Lineage Cell Therapeutics, Inc.

Welcome to the Lineage Cell Therapeutics Second Quarter 2026 Conference Call. At this time, all participants are in 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 the 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.

Thank you, Jericho. Good afternoon, and thank you for joining us. A press release reporting our second quarter 2026 financial results was issued earlier today, August 6, 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 filings. With us today are Brian Culley, our Chief Executive Officer, Jill Howe, our Chief Financial Officer, and Dr. Priyantha Herath, our Senior Vice President and Head of Clinical. I'll now hand the call over to Brian.

Thank you, Ioana. Good afternoon, everyone. We appreciate you taking the time to join us today. As some of you know, from time to time, I like to use these calls to bring investors behind the scenes to better understand how we're advancing our programs and business. Probably everyone on this call knows how important Oprigen is, but based on progress we've made elsewhere, we think this is an opportune time to explain what we've been focusing on while Roche and Genentech continue to conduct optimization activities on our lead program. Insights and milestones from the Oprigen program have allowed us to fuel the growth of a new and significantly more internally owned pipeline of cell therapy assets. and I'm not sure that side of our company is as appreciated as it could be, so I plan to discuss that today. Our history of creating multiple new assets from our platform while maintaining a consistent level of annual investment is due to the success we have enjoyed with the Alliscope manufacturing platform. From Alliscope, we believe we will be able to generate off-the-shelf products with commercial scale production costs in the hundreds of dollars per dose versus the hundreds of thousands of dollars you might expect from autologous products. Purity, potency, and control are all critical parts of a successful cell therapy product, but we believe the highest value proposition for allogeneic programs is found on the supply side, and specifically, the ability to establish low-cost production of consistent and potent material. It's quite easy to make prophetic claims about production costs or process control, but it's quite difficult to do these things in practice. For many reasons, cell therapy manufacturing is materially more difficult than it is for small molecules. But unlike some of our peers, lineage does not need to engage in speculation about our manufacturing capabilities. We have already successfully employed the Alloscope platform to generate a two-tiered GMP banking and GMP production system, which we believe is credibly capable of generating millions of vials of a product candidate. And material from those banks has been cleared by FDA and used in the OPERGEN clinical trial. We think having demonstrated this necessary regulatory manufacturing milestone distinguishes us from those who have not. And moreover, We have successfully made cell banks and GMP clinical material for other cell types and from other cell lines, demonstrating the application of our technology in the service of several different indications. We highlight our manufacturing achievements because we know how difficult these things are and we want to invite comparisons to others working in the cell therapy field. Our success to date with Obrigen means that we have an amazing opportunity to apply the experience, know-how, and intellectual property that we have generated to create new assets. This is a core strategic objective for Lineage, which we internally refer to as Lineage 3.0. And we want to broaden awareness of these assets because we believe they highlight potential additional value residing in our company. Importantly, these pipeline assets each possess Three key criteria which I will outline for you now. First, we have and will continue to choose programs for which we believe the Alloscope platform offers a significant competitive advantage, meaning there is a quality and or a supply issue that we can seek to address through our consistency and scale solutions. Second, We identified programs that may be capable of generating meaningful signals in a relatively small single-arm trial. Oprogen is a great example of this. At the completion of a first-in-human trial, we secured a collaboration with a $50 million upfront fee and an additional $620 million in potential milestones. which we believe was driven by the fact that GA patients are not known to spontaneously replenish their retinas or durably retain vision gains, yet we showed this outcome in five clinical cases. This evidence was compelling even from a small number of patients because the change deviated from the expected natural course of disease. Similar outcomes can be predicted from diabetes and corneal endothelial cell therapy programs because Outcomes such as corneal clarity and insulin independence are not known to occur naturally, making these clinical signals easier to identify even in relatively small trials. And then third, we want the assets that make up Lineage 3.0 to provide us with superior overall economics, which doesn't mean we won't still consider partnering an asset early. It just means that the economics for any deals we strike should reflect the value of us mitigating some of the risk associated with scale-up and for the potential or actual generation of convincing data from a first-in-human trial. I'm next going to briefly discuss how we believe the three components of Lineage 3.0 that I just discussed will generate value for us in each of our pipeline programs. I'll start with Core 1, our corneal endothelial cell, or CENC therapy program, which is designed for the treatment of Fuchs or other corneal endothelial dystrophies. Core 1 is a wholly owned preclinical asset which benefits from our existing ophthalmology and manufacturing expertise and represents a natural next application of our technology platform because it focuses on what we do best, large-scale, high-quality cell manufacturing. We began exploring CEMCs as a potential new program in the Second quarter of 2025, and we started doing wet lab work in the third quarter of 2025, and just nine months later, we successfully employed our Alloscope 5D technology to this program. That means we achieved seamless bioreactor-based 5D precursor expansion and differentiation to support CENC production, which we believe, together with our proprietary thaw and inject formulation, supports a potentially best-in-class product profile. This work, unsurprisingly, also met our internal criteria for continued advancement into preclinical testing, which is beginning imminently. And thanks to the development precedent that is available for this indication, we are targeting to have initial in vivo data generated by the end of the year. We think this will be an important data point because we want to show that the cells which we make can perform at least as well as cadaver cells in the applicable and previously established models of efficacy. As to how we see ourselves fixing a supply side issue with CORE1, millions of people are potential candidates for corneal transplants and yet today there is only one donor for every 70 diseased eyes globally. The current supply of CENCs from cadavers is limited by the low availability of donors as well as by inconsistent yield and quality. But cadaver source transplants have also been demonstrated to be highly effective. Cataveric sources of CENCs have been approved in Japan to treat corneal endothelial disease, providing strong evidence for cell replacement as an effective mechanism of action. And as an added benefit, unlike the Oprogen program, we don't expect to have any need for delivery optimization because the cornea is a relatively accessible site with a simple injection-based delivery method supporting a long clinical track record of positive outcomes. The Core One program aims to solve the double deficiencies of supply and shelf life of the current therapy because not only do cadaver-derived cells have variable yield and quality, donor harvested material is not currently cryopreserved and needs to be used promptly. These deficits highlight the benefits of having a reliable, consistent, and scalable source of these cells that can also be frozen, shipped, and thawed before use. For these reasons, CORE1 fits ideally into our ongoing paradigm for rapid pipeline development, and we look forward to providing additional updates on this program as it continues to advance. As I mentioned, we recently elected to advance CORE1 into in vivo animal testing, and initial internal preclinical data is expected to be generated later this year. Moving next to Type 1 diabetes, this is our second case study for Lineage 3.0. As with CENCs, the clinical data shows that islet cell transplants can be an effective and powerful treatment option. Each year, dozens of patients become insulin-independent thanks to islet cells sourced from cadavers. However, islet supply is a major unsolved problem. Expansion of islets from cadaver sources cannot currently meet the commercial needs for these cells. Immunosuppression, patient eligibility, and hypoimmunity are all additional hurdles that need to be overcome, and several companies are making great strides on those problems. But we believe the hurdle with the least amount of progress to date, and also the best fit for our technology, is making islets at the scale required to address the large unmet need. 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. In comparison, the dose of Oprogen is up to 200,000 cells, which is 5,000 times smaller. On top of that, the proliferative capacity of RPE cells in our hands is at least 50 times greater than the published capacity of islets, meaning There is an approximately 250,000 fold gap between current technology and what we believe will be needed for commercial scale islets. This gap will need to be filled somehow. Therein lies the fundamental problem. Islet cells do not readily expand during differentiation or in mature form. So the scale problem needs to be solved prior to differentiation into these cells. Our proposed solution to this problem is employing a modification of our Alloscope platform in what we call Alloscope 5D, which 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. We are employing Alloscope 5D to support the ILT1 program because the 5D technology is aimed at not only generating massive numbers of pluripotent cells prior to differentiation, but also ensuring those cells retain their pluripotency and synchronized response to the factors that are needed for efficient differentiation. Yes, it's true that pluripotent cells can maintain long telomeres and self-replicate, but they can still lose genomic integrity and synchrony with every cell cycle or passage, meaning it is necessary, yet very difficult, to maintain homogeneity and control of differentiation as you expand into large numbers of cells. ILT1 is our plan for a cell therapy product candidate that is initially focused on producing a homogenous population of undifferentiated pluripotent cells ready for synchronized differentiation and which could serve as the high feed source material to an islet cell differentiation process for large scale production. If we can develop a modality that supports an islet cell production process from expansion through differentiation in a dynamic culturing system, we could potentially solve a major hurdle to commercial scale production of an islet cell therapy. This manufacturing first approach underlies our view of the islet transplant competitive landscape. If we can solve the manufacturing problem, we might have a very successful product with large margins. And even if others are present, we can be nicely positioned against anyone else trying to solve the scale-up problem through less efficient brute force approaches. And with this initiative, we are inverting a traditional development paradigm by focusing on the scale-up of undifferentiated cells first because as I explained just a moment ago, we believe that once you've shown that you can actually produce your material while maintaining its quality at scale, you may be materially reducing the risk profile for the remainder of the development project. Multiple independent groups have already shown that islets can clear preclinical and clinical testing and be an effective intervention for people with type 1 diabetes, but no one, to our knowledge, has shown that they can scale islets to levels that meaningfully meet the unmet need. For this reason, we think it's appropriate to focus on the unresolved scale problem before performing expensive preclinical and clinical studies. We believe advancing into clinical testing without a robust manufacturing process may prove to be a significant setback for some of the current companies in this space and that there is value in establishing from the beginning a process that can support downstream development, especially when such development has a credible clinical and regulatory precedent. I previously reported that we met our first internal manufacturing milestone for this initiative by demonstrating a fully suspension-based process for undifferentiated pluripotent cells from one of our proprietary cell lines at a half-liter scale. We have since then successfully demonstrated this process in a larger multi-tier format. In parallel, we have applied Alloscope 5D to our Core 1 program, showing that we could successfully apply 5D expansion protocols to support the generation of a fully differentiated and specific cell type. Looking ahead, our next goal is to show that cells we expand from the 5D platform can also differentiate into islet precursors, which could demonstrate their ability to be further differentiated into islet cells. I'm hopeful that demonstration will bring more attention to this program, and I'm pleased at how quickly this work has progressed. As I said on a prior call, we're happy to take you on this development journey, because if it continues to pan out, we believe it could become a very valuable component of our business. Next, I'll spend a few moments on Resonance. Resonance is a preclinical auditory neuronal cell transplant to treat hearing loss and is the first internal program built from the beginning on our Alloscope platform. Resonance is being developed under a partnership with William DeMont Invest, or just DeMont, where DeMont has agreed to fund up to $12 million toward a preclinical development plan, which is intended to support an IND and or CTA filing. This three-year alliance is approaching its one-year anniversary, and we are pleased with the progress made to date by the parties. Resonance is an example of two important features of our platform. The first is that we showed we could conceive of and successfully manufacture a completely new cell-based product candidate in a rapid and efficient way. 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. The second key feature of Resonance is that it is aligned with our Lineage 3.0 ideals. We believe that if a signal of a treatment effect in hearing loss patients is observed, it would be an important finding in this population, even if it occurs in a small number of patients. That is because, like in dry AMD, patients who suffer from hearing loss from the destruction of a particular type of cell have not been shown to improve spontaneously. If we do see signs of a treatment effect in even a small number of patients with sensorineural hearing loss, we think that could drive value even long before the results of a randomized trial. Resonance continues to advance in preclinical testing, and the goal of our partnership, as I said, is to advance it to an IND, so I look forward to keeping you informed of our progress. In the meantime, I can share an update that we have successfully completed three engineering runs of Resonance, and we also recently completed our first GMP run, which is now undergoing release testing. We've also been establishing a novel model of deafening, which will enable us to conduct functional animal testing using the cells we produced under this important partnership. Resonance represents a novel approach to treating a large underserved market. It doesn't include the cadaver-based treatment precedent of cornea or islet cells, but that's partly why we elected to partner it early and share risk. At the same time, Resonance has only one comparable competitor that we can identify and is targeting a very large potential market, so it fits nicely with our Lineage 3.0 strategy. For this reason and more, we're hoping to see resonance make it into a clinical trial. Next, as a hybrid to the first three examples I've given today, I'm pleased to share some new ideas we have been evaluating for OPC1 development. Implementing these new ideas would more closely align OPC1 into the Lineage 3.0 paradigm. As you likely know, the early efforts with OPC1 were conducted by a different sponsor and focused solely on a subacute patient population. We haven't needed to evaluate the merits of this approach because we've been focused on the more immediate and necessary goals of manufacturing the cells on what we believe will be a commercially viable platform and developing a new delivery device. In the past year, We've more fully evaluated our new manufacturing process and collected some encouraging initial data with the new device. As a result, we've gotten increasingly comfortable that both of those aspects will be successful, which means we can now turn more earnestly to the topic of patient selection. We also recently hired a new head of clinical, Dr. Herath, who's on the call today and brings the appropriate resources to evaluate the various possible development paths for OPC1. As a result of that work, which remains ongoing, we anticipate we may decide to prioritize a chronic patient population for future OPC1 development. There are many reasons to consider this adjustment, but I'll review three of them for you today. First, and probably the most compelling reason of them all, is that chronic patients have a much more stable neurological baseline compared to subacute patients. The neurological and functional status of chronic patients is typically well established, can be reliably and repeatedly measured, and is not likely to change meaningfully without intervention. That means these patients can serve as their own internal treatment control, something that is not possible with a subacute patient population. We think this can help overcome the heterogeneous nature of these injuries and the resulting clinical picture because, as you know, Subacute patients experience a great deal of spontaneous improvements during the first nine months or so. SCI experts we've consulted with acknowledge that it's extremely difficult to tell whether a change in function in a subacute patient is attributable to treatment or to spontaneous improvement, even if you have a well-matched natural historical cohort as a comparison. This issue is mitigated in chronic patients, which is why they fit better into our translational evidence paradigm. Chronic patients are also significantly easier to enroll than subacute patients because they're approximately 10 times more prevalent than the subacute population and because the window of eligibility for chronic is measured in months or years, not in just a few weeks. But that is not the only reason to consider focusing on chronic injuries. The change in demographics, the published evidence, and the standard of care for subacute patients has advanced, and we need to advance with it. Over the years, the average age of an SEI injury has risen from people in their 20s into their 40s. Patients are older, more medically complex, and bring different challenges regarding consent and stabilization. Thanks to improved care, the acute and subacute rehab phase, which subacute patients experience in the hospital, has shortened to just a few weeks, and AIS conversion rates have risen, which is great for patients but makes clinical trial data collection and database comparisons in the subacute population more difficult than before. Meanwhile, recent data from various groups have shown that chronic patients, especially those with preserved mid-sagittal tissue bridges at their injury site, are the ones most likely to show evidence of recovery from cell therapy, especially when the intervention is combined with a rehabilitation protocol. For years, this was not the conventional wisdom. Animal studies from years ago suggested chronic SCI would be a less responsive population, but those studies were conducted in some cases 20 years ago, had some design flaws, and were never replicated by us or others. We find the recent and modern bodies of work done by both clinical or industrial groups and preclinical and academic groups to be much more convincing and reliable. We appreciate the dedication of these groups to advancing the field because It allows us to proceed into the chronic population with not only a product candidate with the longest published safety profile in the field, but also pre-existing evidence of potential activity for this mechanism. Overall, we are excited that chronic patients, a direction and population we have long considered attractive, have been increasingly validated by us and others, giving us a more promising clinical path and the opportunity to adapt the OPC-1 program into our model of early trials that can potentially generate meaningful evidence. And so, while we continue to enroll the ongoing dose study and assess our new way of delivering OPC1 cells to patients, we are simultaneously refining our view of how to best focus on the chronic patient population. Dr. Roth has been collaborating with SCI thought leaders, and I expect we will be able to discuss some of our specific plans on a future call. In the meantime, I'll add that the dose study, which is designed to demonstrate the safety and performance of the novel spinal cord cell therapy delivery device, to date has performed as expected with no unexpected procedural, product, or device-related adverse events, nor does it require any significant design changes. So we are looking forward to enrolling additional patients on that study this year. And now, saving the first for last, I will provide a few words on our lead program, OPERGEN. I think everyone's well-versed on where we stand with this program. Data we initially reported from our Oprogen Phase I to A clinical study included improved anatomy of the retina, halting or reversal of atrophic progression, and improved vision in patients with dry AMD. These are outcomes not known to occur naturally in human beings. And since we made these initial reports, three other companies have reported similar outcomes with their own version of an RPE transplant. providing supporting evidence for this mechanism of action. But importantly, our data indicate that such outcomes are achieved only when the cells are delivered right to the target lesion. And there are choices you can make regarding how to conduct delivery to this area. For example, you can access the subretinal space from the front of the eye, transvitrially, or around the back of the eye, superchoroidally. Like many surgical choices, there are trade-offs. So our partners have undertaken a campaign to evaluate a number of surgical devices and methods which we believe are intended to improve and simplify clinical outcomes. We believe that this approach may ultimately support a more valuable asset through three prongs, a stronger risk-benefit profile, a dominant position over competitors, and presumably translating into more revenues attributable to wider adoption by surgeons. This kind of work takes time, but we're encouraged by the progress, for example, reported by the clinical research team at Duke University, which published recently on a novel single-step subretinal injection device that significantly outperformed the current off-the-shelf device in calibrated volume delivery to the subretinal space in a relevant animal model. Overall, as we look at how actively Roche has been culling their pipeline in favor of first and best in disease assets. And alongside the supportive comments they have made about Oprogen and their commitment to ophthalmology, we remain confident that the Oprogen program is receiving abundant care and attention from our partners, and we continue to anticipate a positive future for the program. This, by the way, is aligned with what the Genentech speaker at the Arvo Icelerator Conference said a couple of months ago. He noted that transformational outcomes in cell therapies should be defined by a metric of visual function and preserving vision and went on to say that Genentech was investing in surgical development because safe and reliable delivery of Oprigen was key to the outcome that they're looking to achieve for their patients. He also highlighted the three-year clinical data with Oprigen as evidence of what was possible for the field. We support all of those statements and more. So while we await completion of the ongoing surgical optimization work in the Gallet study, we will continue to closely monitor any relevant activity. As one example, Oprogen was recently registered in the EMA IRIS database, which is something that sponsors need to do before they conduct product-related activities like obtaining scientific advice or running clinical studies in Europe. As a second example, We were very happy to see that Roche expanded the GLET study from six sites to 17 starting last year. And as a third example, Roche dedicated approximately half of his exhibit hall space at the most recent ARVO conference to the operogen mechanism of action, which we think is intended to raise awareness of this novel approach to treating dry AMD with an RPE cell transplant. These kinds of actions along with their continued efforts to discuss the OPERGEN program from the podium at medical and scientific conferences continues to provide us with encouragement that OPERGEN is being well supported within the Roche organization. To wrap up, I believe it's important to highlight that we have in the past year demonstrated the ability to rapidly generate additional novel assets with what we believe are differentiated and compelling profiles to create a growing pipeline of cell transplants that we can develop internally or seek to partner where we think it makes sense to do so. Our overall strategy aims to efficiently leverage our Alloscope platform to create, support, and manage a broad pipeline of cell-based assets. I'll invite you to keep in mind that our platform assets share certain essential traits so that each dollar we invest in innovation may have impact across multiple programs. We believe this allows us to expand our pipeline without losing the focus required to succeed in each indication and still maintain a manageable and efficient level of capital investment compared to our cell therapy peers. Most of all, we appreciate that the innovative and successful work that created the Opogen program is giving us the opportunity to generate a portfolio of similar cell-based transplant therapies for many millions of patients around the world and hopefully build a very successful and important company. With that, I will turn things over to Jill for a review of our financials.