Lineage Cell Therapeutics, Inc.

Welcome to the Lineage Cell Therapeutics First Quarter 2026 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 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 Hohn, Head of Investor Relations at Lineage. Ms. Hohn, please go ahead.

Thank you, Demi. Good afternoon and thank you for joining us. A press release reporting our first quarter 2026 financial results was issued earlier today, May 12th, 2026, 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 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 in the Form 10-Q filed today. 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 filing. With us today are Brian Culley, our Chief Executive Officer, and Jill Howe, our Chief Financial Officer. I will now hand the call over to Brian.

Thank you, Ivana. Good afternoon, everyone. We appreciate you taking the time to join us today. We have a lot of great things to cover. I'm going to try and keep it short so that we can have plenty of time for analyst questions. I do definitely want to highlight the successful expansion of Alloscope, our proprietary cell manufacturing platform, most notably because it led to the launch of CORE1, our new wholly-owned corneal endothelial cell transplant program. We also successfully met our first internal milestone with our ILT1 manufacturing initiative and established a new scientific advisory board and attracted and recognized and established Cell Therapy Executive as its founding member. But before I share those and other updates, I'll begin with the status of our lead clinical program, Oprigen. Data we reported several years ago from the Oprigen Phase 1-2A clinical study included improved anatomy of the retina, halting or reversal of atrophic progression, and improved vision in patients with dry AMD. These are compelling data because they're not known to occur naturally in human beings. And since we made these initial reports, two additional and very important advancements have occurred in the field. The first of these is that three other companies have reported similar results with their own version of an RPE transplant. independently providing further evidence in support of the mechanism and its treatment effects. The second is that Roche and Genentech's long-term analysis of our data show that vision gains persisted for at least three years following a single administration of cells among patients who received those cells to the target location. Taken together, these data appear to us to be consistent with continued forward progress of the OPERGEN program. And while we await a decision on the future of the OPERGEN program, I'll note that while we've long believed that we may be seeing a potential functional cure for advanced dry AMD in the OPERGEN program, this month's presentation by our partners Roche and Genentech is the first time that they have used similar language to describe OPERGEN as a potentially disease-modifying treatment. Obviously, even discussing disease modification and geographic atrophy is exceptionally promising because dry AMD is a common condition that has not been shown to self-resolve and only leads to worsening vision. And so we find it notable that after adding only a single site in 2024, Genentech has now opened 11 new clinical sites starting in late 2025, bringing the ongoing study to a total of 17 unique locations. As I've explained on these calls before, we do not have a timeframe to share when or whether a Galette study data reveal and or a public commitment to a multicenter controlled trial may occur. But we continue to be confident in our partner's commitment to the program. And we believe that the work that they are doing in the Galette study to optimize surgical delivery will improve the product's profile and is intended to increase its probability of regulatory and commercial success, especially compared to the competition, which appear to us to still be in the early stages and not as advanced as we are in the necessary aspects of manufacturing or delivery. Overall, we believe our powerful quartet of scalable manufacturing, proprietary delivery tools, long-term safety and efficacy data, and a partnership providing world-class commercial capabilities make us bullish on the potential for Oprogen to capture a significant portion of a multi-billion dollar and still understirred GA market. And because all of our programs have certain features in common, we believe we can bring the same kinds of attributes to other cell transplant programs, but even more quickly, which should explain why we are eager to try and apply these learnings to other cell types. Because development of cell therapies is very different than that of small molecules, we needed first to invest in our manufacturing capabilities to enable development of these other cell types. And that is because in cell therapy, the process is the product. Even seemingly insignificant changes to a process can impact your product's characteristics, including its efficacy. So you want to ensure that you have the right process in place before beginning clinical testing. Making those investments too late could be fatal to a program, analogous perhaps to changing the structure of a molecule. Some companies may feel pressured to rush into clinical testing without a robust scalable manufacturing process and assume they can figure that part out later. We think that approach can create significant risks. We are choosing instead to invest in commercially viable process development before launching clinical trials so that if we do demonstrate compelling clinical activity, we believe we can be much more confident that the product which led to that activity can continue through approval and eventual commercialization. Otherwise, you may be delaying an inevitable and potentially critical shortcoming, which could cause you to go back to square one with the regulators. Fortunately, while manufacturing may sometimes be an underappreciated or even overlooked area of cell therapy, it is nonetheless an integral factor in a product's success. And we believe we've made tremendous strides in this area. Our Alloscope manufacturing platform utilizes a two-tiered banking system in which a master cell bank generates a working cell bank, which generates the clinical material. The production capability underlining this approach is easy to understand. A single vial from a master cell bank can generate an entirely new working cell bank and any vial from that working cell bank can generate the product. That means the amount of material you can mathematically generate is being multiplied at each step. So if each step has a hundred vials, even just a hundred times a hundred times a hundred is a million vial production capability. And this is not a prophetic claim about large-scale production. We have performed these individual steps multiple times. And the final product from our banks has cleared the FDA requirements and been used in clinical testing. If we were to successfully perform these steps again and again, using the full potential of our banks, we would produce many millions of vials of our product. Importantly, this kind of scale also means our cost per dose for a particular program can potentially be in the hundreds of dollars, which we believe offers advantages in terms of patient access and affordability. And the potential for low-cost scale is one of the reasons we're so excited about the allogeneic, off-the-shelf product candidates in our pipeline. I'll now turn my focus to how we apply our manufacturing success and lessons we've learned into our pipeline of cell-based assets for other medical conditions that arise from the loss of critical cellular function. OPC-1 is our second clinical stage program designed to increase mobility for people who have suffered from a spinal cord injury by delivering new and functional oligodendrocyte progenitor cells to the site of injury. OPC-1 has been administered to 30 individuals in two Phase I, II safety trials, and we believe the long-term safety and efficacy data collected in those trials is both promising and worthy of further investigation. This is a program that was created before the advent of modern cell therapy technologies and required some improvements to both the production process and product delivery. We've previously reached our goals on the production process side, generating new cell banks and producing a cleaner, potent, and uniform product on a commercially viable platform in our in-house GMP facilities. We also overcame a major deficit with accessibility by inventing and introducing a new patented thaw and inject formulation, which we developed for and then borrowed from the Oprogen program. That material has undergone in vivo comparability testing and we expect to present that supporting data package to FDA later this year with the intention of introducing those cells, those new cells, into the ongoing DOST trial. DOST is running in parallel to provide a separate analysis, which is to evaluate the safety and performance of a novel and proprietary delivery system for OPC1. Our goal with the new device is to deliver the cells to the area of injury without stopping patient ventilation, something that was required in prior studies. Once the cells and device have been adequately tested and a study design has been discussed with FDA, we expect we would be in a position to conduct a larger comparative study of OPC1, either alone or with a partner. Notably, the ongoing study is the first time OPC1 has been administered to patients with chronic injuries, which are injuries that may have occurred as long as five years prior to treatment. We have treated two such patients to date, and because we will be collecting functional assessments on all patients, we have the opportunity to investigate any signals of efficacy that may arise. This is important because unlike subacute patients, most chronic patients have reached a performance plateau where further spontaneous improvements are considered unlikely and therefore any functional improvements they gain may be easier to detect. And chronic injuries also represent a new and larger potential patient population for this experimental therapy. Importantly, The first chronic SCI participant is coming up on their one-year follow-up visit, so we expect to be able to provide an update on how they're doing on our next earnings call. And while the possibility of a treatment effect in chronic patients is an exciting topic, I don't want us to lose sight of the point that the dose study is designed to demonstrate the safety and performance of the novel delivery device. And to date, that device has performed as expected with no unexpected procedure, product, or device-related adverse events or significant design changes required. DOST also has recently been expanded to a second site, the Rancho Research Institute, located in Downey, California, in conjunction with the Rancho Los Amigos National Rehab Center. We are honored to have Dr. Charles Liu, the principal investigator, and his team involved with the OPC-1 program. Moving next to Resonance, this is our first internally developed program using the modern technology available from the Alloscope platform. This is an auditory neuronal cell transplant to treat hearing loss. Resonance was built from the beginning on our Alloscope platform, so it already has the features I discussed a few minutes ago. And last year, we announced a partnership for this program with William DeMond Invest, which is expected to fully fund the planned preclinical development plan leading to an IND filing. Resonance is an important example that showed we could conceive of and successfully manufacture a completely new cell-based product candidate on our AliceGo platform in a rapid and efficient way. From an initial investment of approximately $1 million, we generated new intellectual property and advanced Resonance into preclinical testing in about one year. The speed and success of that project then led to a partnership with DeMont, a world-leading hearing healthcare company, which brought us access to specialized technology, auditory expertise, and a network of hearing health leaders. As shared previously, DeMont also agreed to fund up to 12 million of preclinical activities leading to a first in human regulatory filing, a portion of which has already been spent in support of the project, including as reimbursement to Lineage for our contributions. We believe this collaboration demonstrated the speed, efficiency, and value creation that the Alloscope platform can provide, as well as highlighting productive deal-making. And we hope to repeat this success with some of our other cell transplant programs. Meanwhile, our collaboration with DeMont has been progressing well. I'm happy to share for the first time today that we have successfully completed three engineering runs, and preparations are underway to perform that process in our GMP suite. Successful manufacturing of GMP material will be an important next milestone, as it's something we want to complete before speaking with the regulators about human testing. We've also established a novel model of deafening, which will enable the initiation of functional animal testing using the cells we've produced under this important partnership. Moving now into the rest of the pipeline, I want to provide some context regarding the next two programs, our islet cell and corneal endothelial cell initiatives. Human body is comprised of more than 200 discrete cell types. And because pluripotent cells can become any of those 200 cell types, we have many choices about where to deploy our resources into additional product candidates. After extensively evaluating where we might generate the greatest value from our process development and directed differentiation expertise, we announced two new initiatives. One focused on addressing the issue of scale in type 1 diabetes, and a second one focused on corneal endothelial disease. One of the things we like about these two initiatives is that clinical evidence demonstrating that a cell transplant can address the respective diseases already exists. So unlike a small molecule program where you really have no idea about clinical efficacy or the translatability of animal models until you reach those steps, there already is established data showing that functional islet cells can lead to insulin independence and that functional corneal cells can treat Fuchs dystrophy. In these areas, the clinical risk may be reduced due to these precedents and thus the business opportunity for lineage resides where we perform best, on the process development and production side. And because islet and cornea cell transplants are currently performed using cadaver cells, we see a huge opportunity to try and develop a consistent and low-cost supply of these cells from our Alloscope platform. Starting with core one, This is a corneal endothelial cell, or CENC, therapy program designed for the treatment of Fuchs and other corneal dystrophies. Fuchs corneal dystrophy is a progressive condition where cells on the inner layer of the cornea die off, causing swelling and vision loss. In the advanced setting of this disease, DMEK, or the Semets Membrane Endothelial Keratoplasty, is a surgical option consisting of replacing the diseased cells with a donor graft often leading to improved vision. CORE1 is an internally developed and wholly owned preclinical cell transplant aimed at providing a consistent and affordable supply of corneal cells to these procedures. And I hope it isn't missed that CORE1 can benefit from our ophthalmology and manufacturing expertise and highlights our approach by focusing on what we do best, large-scale, high-quality cell manufacturing. Millions of people are potential candidates for corneal transplants, but the current supply of CEMCs from cadaveric sources is limited by the low availability of organ donors, which, by their nature, have inconsistent yield and quality. Nevertheless, CEMC therapy from cadaveric sources has been approved in Japan and is in Phase III testing in the U.S., providing evidence for the mechanism of action and business opportunity. But according to JAMA Ophthalmology, Cadaver sources can only serve about 1 in 70 patients, highlighting the unmet need. The CORE1 program aims to solve this limitation because existing approved CENC transplant therapy not only relies on cadaveric tissue, which is limited and variable, but also requires cells to be transplanted within 30 hours of harvesting, creating barriers to patient access. We believe there is a terrific opportunity to address the unmet need for reliable, consistent, scalable, and cryopreserved CENCs. And again, CENC transplant therapy is already clinically validated with preclinical models, endpoints, and clinical and regulatory precedents that are well-established and ready to be copied by an innovator with a superior cell source. From a manufacturing and formulation perspective, the anticipated therapeutic dose is small. fewer than 2 million cells per patient, which we believe is well within the capability of Alloscope to deliver low cost of goods and an efficient production process. The differentiation pathway is well understood, and we believe we can utilize one of our existing differentiation methods to create a proprietary position, as well as potentially accelerating and streamlining product development. As a result, in just a matter of months, our team advanced the Core One program from little more than an idea into preclinical development and was able to successfully manufacture off-the-shelf corneal endothelial cells on our Alloscope platform with the identity and morphological and functional characteristics that met our initial internal criteria and support further development. We plan to advance this program first into translational models and thereafter into initial human testing, and I hope at our next quarterly call that I'll be able to provide a timeline for initiation of a clinical trial of CORE1. Moving next to type 1 diabetes, we've been getting a lot of interest about our entry into this space. As with CENCs, the clinical data show that islet cell transplants can work. Each year, dozens of patients are reported to be functionally cured using islet cells from cadavers, meaning they can regulate their blood sugar without daily disease management. However, islet supply is a major unsolved problem. Expansion of islets from cadaver sources cannot currently support a commercially viable source of these cells. Immunosuppression, patient eligibility, and hypoimmunity are all additional hurdles that need to be overcome. But we believe the hurdle with the least amount of progress to date is making islets at the scale required for commercial success. And we believe significant value in the islet cell transplant community should accrue to whomever solves the scale problem. One reason for this supply gap is that the required dose of islet cells may be as high as a billion cells per patient. For reference, the upper limit for an optimized bioreactor process might be 10 billion cells per liter. And that is still commercially inadequate for T1D patients, even at 10 or 15 liter scale. And because mature islet cells do not expand readily in culture, these optimal calculations don't even apply. Our calculations suggest that you might begin to reach commercial viability at thousands of doses per batch, implying that production will have to occur on the scale of at least an 80 liter reactor. But carrying out a differentiation process in an 80 liter vessel requires feeding that vessel with many billions of undifferentiated pluripotent cells. You can't just rely on on cells to divide endlessly. They have to retain their full pluripotency, their genetic stability, and do so without losing their homogeneity and synchrony. And that is the fundamental problem. Conventional 3D expansion in aggregates introduces heterogeneity, leading to lower control, lower synchrony, and higher dissociation requirements, resulting in more genetic aberrations and less effective differentiation. But generating billions of cells from conventional 2D approaches requires impractically large surface areas and high aseptic risk. There is an unavoidable conflict in islet cell production between reproducible control and sufficient scale. And there is no trade-off. You have to combine the best of both worlds in order to produce a commercially viable product. Our proposed solution to this problem is called ILT1. a new manufacturing initiative employing a modification of our Alloscope platform into what we call Alloscope 5D. Alloscope 5D has the goal of generating large-scale production of pre-differentiated cells with reduced manipulation and passaging so that you're capturing both 2D synchronization and control of differentiation with 3D environmental control and scalability, hence 5D. ILT1 is initially focused on producing a homogenized population of undifferentiated pluripotent cells ready for synchronized differentiation, and which, if successful, could thereafter serve as the high-feed source material for differentiation into islet cells. If we can develop a modality that can support an islet cell production process from expansion through differentiation in a dynamic culturing system, we could potentially solve a major hurdle to production and commercialization of an islet cell therapy product candidate. With this initiative, we are inverting the traditional development paradigm by focusing on the scale-up of undifferentiated cells first, because as I explained in the beginning of this call, once you've shown that you can actually produce your material while maintaining its quality at scale, we believe you may be materially reducing the risk profile for the remainder of the development project. That is because multiple independent groups have already shown that islets can clear preclinical and clinical testing and become an effective intervention for people with T1D. Similarly, editing strategies and differentiation protocols already exist and can provide risk reducing information in those respective areas, but no one to our knowledge has shown that they can scale islets to commercially relevant levels. For this reason, we think it's appropriate to focus on the unresolved scale problem rather than performing years of expensive preclinical and clinical studies while deferring the problem of scale up for later. For some companies, advancing into clinical testing without a robust manufacturing process may even become a significant setback. We think the value is in establishing from the beginning a process that can support downstream development. I previously reported that we met our first internal manufacturing milestone for this initiative by demonstrating what we believe is a highly homogenized, scalable, and fully suspension-based process for generating undifferentiated pluripotent cells using one of our proprietary cell lines. After this work was successful at a half liter scale, we then moved into a larger multi-liter format which continues today. If we are successful at the larger scale, we would then seek to demonstrate Alloscope 5D scalability with either an internally or externally sourced hypoimmune cell line, one that is suitable to support islet cell differentiation. Or we may proceed with a non-hypoimmune line or perhaps both. We don't need to generate islets yet. We first want to demonstrate the capability of being able to generate enough raw material that can become islets. As one final point on Alloscope 5D, I'll add that we don't yet know what the upper limit is for our approach, but we've already done it reproducibly at a small scale, and that allows us to apply insights, IP, and process improvements to our other programs. such as by potentially making larger cell banks or driving our production costs even lower. We'll do our best to keep you informed on ILT1, but I can share today that we believe it's already paying off in other areas. Changing gears for just a moment, we recently announced the formation of our Scientific Advisory Board to provide strategic counsel and insights into the development of our pipeline. The SAB's founding member is Dr. Joachim Freubis, a recognized and established biopharma executive who brings extensive experience across ophthalmology, neurology, diabetes, and other areas of interest to us. Dr. Freubis helped shape cell therapy development at Novo Nordisk and Blue Rock, and has led cross-functional global teams responsible for the late-stage development and commercialization of multiple approved products. We're excited to have been able to attract a leader of his caliber and look forward to providing updates on further appointments to our SAB throughout the year. In addition, we also welcome Dr. Priyantha Hirath as our Senior Vice President and Head of Clinical. Dr. Hirath is a board-certified specialist neurologist with extensive experience spanning early translational development, regulatory affairs, and clinical development through successful Phase III clinical trial execution. He brings a broad clinical perspective suitable for our diverse pipeline and a deep understanding of disease penetration, progression, and meaningful outcomes. We are pleased to have attracted the support and contributions of Drs. Freubus and Herath to our growing and maturing company. To wrap up these remarks, our business strategy aims to efficiently leverage our Alliscope platform and create a pipeline of related but discrete cell-based assets. some of which we may advance internally toward commercialization, and some of which we may seek to partner during early or late development. If you're wondering how we can manage such a broad pipeline, please keep in mind that our platform generates assets which share certain essential traits in common, such that each dollar we spend on innovation can apply across multiple programs. And while each product candidate is intended for a different condition and each cell line behaves in a unique manner and their respective development risks vary, the early steps of banking, process development, and achieving control, purity, and scale have somewhat common features in the way we apply them, which allows us to broadly expand the scope of our pipeline without losing the focus required to succeed in each indication and using our capital in an efficient way. I hope that business update has been informative, and with that, I'll turn things over to Jill for a review of our financials.