Lineage Cell Therapeutics, Inc. (AMEX:LCTX) Q4 2024 Earnings Call Transcript

Lineage Cell Therapeutics, Inc. (AMEX:LCTX) Q4 2024 Earnings Call Transcript March 10, 2025

Lineage Cell Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.01, expectations were $-0.04.

Operator: Thank you for standing by. My name is Rochelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Lineage Cell Therapeutics Fourth Quarter and Full Year 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.Lineagecell.com. This call is subject to copyright and is the property of Lineage and recordings, reproductions 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 your host for today’s call, Ioana Hone, Head of Investor relations at Lineage. Ms. Hone, please go ahead.

Ioana Hone: Thank you, Rochelle. Good afternoon and thank you for joining us. A press release reporting our fourth quarter and full year 2024 financial results was issued earlier today, March 10, 2025 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 statement sections in today’s press release and in the company’s SEC filings, including its most recent annual report on Form 10-K and its subsequent quarterly reports on Form 10-Q. 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. Good afternoon, everyone. We appreciate you taking the time to join us on this call. There are three topics which I plan to cover today. I’ll start with an update on OpRegen and some recent developments in the field of RPE transplants which we think reflect favorably on our program. Then I’ll transition to scalable GMP manufacturing which is a topic of rising importance to the cell therapy field. And then I’ll provide a few words on our in-house program, OPC1 and our recently initiated spinal cord trial and some plans for the future. As most of you know, our lead candidate OpRegen for patients with dry AMD with geographic atrophy is an allogeneic cell transplant comprised of RPE cells. OpRegen is delivered as a suspension to the subretinal space in a onetime surgical procedure and it’s currently in a Phase 2a study called the GAlette Study that’s being managed by our partners Roche and Genentech.

We believe the ongoing GAlette Study is progressing well. This is an open-label study with 90-day primary and secondary endpoints, and it has been enrolling for nearly two years. So we believe that a sufficient amount of data should have been collected and reviewed by now from which to make a decision on whether or not to continue investing in this program. This is relevant because Roche recently underwent a comprehensive review of its pipeline during which they trimmed nearly 30% of their development programs, including some partnered cell therapy programs. We were not affected by those pipeline reductions and instead we’ve observed since that time what appears to be an increase in OpRegen activity in the past year. For example, about a year after the trial began, Roche and Genentech entered into an additional agreement with Lineage to provide services for things like manufacturing, training and long-term follow up of our Phase 1/2a patients.

They continued to open clinical sites in the ongoing GAlette Study and they recently sought and obtained RMAT designation for OpRegen. I want to be clear that Lineage has not received any interim data from Roche’s ongoing Phase 2a trial and we do not know when any such data will be made available. But these actions by our partners appear to us more likely than not to reflect things moving in a positive direction. I will add that our rise in confidence is reflected in certain actions that we are taking, such as structuring warrants around a positive OpRegen clinical milestone which if it occurs, would accelerate the maturity date of those warrants. If the share price exceeds the warrant strike price at that time, that could provide us with an additional $36 million of capital.

We did this in part to reduce concerns about a post event financing overhang, something which is often associated with major clinical announcements. We continue to be unable to guide to the timing of any Phase 2a updates from Genentech and we don’t yet know the process by which findings from the GAlette Study will become available, but I do want to remind everyone that a decision to advance to a next study could happen at any time. There is no regulatory requirement that we are aware of which requires Genentech to complete enrollment in the ongoing study or to announce Gillette data before launching a controlled study. Even if Genentech wanted to keep the GAlette study highlights confidential from competitors, they still would be required to post a new clinical trial on clinttrials.gov which would trigger acceleration of the maturity date of the warrants.

While we all eagerly await information from the ongoing Phase 2a trial, there are two things in the meantime which I’d like to highlight for you today. The first, is that we have learned that Roche and Genentech planned to provide a three year clinical update from the Phase 1/2a trial which Lineage conducted. For those of you who recall the two year update, at last year’s Retinal Cell and Gene Therapy Innovation Summit, Genentech reported changes to key anatomical structures and more importantly average gains to BCVA of 5 to 7 letters which persisted for two years. I’m not able to provide the details about the forthcoming three year data, but Genentech have reviewed the anatomical and functional benefits which were reported at two years and I can report today that that those benefits have indeed continued to persist for another consecutive year.

To date, five patients from the Lineage Phase 1/2a trial have demonstrated durable anatomical and functional improvements and I will remind everyone that these effects have not been shown to occur spontaneously. Observing vision gains lasting for three years despite dry AMD being a degenerative and irreversible disease is to us indicative of a powerful and durable treatment effect, one which may prove in future clinical trials to be superior to currently available therapies because patients on those treatments continue to lose vision. One look no further than the 1,211 GA patients who were treated as part of the HEKXETICOPLAN [ph] Phase 3 studies and reported in the Lancet in 2023, where the mean vision change on that best available therapy was a loss of 8 to 9 letters, and the untreated patient control similarly lost seven letters.

More recently, a long-term study of more than 18,000 people with dry AMD and who did not develop neovascular AMD during the observation period experienced BCVA losses of 12 letters at 36 months and among the cohort of the oldest patients with moderate vision loss at baseline or moderate vision rather at baseline the mean loss was 20 letters. Based on the information I shared today about mean BCVA of those OpRegen patients remaining above baseline at three years, the performance to date between OpRegen and anticomplement or OpRegen and an untreated control is not just that patient vision is moving in opposite directions, but that that delta is getting wider over time. The second OpRegen item I wanted to highlight is some recent news emerging from competing RPE companies, which I think is extremely positive for us.

First, a small U.S. based company which uses RPE cells, which they source from cadavers, recently reported gains in vision at 12 months using their approach. Second, a different small competitor, this one based outside of the U.S. but using a cell line as a source of RPE, plans to share data from their RPE program at the ARVO Conference in May. We’ve seen some of their top line data and it is both positive and consistent with our original findings. And then third, according to a recent news article, Astellas RPE therapy is “very close to proof of concept results”. We haven’t seen their data, but we assume it will be positive or we don’t think this program would be highlighted by their Chief Strategy Officer. If you’re surprised that I would highlight our competitors in such a positive way, it’s because we’re working with a completely new modality and it’s normal for people to be unconvinced by a relatively small number of patients, especially when we’re all making claims about uncommonly positive clinical outcomes.

But every time a company independently reports positive data from an RPE transplant and those data points get aggregated, it can become a powerful endorsement of our mechanism and add conviction to this approach. At this point there are four, and probably soon there will be five independent reports of functional gains from an RPE transplant. From among those companies, investors will presumably try to sort out which among us is best positioned to win the large addressable market. And given everything that is required to successfully manufacture and commercialize an allogeneic cell therapy product for such a large patient population, I feel confident that the combination of Lineage’s manufacturing process, Genentech’s development strategy and Roche as the commercialization partner provides us with a triumvirate of advantages over these other programs.

And while we wait for the story to play out, these other programs may also provide our shareholders with validating endorsements that we’re on the right track. This topic actually leads nicely into my discussion of scalable cell therapy manufacturing. Lineage has been making investments of time and capital into our manufacturing capability for many years, which has generated new intellectual property, but perhaps more poignantly has helped us achieve specific and measurable milestones in that area. I think we’re all aware that unlike five years ago, exceptional clinical data except is no longer sufficient to drive high valuations. In connection with increased awareness of modern cell therapy practices, investors have learned much from the crowded and undifferentiated CAR T space and increasingly appreciate that if you don’t have a credible path to commercial scale manufacturing, then maybe you really don’t have a viable product candidate.

And that concern is especially true for allogeneic cell therapy programs, because the main reason allogeneic is attractive is because it’s supposed to offer affordable production of consistent material. But that is not the definition of allogeneic. Allogeneic just means the cells are sourced from a donor instead of from the patient. The term allogeneic should not be expanded to assume affordable production or immediate use products. In some cases, allogeneic might only mean a donor provides a single source or a single dose of a therapy, such as the case for an organ transplant. In better instances, companies might be generating 10, 100 or maybe up to 1,000 doses of their therapy from a bag of donated blood. But while those programs are allogeneic by definition, they aren’t maximally reducing the cost of production.

Our view is that you’re not actually delivering on the benefit of an allogeneic therapy unless your production system can deliver millions of doses. And that’s where we’re working to establish a leading position in allogeneic process development, production and scale. I want to explain why we believe this is a credible path. Given the large patient population, we’ve always known that OpRegen would require a commercially viable manufacturing platform. So for years we’ve invested heavily in process development and other cell therapy manufacturing capabilities. But those investments do not need to be limited only to OpRegen. In many cases, the methods, trade secrets, insights and know how we have acquired can be, and in some cases already has been applied to our other programs.

In this way, overtime, we are enabling Lineage to develop multiple programs, each possessing the necessary dyad of clinical evidence and commercially viable production. The main reason I speak on this topic so often is that when I look at the cell therapy landscape, especially at the noncancer allogeneic field, I can only find vague and aspirational statements about stable cell banks or theoretical projections about manufacturing scale. I have not yet found evidence that these companies have produced their drug product by a scalable process in a GMP environment. So while they may be allogeneic by definition, they haven’t yet shown a believable line of sight to the primary reason for pursuing an allogeneic approach, which is a large scale production capability.

And in our view, if you can’t deliver on large scale production, you aren’t going to be able to affordably address a large patient population. So what we’ve been working on is to become the first company to reduce to practice a clear and convincing case of a scalable GMP production process. We believe doing this will set a high bar for allogeneic economics and help make Lineage an attractive company and partner. To explain in detail what this looks like, if you were to generate 100 vials of a master cell bank in a GMP lab and randomly select one of those vials to manufacture another 100 vials of a working cell bank, and then you randomly select one of those vials to make 100 vials of your product, you will have credibly demonstrated that you have reduced to practice a production capability of 1 million vials.

We don’t believe any of the allogeneic companies we monitor has achieved this milestone, yet we believe it is a necessary component to commercial success in a large market indication. So we are focusing on this goal as a way to capitalize further on our investments in OpRegen and help differentiate us from our peers in this area. Next and thirdly, I’ll briefly comment on our second clinical stage allogeneic program, OPC1. You might have seen this program highlighted on CNN back in January and if not, the interview we did with Sanjay Gupta is still available on our website. OPC1 is designed to help increase recovery and mobility for people who have suffered from a spinal cord injury. It is comprised of a population of the myelin generating cells of the spinal cord and these cells help control the messages between your brain and your muscles.

Our approach to addressing paralysis due to spinal cord injury is to manufacture replacement cells of the spinal cord and deliver them right to the site of injury, which is basically the same approach that produced successful outcomes to date in dry AMD. OPC1 has been tested in 30 individuals with severe spinal cord injuries and while the long-term safety and efficacy data we have collected so far is promising and merits further investigation, this was an acquired program and we have two areas of improvement we’d like to complete before we would feel ready to move OPC1 into a later stage trial. The first area of improvement is delivery. We recently began a small clinical study called the DOSED Study to test the safety and performance of a novel delivery device.

We believe the device we are testing in this study will be superior to the original delivery system in two ways. First, it’s easier to use and deploy to clinical sites and more importantly, the new device allows a dose of cells to be administered to patients over four to five minutes without stopping the patient’s respiration. Previously, it was necessary to stop ventilation when you delivered the cells, so this is a significant enhancement to the procedure. In addition to the safety and the performance of the new device, we also will be collecting functional assessments on all patients, which gives us the opportunity to investigate any signals of efficacy that may arise. That is important because this study will be the first time OPC1 is administered patients with a chronic spinal cord injury, which represents an additional and larger patient population for this experimental therapy.

The first site for this clinical study is just down the road at UC San Diego Health, and patient enrollment is expected to commence next quarter. The second area of OPC1 improvement is our new manufacturing process, which actually has two subparts. We first applied lessons from our OpRegen program to increase the scale, purity and control of the cells we make, and second, we developed a new immediate use formulation which eliminates the lengthy dose preparation steps that were required in prior studies. Subject to obtaining clearance from FDA, we plan to introduce the cells we make from this improved process and the new formulation into the dose trial. In parallel with these two ongoing enhancements to the OPC1 program, we also are working on the design of a larger trial with a focus on collecting more sensitive and clinically relevant endpoints, which we think will help overcome the complexity of data capture in this patient population.

When all three of these necessary activities have been concluded, the design, the device and the cells, we believe we, neither alone or with a future partner, will be in a position to conduct a larger clinical trial of OPC1. And I should add that we still plan to apply for a CIRM clinical grant as soon as they begin accepting applications, which CIRM has indicated will occur this spring. Last comment I want to make before we review our financials is that we don’t often highlight individual patent issuances, but just so that you are aware, we have continued to add value to our patent portfolio. For example, earlier this year, two additional OpRegen patents issued which included claims covering certain aspects of how we manufacture ourselves.

Some of the discoveries we make we patent, while others we intentionally retain as trade secrets. But overall, we aim to increase our proprietary position for OpRegen in all of our development programs in the best possible way. And with that, I will turn things over to Jill for a review of our financials.

Jill Howe: Thanks, Brian and good afternoon everyone. As of the date of this filing, our overall cash position is expected to support our current planned operations into Q1 of 2027. Our runway has been meaningfully extended following our November 2024 registered direct offering and as of December 31, 2024, we are reporting year end cash, cash equivalents and marketable securities for $47.8 million, together with the approximately $5.5 million in net proceeds which we received from the second closing of this offering that occurred in January. This supports our current runway guidance of approximately two years from now. Importantly, the November financing incorporated a milestone warrant with a mechanism to accelerate maturity, which means Lineage may be able to access an additional $36 million in funding if the clinical milestone is achieved and the stock is above $0.91.

We implemented this financing strategy because we believe a go no go decision by Roche to publicly disclose their intent to run a controlled clinical trial of OpRegen would be a major event for Lineage and for OpRegen’s probability of success. Our strategy was to not only secure immediate capital, but to also create an opportunity for future capital, which again is contingent in part upon the successful advancement of OpRegen. Alongside this recent financing activity, we will continue to balance between our cost and investment of capital as we work towards other potential sources of funding such as milestone payments we are eligible for under the Roche Genentech Collaboration, Program grants and or additional business development transactions.

Next, I will review our fourth quarter operating results. Our revenue is generated primarily from collaboration revenue, royalties and other revenues. Total revenues for the fourth quarter were approximately $2.9 million, a net increase of $0.8 million as compared to $2.1 million for the same period in 2023. The increase was primarily driven by more collaboration revenue recognized from deferred revenues under the collaboration and license agreement with Roche. Operating expenses are comprised of research and development expenses and general and administrative expenses. Total operating expenses for the fourth quarter were $7.8 million, a decrease of $0.4 million as compared to $8.2 million for the same period in 2023. R&D expenses for the fourth quarter were $3.4 million, a decrease of $0.5 million as compared to $3.9 million for the same period in 2033.

The net decrease was primarily driven by a decrease of $1.2 million for our OPC1 program expenses and $0.2 million for other research and development programs, partially offset by an increase in $0.4 million for our OpRegen program expenses and $0.5 million for our preclinical program. G&A expenses for the fourth quarter of $4.4 million were primarily in line with expenses for the same period in 2023. Loss from operations for the fourth quarter was $5.1 million, a decrease of $1.3 million as compared to $6.4 million for the same period in 2023. Other income expenses for the fourth quarter reflected other income of $1.8 million compared to other income of $1.6 million for the same period in 2033. The net increase was primarily driven by changes in fair value of warrant liability, largely offset by exchange rate fluctuations related to Lineage’s international subsidiary and certain warrant related transaction costs incurred as part of the November 2024 financing.

The net loss attributable to Lineage for the fourth quarter was $3.3 million or $0.02 per share compared to a net loss of $4.8 million or $0.03 per share for the same period in 2023. Next, I will review our full year operating results. Total revenues for the year were $5.9 million, a net increase of $0.6 million as compared to $8.9 million for the same period in 2023. The increase was primarily driven by more collaboration revenue recognized from deferred revenue under the collaboration and license agreement with Roche. Total operating expenses were $31 million, a decrease of $2.7 million as compared to $33.7 million for the same period in 2023. R&D expenses were $12.5 million, a decrease of $3.2 million as compared to $15.7 million for the same period in 2023.

The decrease was primarily driven by $2.7 million for our OPC1 program expenses, $1.1 million for our pre-clinical and other research and development programs. These decreases were primarily offset by $0.6 million for our OpRegen program. G&A expenses were $18.2 million, an increase of approximately $0.9 million as compared to $17.3 million for the same period in 2023. The net increase was primarily driven by $0.6 million for stock based compensation expense and $0.4 million for personnel costs, partially offset by an overall decrease in cost incurred for services provided by third parties. Loss from operations were $21.5 million, a decrease of $3.2 million as compared to $24.7 million for the same period in 2023. Other income and expenses reflected other income of $2.9 million compared to other income of $1.5 million for the same period in 2033.

The net increase of $1.4 million was primarily driven by changes in the fair value of warrant liability, exchange rate fluctuations related to Lineage’s international subsidiaries and fair market value. Changes in marketable equity securities. This increase in other income was partially offset by certain warrant related transaction costs incurred as part of the November 2024 financing as well as the non-recurring prior year employee retention credit. The net loss attributable to lineage was $18.6 million or $0.09 per share compared to a net loss of $21.5 million or $0.12 per share for 2023. And with that I’ll hand the call back to Brian.

Brian Culley: Great. Thanks Jill. So I will summarize by saying first that we remain confident in the potential for OpRegen to drive positive clinical outcomes in dry AMD and we feel the independent evidence generated from other RPE transplant trials supports and elevates that belief. Second, we are planning for success by seeking to capitalize on our historic investments in cell manufacturing and use those investments as a foundation from which additional programs can be advanced into and through clinical trials. And third, we are steadily advancing OPC1 toward a larger clinical trial in spinal cord injury while ensuring first that the necessary attributes for that program to be successful are in place. We very much appreciate your support and belief in our vision and with that operator we are ready to take some analyst questions.

Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Jack Allen with Baird. Please go ahead.

Jack Allen: Great. Thank you so much for taking the questions and congratulations on all the progress. I guess the first one I wanted to ask on OpRegen was around the competitive landscape. It seems like there are a lot of players that are making advances in the field. You mentioned on the call a few different pieces of differentiation as it relates to OpRegen, but what are you doing as a team to protect your market leadership here as it relates to RPE seller placements. And then a quick follow up on OpRegen, when do you see the updated three year data that was alluded to on the call. And then I just have one follow up after that as well. Thank you so much.

Brian Culley: Thank you, Jack. Ultimately, product development is intended to be a means by which revenues are captured. So I think what I said in my opening remarks is really the crux of it. Whether there’s one company working on RPE transplants or 50 companies is not as important as whether you are putting in place all of the right and necessary attributes for success. So I use the word triumvirate and I really think that the triumvirate of the Lineage manufacturing, The Genentech product development capabilities and then Roche as a leader in ophthalmology as a commercialization partner puts us far and ahead in a better position than anyone else. I think it’s an open question in the field still as to how differentiated different programs ultimately can be, and that differentiation would presumably need to be demonstrated in a clinical setting.

I find that to be a fascinating question, but there is no answer. We have seen cases where companies have failed to advance, but it’s sometimes unclear why they have left the area. So we find a lot more to be happy about when we see these independent examples validating a novel mechanism like the one that we have. But I really don’t lose any sleep worrying that these other organizations are going to be more well prepared than Lineage is to be able to make and sell this product through the various alliances and relationships that we have in place.

Jack Allen: Got it. And then just very briefly, do you have any additional timeline as it relates to the three year OpRegen data? And then I wanted to ask bigger picture, how do you think about the positive early results from not only OpRegen as an RPE cell replacement therapy, but now we’re seeing, I think you quoted four to five companies in the RPE cell place space, see these as an active modality for cell replacements. How do you see that leading across to the broader Lineage story? And what do you think of as RPE cells as a proof-of-concept for OPC1 and potential other programs online?

Brian Culley: Thanks, Jack. Yes. So for the three year data, those inquiries could be directed to Genentech. They get to decide which events and conferences and they’ve selected a lot of different ones over the years that we’ve been involved with them. So we don’t have today an announcement or a disclosure about where they would be announcing that information, only that they intend to. However, I hope it does not go unnoticed that I did say that the effects continued to persist. So we’ll be sure to make sure that everyone is aware that if we or Genentech make an announcement, which is the normal course of events, that you would be and everyone would be aware of that. The second one, with respect to modality, I think that there’s a conflation in the minds of many people that cell therapy is synonymous with CAR T.

And while CAR T has certainly revolutionized the therapies in oncology, there are almost countless numbers of programs that are in our view, sometimes poorly differentiated. And we really think that the growth opportunity is not in oncology, but in all of the other areas that you might call noncology. So these would be the most obvious places where cell transplantation kind of lends itself. So RPE transplants four or five companies, and there’s probably a bunch of academic initiatives out there as well. Spinal cord injury has long been one of the premier choices in terms of suitability between the mechanism and the condition. And we’re very proud to have the most advanced cell transplant program in that indication. Some of the others that you might find going out into this growth area would be Parkinson’s.

Bayer just announced that they were going to move from a Phase 1 to a Phase 3 type 1 diabetes. Attracted a great amount of attention for our neighbors at Sana. We also, and there are other companies, have initiatives in auditory neurons. There are hundreds of different types of cells in the human body. Clearly not all of them is suitable as a cell transplant medicine, so to speak. But the ones that I’ve mentioned here on the call today certainly are. And I think they’re getting a lot of attention for the companies that are working in this space. So we see it as the real exciting side of cell therapy versus CAR T. For us, CAR T has been a wonderful validation of what is possible. And now companies like Lineage and others are looking at some of these large fields where small molecules and antibodies have left some opportunity on the table.

And I think that there is increasingly going to be excitement and a higher belief system in the use of complex cells as solutions for diseases and conditions which have not been fully solved by small molecules or antibodies.

Jack Allen: Well put. It’s great to see the growing proof of concept and congratulations again on all the progress. Thanks so much.

Operator: Question comes from the line of Joe Pantginis with H.C. Wainwright. Please go ahead.

Joseph Pantginis: Hey guys, good afternoon. Thanks for taking the question. So, a couple questions on OPC1, please. So first, I guess they’re all logistics questions. I’m assuming you’re using the same centers that you used in Phase 1 2a. And just curious, is there a certain percentage of new centers where the surgeons have gone through the updated training?

Brian Culley: Thank you, Joe. We will have at peak a combination of new sites and experienced sites. The first site at UC San Diego is attractive to us because we do have some dose prep work that needs to get done and they have the right facilities for that. As additional sites come on, those will turn up on our clinicaltrials.gov posting, which is already available. And so you’ll be able to see the sites as they come on board.

Joseph Pantginis: No, that’s great. And just as a side to that, how far ahead, say, of even appearing on clinicaltrials.gov, would the training have occurred? And then my second question was, from the time of the Phase 1 2a, which was a while ago, can you describe any changes in the logistics and being able to get patients to the surgical suite faster or any other components that have improved?

Brian Culley: Yes. Thank you. With respect to training, there are a lot of different kinds of training. There’s protocol training for the labs, the CRO, there’s surgical training for the surgeons. There’s even training for transportation and management of the drug. When all that work is complete and then you have a site initiation visit, then you’re actively enrolling patients. So what you find is there is a long continuum from beginning to end as sites go through all of these stage gates and you may have multiple sites in different points along that continuum at any one time. With respect to the prior study, we absolutely saw opportunities to learn from the prior trial and to look for best practices. And in fact, that was one of the reasons why we wanted to develop an immediate use formulation, because the original use of this therapy included literally hours of preparing the cells, washing them, plating them, etcetera, rather than the formulation which we developed, which is immediate use.

So there are places that we think will ease the burden for both the patient, the caregiver, the provider, even the study coordinators, and also us as sponsor. But at the end of the day, there certainly are some unavoidable activities of getting everyone in for all of their assessments within the appropriate windows and all the other things that are required to execute a high quality clinical trial.

Joseph Pantginis: Got it. Thank you, Brian.

Brian Culley: Thank you.

Operator: Your next question comes from the line of Michael Okunewitch with Maxim Group. Please go ahead.

Michael Okunewitch: Hey guys, thank you so much for taking my questions today. I guess just for the dose study, will FDA want you to prove the device safety in either of the settings first and kind of like a safety running portion for the study before you can open it up to fully enroll across all the planned sites? Or can you just start off pretty much from the get go?

Brian Culley: Thank you, Michael. There is. That’s a great question. And there is a staging process. So FDA really did us a favor by encouraging us to enroll chronic patients in this study. But they did also want to put some appropriate safety measures in place. So the first several patients in the study will have thoracic injuries. So they would be from T1 to T10. That’s your thoracic range. And there’s a hierarchy of if you’re familiar with the Asian spinal injury association or Asia. There’s an international standard for how you classify neurological spinal cord injuries, and the shorthand of that is Asia A, Asia B, Asia C, which is AISA, AISB. So AISA would be you’ve got a no function or sensation below the level of injury, so you have the least amount to lose in that situation. So we would start with a thoracic patient of A’s A, and then we would work our way up into open enrollment, I think around patient four.

Michael Okunewitch: All right, thanks for that. And then just in terms of your capital plans, right, you have strengthened your balance sheet a bit. Are there any plans to accelerate the work on respondents at all or do you find it more prudent to maintain more of a steady approach given that we still face some market uncertainty?

Brian Culley: I’ve noticed the market uncertainty for certain. So resonance absolutely is still an important program for us. We continue to work with the University of Michigan as well as internally on that program. It didn’t get a lot of airtime in my prepared remarks, only for the sake of time, not because there’s anything new or different with it. I think the organization’s management prides itself on being extremely prudent and insisting upon a return on the capital which we invest into our programs. So I think that it is the case that this is not and has not been for years, the kind of environment where companies can go as fast as they possibly can. And I think we’re seeing a lot of penalties being paid for companies that did that.

Instead, we are very careful about the investment decisions that we make and we also are aware that we might have a much more attractive cost of capital in the future when OpRegen is a little bit more advanced. And that will make our ability to accelerate development of other programs a little more attractive to our investors. So we really try to strike an appropriate balance considering macro micro sector internal and all the other factors that one might imagine in order to try to maximize the investment opportunity for our shareholders over long periods of time.

Michael Okunewitch: All right. Thank you very much, Brian. Appreciate your color on the matter.

Brian Culley: Thank you, Mike.

Operator: Your next question comes from the line of Mayank Mamtani with Riley Securities. Please go ahead.

Mayank Mamtani: Yes, good afternoon, team. Congrats on the progress and thanks for taking a question. So, Brian, appreciate you mapping the development stage progress of some of the peer RPE programs. Looks like a couple are coming at Arvo, some incremental data. Could you touch on where we are with maybe some of these programs in terms of manufacturing the source material, cell line process development scale of GMP grade material that you might be aware to the best of your knowledge. And is there any direct comparison on what number of cells that are needed across the programs to kind of get to that therapeutic effect which we’re starting to see with some of these programs? And then I do have a follow up.

Brian Culley: Thank you, Mayank. With respect to the number of cells, I think most companies are operating anywhere from maybe 25 or 50,000 up to 200,000 and I think that has to do with a surface area calculation. These cells tend to they’re adherent and they tend to form very organized structures as they are administered to the subretinal space. With respect to the manufacturing by other companies, I very much wish that I had some specific information about their capabilities because I would probably aim to contrast it with our own capabilities in that regard. I have said before that we are on a feeder free system. Other than the fill finish, it’s a closed system, thousands of doses per batch. I don’t know where other companies are other than one company that sources their material from cadavers.

So I don’t know that that is necessarily a commercially viable source because passaging mature cells is not something that one can do endlessly the way that a pluripotent stem cell can be passaged endlessly. I also look at the Astellas program. Obviously that is a very well-funded global organization. However I think their Ind opened in 2010 so they have been working for a very long time. We do get the impression that they will have some results announced soon. So perhaps it will be an opportunity to get some insights into their manufacturing capabilities. But I think that even at current process scale and current non optimized capabilities that lineage is probably setting the bar. And I hope to be able to not only say more about our capabilities in the near future but also find some insights about the competitors capabilities which perhaps will only highlight that we believe we have the most promising opportunity in this particular approach.

Mayank Mamtani: Super helpful. Yes, thank you Brian. And just to follow up on that comment you made about the control study which could theoretically be run in parallel to the Galette study. Is there any insight you may have on the kind of patient exposure and what efficacy endpoints could make sense given obviously the very large BCVA treatment effect that you get with this modality and not sure again if there’s anything to blend with other programs. Believe there’s one more that has RMAT designation like yours but I assume you’re in the lead and whatever we learn about the next step from Roche is going to be what others will follow. That was kind of my question. Thanks again for taking my question.

Brian Culley: Yes, thank you for that, Mayank. I do note that some of the reports I’ve seen from others indicate pretty significant improvements in BCVA. One hypothesis is that those companies have in fact learned from our experience and are taking great care to deliver the cells right across the GA, that of course was one of our important findings. So it is possible that they are seeing absolute values at clinically relevant time points that are even greater than the ones that we have reported in our study, simply attributable to learning from our experience and delivering the cells in exactly the ideal location. Which is terrific because it would suggest to me that the ongoing surgical optimization study which Genentech is conducting holds the promise of potentially having even better results than we have already reported in our Phase 1.

I have no specific knowledge of that happening at this time. However, it would seem to be plausible given what others have reported with their own approaches. So I do think that there are opportunities here for this treatment, especially because it is novel to improve, which is quite frankly a normal storyline for a new technology, that it gets better over time. So I would be hopeful that that would be the case here. But again, Genentech is specifically conducting a surgical optimization study to explore various ways, methods, equipment to deliver cells to the subretinal space. But because the clinical effects which Lineage have reported do not ever happen spontaneously, one would reasonably assume that Genentech would be able to see signals of efficacy in the ongoing study and thereby make some decisions about how important this program is or is not to them.

With respect to the size of the study, I don’t know that surgical optimization ever truly ends. There are probably people still trying to make LASIK surgery better even today. So I would imagine that as this technology continues, some version of surgical optimization might continue forever. So I don’t know that there necessarily is a discrete and statistically powered endpoint associated with the ongoing GAlette Study. Which is why I elected to make the point that a decision to advance into a controlled study could occur at any time and doesn’t necessarily have to be tied to the conclusion or any particular follow up period of the ongoing GAlette Study. And in fact we intentionally designed the warrants in the financing to be tied to that milestone for exactly that reason.

Mayank Mamtani: Makes sense. Thank you, Brian.

Brian Culley: Thank you very much.

Operator: Your next question comes from the line of Albert Lowe with Craig-Hallum. Please go ahead.

Albert Lowe: Hi Brian, I was interested in your comment about the potential for Roche to start a new controlled study. I guess at any time in the absence of a data disclosure, I was wondering, would there be anything on your end required to prepare for that possibility? Perhaps on the manufacturing side of things or anything else?

Brian Culley: We maintain a very clear wall between public information and information that Lineage may come into possession of. So I really don’t have any particular item to point to and in fact I struggle to sort of hypothesize what one might look at. I suppose in some cell therapy applications having sufficient material might be an indicator of what a partner is aiming to do. But as I’ve shared a couple of times, our production levels are already so high that we do not have a shortage. We don’t need to do anything in particular with respect to our product scale, our process scale, in order to adequately supply even the largest of clinical trials. So I think all those decisions will ultimately be up to our partners in our partners hands. And we will, just collaborate and cooperate with them at any point that is in the furtherance of the OpRegen program.

Albert Lowe: Okay. All right, got it. Sounds like you have plenty of RPE cells on hand. Maybe just one more question. I was interested in the impairment that you mentioned earlier of the great ASIA, great A or B or complete or incomplete injuries. And I was wondering if there are any differences between the responses in these type of acute patients in the prior studies and if there are any other features that you think might make chronic patients good candidates for OPC.

Brian Culley: Thank you for that question. The prior work included only five patients with thoracic injury, but 25 patients with cervical injuries. So the comparisons that we will be making are probably more likely to be interesting on the cervical side. But at the same time, this study is intended to be a safety and performance study of a device and delivery and the follow up periods in spinal cord injury can be quite long. So given the size of the study, the period of follow up and the objective, the primary endpoint objective of the study, we don’t really know what meta-analysis or what sort of predictive outcomes we might be anticipating. But to the extent that chronic patients have never been treated with OPC1, there certainly are many people in the field who are not intimidated by the presence of the scar and old injuries.

And these individuals, and we would be among them, believe that the plasticity and the regenerative capability of the spinal cord, even after many years, can be reengaged and restored. Perhaps not completely, but I believe even partially, could be extremely clinically relevant to individuals who have lost their motor control. So we are very excited to see OPC1 go into chronic patients for the first time because unlike subacute patients, where you really don’t know what the recovery journey for any individual patient is likely to be, Although I will say that the field is getting better at predicting that. But a chronic patient who has plateaued for many years might be more easy to provide a signal after therapy if they in fact have some sort of change in their performance status.

So I think what’s attractive about chronic is not just that there are larger numbers of patients who perhaps might be easier to enroll because they have already been stable and are not coming off of a very acute injury, but also because their baseline should be stable. And so changes to baseline might be more easily attributed to our intervention.

Albert Lowe: Okay, I see. All right. Thank you for taking my questions today.

Brian Culley: Thank you, Albert.

Operator: Your final question comes from the line of Sean McCutcheon with Raymond James. Please go ahead.

Sean McCutcheon: Hey Brian, can you provide some additional thoughts on the ability to use DOSED as a bridge to the new formulation of OPC1 and maybe what comparability studies remain for the new production process? Maybe speak to your confidence in being able to include the new formulation in that current IND? Thanks.

Brian Culley: Yes, excellent question and thoughtful question, Sean. We have manufactured OPC1 with our improved process and we have conducted substantially all of the comparability testing that we intend to do, which includes in vivo efficacy studies. Importantly for everyone listening, it’s very important that the process does not change the potency or efficacy of these cells. And so the comparability testing would include all of the customary features of identity and other characterizations of the cells, potency of the cells, including in vivo study, bioinformatics analysis of the cells. We are substantially complete, but we did strategically prefer to have the IND process for DOSED be completed as it has been so that we could get the study up and going and then as a second phase, introduce all of the data for the new cells to FDA for their review and append it into the dose study.

In that way, we didn’t want to give them both a new device and new cell process to think about. We thought that would be more efficient. In hindsight, it still took a long time to review, but I think that’s okay. I think staging it in the way that we have makes sense. I cannot say today whether the new cell process will be introduced into the scope of the six to 10 DOSED patients or if we will append a small number of patients to the end of dose. But our current thought is that we would use the forthcoming sites and the currently activated site to be the sites that are also utilizing the new formulation of the cells. So I think one of the things that we would like to do is actually get some of that information out and perhaps that can aid with some investor comfort by seeing how the new process compares to the old process because we do think that it is much better way of making the cells we’ve got much better control and that it is going to be deemed by us initially as comparable and we expect the FDA will find that same conclusion.

Sean McCutcheon: Understood. Thank you.

Brian Culley: Thank you very much Sean.

Operator: That ends our Q&A session. I will now turn the call back over to Brian Culley for closing remarks. Mr. Culley, please go ahead.

Brian Culley: Great. Thank you everyone. We hope this was helpful and we’ll look forward to having you back soon for our Q1 2025 call in May.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.