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BioTime Closes $43.2 Million AgeX Share Sale Transaction With Juvenescence

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BioTime, Inc. (NYSE American: BTX), a clinical-stage biotechnology company focused on degenerative diseases, today announced that it has closed the previously announced transaction with Juvenescence Limited, a global leader in developing therapeutics focused on improving and extending human lifespans.

BioTime sold 14.4 million shares of AgeX to Juvenescence for $43.2 million. The cash consideration of $21.6 million, or 50% of the purchase price, will be paid in two installments. The first installment of $10.8 million was received by BioTime at the close of the transaction. The second installment will be paid on November 5, 2018. The remaining 50% of the $43.2 million consideration, or $21.6 million, has been paid by Juvenescence in the form of a 2-year convertible promissory note with an annual interest rate of 7%, payable at maturity, if not converted into Juvenescence common stock sooner.

“Critical to the success of any biotech company are programs, people and capital,” said Dr. Michael West, CEO of AgeX and Co-CEO of BioTime. “AgeX, aided by this alliance, is now an organization that is strong in all three of these areas, while providing both short and long-term benefits to BioTime.”

“We formed AgeX with technologies and programs that were within BioTime, but whose value we believe was not appreciated by the market. With the completion of this transaction we have been able to realize near-term benefit and retain potential longer-term value for our shareholders,” said Adi Mohanty, Co-CEO of BioTime. “BioTime formed AgeX with agreements that allow both companies opportunities to further benefit from each other’s successes, skills and strengths. The agreements were designed to maximize the potential of AgeX programs while providing for potential future milestone payments and royalties to BioTime. BioTime and AgeX will be working toward the success of both companies for many years to come.”

In consideration for the sale of 14.4 million shares of AgeX, BioTime potentially benefits from this transaction in multiple ways:

  • BioTime receives $21.6 million in non-dilutive cash to support the development of its core clinical programs. This additional amount adds an additional 10 months of BioTime’s current monthly cash burn average of approximately $2 to $2.2 million.
  • BioTime obtains either another $21.6 million in cash in the future or a potentially higher value through a share of Juvenescence’s value in its potential initial public offering , which Juvenescence has previously indicated it plans to undertake in 2019. BioTime received from Juvenescence a two-year convertible promissory note for $21.6 million that accrues interest at 7% per year. If the note is converted into Juvenescence stock, BioTime has the potential to benefit from any increase in value above the IPO price. Any subsequent liquidity from a sale of the Juvenescence shares represent additional non-dilutive funding from the transaction. At BioTime’s current monthly cash burn it could provide another 10 months, or more, of funding.
  • BioTime will continue to benefit from any potential increase in AgeX value between the time AgeX stock is publicly traded and the Juvenescence IPO . If AgeX trades above $3 per share, the transaction provides for an increase in the number of shares of Juvenescence stock to be received by BioTime at a Juvenescence IPO. For example, if AgeX is trading at $6 per share at the time of Juvenescence’s IPO, BioTime would receive twice the number of shares of Juvenescence at conversion. BioTime has previously indicated that it intends for AgeX to be publicly traded by the end of September 2018, though the timing will depend on the SEC review, listing on a national exchange and other factors.
  • BioTime retains a potential to further benefit from the future success of AgeX programs . The existing milestones and royalties in the licensing arrangement from BioTime to AgeX remain and were not changed as part of the Juvenescence transaction. In addition, even after BioTime’s planned upcoming distribution of some of its AgeX shares to BioTime shareholders, BioTime will continue to own a meaningful stake in AgeX.

In addition, AgeX will benefit from its alliance with Juvenescence by partnering with a world class organization that has a proven and seasoned team of experts in drug development, strategy, commercialization and finance. Juvenescence founders and key management, including James Mellon (Chairman) and Dr. Gregory Bailey (CEO), have helped to build several other companies that have delivered significant shareholder value, including Medivation, Inc., which was sold to Pfizer for $13.6 billion, where Dr. Bailey provided financing to Medivation and served on its board of directors.

By combining BioTime’s existing cash and other assets with the total $43.2 million nominal value of the Juvenescence transaction, if realized in cash, BioTime has sufficient capital, at management’s currently planned level of expenditures and receipts based on a monthly cash burn average of approximately $2 to $2.2 million, to achieve its upcoming major Renevia® and OpRegen® milestones, which are expected to be completed by 2020.

At the close of the Juvenescence transaction, BioTime filed with the SEC a Form 8-K on August 31, 2018, providing information regarding the transaction and its effects on BioTime’s consolidated financial statements. Investors are encouraged to review the 8-K. BioTime reported a gain of $77.5 million and an increase in assets of $73 million on a pro forma basis using its second quarter 2018 reported unaudited financial statements. The gain was due to the transaction and deconsolidation of AgeX’s financial statements from BioTime’s. The deconsolidation was triggered because BioTime’s ownership in AgeX was reduced to under 50%.

The pro forma financial information is based on BioTime’s historical unaudited consolidated financial statements and the AgeX historical unaudited consolidated financial statements. It is intended to provide shareholders and other interested parties with information about how the Juvenescence transaction and deconsolidation of AgeX might have affected the BioTime historical unaudited consolidated financial statements if the Juvenescence transaction closed and deconsolidated AgeX as of June 30, 2018. The pro forma financial information is based on available information and assumptions that BioTime believes are reasonable. The pro forma financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what the financial condition or results of operations would have been had the transactions described above occurred on the date indicated. The pro forma financial information also should not be considered representative of the future financial condition or results of operations. BioTime is not able to estimate the actual gain or the actual income tax impact on this gain, until it determines the actual balances, which will be completed during the third quarter ending September 30, 2018. The actual gain, including related income taxes, if any, may differ materially from the pro forma estimated, net of tax, gain shown herein. BioTime has filed on August 31, 2018 its unaudited pro forma condensed combined financial statements as an exhibit to the Current Report on Form 8-K showing pro forma effects of the closing of the Juvenescence transaction and the deconsolidation of AgeX.

The impact of the Juvenescence transaction and the deconsolidation of AgeX will be reported in BioTime’s unaudited quarterly report on Form 10-Q for the quarter ending September 30, 2018 to be filed with the SEC.

BioTime remains committed to unlocking further value for its shareholders and continues to move forward with its planned distribution of AgeX shares to BioTime shareholders as previously communicated. BioTime shareholders will receive one share of AgeX common stock for every 10 shares of BioTime common stock held. More information about the distribution will be communicated in the coming days. This press release does not constitute an offer to sell or a solicitation of an offer to buy securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.

About BioTime, Inc.

BioTime is a clinical-stage biotechnology company focused on degenerative diseases. Its clinical programs are based on two platform technologies: cell replacement and cell/drug delivery. With its cell replacement platform, BioTime is producing new cells and tissues with its proprietary pluripotent cell technologies. These cells and tissues are developed to replace those that are either rendered dysfunctional or lost due to degenerative diseases or injuries. BioTime’s cell/drug delivery programs are based upon its proprietary HyStem® cell and drug delivery hydrogel matrix technology. HyStem® was designed, in part, to provide for the transfer, retention and/or engraftment of cellular replacement therapies. HyStem® is a unique hydrogel that has been shown to support cellular attachment and proliferation in vivo. Current research at leading medical institutions has shown that HyStem® is compatible with a wide variety of cells and tissue types including brain, bone, skin, cartilage, vascular and heart tissues. Due to the unique cross-linking chemistry, HyStem® hydrogels have the ability to mix cells, biologics and small molecule drugs and can be injected or applied as a gel which allows the hydrogel to conform to a cavity or space. This property of HyStem® hydrogels offers several distinct advantages over other hydrogels, including the possibility of combining bioactive materials with the hydrogel at the point of use. BioTime is also developing HyStem® for the delivery of therapeutic drugs and cells to localized areas of the body, including for sustained drug release in the targeted anatomical sites. BioTime’s lead cell delivery clinical program is Renevia®, which consists of HyStem® combined with the patient's own adipose (fat) derived tissue or cells. Renevia® met its primary endpoint in an EU pivotal clinical trial for the treatment of facial lipoatrophy in HIV patients in 2017. BioTime has submitted Renevia® for CE Mark approval in the EU. There were no device related serious adverse events reported to date. BioTime’s lead cell replacement product candidate is OpRegen®, a retinal pigment epithelium transplant therapy, which is in a Phase I/IIa multicenter clinical trial for the treatment of dry age-related macular degeneration, the leading cause of blindness in the developed world. There have been no unexpected serious adverse events reported to date. BioTime also has significant equity holdings in two publicly traded companies, Asterias Biotherapeutics, Inc. (NYSE American: AST) and OncoCyte Corporation (NYSE American: OCX), and a private company, AgeX Therapeutics, Inc.

BioTime common stock is traded on the NYSE American and TASE under the symbol BTX. For more information, please visit www.biotime.com or connect with the company on TwitterLinkedInFacebookYouTube, and Google+.

To receive ongoing BioTime corporate communications, please click on the following link to join the Company’s email alert list: http://news.biotime.com.

About AgeX Therapeutics

AgeX Therapeutics, Inc., an affiliate of BioTime, Inc. (NYSE American: BTX), is a biotechnology company focused on the development of novel therapeutics for age-related degenerative disease. The company’s mission is to apply the proprietary technology platform related to telomerase-mediated cell immortality and regenerative biology to address a broad range of diseases of aging. The current preclinical development efforts include two cell-based therapies derived from telomerase-positive pluripotent stem cells and two product candidates derived from the company’s proprietary induced Tissue Regeneration (iTR™) technology. AGEX-BAT1 and AGEX-VASC1 are cell-based approaches in the preclinical stage of development comprised of young regenerative cells modified using the Company’s UniverCyte technology facilitating immune tolerance, formulated in HyStem® matrix, designed to correct metabolic imbalances in aging and to restore vascular support in ischemic tissues respectively. AGEX-iTR1547 is a drug-based formulation in preclinical development intended to restore regenerative potential in a wide array of aged tissues afflicted with degenerative disease using the company’s proprietary iTR technology. Renelon™ is a first-generation iTR product designed to promote scarless tissue repair which the Company plans to initially develop as a topically-administered device for commercial development through a 510(k) application. In addition to the product candidates in early development, the company, through its LifeMap subsidiary, currently markets genomic interpretation algorithms. In addition, the company, through its ESI BIO division, markets Cytiva®, comprised of PSC-derived heart muscle cells used in screening drugs for efficacy and safety.

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

About Juvenescence, Limited

Juvenescence is developing multiple therapeutics focused on improving and extending human lifespans. The Juvenescence team comprises proven and seasoned experts in drug development, strategy, structure, commercialization and finance. From its outset, Juvenescence has staked out a major footprint in AI, and specifically in machine and deep learning through its part ownership of Insilico Medicine and through its ownership in NetraPharma and Juvenescence AI. Access to these two AI engines from its joint ventures are expected to assist its efforts in drug discovery, as well as in optimizing human trials of the therapeutics it develops. Juvenescence’s pipeline consists of pre-clinical candidates that have been joint ventured with leading research institutions and associated scientist inventors.

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. Investors are cautioned that statements in this press release regarding: (a) any value to BioTime shareholders of the remaining AgeX common stock or the promissory note from Juvenescence and the potential for liquidity of those assets; (b) BioTime's plans or expectations for distribution of AgeX common stock to BioTime shareholders; (c) potential listing and value appreciation of AgeX common stock on the NYSE American; (d) whether the relationship with AgeX and Juvenescence can lead to increase value for shareholders; (e) BioTime’s cash sufficiency forecast, including its projected cash burn and proceeds from the Juvenescence transaction; (f) potential milestone and royalty payments; (g) whether the Juvenescence transaction will generate the expected liquidity and flexibility for BioTime to support its operations and plans through the clinical and other results projected and whether those events will occur as currently anticipated. Forward-looking statements involve risks and uncertainties. These risks and uncertainties, include, without limitation: (i) the possibility that BioTime shareholders may realize little or no value from the AgeX common stock or from the Juvenescence transaction; (ii) the potential inability of BioTime to complete the distribution in a timely manner or at all, including as a result of the failure of BioTime and/or AgeX to obtain or maintain required federal and state registrations and qualifications necessary to enable the distribution, and related transactions; (iii) the possibility of litigation that could arise as a result of or in connection with the Juvenescence transaction, distribution or related transactions; (iv) that there is no existing public market for AgeX or Juvenescence common stock, nor may a public market for such securities ever develop; and (v) that BioTime may require additional financing to fund its programs. 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 BioTime, Inc. and its subsidiaries, particularly those mentioned in the cautionary statements found in more detail in the “Risk Factors” section of BioTime’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC (copies of which may be obtained at www.sec.gov). Subsequent events and developments may cause these forward-looking statements to change. BioTime 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.

Contact information

BioTime Investor and Media Contact:
David Nakasone, 510-871-4188
Dnakasone@biotime.com
Or
Media Contact for AgeX:
Gotham Communications, LLC
Bill Douglass, 646-504-0890
bill@gothamcomm.com

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