TO CONDENSED FINANCIAL STATEMENTS
Organization, Basis of Presentation and Liquidity
Biotherapeutics, Inc. (“Asterias” or “the Company”) is a clinical-stage biotechnology company dedicated
to developing pluripotent stem cell-derived therapies to treat neurological conditions associated with demyelination and cellular
immunotherapies to treat cancer. We have industry-leading technology in two cell types, each with broad potential applicability:
(1) oligodendrocyte progenitor cells, which become oligodendrocytes that have the potential to remyelinate axons within the central
nervous system and perform other restorative functions, and (2) antigen-presenting dendritic cells, which train T-cells in the
immune system to attack and destroy solid or liquid tumor cells across multiple types of cancer. Asterias currently has three
clinical-stage therapeutic programs:
Spinal Cord Injury. AST-OPC1 is an oligodendrocyte progenitor cell population derived from pluripotent
stem cells that is currently in a Phase 1/2a clinical trial for spinal cord injuries (“SCI”) that has been partially
funded by the California Institute for Regenerative Medicine (“CIRM”).
Non-Small Cell Lung Cancer. AST-VAC2 is a non-patient-specific (“off-the-shelf”) cancer
immunotherapy derived from pluripotent stem cells that is currently in a Phase 1 clinical trial in non-small cell lung cancer
(“NSCLC”). The trial is being funded and sponsored by Cancer Research UK (“CRUK”), the world’s largest
independent cancer research charity.
Acute Myeloid Leukemia. AST-VAC1 is a patient-specific cancer immunotherapy which has generated positive Phase 2 data in the treatment
of acute myeloid leukemia (“AML”). Because AST-VAC1 and AST-VAC2 are both dendritic cells presenting the telomerase
antigen, an antigen presented by 90% of all cancers, we believe that AST-VAC1 provides supportive evidence for the use of AST-VAC2
in the treatment of AML.
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X of the Securities Exchange Commission. In accordance with those rules and regulations certain information
and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted pursuant to such
rules and regulations. The balance sheet as of December 31, 2017 was derived from the audited financial statements at that date,
but does not include all the information and footnotes required by U.S. GAAP. These financial statements should be read in conjunction
with the audited financial statements and notes thereto included in Asterias’ Annual Report on Form 10-K for the year ended
December 31, 2017.
accompanying interim condensed financial statements, in the opinion of management, include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of Asterias’ financial condition and results of operations.
The condensed results of operations are not necessarily indicative of the results to be expected for any future interim period
or for the entire year.
– Since inception, Asterias has incurred operating losses and has funded its operations primarily through the issuance
of shares of Asterias Common Stock, sales of marketable equity securities that we hold, warrant exercise proceeds, payments from
research grants, and royalties from product sales. At September 30, 2018, Asterias had an accumulated deficit of $132.3 million,
working capital of $13.3 million and stockholders’ equity of $24.5 million. Asterias has evaluated its projected cash flows
and believes that its cash, cash equivalents, and restricted cash of $6.5 million, marketable equity securities of $6.2 million,
and $2.4 million of receivables largely related to our Novo agreements (payments were received in early October 2018) as of September
30, 2018, will be sufficient to fund Asterias’ operations through at least twelve months from the issuance date of these
financial statements. If the value of Asterias’ marketable equity securities decreases or it is unable to obtain adequate
future financing or other sources of funding, it may be required to reduce or curtail its operations. Future financings or other
sources of funding may not be available to Asterias at acceptable terms, or at all. Sales of additional issued equity securities
would result in the dilution of interests of current shareholders.