the year ended December 31, 2018 were $46.5 million, as reported, which is comprised of $38.8 million for BioTime and $7.7 million for AgeX. Total operating expenses for the year ended December 31, 2018 were $37.0 million, as adjusted, which is comprised of $31.0 million for BioTime and $6.0 million for AgeX.
R&D Expenses: R&D expenses for the year ended December 31, 2018 were $21.8 million, a decrease of $2.2 million, compared to $24.0 million for 2017. The decrease was mainly attributable to:
a decrease of $1.5 million in AgeX related programs, including LifeMap Sciences, due to the AgeX deconsolidation;
a decrease of $0.8 million from the absence of OncoCyte research and development expenses incurred in 2017 as a result of the OncoCyte deconsolidation in February 2017;
a decrease of $0.5 million in LifeMap Solutions expenses resulting from the cessation of its mobile health software development application business in July 2017; and
a decrease of $0.3 million in BioTime related program expenses, primarily related to completing the Renevia clinical trial in early 2018.
The decreases were partially offset by an $0.8 million write-off of certain acquired in-process R&D assets in March 2018 that have no alternative future use by AgeX.
G&A Expenses: G&A expenses for the year ended December 31, 2018 were $24.7 million, an increase of $4.8 million, compared to $19.9 million for 2017. The increase was primarily attributable:
an increase of $2.3 million related to management transition and other compensation related costs, including hiring costs for a new chief executive officer during September 2018;
an increase of $2.1 million for legal, audit and compliance costs related to distributing 12.7 million shares of AgeX common stock to BioTime shareholders in November 2018; and
an increase of $1.5 million in noncash stock-based compensation expense due to increases in equity award grants.
These increases were partially offset by decreases of $1.4 million in combined G&A expenses related to the OncoCyte deconsolidation in February 2017, and to LifeMap Solutions, which ceased conducting its mobile health software application business in July 2017, and $0.3 million in AgeX related costs, including LifeMap Sciences, due to the AgeX deconsolidation.
Other Income/(Expenses), Net: Other income/(expenses), net for the year ended December 31, 2018 were $5.3 million in expenses, as compared to $15.6 million in income for 2017. The variance was primarily driven by changes in market values of the Asterias and OncoCyte shares held by BioTime and gains from the AgeX deconsolidation in 2018 from the sale AgeX shares to Juvenescence, and from the OncoCyte deconsolidation in 2017.
Net loss attributable to BioTime: The net loss attributable to BioTime for the year ended December 31, 2018 was $46.0 million, or $0.36 per share (basic and diluted), compared to a net loss attributable to BioTime of $20.0 million, or $0.17 per share (basic and diluted), for 2017.
Conference Call and Webcast
BioTime will host a conference call and webcast today, at 1:30pm PT/4:30pm ET to discuss its fourth quarter and full year 2018 financial results and to provide a business update. Interested parties may access the conference call by dialing (866) 888-8633 from the U.S. and Canada and (636) 812-6629 from elsewhere outside the U.S. and should request the "BioTime Inc. Call". A live webcast of the conference call will be available online in the Investors section of BioTime’s website. A replay of the webcast will be available on BioTime’s website for 30 days and a telephone replay will be available through March 21st, 2019, by dialing (855) 859-2056 from the U.S. and Canada and (404) 537-3406 from elsewhere outside the U.S. and entering conference ID number 1091719.