Lineage Cell Therapeutics, Inc.

Welcome to the Lineage Cell Therapeutics first quarter 2023 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's website at www.lineagecell.com. This call is subject to copyright. and is the property of lineage in 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, Iwana Holm, Head of Investor Relations at Lineage. Ms. Holm, please go ahead. Thank you, Abby.

Good afternoon, and thank you for joining us. A press release reporting our first quarter 2023 financial results was issued earlier today, May 11, 2023, 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 meeting 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. 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, Jill Howe, our Chief Financial Officer, and Gary Hogue, our Senior Vice President of Clinical and Medical Affairs. With that, I'd like to turn the call over to Brian.

Thank you, Ivana. Good afternoon, everyone. We appreciate you taking the time to join us today. Our most recent quarterly call was just two months ago, but I'm happy to report today on additional and fairly exciting progress which has occurred since then. The most significant event of the past two months was the ARVO Annual Meeting held in New Orleans, where Dr. Eyal Benin, one of the investigators involved with the initial Phase I-IIa trial of Oprigen, presented never-before-seen analyses which Genentech performed on data collected in our study. To be clear, these were new, independently generated analyses conducted by Genentech's MAST expert grader, And while the data support and reinforce our original findings, as well as the study findings made by the Johanny Image Research Lab, these were novel analyses and results, which lineage had not previously reported. We have previously reported and presented on unique clinical findings among some of our cohort four patients, including areas of GA being smaller at 12 months than at baseline, and increases in patient visual function at 12 months, which occurred notably among the five patients who received extensive coverage of Oprogen across their area of GA. But Genentech took these data analyses even further using proprietary technology and imaging expertise, and they were able to generate new analyses from the raw data and images. These additional results support what lineage had reported previously, including structural and functional improvements in a disease previously thought to be inevitably progressive. Genentech showed new findings supporting the observation that extensive placement of opergen cells across the area of GA appear to result in the best clinical outcome seen in clinical trials to date, as well as continued evidence that transplants of opergen cells may result in a multi-year treatment effect from a single dose. We believe these findings compare favorably versus the burden of someone typically elderly and with very poor vision seeking out a monthly or even every other monthly injection of a complement inhibitor. And importantly, these data were collected using a common surgical technique which every licensed vitreo-retinal surgeon is capable of performing using standard instrumentation. And these outcomes occurred five out of five times when opergen was placed extensively across the area of GA. Additionally, something which I believe has continued to be overlooked is the evidence Genentech presented, which showed a patient who no longer had features of serora near the border of their GA following treatment with opergen. I'll remind you that serora is an area of complete RPE and outer atrophy which essentially means the complete loss of photoreceptors and the essential supporting RPE. I'd also like to point out that thousands of patients have completed clinical trials for the two leading complement inhibitors, but despite recent reports from extensive subgroup analyses of those data, I'm not aware of even a single case of seror resolution among them. Now, while lineage may not have yet as many data points as the competition, but even setting aside the vision gains we've reported in patients who should be losing vision, we are reporting much larger anatomical changes in the competition. And we're using objectively collected methods on anatomical features unaffected by patient effort. So I believe these direct comparisons and questions about relative value are completely valid. We welcome these comparisons, especially as the OPERGEN program advances through the clinic. As a reminder, the primary and secondary endpoints for the ongoing study occur just 90 days post-treatment, which means these data are detectable and collected nine months earlier than the more common 12-month treatment outcomes. Before moving on, I'd just like to convey my appreciation to our partners, Roche and Genentech, for enthusiastically supporting our desire to have these new data presented at ARVO. Their retinal tissue segmentation algorithm and additional resources which they deployed give us further conviction in our cell transplant approach and reflect the insights and expertise which we were counting on when entering into the license agreement for the development and commercialization of Oprigen, from which I'll remind you we're eligible to receive up to $620 million in additional payments as well as double-digit royalties. In the meantime, we'll closely monitor the establishment and size of the dry AMD commercial market. While Lineage does not have a commercial product today, we believe the recent approval of Cyphovry and reported $5.9 billion acquisition by Astellas of a similar complement inhibitor asset will not only help create engaged and informed physician and patient populations, but also set the stage for potential next generation products like Oprigen by verifying expectations of a multi-billion dollar commercial market, which is comprised of patients eager to find effective interventions for their debilitating condition. Moving next to our OPC1 program, which is intended to help patients recover more fully from a spinal cord injury, our recent focus has been on completing the requisite regulatory interactions to support the initiation of the DOST trial, which is a six to 10 patient safety study of a new spinal cord cell delivery system. This new system is expected to greatly improve the transplant procedure by allowing the surgeon much more time to administer the cells to the spinal cord and to do so while the patient's respirator is still connected. As you'll recall, we previously held an RMAT meeting with FDA to discuss the use of the new delivery device. Along with the device information, we included a protocol synopsis for the clinical safety study we plan to conduct in subacute and chronic SCI patients. That RMAT interaction was followed by a request from lineage for a Type B meeting to discuss specific items which would be included in an IMD amendment. Unexpectedly, the FDA noted in response to our request that their written responses from that meeting would not be available until the last week of June, which is approximately eight weeks later than we'd expected for a Type B meeting request. I want to provide some comfort that, to our knowledge, this later-than-expected meeting date is in no way a reflection on the OPC1 program. The FDA explained that the delay was due to time constraints among certain essential staff members necessary for our topics. So we find this to be unfortunate but not entirely surprising given the deluge of cell and gene therapy programs currently in development. Nevertheless, after the Type B meeting is held this summer and provided that the agency's responses support the use of the new delivery system, we expect to be able to submit an IND amendment for OPC1 in Q4 and open the dose study clinical site as soon as possible thereafter. I do have three additional updates on OPC1 today. The first is that we strengthened our intellectual property position through a patent which was granted for claims covering manufacturing processes which Lineage developed. That patent has claims which expire no earlier than 2040, providing us with a long period of protection for this program. Second, I want to provide an update on our announcement regarding the creation of the first annual Spinal Cord Injury Investor Symposium, a conference which Lineage will be presenting this year alongside the Christopher and Dana Reeve Foundation, and which will be held the last week of June at the Sanford Consortium for Regenerative Medicine in La Jolla, California. We created this event to increase engagement between industry and patients and the patient advocacy community, which in our experience can help inform and improve the product development process. The Reeve Foundation is a recognized leader in the field of spinal cord injury, and we're proud to have them as a partner as we advocate for those affected by paralysis. We aim to increase disease awareness, elevate the probability of success for product development, and promote clinical trial participation by focusing on topics such as patient-appropriate endpoints and the benefits of partnerships among and between for-profit, and non-profit organizations. Most notably, two days ago, we announced that we've received an education grant from the California Institute for Regenerative Medicine, or CIRM, recognizing the SCI Investor Symposium as an important scientific conference and supportive of CIRM's overall mission and objectives. We are thankful for this additional financial support from CIRM, and you may recall that OPC-1 was one of the first clinical trials ever supported by CIRM, and we're grateful to the agency for its continued commitment to spinal cord injury. As I have shared before, we still expect to approach CIRM about a clinical trial grant to support the dose clinical study, but that step is normally performed after the IMD amendment has been submitted. So third and lastly for OPC1 today, I just want to convey my appreciation to all the members of team lineage, both in Carlsbad and Israel. as well as any investors who participated in the Wings for Life World Run last weekend. The World Run is an important and global fundraiser for SEI research and embodies the importance of broad-based collaboration, which, as I just explained, we believe is core to successful product development in this condition. Moving along, I have just a few more updates to share for VAC2. As you know from our previous discussions regarding the pre-IND written feedback we received, we have a fairly clear path to support the CMC side of an IMD submission. But it would be expected for us to also include any ex-US clinical data which has been collected. That means providing data from the UK-based Phase I trial performed by Cancer Research UK in eight patients with non-small cell lung cancer. We've been waiting for that data to arrive, and I'm happy to share today that we received some key updates and now expect the complete data package to arrive next quarter. I have stated previously that we believe strategic alliances offer us the best mix of risk and reward for the VAC platform, and our BD team has several exploratory discussions ongoing for VAC2 and the VAC platform more generally. While there can be no assurance that any development partnerships we're exploring will come to fruition, our preference for the VAC program is to de-risk it through one or more alliances rather than proceeding independently, and the BD team will continue to work on this initiative. There also have been some encouraging clinical results reported in the neoantigen vaccine space lately. So we intend to continue to monitor this landscape closely because doing so will better inform our corporate strategy and help us determine the best development path for VAC2 or any other VAC platform programs which we may pursue later. through academic or corporate partnerships. For ANP1, which is our transplant program for hearing loss, the preclinical testing is ongoing through a collaboration with the University of Michigan. Our initial objectives from this collaboration are to determine the preferred location for the cell transplants and to determine how long the cells can survive after transplantation. Last week, I was provided with the first-ever images generated from that preclinical work. And, in fact, I'll see if we can post one of those images to our Twitter account after this call. I think it's kind of a cool thing to see. I was excited to see the early data because, as you will recall, our hearing loss program didn't even exist at the beginning of last year, and yet we already have our first preclinical data emerging. This is such a great example of the speed and return on investment from our R&D dollars. We developed a differentiation method, filed intellectual property, and proceeded into in vivo testing in less than 12 months and with a commitment of less than 1 million R&D dollars. And frankly, I think one of the key advantages for lineage in what continues to be a difficult environment for small biotech companies is that our core technology offers us the ability to make tremendous progress without also having to make tremendous expenditures. Our disciplined spending and efficient use of R&D dollars is a foundation which Jill and I believe is appropriate for our stage of development and which can help us bridge to important events and opportunities which lie ahead, such as completing enrollment and reporting data from the ongoing Phase II trial of Oprogen, the initiation and conduct of clinical trials for OPC1, and progress in partnerships which we pursue across other areas of our business. As a final but actually quite important note, I'm also happy to report that based on preliminary estimates of market cap cutoff, we anticipate lineage will be added into the Russell 3000 and the Russell microcap indices this summer, an inclusion which may help to expand investor awareness, increase institutional ownership, and provide additional liquidity in our stock. With that, I will now hand the call over to Jill for a discussion of our financials.