Lineage Cell Therapeutics, Inc.

Welcome to the Lineage Cell Therapeutics Second 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 Investor Sections of Lineage website at .lineagetell.com. This call is subject copyright and is the property of Lineage. And recording, reproduction, or transmission 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, Ms. Iona Hone, Head of Investor Relations at Lineage. Ms. Hone, please go ahead.

Thank you. Good afternoon and thank you for joining us. A press release reporting our Second Quarter 2024 financial results was issued earlier today, August 8, 2024, and can be found on the Investor 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 sections 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 31, 2023. We caution you not to place under 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.

Thank you, Iwona. Good afternoon, everyone. We appreciate you taking the time to join us on the call today. There are three things that I plan to discuss today. First, I'll have some brief comments about the macro environment because it's important and we obviously are affected by it. Second, I will provide an update on our lead program, Oprigen, for the treatment of dry AMD. And third, I'll provide an update on our IND amendment for the spinal cord program alongside some additional progress we've made with our pipeline. First, it's impossible to ignore that the biotech sector remains in an unprecedented bear market. While positive reactions to clinical data, M&A deals, and IPOs still occur in pockets, the overall sentiment for small-cap bioinvestors remains extremely cautious with many investors on the sidelines or in some cases outright negative on the sector. And as you know, this regrettably sour environment has been present with us for several years. In times like these, it's critical for capital-intensive businesses like ours to manage their cash wisely, to focus only on one or two priorities, and to seek out the best available cost of capital. Some biotech companies have elected not to follow these practices and a record number of them have suffered as a result. Now, we obviously cannot control interest rates or generous flows, but we can, and we do, seek to optimize things which we can control, such as where our capital comes from, how that capital is deployed, and what we get in return from those investments. Our staged and measured approach, coupled with our deep commitment to fiscal discipline, has ensured that we've been able to weather multiple years of unpredictable market environment much better than many of our peers. And such sustainability is important because we believe our cell transplant technology can become a very powerful platform. This optimism comes not only from our current programs, but also from the continued success being shown by similar cell transplant programs in areas like diabetes and Parkinson's disease. And when the biomarkets do improve, and history suggests they will, we will be prepared to make the necessary and appropriate adjustments to capitalize on that environment as well. With those macro comments out of the way, up next is Oprigen, which is our retinal cell transplant to treat geographic atrophy secondary to age-related macular degeneration. I assume everyone on this call is aware that our partners, Roche and Genentech, are currently conducting a Phase II trial of the Oprigen program with an estimated enrollment of 60 patients. We are happy to announce today that the first XUS clinical site for this study has been opened. This is an experienced site located in Israel and managed by an investigator who also participated in our Phase I-IIa study. We are pleased that the Genentech clinical team continues to expand the number of sites in the Oprigen trial, which additionally helps to increase exposure of and experience with our lead product candidate. Because clinical data releases can be significant events for investors, we often are asked when the data from this trial will be available to the public. The answer, which by the way is a completely normal arrangement for pharma partnerships like ours, is that lineage does not control the timing or format of data coming from this Genentech-run trial. However, that does not mean we are in an information vacuum. There are a number of publicly available items which we believe are encouraging indicators for this program. I would like to highlight some of those positive signs for you today because having a clear and comprehensive view of Oprigen is not only critical to the investment thesis for lineage, but also informs the strategic decisions we make for the company. Starting off, it is important to point out that the ongoing trial has three outcome measures. The first outcome measure is the proportion of patients with successful delivery of Oprigen to the target region of the eye. The second is overall safety and the third is improvement in retinal structure, which by the way is an outcome measure that wasn't even collected in the Cyphoveri or Iserva anti-complement trials because neither of those drugs has shown they can improve retinal structure. We believe even just the fact that our partners are collecting data on things like retinal improvement is an indication that Oprigen may offer patients a far superior profile than any of the non-cellular approaches. But as I was saying, there are three primary and secondary outcomes collected in this study and importantly, they are all assessed at three months post-treatment. And as a reminder, the first patient in this open label study was enrolled in March of 2023, which means Oprigen is currently in an unblinded open label study with outcome measures being collected at three months and which has been running for 17 months. And while we do not know the extent of any analyses which may have been conducted, we nonetheless assume that based on these facts, some amount of interim clinical data has been collected and reviewed by our partners. While lineage does not have access to results from this study, we believe an informative amount of data may already be available from patients treated to date. And that relates to my next point. Roche has recently been undertaking a rigorous review of their product candidate pipeline. Last September, Bloomberg News reported that Roche's new CEO, quote, aims to move fast on high-risk, high-reward programs. Then this April, Endpoint News reported that Roche, quote, doubled down on high-impact projects after slashing 20% of their pipeline. We saw evidence of this pipeline prioritization, which in some instances included terminations to license agreements, terminated programs in cell therapy, and terminations in ophthalmology. But against this backdrop of ruthless culling and prioritization, there are signs which suggest to us that Oprigen, which is a licensed ophthalmology cell therapy program, remains in a good place. First, as I reported last quarter, Roche and Genentech electively reported long-term data from the lineage-run Phase I-IIa study at the Retinal Cell and Gene Therapy Innovation Summit in May, which showed durable increases to BCVA and durable increases to key retinal layers, lasting for at least 24 months. This is a starkly different result from what anti-compliment therapies have demonstrated to date, where vision loss and tissue loss are the expected outcome over the same time period. And not long after that data update, Genentech entered into a new and additional agreement with lineage to provide services which support certain development activities for Oprigen, including to provide an additional five years of follow-up for the patients enrolled in the lineage-run Phase I-IIa study. And we have seen this kind of positive sign continue this year, as recently as the Roche Virtual Ophthalmology Day last month, where the Global Franchise Head for Ophthalmology said, quote, While at the same time, we noted that they terminated another Phase II program in GA. So from our perspective, while we are waiting for Oprigen data, we are encouraged that these statements from our partners continue to confirm their strong focus in geographic atrophy, and to our knowledge, Oprigen is the only clinical program they currently have in this indication. Again, it's important for me to emphasize that as of today, we do not have information about the results of the ongoing trial. We also don't know to what extent our partners have or have not reviewed any interim data. All we are providing today is management's perspective of the situation based on our assumptions, as well as on publicly available actions and statements, which we believe in the aggregate more likely indicate positive rather than negative progress with Oprigen. At a minimum, whatever is known to Genentech appears to have been sufficiently supportive of Oprigen's continued development at a time when Roche is making deep cuts to their product pipeline. So we are encouraged by these signs and remain hopeful that additional signs like the ones I've highlighted for you today will increase investor interest in the coming months. While we await further news and progress from the DRY-AMD program, we remain optimistic about our future because we believe the fundamental mechanism of cell replacement, which has been partly validated by the successful partnering and continued clinical testing of the Oprigen program, offers important advantages over small molecules and antibodies and that cell transplants could be applied to many other areas of the body. We've seen evidence of this idea recently in the surge of CAR-T assets, which have moved into early stage autoimmune disease trials. But CAR-T is a tremendously crowded area. We believe the far more exciting and untapped opportunity for cell therapy lies not in indication hunting with undifferentiated CAR-T assets, but rather in using the appropriate cell type in the many non-oncology indications for which chronic degeneration is a prominent feature. A number of large companies, including Bayer, Novo Nordisk, Astellis, and Vertex, have made major investments in this field, as well as newer entities which have raised significant capital from high caliber investors. And while we welcome these new entrants for the additional validation they may bring to our approach, we remain comforted by our two decades of experience. Those working in this field know well that affordably scaled and well controlled manufacturing, like ours, are extremely difficult to master, even by large, well-funded companies. We also continue to be one of very few, perhaps the only pure play, publicly traded company which can offer investors access to this technology via equity holdings. For these and other reasons, we believe we can remain a leader in this growing and powerful branch of medicine for many years to come. We have several pipeline programs which we're excited about, such as auditory neurons for hearing loss and an as yet undisclosed program in neurology, but our next most clinically advanced pipeline program is OPC1, which is our cell transplant program for spinal cord injury. The objective of this program is to replace damaged cells located in the spinal cord in order to restore or provide function to people who have been paralyzed by spinal cord injury. This approach is of great interest and importance to the SCI field, and Lineage has more experience, clinical data, and years of patient follow-up in SCI cell transplant therapy than any other company. We are manufacturing and transplanting cells which closely resemble those found naturally in the spinal compartment, which, by the way, is the same basic approach that has yielded positive clinical results in the ocular compartment with our DRY-AMD program. Similar to Oprigen, we manufacture our spinal cord cells at a CGMP facility which we own and control, rather than outsourcing this difficult work to a CDMO. We've collected and published as long as 10 years of safety and efficacy data on our SCI patients and believe the adjustments we've made recently to increase the purity and scale of our cells will further improve the quality and commercial 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 our cells to patients. As we finalize the information package for FDA, which will support our new manufacturing process, our most immediate objective for the OPC-1 program is to improve upon the delivery system. The original system used in previous studies was adequate but not optimized for that purpose. We have licensed rights to, and have helped develop for our intended use, a novel delivery system called MyPSD which can administer OPC-1 to the spinal parenchyma in both chronic and subacute SCI patients. This offers several advantages over the original device, including the ability to maintain patient respiration while the cells are being delivered. We believe MyPSD will offer a safer and easier to use solution for this therapy. We have filed an IND amendment with the FDA which, when cleared by FDA, would allow us to initiate our planned study to evaluate the safety and performance of this novel delivery device. As I reported on a prior earnings call, the FDA advised us to expect a delayed process for review of our INDA due to their significant workload and conflicting PDUFA priorities. As a promising sign, we nevertheless have received a number of information requests from the FDA, and we promptly submitted our responses to those requests. In response to our most recent request for further information, the FDA advised in early July that their review was complicated by the requirement of intercenter review, specifically CBER and CDRH, and they were unable to provide a timeline for completion of their review, but that they were working to the best of their ability to deliver a response to us as soon as possible. Fortunately, we heard this week from the project manager that a call with the FDA review team is being arranged with us, so we're hopeful to have a positive update soon. I will add that we do not believe there are any unusual aspects to our INDA, especially considering that we're proposing to evaluate an externally positioned device with a therapy that already has been tested in 30 patients. And in fact, we have heard from a number of external advisors, both from the regulatory and legal fields, that other cell and gene therapy sponsors have been experiencing these kinds of delays in the FDA's review process as a result of a heavy workload. So while that is unfortunate, we have in the meantime been conducting a number of customary trial preparations to support opening the first clinical study site, something which we continue to target as soon as feasible pending receipt of FDA's feedback, and we also concurrently are working on resubmitting our CIRM grant application to support the dose study. We continue to be very excited about the possibility of significantly reducing the cost of that trial by a CIRM Clin-2 grant, but the timing of our submission is contingent on receipt of FDA clearance of our INDA. So while we wait for FDA's clearance, we will take advantage of this additional time to continuously improve the application and give it the best chance of success. I'll also add that an unattended benefit of FDA taking a long time for its review is that we have not assumed many of the projected expenses associated with initiating this trial, so we end up in a better than expected cash position for the period, which Jill can talk about in her section. The last few things I'd like to mention today is a reminder that we have a very exciting preclinical programs in both sensorineural hearing loss and in an as-yet undisclosed indication with our gene editing partner, Eterna. The hearing loss program, ANP1, is a cell transplant comprised of a population of auditory neuronal cells delivered to the inner ear to replace the cells which have become dysfunctional due to damage or degeneration. The manufacturing process for ANP1 has been built upon the same platform as the Oprogene program, which allowed us to accelerate its development and move rapidly into preclinical animal testing. And in fact, a functional test in an animal model is currently underway. In parallel, the manufacturing team wanted to highlight some of their recent accomplishments and are planning to present preliminary data at a scientific conference next month. I learned yesterday that the abstract for that data was accepted, so we will provide those details soon, which is something we can all look forward to. I also want to add that the ANP1 product candidate was created from investments we made in our in-house R&D team. It is an entirely homegrown program, which was not licensed from an academic lab and did not involve any external financial support or require any technology licenses. Being able to design, and then in some cases own nearly 100% of a pipeline program, is an underappreciated advantage which we have created from our experience and capabilities with directed differentiation and process development. While there is abundant attention on Oprogene today, and for good reasons, I don't want us to lose sight of the long-term value which our development engine could create for this company. For this reason, we are continuing to grow our pipeline and engage in partnership discussions which align with this strategy. The ongoing efforts to generate a hypoimmune cell line with our gene editing partner Eterna continues to make progress, and we look forward, later this year, to announcing an initiative we started an entirely new indication. So to wrap up, I will offer three things investors may want to watch for in the coming period. The first is to monitor for any further updates, indications, or other information on Oprogene coming from either us or our partners. The second is us receiving a clear path forward from FDA to initiate the safety study of the new OPC1 delivery device and to apply for the CIRM clinical grant. And the third would be an update on the AMP1 program for sensorineural hearing loss, which as I updated just today is expected next month. With that, I will turn things over to Jill for a review of our financials.

Thanks, Brian, and good afternoon, everyone. Our reported cash, cash equivalents, and marketable securities of $38.5 million as of June 30, 2024 is expected to support plant operations into Q4 2025. Now, this extension of our cash runway may be further than you might have expected. However, as Brian mentioned earlier, this is primarily due to the delay we are experiencing with the FDA on the DOS trial, along with other smart cost-feeding measures which have extended our current runway. Next, I will review our second quarter operating results. Our revenue is generated primarily from collaboration revenues and royalties. Total revenues were approximately $1.4 million, a net decrease of $1.8 million, as compared to $3.2 million for the same period in 2023. The decrease is primarily driven by lower collaboration and licensing revenue, recognized from deferred revenues under the collaboration and license agreement with Roche. Our operating expenses are comprised of research and development expenses and general and administrative expenses. Total operating expenses were $7.3 million, a decrease of $0.9 million, as compared to $8.2 million for the same period in 2023. R&D expenses were $2.9 million, a net decrease of $1 million, as compared to $3.9 million for the same period in 2023. The net decrease is primarily driven by $0.6 million for our OPC-1 program and $0.3 million for our preclinical programs. G&A expenses were $4.3 million, a net increase of approximately $0.1 million, as compared to $4.2 million for the same period in 2023. The increase is primarily driven by stock-based compensation expenses and personnel costs. Laws from operations were $5.9 million, an increase of $0.9 million, as compared to $5 million for the same period in 2023. Other income and expenses reflect other income of $0.1 million, as compared to other expenses of $0.2 million for the same period in 2023. The change was primarily driven by exchange rate fluctuations related to our international subsidiaries, fair market value changes in marketable equity securities, and interest income earned within our money market accounts. Our net loss of $5.8 million or $0.03 per share, compared to a net loss of $5.2 million or $0.03 per share for the same period in 2023. We continue to uphold our commitment to fiscal discipline, and we are confident that this approach will continue to support our plans of achieving pivotal milestones in generating shareholder value through our ongoing investment in our programs. Now I will hand the call back to Brian.

Great, thanks, Jill. So to briefly summarize three key points for today. One, we recognize the continued challenges of the macro situation, and we're taking the appropriate measures to cope with those challenges. Second, we continue to be extremely happy with our recently expanded alliance with Roche and Genentech, reflected by the OPERGEN data update that was provided in May, the new service agreement we entered into also in May, as well as the additional site opening, which I disclosed today. And third, while we unfortunately aren't able to predict how much longer the review of our INDA will take, we are taking steps to hit the ground running with the initiation of the DOS study and the submission of a CIRM grant to provide financial support for that clinical study. I appreciate your attention today, and with that, operator, we are ready to take any analyst questions.

Hello, our question

and answer session begins now. Our first question begins, comes from the line of Mayak Mamtani with B. Riley. Please go ahead.

This is Kevin Kuo on the call for Mayak. Thanks for taking our question and congrats on the progress. So really appreciate the information on the collaboration with Roche and understood that you can now control the timing of it. But just wondering if you can maybe provide more color on how the new services agreement has enhanced the partnership, maybe on manufacturing scale, like any updates so far regarding support your development of commercial manufacturing. That would be very helpful. Thank you.

I appreciate the question. Thank you. Similar to the original license agreement that we entered into, there are limits to what I am able to share with respect to the services agreement. That said, reading between the lines, I think there are some positive signs that can be taken from it. The most obvious one is that it was entered into after what we believe is a period of time that permits Genentech to form an opinion on the OPERGEN program. We do know that in our hands the clinical observations of improved vision and improved retinal structure tended to occur very quickly, certainly within 90 days, sometimes even just in a few days. And so we are hopeful that the willingness and enthusiasm for an expanded agreement is indicative of enthusiasm for the program. But again, I must iterate that I don't have specific knowledge of that. It is just an interpretation. But one of the component parts of that service agreement, as I mentioned in my prepared remarks, is a follow-up, a long five-year follow-up from the patients, an additional five-year follow-up from the patients that we enrolled in the Phase -II-A. So again, without specific knowledge, my view of that is that a partner being interested in following Phase I patients for an additional five years is consistent with enthusiasm and interest in a program rather than a lack of interest or a lack of enthusiasm. There are, of course, expenses associated with the service agreement. So it's not just Linnea's providing services out of goodwill, but we are compensated for such services. So I'm encouraged by the additional investment that has also occurred. There were also in that service agreement some additional support that we provide in the manufacturing side of things. As you may or may not be aware, Lineage continues to be the manufacturer of clinical material for Oprigen currently. However, the plan, and this was the plan from the beginning, is that Roche and Genentech would receive technology transfer training from Lineage until such time as they could complete their own manufacturing of clinical material and then subsequent to that commercial material. So it continues to be the plan of both companies that Roche and Genentech will be the commercial manufacturer of this product. But as you probably can appreciate, technology transfer is a very long process, and this process that we have developed over many years is not easily mimicked from just reading a batch record. There is personal -on-one training that is required in order to be able to conduct it correctly, which is a great barrier to entry for us with respect to others. But it also means that tech transfer can take a while, especially at the level of quality that you would expect for a commercially viable product. So hopefully that does as much as I can to answer your question while remaining within the bounds of confidentiality that I am beholden to.

Yes, thank you.

Our next question

comes from the line of Joe Pantgenese with HC Wainwright. Please go ahead.

Hey everybody, good afternoon. Thanks for taking the questions. So first, I'm not going to talk about potential data around OPERA Gen, but I wanted to, I guess, also take a little foray into confidentiality. And I wanted to focus on potential milestone payments. And first is your current cash guidance, which is fantastic, by the way, taking into account future milestone payments from Roche. And do you have any at least at the minimum directional guidance with regard to, I'm assuming, you know, once Phase 2 data start to roll out, there might be some cash associated with that?

So two parts. I'll do the second part first. So the second part is, no, we are not able to disclose the triggers for the milestones. The only information we've been able to disclose is A, that there are $620 million of milestone dollars for which we are eligible. And then B, we have previously said, and I will repeat today, that it's not a particularly unusual deal. It's not an absurdly backloaded deal. There are milestone payments and eligibility that would be meaningful to this company in a medium and shorter term. So it's not an unusual deal. I would characterize it as a very normal looking deal. But as you can appreciate, it is typical for Big Pharma to not want to disclose all of the various triggers and amounts because that information can be used by other people they're negotiating with. And so, you know, we will just have to work hard as we are to meet those milestones, and then they will appear on the balance sheet, and then you'll become aware of them.

Yeah, wonderful. And, Joel, I'll add to that the initial question you had around the current runway, including milestones, and no, we don't actually have those baked into that current runway. I think anything speaks to how we think about being thoughtful and conservative with our cash and our cash investments and making sure we really have a holistic understanding of being able to continue through this tough environment.

That's great to hear. Thanks. And then if I could just switch over to OPC-1 for a little bit. I guess, you know, looking forward to the start of the study, I guess, what kind of activities can you describe specifically around, say, you know, patient identification and screening and processing, and, you know, even if there's a backlog of patients that you'd be able to use to attract for the study?

Sure, I can address some of that. There are a lot of activities that you are able to conduct if a site is willing. You know, training and familiarity with the program, discussion about protocols and implementation. The boundary condition is typically when you involve a patient. So if you do not have an OpenIND, you don't have all of the regulations and protections in place for patient safety and information flow, you really aren't able to cross that line. So you can think of this as sort of you're in a non-solicitation zone. So you can get ready, but you really can't initiate the game play, active game play, until you have all of the contracts and documentation in place. So there are some things that we can do to get ready, and there are some things that we are prohibited from doing. But there is something that we hypothesized many months ago about this study, and that hypothesis was that it would be easier to identify patients that have a chronic injury than patients that have a subacute injury because the subacute treatment window is between 21 and 42 days. So you need an event to occur in order to have an eligible patient, whereas a patient with a chronic injury who maybe had that injury a year ago or two years ago or three years ago may or may not be under active physical therapy, but certainly exists on a list somewhere as under a physician's care, those people would be easier to identify. Those questions have been asked specifically of the sites, and we've received encouraging information that our hypothesis would be correct, and that once we are in fact permitted to initiate patient outreach, that it would be relatively straightforward. But I would also add to that that we of course intend to implement the various sort of social media website and targeted type campaigns through the relationships that we've built with the Spinal Cord Committee over the last few years to help support our outreach efforts and identify interested patients because of course it's a small study, and the faster we can get it completed, the better, especially in light of the fact that it is a safety study with a primary outcome measure at 30 days. So we don't have to wait two years to see how a patient is doing. We will collect that information, but that is not the information that the study was designed to generate. The study was simply designed to generate data to support using MyPSD in much larger campaigns later.

That's extremely helpful, Brian, and if I could just ask one logistical question, and I appreciate your indulgence. Logistically speaking, for your CIRM grant, and of course a few pieces have to come into play, like you said, to INDS to be approved, etc. Are you looking for a potential range of money that you could be awarded, and what is the general, I know you alluded to this a little bit, what is the general or potential offset for the cost of the studies, like proportionally?

Yeah, we are disclosing what our ask is in the grant. It's based upon a very detailed budget that gets built, and there's all sorts of assumptions and milestones, but if you were to go to the CIRM website and dig deeply, you'd probably find that typically around half of the cost of a study can end up being covered through a CIRM grant. So we're talking about meaningful amounts. This is not like low single million dollars. These are meaningful offsets, and I love to add the point that I feel that CIRM grants reflect or represent some of the most attractive cost of capital because the obligations to share in the upside of the program come at commercialization and are extremely reasonable. So I love this as a way to help pay for this study because it's a large amount of capital that can be available and can be granted to companies like ours, and the hook that it comes with in terms of some repayment is really affordable relative to almost anything else that we could imagine. So we're hopeful and eager that we will be successful in our grant efforts, and I think that the profile of OPC-1 and its prior success in receiving capital from CIRM is going to put us in a very good position with respect to receiving that capital.

Thank you for all the details.

I appreciate those questions, Joe. Thank you.

Our next question comes from the line of Jack Allen with Bayard. Please go ahead.

Great. Thanks so much for taking the questions, and congratulations on the progress. Maybe dovetailing off of the last question around CIRM, I wanted to ask about the ability to access that capital when the IND is cleared. Are those grants taken on a rolling basis, and how quickly could you potentially access the CIRM capital to run the DOS study? And then I have one follow-up as well.

Yeah, Jack, I'm happy to address that question. I think there will be a little bit of a delay, certainly in just the timing of us being able to submit that grant. The CIRM has come out recently with talking about the massive amount of influx and applications they've received, so they've had to slow down their process a little bit. So we certainly are collected in that process, but I do believe we've had great communications with CIRM behind the scenes. We continue with managing that relationship, and they're aware that we are in this conundrum, if you will, with the FDA to be able to submit, and I think it's all very positive for us to move forward. And again, it's not a lump sum. It will be gradual over time as we work through the trial, if that's helpful as well.

Got it. That's very helpful. And then I also wanted to touch on one of the comments made by Brian around the CIRS agreement. I understand there's a lot of confidentiality issues as it relates to that agreement, but I think you mentioned that they're extending the follow-up period for the Phase I-II patients by five years. I guess any context around when that follow-up period was set to sunset and how we should think about the extension for an additional five years in the context of the agreement being signed?

Well, the original study had a five-year follow-up period, five-year post-administration, and because the patients were enrolled at different points, of course each person had a different five-year follow-up. There have been, as you can imagine, since it's been a long time, a number of patients that have fallen off study, but there are some other patients who have remained on study. I can only speculate about why Genentech was interested in following up those patients for an extended period. My belief is, and this belief is based upon the kinds of investor questions that I get, my belief is that everybody would like to know how long this therapy lasts. And so if you have people who received it five years ago and they may be continuing to enjoy an increase in vision or their vision may be stabilized or perhaps they're losing vision, we haven't said anything beyond 24 months, but the fundamental question of how long does this treatment last is really important to the value proposition. You know, are patients going to, is the product profile akin to gene therapy, which would be one time and done, which would be extremely attractive compared to the monthly treatment of the competing drugs that are out there? Is it more therapy that maybe lasts two or three years? I actually still think that that's a hell of a lot more attractive than 24 injections into your eyeball, but I think that these are questions that, as usual, they do include safety components, but I would presume that the greater level of interest here is that you have a set of patients that have a long history. If they're continuing to benefit, you'd like to see how long that benefit is lasting. But again, I have to emphasize that that is Brian's speculation and that no part of the intent of following the patients for an additional five years is included in the service agreement itself, only the continued monitoring of those patients.

Thank you so much. Maybe just one more if I may. I know that you announced that the two-year data is interesting. I'm wondering if you have any thoughts around

the ability of

three-year data as it relates to the chronology

of follow-up in

the study? And then just

briefly

on the additional five years,

ten years,

I'm

curious about that. I don't want to do too much on that. Was that considered out or do you have any sense? I'm

going

to have to let you know that I did sort out the first question. You were very broken up there. I can restate your first question. I believe you were asking about any guidance as to when or whether 36-month data from the Phase I study could be available. I know that data presumably exists, but as it has been the case since we entered into the agreement, the ultimate decision as to when and how such data is disclosed is a decision that's largely controlled by Roche and Genentech. However, based on their past behavior, which has been very supportive of disclosing OPERGEN data, I would presume that at some point that data would become available and I'm hopeful that would be the case. With respect to the second question, I'll give you an opportunity in case the line has stabilized here. See if you can ask the second question again and I'd be happy to answer it.

Hey, Brian. I appreciate that you were able to catch the first question. I don't know if you can hear me more clearly now.

Yes, sir.

Okay. I just wanted to touch real briefly on the additional five years in the service agreement. It seems like it was in addition to five original years. My understanding is that the FDA has typically looked at 15 years of follow-up for novel cell and gene therapies. Do you have any thoughts around the choice of maybe 10 here as opposed to 15 or was 15 in the discussion as well?

My recollection is that it's been a moving target for FDA. I hope I'm not incorrect in this assumption, but certainly when this study was put in place, five years was the agreed upon protocol that was cleared by FDA and of course we have annual safety reports that we provide to the FDA. So had we still been independently managing the program, presumably we would have concluded at five years and that would have been sufficient. So there was, to our knowledge, there was no change in the regulation and a requirement to follow patients longer, although I have seen 15 years certainly with some gene therapies and I have seen some other companies that have electively done longer follow-up. So it cannot be written off as a possibility, but it is not, to our knowledge, specifically applicable to this program which FDA had blessed and let us conduct and I presume would have been fine to have concluded after five years.

Got it. Thanks so much for taking the questions and congratulations again on the progress.

Thank you, Jack.

Our next question comes from the line of Michael Konowich with Maxine Group. Please go ahead.

Hey, Ryan. Thank you so much for taking my questions today. I guess just to take in the context of your comments at the top of the call, are there any plans to move some of the preclinical programs like AMP1 into functional models of hearing loss or IND-enabling studies in the near term or should we expect the focus to remain on careful spend on OPC1 until market conditions start to improve for micro-cap biotechs and small-cap biotechs?

Thank you, Michael. You've asked one of my favorite questions because I like to think of the answer this way. There is an efficient frontier of spending, an efficient frontier of investment which is going to change depending on the macroeconomic environment, the availability of capital, the cost of that capital. So there are extremes where you bunker, do nothing and wait, but that is not efficient. And there are extremes where you overspend, hope for better days and you're wrong and you essentially ruin the company. I won't name names but my goodness, there's evidence of that over the last few years clearly. What we are trying to do, which I believe is the most efficient way to create value for lineage and the platform we have, is to essentially make modest but impactful investments in early stage programs to have a larger pipeline while waiting for the Oprigen program to generate additional data and conviction for the markets because my belief system here is that when Oprigen is finally appreciated for what it can do for patients, that the value of this company will look very different and thus the capital that we would use to move into early clinical trials, which of course are much more expensive than animal studies, would be raised at much more affordable prices. So the real answer to your question is that both are occurring. We are making very smart, very prudent investments in the pipeline, very affordable investments in areas where we can capitalize on having duplications such as using the manufacturing platform of Oprigen on other programs. We have been investing in a knowledge database about where the best opportunities for cell transplantation can occur, which is very difficult and laborious work but it's also very affordable information and it sets you up for success later. And not being tempted to rush aggressively into trials that we're not ready for or we cannot reasonably afford, especially in an environment that's not giving companies credit for it. So whether people agree or not that we've selected the right place in the efficient frontier, our philosophy for long-term growth of this company and to become a dominant entity in this new frontier of medicine is to benefit from the success of Oprigen in the study that is being run right now and to use that success as the lever to move these early-stage seeds forward and harvest them either through the internal ownership or through partnerships in the future. That is our business.

All right. Thank you for that. And then one more just quick follow-up. I wanted to see if you could provide any more color on what sort of data the manufacturing group is planning to present.

I haven't seen the deck. The abstract was just approved yesterday. So I can say as a general matter, I've seen some really wonderful work on things like scale, purity, the kinetics of identity markers and so forth. The functional animal model for ANP1, which is ongoing, would not be part of that update. But of course that is a fascinating and really important piece of data that we are working on generating. So at some point we will aim to have that information available. But I think you can expect for the ANP1 update next month that it will look a lot more like process development data rather than activity data in an animal model.

All right. Well, thank you very much for taking my questions today, Brian, and congrats on the progress.

I appreciate that, Michael. Thank you also.

Let's conclude our question and answer session. I will now turn the call back over to CEO Brian Coley for closing remarks.

Thank you, R.V. Nothing more to add. I appreciate everyone's time today and thank you very much. We'll look forward to being with you next time.

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