Earnings call: Lineage Cell Therapeutics reports positive OpRegen trial results

In a recent earnings call, Lineage Cell Therapeutics (NYSE:), a biotechnology company specializing in regenerative medicine, reported promising results from its OpRegen treatment for dry age-related macular degeneration (AMD (NASDAQ:)). The therapy showed an average gain in visual acuity, contrasting with the typical loss experienced with other treatments. Additionally, the company is advancing its spinal cord injury program, OPC1, with a new clinical trial on the horizon. Lineage remains well-capitalized, despite reporting a net loss for the quarter, and is continuing to invest in its pipeline and partnerships.

Key Takeaways

• OpRegen treatment for dry AMD showed an average gain of 5.5 letters in visual acuity after two years.
• Lineage entered a new services agreement with Genentech for OpRegen development.
• OPC1, Lineage’s spinal cord injury therapy, is preparing for a new clinical trial with a novel delivery system.
• The company reported a net loss of $6.5 million for the quarter but remains sufficiently capitalized.
• CEO Brian Culley compared OpRegen’s progress to LASIK surgery, becoming more routine with experience.
• The company is considering providing 36-month data on OpRegen therapy but has not set a date.
• Lineage is confident in the long-term handoff of the OpRegen program to Roche and Genentech.
• The company is in the process of activating sites for the OPC1 therapy and awaits updates on the CIRM application.

Company Outlook

• Lineage Cell Therapeutics (LCTX) is focused on advancing its product pipeline, with a strong commitment to fiscal discipline.
• The company is awaiting FDA clearance to initiate a new trial for its OPC1 spinal cord injury therapy, expected to open its first clinical site in June.

Bearish Highlights

• The company reported a net loss of $6.5 million for the quarter.

Bullish Highlights

• Positive trial results for OpRegen therapy in treating dry AMD, with patients gaining visual acuity.
• A new services agreement with Genentech supports the ongoing development of OpRegen.
• The upcoming OPC1 clinical trial features a novel delivery system that may offer a safety advantage.

Misses

• Two participants in the OpRegen study dropped out for personal reasons, not related to serious adverse events.

Q&A Highlights

• CEO Brian Culley discussed the potential for a control eye in trials to be treated with a complement inhibitor, expressing confidence in OpRegen’s success.
• The company is preparing for the activation of clinical sites for OPC1 therapy and is awaiting CIRM application updates.
• Lineage is confident in the ability to enroll patients in the OPC1 trial and believes even small improvements for patients would be significant.

The company’s commitment to advancing its therapies, coupled with the positive trial results and strategic partnerships, positions Lineage Cell Therapeutics as a company to watch in the regenerative medicine space. The market demand for new therapies in dry AMD and spinal cord injuries remains high, and Lineage’s innovative approaches could potentially meet these needs.

InvestingPro Insights

Lineage Cell Therapeutics (LCTX) has recently garnered attention for its advancements in regenerative medicine, especially with its OpRegen treatment for dry age-related macular degeneration (AMD) and the upcoming clinical trial for its OPC1 spinal cord injury therapy. As investors and industry observers evaluate the company’s potential, certain financial metrics and InvestingPro Tips provide additional context to its current market position.

InvestingPro Tips highlight that LCTX holds more cash than debt on its balance sheet, which is a reassuring sign of financial stability. This is particularly important for a biotech company like Lineage, which requires significant capital for research and development. Additionally, the company’s impressive gross profit margins, which stand at 91.88% for the last twelve months as of Q1 2023, suggest that once its products are commercialized, there could be a strong potential for profitability.

From the InvestingPro Data, it’s notable that LCTX has experienced a significant return over the last week, with a 11.32% price total return. This could indicate increased investor confidence following the recent positive news about its therapies. However, the company’s net income is expected to drop this year, and analysts do not anticipate the company will be profitable this year, which may temper expectations in the short term.

Investors should also consider the company’s valuation metrics, such as the Price/Book ratio of 3.78, which suggests that Lineage is trading at a premium compared to its book value. This premium may be justified by the company’s future growth prospects and the innovative nature of its treatments.

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Full transcript – Biotime (LCTX) Q1 2024:

Operator: Welcome to the Lineage Cell Therapeutics First Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investors section of Lineage website at www.lineage.com. This call is subject to copyright and is the property of Lineage and recordings for productions or transmissions of this call without the express written consent of Lineage are strictly prohibited. As a reminder, today’s call is being recorded. I would now like to introduce you to your host for today’s call, Ioana Hone, Head of Investor Relations of Lineage. Ms. Hone, please go ahead.

Ioana Hone: Thank you, John. Good afternoon and thank you for joining us. A press release reporting our first quarter 2024 financial results was issued earlier today, May 9th, 2024, and can be found on the Investors section of our website. Please note that today’s remarks and responses to your questions reflect management’s views as of today only and will contain forward-looking statements within the meaning of federal securities laws. Statements made during this discussion that are not statements of historical fact should be considered forward-looking statements, which are subject to significant risks and uncertainties. The company’s actual results or performance may differ materially from the expectations indicated by such forward-looking statements. For a discussion of certain factors that could cause the company’s results or performance to differ, we refer you to the forward-looking statements section in today’s press release and in the company’s SEC filings, including its annual report on Form 10-K, for the year ended December 31st, 2023. We caution you not to place undue reliance on any forward-looking statements, which speak only as of today and are qualified by the cautionary statements and risk factors described in our SEC filings. With us today are Brian Culley, our Chief Executive Officer; and Jill Howe, our Chief Financial Officer. I’ll now hand the call over to Brian.

Brian Culley: Thank you, Ioana, and good afternoon, everyone. We’ve had an exciting week, and I appreciate you taking the time to join us on this call. We have many positives to cover today, including the news we just shared a few minutes ago, but I want to begin with the recent data update on OpRegen. Data is a major driver of value and that data was notable for several reasons, and I just want to ensure those points are clear for our new and existing shareholders. Last Friday, on behalf of Roche and Genentech, Dr. David Thelander, presented 24-month results from the Phase 1/2a trial of OpRegen for dry AMD. As you know, dry AMD is a degenerative disease that never resolved spontaneously. Dry AMD also currently has no treatment options that can improve vision or even maintain vision in terms of the number of letters read on an eye chart, which is the standard way to assess visual performance in these patients. In fact, according to a recent publication in the Lancet reporting on a clinical trial of more than 1,200 dry AMD patients, [indiscernible] treated patients with baseline disease characteristics similar, although not identical to those OpRegen patients reported by Dr. Thelander lost an average of seven letters of visual acuity after 24 months. Patients who received the best available treatment with an FDA-approved complement inhibitor still experienced a mean loss of vision of eight or nine letters over the same 24-month time period. In comparison, among the 24 patients treated in the OpRegen Phase 1/2a study, and we focused on the 12 patients, which we call Cohort 4, and these are patients who were not already legally blind at baseline, 10 of those 12 patients had data available at 24 months, which, therefore, somewhat matches those reported in the Lancet publication. And those Opergen patients actually gained an average of 5.5 letters. I think it’s worth repeating this point. This cohort of OpRegen patients gained back an average of 5.5 letters of visual acuity while comparable patients on anti-complement therapy or no therapy at all lost seven to nine letters. So if you compare these time matched outcomes, our experimental therapy was on average, 14 letters better than the best available therapy. More importantly, these OpRegen patients gained vision while those others lost it. Digging further, if you look only at the five patients who received more thorough coverage of Opregen across their areas of GA, that difference moves even further in our favor with an average gain of 7.4 letters of BCVA at 24 months, coupled with those gains in visual acuity were the anatomical changes, which also were reported by Dr. Telander. I won’t repeat his entire presentation, which is available on our website, but a summary version of it is that some of these OpRegen treated patients who should all be experiencing degradation of their retinal tissue have shown imaging evidence of retaining or even gaining critical layers of their retina two years after receiving a single transplant of OpRegen RPE cells. While this observation did not occur in a large number of patients, it’s important to keep in mind that this is a phenomenon which never occurs in the natural course of this disease. And additionally, our pharma partner is reporting these observations independently by accessing and evaluating raw data, collected from our study at multiple sites, from multiple surgeons and even using significantly different delivery techniques. Now we all know that small data sets from early-stage studies are not as conclusive as large studies, but that does not mean that small data sets aren’t valuable. It depends on their context and the consistency of information which they provide. For this reason, I think it’s worthwhile to put two things into perspective. First, the data set I’m comparing us to is not small. The complement data — data I just mentioned includes more than 1,200 patients. So we believe the vision loss experienced by those patients is both relevant and reliable to use as context for our data. Second, while our data reports on a cohort of 10 patients rather than the large number of patients used to determine findings of safety and efficacy for marketing authorization, it’s certainly encouraging to us that these 10 patients with dry AMD treated at six different clinical sites in two countries, by eight different surgeons and using two different routes of delivery as a group and also as a majority showed improvement in an unavoidably degenerative condition. Moreover, the visual acuity improvement over untreated eyes, which also had dry AMD, was present as shown in the presentation last week at six months, 12 months and now demonstrated also at 24 months. OpRegen is a treatment designed and intended to accomplish exactly this kind of replace and restore outcome. So while additional data will be needed to determine the future value of our treatment it seems to us at lineage that the stream of incremental evidence of a beneficial and durable clinical effect is continuing, and this gives us great hope for the future. Taking the future of the segue for the next topic, we had a second significant and positive event this week. We announced just a few minutes ago that we have entered into a new services agreement with Genentech, which will provide additional support to the ongoing development of OpRegen. To be clear, we did not renegotiate our existing license agreement. This is a new additional agreement under which Lineage will be providing certain clinical, technical training and manufacturing services expanding beyond the scope of the existing license agreement that also further supports the ongoing advancement of the OpRegen program. These additional services will be fully funded by Genentech and include activities to support the ongoing Phase 1/2a and the currently enrolling Phase 2a studies as well as additional technical training and materials related to Lineage’s cell therapy technology platform, which can support commercial manufacturing strategies. We believe this additional commitment provides an important signal of our partners support for our approach at a time when they are making difficult decisions about their developmental pipeline. Specifically, we noted that gross representatives recently stated they are focusing on high impact assets which is supported by recent actions they have taken to prioritize their pipeline toward first-in-class and best-in-class assets. We welcome that as our view is that OpRegen satisfies both of those criteria. For today, I’ll summarize my updated view of the OpRegen program with these three points. First, we announced additional validating data this week, which offers implications for both the clinical benefit and durability of our lead product candidate. Second, we’ve entered into a new services agreement with our partner, which will expand the investigation and understanding of OpRegen and further deepened the valuable relationship we struck on this groundbreaking project. And third, despite safety concerns with current FDA approved treatment options, the commercial market for a dry AMD therapy continues to grow and is creating a more informed patient population. We believe all of these factors combined to position us well for a promising and potentially revolutionary approach to treating dry AMD. While dry AMD is a compelling opportunity and OpRegen may have applications in additional ocular diseases, we believe our cell transplant approach is not limited to ocular conditions. We believe the fundamental science of cell replacement offers advantages over small molecules and antibodies in certain situation, advantages, which could be applied to many areas of the body. As Genentech’s Vice President and Global Head of Ophthalmology Product Development recently said on a podcast, and I’ll again quote antibodies can’t replace dead cells. Only cells can replace dead cells. I couldn’t agree with them more. Clearly, cell therapy has already revolutionized oncology treatment, and there are many other indications where it could have a positive impact on chronic degenerative diseases. And I think there’s abundant evidence from the biotech and pharma world to support that statement. We can not only point to large companies like Bayer (OTC:), Roche, Astellas or Vertex (NASDAQ:), who have made major investments in this emerging field, but also look to newer entities, which have raised significant capital from high-caliber investors to explore what is possible using cell transplant technology. While we welcome these new entrants for the validation they bring to our approach, we’re also comforted by our experience, which indicates that the learning curve for this form of cell therapy, especially doing affordably scaled and well-controlled manufacturing is extremely steep and long. For this and other reasons, we believe we can remain a leader in this new branch of medicine by advancing our growing pipeline of opportunities and while pointing to the continued success of OpRegen. Our most advanced example of making investments in our pipeline is, of course, OPC1, our cell transplant program for spinal cord injury. The objective of this program is to replace the cells, which comprise the spinal cord and restore or provide function to people who have been paralyzed by a spinal cord injury. This is an approach of great interest and importance to the SCI field, and there have been a number of attempts to use stem cells in this patient population. However, those efforts all utilized undifferentiated for mesenchymal stem cells. At Lineage, we don’t use undifferentiated stem cells in any of our clinical programs because those aren’t the cells which are destroyed or lost to disease. Instead, we are manufacturing and transplanting cells which far more closely match the identity of cells found naturally in the body. And specifically, in this case, those found in the spinal compartment, which by the way, is the same fundamental approach, which has yielded positive results in the ocular compartment with our dry AMD program. We manufacture our spinal cord product candidate at a CGMP facility, which we control. And alongside the advantages of having in-house manufacturing, we’re not aware of anyone who has a longer set of safety data in cell therapy for spinal cord injury. We’ve collected and published as long as 10 years of safety and efficacy data on our patients and believe the adjustments we’ve made to increase purity and control of our sales and our manufacturing process will further improve the quality profile, which we’ve already demonstrated for this program. And in addition to improving the material we transplant, we’re simultaneously investigating superior ways to deliver ourselves to patients. To that point, the next clinical trial we plan to run in spinal cord injuries for the safety and performance of a novel delivery system, which we will initiate as soon as we receive final clearance from FDA. We have already submitted the requisite IND amendment information and received comments from the FDA. And typically, those comments only take us a few days to respond to, but FDA has explained to us that their heavy workload is causing delays. And in fact, their review of our submission has continued past their initial expectation of April 26, but we believe we are approaching the end of this portion of the regulatory process. And so in parallel, we are continuing to perform the necessary start-up activities for the clinical study. If FDA clearance does become likely to our target start date this quarter. We will provide that information around that time. But at present, we believe we remain on track to open our first clinical site for this study in June. There are three important aspects of this trial, which I want to note for you today. First, the delivery system we’re testing has been designed to deliver cells without stopping patient ventilation. -Prior trials, including also the two prior trials of OPC1, which have been completed, required the patient’s ventilator to be stopped during cell administration. We consider keeping the patient connected to the ventilator to offer an obvious safety advantage over therapies, which do not have this feature. This new approach is also compatible with our proprietary thaw-and-inject formulation, which has eliminated costly dose preparation steps and the associated counting and handling of cells in favor of a simple five-minute filing procedure followed by a slow manual push of the cells via an off-the-shelf needle. Thirdly, and probably the most exciting point among the three is that this study will be the first time OPC1 is administered to patients with chronic spinal cord injuries. That will be a significant milestone for this program, because most chronic injury patients have reached a plateau in their recovery. So if we happen to observe any functional recovery in a patient who has plateaued, it can significantly broaden the addressable patient population for this therapy. So in addition to the safety and performance of the new device, we also will be collecting functional assessments on the patients to investigate whether any signals of efficacy are present among chronic injury patients. As our technology and know-how increases as our lead program adds validation to our approach and as our internally developed programs reach clinical testing, we are positioning ourselves to retain a growing share of the economics of our success. For this reason, we plan to continue investing in our pipeline and partnerships, which are aligned with this strategy. For example, our alliance with Eterna to generate a hypo immune cell-line for future cell transplant programs is making good progress, and that could be something we discuss on the next call. An additional comment I wanted to make today was to provide an update on the second annual SCI Investor Symposium. We created this conference with input and support from the Christopher and Dana Red Foundation and California Institute for Regenerative Medicine as part of our efforts to expand collaborative partnerships and drive greater awareness to the SCI field. To our knowledge, this investor facing conference is the only one of its kind in spinal cord injury and we’re delighted by the quality of speakers and companies, which have confirmed to present. In addition to molecular interventions such as these self-transplants and small molecules being developed by Lineage and AbbVie (NYSE:), we have added companies from the electrical stimulation and BCI fields. Most of the thought leaders who presented last year have already committed to return, and we are continuing to add speakers. The event aims to provide a comprehensive view of issues and opportunities in spinal cord injury. You can expect an update from us on this conference in the coming weeks, and I hope that some of you will consider joining us for it in San Diego on June 26th and 27th. Before handing the call over to Jill to review our financials, I wanted to add a few words about the passing of our long-serving Chairman, Mr. Al Kingsley. Al played a pivotal role in this company’s journey. He was incredibly dedicated and creative in his work, and our deepest condolences go out to his family, friends and countless colleagues. Al was a man of great faith and charity in both his personal and professional lives, and we intend to honor his dreams for this company through the inspiration and dedication that his memory provides for us each and every day. Jill?

Jill Howe: Thanks, Brian, and good afternoon, everyone. Starting with our balance sheet, I am pleased to announce that we remain sufficiently capitalized to carry out the near-term activities in our current operating plan. Our reported cash, cash equivalents and marketable securities of $43.6 million as of March 31, 2024, is expected to support planned operations into Q3 of 2025. Next, I will review our financial operating results — our first quarter operating results. Our revenue is generated primarily from collaboration revenues and royalties. Total revenues were approximately $1.4 million, a net decrease of $1 million as compared to $2.4 million for the same period in 2023. The decrease was primarily driven by lower collaboration and licensing revenue recognized from deferred revenues under the collaboration and license agreement with Roche. Our operating expenses are primarily comprised of research and development expenses and general and administrative expenses. Total operating expenses were $8.1 million, a decrease of $0.9 million as compared to $9 million for the same period in 2023. R&D expenses were $3 million, a net decrease of $1.2 million as compared to $4.2 million for the same period in 2023. The net decrease was primarily driven by $0.4 million for our OPC1 program, $0.3 million for our preclinical programs and $0.2 million for our OpRegen program. Another $0.3 million of the decrease is attributable to other research and development expenses, primarily related to reduced manufacturing activities. G&A expenses were $5 million, a net increase of $0.3 million as compared to approximately $4.7 million for the same period in 2023. The increase was primarily driven by $0.2 million in stock-based compensation expenses and an overall increase in costs incurred for consulting services. Our loss from operations were $6.7 million, an increase of $0.1 million as compared to $6.6 million for the same period in 2023. Other income and expenses were comprised of other income of $0.1 million compared to other income of $0.4 million for the same period in 2023. The net decrease was primarily driven by the employee retention credit recognized in the prior year, partially offset by exchange rate fluctuations related to our international subsidiaries. Our net loss was $6.5 million or $0.04 per share compared to a net loss of $4.4 million or $0.03 per share for the same period in 2023. Moving ahead, our aim is to uphold our commitment to fiscal discipline. We are confident that this continued approach will support our plans towards achieving pivotal milestones and generating shareholder value through ongoing investments in our programs. Now, I’ll hand the call back to Brian.

Brian Culley: Thanks, Jill. To summarize three key points for today. One, we continue to be extremely happy with our now recently expanded alliance with Roche and Genentech, not only for their commitment to advancing OpRegen through the clinic, but also for enhancing awareness of the program at medical and scientific meetings. Two, we’re excited to be putting a second cell transplant program into active enrollment this year in a disease with an enormous unmet need and limited competition. And three, we will continue to look for ways to build value from our early-stage pipeline through thoughtful investments in experimental studies and methods as well as from strategic collaborations, which can help advance our programs and validate our approach. I appreciate your attention and time today. And with that, operator, we are ready to take analysts’ questions.

Operator: Thank you. Ladies and gentlemen, we will now begin our question-and-answer session. [Operator Instructions] The first question comes from the line of Jack Allen from Baird. Please go ahead.

Jack Allen: All right. Thanks so much for taking the questions and congratulations to the team on all the progress made throughout the quarter. I guess my first question is on the new Roche agreement. Seems like a very interesting investment from a company that’s already partnered with you on Opergen. To what extent can you provide some more color on the scope of the agreement and any financial terms also tied to that agreement as well? And then I have a quick follow-up as well.

Brian Culley: Thank you, Jack. I think in an environment where many biotech companies have been struggling, we are delighted to see this agreement, I would say, showcase an increased commitment to the partnership and expand the scope of work and investigation into the Opergen program. There are some areas of activity that are covered by this agreement. They would include things like extending the follow-up period of the ongoing Phase 1, 2A trial. That can provide further information about the potential of activity of Opergen beyond five years. Genentech is planning to expand to one or more sites in Israel. We are uniquely positioned to provide support with that expansion insofar as we have feed on the street in Israel. And I think more generally, you know, Genentech is looking to continue to evaluate the operational needs of the study. So we don’t have a lot of detail. We are not disclosing the financial information at this time where we’ve shared the information we can, but those are examples of some of the scope of work that will be funded by Genentech and will, in their respective ways, contribute back to the ongoing investigation value of the program.

Jack Allen: Got it. Great. And then for more of a scientific side, I know we spoke quite a bit about the clinical data that was announced, but there was also some preclinical data that your collaborators at Genentech looked at in a pig model, looking at different methods of administration. I’d love to hear, I guess, any thoughts you have as it relates to how high a percentage of patients you expect could be optimized to gain complete coverage of the GA lesion as we’ve seen that provides better clinical results. And then one other quick clinical question I had as well was we saw 24-month data last Friday. When might we be able to see 36-month data? I mean, it seems like this is durable, but as the data continue to evolve to show great durability, it’d be great to see that data as well.

Brian Culley: I’m smiling because I’m just thinking about like the Roman Colosseum, and no matter what you give them, they want more. So, let me go in reverse. So, 36-month data, you know, to be determined. People know when the study began and when it ended, so I guess I would say probably it would not take another year from now to come up with 36-month data, but it has not been determined by us and together with our partner when that would occur. The pig study that you mentioned, and I didn’t put it in the script not because it’s not important, but it reflects another example of Genentech’s commitment to the program that they are conducting not just the ongoing clinical trial, but also evaluating how OpRegen RPE performs in various animal models. The pig study, the mini pig study and delivery is, I imagine, intended in part to help improve the delivery by testing various techniques. There are a number of models or forums where such studies can be done, of course, in the context of a clinical trial. One can also deliver cells into a cadaveric eye for pig eye. So there are a lot of different ways that you can test out different methods or techniques to ultimately try to drive a wedge between the clinical effect of the therapy and the safety and tolerability of a therapy, and that’s what all of us in this field want to do because that is the threshold for obtaining marketing authorization and then having a financially successful product is the evaluation of the risk reward. So I think about this much in the same way that I think about LASIK surgery, which when I was a young person, sounded very scary and dangerous, but as more and more people received it and there was more and more experience with it, it became almost routine, perhaps it is routine at this point. And so I’m comforted by the fact that surgical/procedural and methods seem to be more likely to be able to yield to investment and offer success than trying to come up with, for example, a small molecule to have activity in a very complex disease. So I like very much that an area of great attention is how to get very good delivery of these cells because, of course, that’s one of the big findings from the Lineage Phase 1 is that if you get the cells to the right place, they really seem to drive exceptionally strong clinical outcomes. So I don’t know, if there’s a threshold for what the ceiling could be for a successful therapy, I think that we’ve seen some exciting results even in patients who didn’t receive what we might think of as ideal transplant of the cells across the area of atrophy that invites questions around multiple dosing or dosing patients earlier. There’s a lot of really interesting things. And that is a big reason why we’ve partnered with the best of the best in ophthalmology is that we would not be able to adequately investigate all of those important parameters in a way that would really contribute to the probability of success here. So we’re thankful that we have a partner that identified and agreed that we were on to something exciting and is conducting those studies for the benefit of the program and thereof also for Lineage just benefit.

Jack Allen: Awesome. Great. Thank you very much for taking the questions, and congratulations again on all the progress.

Brian Culley: Thank you very much, Jack.

Operator: The next question comes from the line of Mayank Mamtani from B. Riley. Please go ahead.

William Wood: Thank you very much. This is actually William Wood on for Mayank. I would appreciate you taking our questions and correct on the very next quarter. I want to step back and just play a bit of a devil’s advocate here. When looking at the agreement that you have, the new agreement with Roche, should this be looked at potentially negative where Roche is needing to rely on your services, your experience, your techniques more to get it done because they’re having trouble? Or is this really — that’s the wrong way to look at it, and this really is a positive and they’re just trying to get to the best outcome.

Brian Culley: I feel comfortable saying that I see this solely as a positive. The additional activities are to Lineage’s perspective, beneficial to the program. In some cases, there may be some convenience such as the work in Israel, but we have sort of an additional component, maybe this is really what you’re referring to which is that this is not a normal license agreement. I think if big pharma does a deal with a company that has a small molecule or a company like Genentech does a deal with an antibody company, there’s probably very little that the small company can contribute because the capabilities and the expertise of the big pharma company are so extensive that they don’t really need any input. It’s not going to probably contribute to the further end of the program. But we’re doing something very novel. And although you’re seeing more examples of it every day, and I spoke about this in the body of my prepared remarks, the reality is that even our work is built upon about 2 decades of experience — so if you ask the question in this way, can Roche and Genentech or any other big pharma benefit by maintaining an ongoing relationship and dialogue and learning additionally from us as the innovator, I think the answer is yes, and we see that as a great positive because it suggests that there are competitive barriers that others will have difficulty surpassing that we get to remain more closely involved in the program, perhaps in genders. I cannot speak for Roche’s strategic plan, but perhaps it in genders a sense of interest in additional work or additional campaigns, there are many things about this expanded agreement that go beyond my over comments that companies are being rigorous about what they invest in and looking for high-impact, high-value programs. And some companies are laying people off or killing their programs. And here, we see a very clear sign of additional commitment. That’s all positive. But when you wrap it up into a much larger picture, we will never be able to go 50% with the resources that Genentech can put into this program or a Roche can put into this program. So, we still are a minority in terms of the resources that we put into the program compared to them. But we do have some things that we can offer and we can offer those things not just to the OpRegen program, but to many other programs. And that really speaks to the value of this company in this business where today known well for what we have entered into for the dry AMD program with Roche and Genentech. But in the future, I think the learnings and lessons and advantages that we have from this platform will be applied to additional programs as they mature or as they find their way into partnerships. And now you’re talking about the kind of growth that could be incredibly exciting from an investor perspective.

William Wood: Awesome. I appreciate that answer. That was very nice. Very helpful. Within — when we’re thinking — looking at the 24-month data, obviously, we always like to compare to a control arm. How should we be looking at the patients in your trials with the other eye, the contralateral eye, do these eyes also have GA maybe so kind of infers in control? How should we — is that a direct comparison to other trials that we’ve seen maybe in complement? And then sticking on the complement, if I can squeeze in one extra question. Is there a point maybe late-stage development where you actually start using your — the control eye is now injected with, say, a low-dose complement or something of that sort of a standard of care type. Yes, any color there would be appreciated.

Brian Culley: And that’s a fantastic question. I have to begin by saying that there are always going to be some differences among data sets. And they sometimes reside in your inclusion, exclusion criteria and they might even more simply just reside within the number of patients that you’re looking at and thus the variability. So there is no perfect comparison, but I appreciate what you are asking because it’s a normal and appropriate question. And I do think that there are some insights, despite the fact that this is a relatively small patient population, one can still identify a handful of insights. The most powerful one, of course, is that the images and the effects that we have discussed and our partner have presented, do not happen in the natural course of the disease. So we have a very convincing link between the therapy and those changes that we have observed, and we view that those changes are positive changes. Going beyond that, one does have the ability to start asking questions. So for the contralateral eye or the untreated eye in our patient population, I would explain for everyone’s sake that, that is always the eye that has a — on average, that is a smaller area of atrophy. So the patient’s other eye does have dry AMD as a requirement for this study, but it’s always the better eye — and the difference in visual acuity between the treated eye and the untreated eye is very large. I think if I recall correctly that on average, our patients were somewhere around 2060 or 2080 for the untreated eye. So that’s a lot better than the treated eye, which could be running upwards of 2,100 or 2,200. So there is a built-in bias that the treated eye is always starting off in a worse place. Third point that I would make is that the patients on our study, all of the treated eyes had foveal involvement. And so in making comparisons to complement inhibitors, not all of the patients on either of the well-tested complement inhibitors had foveal involvement. And as a general matter, not having foveal involvement would suggest that you have better baseline BCVA or other visual acuity metrics that you might rely on. So there are imbalances. We do look at those imbalances because if you see partially informative sets of data or partially informative analyses, but they all point in the same direction or they reinforce each other, taken as a collective, it can be very exciting because it increases your confidence, of course, is falling short of a 200-patient study, but there’s a lot here that we think is directionally correct, directionally consistent and gives us a lot of encouragement about the difference. The last part of your question is around treatment of a — excuse me, a Control eye, perhaps getting a complement inhibitor as a direct comparison with OpRegen. And I don’t think it’s too bold to say that while that decision would be made by our partner, that design — that clinical study design decision would be made by our partner, my personal opinion is, I don’t care. Because the clinical changes and the anatomical differences between what we’ve seen with OpRegen versus an untreated eye or what we’ve seen with OpRegen versus an anti-complement treated eye are so large and obvious, literally going in opposite directions that I’m not particularly concerned about our probability of success, whether it’s compared to Anticomplement therapy or compared to an untreated eye entirely, especially over a relatively short period of observation, which could be 24 months, 18 months, 12 months in anatomical case, you’d still also want to loop in six months. So, one of the great challenges to wrap-up this answer a little bit shorter, is that, while Visual Acuity and anatomical changes are inextricably linked and travel in the same direction, they don’t travel at the same time or the same pace. So it becomes a very difficult to make direct comparisons, especially as you start to look at subsets. And so we take the opposite approach. We start to rise above the subsets and trying to ask more general questions about directionality of effect over long periods of time and whether those are likely to be due to chance or attributable to our therapy.

William Wood: Got it. Appreciate the thorough answer there. And then, thank for taking our questions, I’ll hop back in the queue.

Brian Culley: Thank you, William.

Operator: The next question comes from the line of Joe Pantginis from H.C. Wainwright. Please go ahead.

Joe Pantginis: Hi everybody. Good afternoon. Thanks for taking my question. Brian, I just want to start with a housekeeping question first on the services agreement. Are you disclosing what the duration is or when it could be renewed?

Brian Culley: No. We have shared what information we are able to share at this time.

Joe Pantginis: Okay. Now with regard to OpRegen, I think the key point that you’ve been making here is that Roche is now doing everything independently presenting the 24-month data independently, doing their own pig study independently. So I guess, I would ask the question this way, and I know, I’m asking you to speak for Roche. So I apologize for that. Since they’re basically seeing all of these data and doing these experiments live, do you feel that any of these can impact their own internal program by pressing the brakes, or pressing the accelerator on any particular aspects as they’ve been looking to optimize the program on their own.

Brian Culley: Well, you do know that I cannot speak for Roche or Genentech. What I can say is that, it was always contemplated from the beginning that there would be a long-term handoff of this program. Partly, that is because the manufacturing process is complex, and you don’t just learn that overnight. So we’ve always anticipated that there would be a transition of both clinical activity, manufacturing activity and ultimately on to commercial activity. But when they entered into the agreement and committed to the upfront payment and the other economics that we are eligible for, they also were able to acquire the discretion to make those choices. Now of course, most license agreements have provisions around things like terminations and clawbacks and commitments to continue to make commercially reasonable efforts and so forth. And most of that is typically redacted in the filed copies. But what I can say is that even those of us at Lineage, to a certain extent, look at external indications for signs of whether we think our partner is accelerating their interest, decelerating their interest or maintaining their interest. And we continue to be very happy and appreciate that Roche and Genentech do go to link to talk about this program and share data. And I’m not sure that every company does that with every program, and it does not necessarily mean anything. But we presume that, that reflects some enthusiasm. So I think it may be tea-leaf reading or in this case, perhaps the leaves are palm from, which are much larger. But ultimately, where the program fits into their pipeline and their strategic value, their urgency or their decisions on budget year-to-year, those are things that they will decide through their own contemplation of their corporate objectives, but there’s a reason we wanted to go with this organization and it’s because they understand ophthalmology. They have been exceptionally successful in ophthalmology, and we think that they are as committed to getting this product out and changing lives as we are.

Joe Pantginis: No, that’s very helpful. I appreciate that. And then on OPC1, I was wondering if you could walk us through the steps for site activation, specifically, when are the physicians trained, have they already had some broad training across the sites already, general device availability? Are they essentially stockpiled, ready to be set to the sites? So that’s the top end of the question. And then financially speaking, can you just remind us where — because you gave an update at your year-end call where things stand with regard to the CIRM application cycle? Thanks.

Brian Culley: Yes. Thank you, Joe. I’ll just say for CIRM, there really has not been any update that we’ve received yet. So we continue to wait for the next Board meeting. That Board meeting, I believe, is scheduled for the end of June. And so we would expect that in the end of June, we would have more information that we would be able to share. With respect to onboarding sites, there’s a very long list of activities. Of course, the contracting around the schedule of fees not only with the site, but also with the many vendors that are involved with the clinical trial. Product has been manufactured and is ready to be shipped to sites. Site initiation visits, device training, all of these are steps that are required prior to a patient being treated surgical manual what’s fortunate for us is that the site that we today think will be the first site to open is a site that had been part of this study several years ago and some of the very same people are involved. And in fact, I would frankly say that, that is something that we found as we were going out and evaluating different sites, is that people who are involved with this program before, we’re very enthusiastic about wanting to be involved again. So I think that’s a good indicator. But I don’t think there’s anything particularly with this clinical trial in terms of the operational execution, I would just add for everyone’s sake that some of the steps such as actually soliciting patients can often do not occur until the full clearance has been obtained with FDA or your risk of having a clinical hold has been diminished down to a very small level. So there are certain steps that are ceding to others. But generally speaking, there’s a lot that you can do to get ready that you can do in parallel, which makes it economically efficient. But you are still working, in some cases, with academic centers that don’t always have the same expectations around turnaround time because of the volume of activity that they and the number of sites that — excuse me, the number of trials that they may support at one time.

Joe Pantginis: Got it. Thanks, Brian

Brian Culley: You bet. Thank you, Joe.

Operator: The next question comes from the line of Kristen Kluska from Cantor Fitzgerald. Please go ahead. .

Q – Unidentified Analyst: Hi. This is Rick Miller [ph] on for Kristen. Thanks for taking our question. We just have one here. From a big picture market perspective and with the caveat of all the differences between OpRegen and the complement inhibitors, do you have any thoughts on the appellate market penetration stats for SYFOVRE showing around 77,000 injections in the first quarter. Specifically, does this tell you anything about the overall market size and appetite for a therapy in the space and maybe appetite for new therapy options in the space?

Brian Culley: Thank you, Rick. I do think the appellate — I do think the SYFOVRE launch does provide some interesting insights into what’s possible in the setting of dry AMD. And specifically, I think their product profile with the safety concerns that are probably well known to everyone on this call yet they’re seeing some fairly good uptake of that product tells you a lot about demand. It tells you a lot about the opportunity and the eagerness for a new therapy. I concur with your comment and the implication that we have a very different product profile, a onetime therapy that might perhaps be able to restore vision or halt the disease in its tracks. So we don’t know what the ultimate commercial profile of this product will look like, if any. But I’m encouraged by the fact that even a product that has been clinically shown to have no effect on visual acuity and can only slow the advancement of the disease by approximately 20% a year — and I recognize I’m generalizing with that because there are multiple products and you can have monthly or every out you monthly dosing. But as a general matter, it doesn’t seem to me to have much of a clinical benefit. It does have some now well-known risks associated with it. And yet, I think last quarter, they did pretty well. So I think that tells us that all of the predictions around a multibillion-dollar opportunity in the setting of dry AMD is clear. It tells us something great about the demand for new therapies and the rapid uptake of new therapies by both the provider and the patient. What we have not seen perhaps is what the level of compliance and commitment to monthly or every other monthly injections in your eye is going to be in the long run. But I don’t care because OpRegen is not administered in that schedule. So we don’t have that as a hurdle for our expected product profile. So I think we continue to stand in a very good place with the added benefit that a theoretical commercial opportunity is turning into an actual commercial opportunity in front of our very eyes. Operator, can we have the

Operator: Yes, he just dropped from the call. The next question comes from the line of Michael Okunewitch from Maxim Group. Please go ahead.

Michael Okunewitch: Hey, guys. Thank you for taking my questions. I guess to start off, I do want to ask about the dose study gearing to start up in the near future, could you just remind us of how many centers you’re targeting and provide any additional color on what you’re expecting in terms of the enrollment rate?

Brian Culley: Yes. Thank you for that question, Michael, and your time today. We only need to enroll or we’re only planning to enroll rather 6 to 10 patients. So it will only be presumably a handful of sites, although we initially reached out to more than 10 when we were doing our initial feasibility discussions and evaluations of site capabilities. The harder question is around enrollment rate. There aren’t many precedents. But I think we benefit from the fact that unlike the first time that this therapy was administered to patients. And in some cases, it was known to be a subclinical dose. So you’re having a conversation with a patient about having an additional surgery, and they are being told they will not benefit from it. And so that would be, to my mind, a pretty significant hurdle to overcome, but the prior sponsor was able to overcome that and was able to enroll such patients. Today, we have the benefit of 30 individuals who have been exposed to this therapy upwards of 5, 7, even now more than 10 years of safety experience. So I think the conversation with patients might be a little bit easier. And we also are going to include approximately half of the patients on the study with chronic conditions. And unlike the subacute patients where you’re — you need to catch them in your neck because they have a window 3 weeks to 6 weeks after their injury where you want to treat them, chronic patients could have 1, 2, 4, 5 years old injury and so they are probably going to be easier to identify, although there is the confounding factor of maybe someone who’s been living with their injury for 5 years isn’t as interested in clinical trials as they may have been when they’re first coming to grips with their new life being a person lived experience in this condition. So I’m not able to make projections not because I don’t want to, but because it’s very difficult to know what it’s going to look like with this particular design. What I would offer is that I have been involved in and successfully completed, to my knowledge, the largest ever clinical trial in a hematological disorder, and was running a small company at that time and going head-to-head with Pfizer (NYSE:) with a very similar 350-patient study. And my organization and the operational excellence that we brought to bear was able to successfully complete our study faster than Pfizer with all of their resources. So, I think we have a great team here. We have some new hires, and I think that, that’s going to put us in the best possible position to get that enrollment as quickly as possible and get those answers so that we can move on to what we’re more excited about, which is the ultimate question of a controlled study and how much of a benefit do patients get from this treatment.

Michael Okunewitch: On that, just given you have the free — basically a free look now at the thoracic and the chronic patients, which you haven’t really previously been exploring. Do you have any idea of what sort of improvement you would want to see to consider developing those indications further?

Brian Culley: Yes. And I think the right answer and the answer which is informed by many conversations with people with spinal cord injury is anything. I think that the non-lived experience community has this idea in its head that therapies should allow people to throw away wheel chairs and run marathons. And it is unfortunate because when you spend time with people who have spinal cord injuries, you learn that very often they want just the next little thing. And whether that is because a little bit more mobility can provide independence or they can creatively use it to achieve some goal that they have, doesn’t matter, the consistent message that we hear is that, boy, wouldn’t I give anything to have just a little bit blank. And that might be bladder control. It might be upper extremity mobility. So, I think that if we saw essentially anything in someone who had confirmed plateaued and that we felt that there wasn’t conflating information from, for example, re-vigor — becoming vigorous again on a physical therapy routine that they had previously abandoned. As long as we thought that it was attributable to the cells, I think that, at a minimum, would drive some new investigation into some animal models and perhaps a small pilot study of that larger patient population.

Michael Okunewitch: All right. Thank you very much.

Brian Culley: Thank you, Michael.

Operator: The next question comes from the line of Sean McCutcheon from Raymond James. Please go ahead.

Sean McCutcheon: Hi guys. Thanks for taking the questions. Can you speak to the two patients that you don’t have 24-month data follow-up for within the limited lab coverage subgroup in the Phase 1/2?. And can you give some balance for the variability on the coverage within that subgroup and how much of the target lesion was covered? And then additionally, what’s your commentary on the trajectory of the BCVA and the extensive live coverage group from month 12 to 14. It looks like you are starting to see a decrement there may be in parallel with the LOI group. Thanks.

Brian Culley: Thanks, Sean. I appreciate those questions. Those two individuals simply elected not to continue in the study, personal reasons, I suppose, but they were not part of some serious adverse event or something like that. And neither of them was among the five “specials” that we have widely discussed. With respect to the BCVA trajectory, I wouldn’t put a whole lot of emphasis or analysis behind the movement from 7.6% to 5.5%, although it may reflect a light erosion of treatment effect. And if it does, I actually think that’s great because that means that 36 months, they’re going to be plus three and at 48 months, they’re going to be plus one, right? It kind of suggest that it’s a very slow tail of change in visual acuity. But I think two letters probably more accurately reflects noise in the system in a relatively small patient population. I would point similarly to the contralateral eye, which, of course, as I stated before, isn’t going to follow a perfect trajectory. But the fact that it was two letters under at 24 months, it could just as easily have been one letter above or five letters below. I think within a small number of letters, you can really fairly say, it’s noise or not conclusive. So I would not have been entirely surprised if at 24 months, it were nine letters instead of five letters. I also wouldn’t have been surprised if it were two letters instead of five letters. I think the important takeaway that we’re seeing is that 24 months is a pretty long amount of time, trying to read into it just what happens between 12 and 24 reminds me of some of our peers that now have approved therapies that were very cute with some of their subgroup analyses. I’m really trying to take more of a generalized view of what we’re seeing compared to the natural course of the disease and say, look, we know that sham-treated or untreated patients essentially are losing a lot more than this. So maybe we lost two letters going from 12 to 24. But the patients that we think are the best match have lost seven, eight or nine letters over those 24 months. And we think that, that’s a 13, 14, 15 letter difference compared to where we are. Now you’re starting to look at numbers that you think probably are not a chance, but rather attributable to the intervention that we provided.

Sean McCutcheon: Got you. And just one quick follow-up on that. You said that the patients at baseline had foveal involvement within the treatment group and tied patients in the fellow eye or the fellow eye, I should say, had better vision. Do you know the proportion of patients — of fellow eye that had foveal involvement?

Brian Culley: I do not. I don’t know if the fellow eye was required to have full vial involvement. I know that the treated eye in all cases did have foveal involvement, but we would have to circle back with you and provide that, which we’re willing to do. I just don’t know it off the top of my head.

Sean McCutcheon: Got it. Thank you.

Brian Culley: Appreciate that question, Sean. Thank you.

Operator: At this time, I will hand the call back to Brian Culley.

Brian Culley: Excellent. Well, thanks, everyone. We’ve done a little more than an hour, so we’ll wrap up. I appreciate your time, and thanks for your continued interest and exciting work. We look forward to our next call.

Operator: Ladies and gentlemen, this concludes today’s conference. Thank you for your participation. You may now disconnect.

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