Ladies and gentlemen, welcome to the Lineage Cell Therapeutics' Fourth Quarter and Year End 2020 Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investors section of Lineage's website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. Any recordings, reproduction, or transmission of this call without the expressed 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 conference, Ioana Hone, Director of Investor Relations at Lineage. Ms. Hone, please go ahead.

Thank you, Jeff. Good afternoon, and thank you for joining us. A press release reporting our fourth and full year 2020 financial results was issued earlier today, March 11, 2021, and can be found on the Investors section of our website. Please note that today's conference call and webcast will contain forward-looking statements within the meaning of federal securities laws, including statements regarding our strategy, goals, data updates, product candidates, planned regulatory meetings, clinical trials, planned manufacturing improvements, financing, and cash management matters. Such statements are subject to significant risks and uncertainties, including those described in our press release issued on March 11, 2021, and our most recent Form 10-K filing. Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to those risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements, which speak only as of today. Presenting today is our Brian Culley, our Chief Executive Officer. Brian will provide prepared remarks, then take questions from analysts. With that, I'd like to turn the call over to Brian.

Thank you, Ioana, and good afternoon, everyone. We definitely appreciate you joining us on the call today. Before I summarize some recent highlights and our financials, I first just want to remind everyone of three ways in which Lineage differs among the growing number of cell therapy companies you may hear about. I sometimes say that we are pioneering a new branch of medicine, which is one of the many exciting things you've probably heard about in the stem cell industry. But Lineage isn't a stem cell company; we don't put stem cells in people; we grow stem cells into great numbers. And then we convert those cells into the specific cell types that your body uses. We then transplant those differentiated cells into your body to restore or improve function that has been lost due to injury or disease. That means we’re more of a cell transplant company than a stem cell company. I want to begin with that important point today because there are significant biological differences between using our differentiated cells compared to the undifferentiated stem cells, which some companies and clinics work with. As one example of this, I’m often asked how our approach compares to adult stem cells or mesenchymal cells, which are usually harvested from places like bone marrow, fat, or umbilical cords. And the answer is we are not like them at all; those are undifferentiated cells which in some cases might be enriched to secrete some proteins or survive in certain environmental conditions. But that's not how we approach the diseases we're working on. We believe that if retina cells are dying, you need to replace and transplant retina cells directly to the eye. If spinal cord cells are missing, you need to transplant replacement cells directly to the spinal cord. For this reason, Lineage resembles transplant medicine more than cell therapy. That is an important point to keep in mind when evaluating what we believe are the lower risks and the potential advantages of our approach. The second thing to keep in mind is that all of our programs are allogeneic, or off-the-shelf therapies. We never remove cells from a patient, manipulate those cells, and then inject them back into the patient's body. Those are autologous approaches and, in some special settings, those indeed can be helpful but they also are unavoidably expensive and difficult to scale because you are literally making a custom therapy for that one person. The Lineage product candidates are manufactured from a single common cell line, which was established and characterized more than two decades ago. Our therapies are designed to be pulled off-the-shelf, or in this case from out of the freezer, and thawed and injected into the patient just minutes later. The economics of an allogeneic therapy compared to an autologous therapy really speak for themselves. But, as I like to say, unless you are working in a disease with unlimited pricing power, if you are not off-the-shelf, then you are going to be left on the shelf. The third thing is I want to remind everyone that our platform, and with it much of our patent estate relies on something called directed differentiation. That means that we harness natural steps in the developmental pathway in order to manufacture our cells. We never manipulate or edit the genomes of our cells as part of the manufacturing process. While the risks of gene editing are still being assessed, it's clear they do exist. But fortunately, that's not something Lineage has to worry about. Our cells are extensively characterized for both form and function. And in all cases, a single cell line can be expanded to supply the commercial needs of any size market. These advantages help establish our belief that our platform technology has a lot of potential not only in these conditions, but also may be able to produce additional product candidates beyond dry AMD, spinal cord injury, and cancer. Pluripotent cells can become any of the cells that comprise the human body. So, we have a large variety of conditions to which our cell therapy technology could be applied and clinically evaluated. As we continue to generate encouraging data on both the safety and efficacy of our three current cell transplants, we’ll also look for opportunities to investigate new applications of our technology, and potentially address additional diseases, either on our own or through strategic alliances. Our belief is that our approach will prove increasingly compelling, so that Lineage can emerge from the background of cell therapy companies to become an important pioneer in what we might have more accurately called the cell transplant revolution. But of course, that plan only works if we first establish some success with our initial endeavors. So, I now will turn to a quick review of last year's accomplishments and set some expectations for you in the year ahead. I'll begin with OpRegen, our product candidate intended to treat dry, age-related macular degeneration with geographic atrophy. This disease is caused by the progressive loss of retinal cells and is a leading cause of blindness in developed countries. Approved therapies do exist for wet AMD and they generate billions of dollars in annual revenue. But despite dry AMD being eight or nine times more common than wet AMD, there are no FDA approved therapies for the dry form. This paucity of treatments may be due to the fact that by the time a patient is experiencing retinal cell death, extensive damage may be beyond what small molecules or antibodies can provide. Our approach is to transplant brand new retina cells to replace or support the ones that have died off or are dysfunctional. By doing so, we believe we may be able not only to slow the disease process, but also potentially even halt or reverse it. We also believe that OpRegen, which currently is contemplated as a one-time treatment performed in about 30 minutes under local anesthesia, has a substantial advantage over competitors developing traditional drugs or biologics because those require monthly or semi-monthly injections directly into the eye. In November of last year, we completed enrollment in our Phase 1/2a clinical trial of OpRegen and reported updated results from this study. At that time, new data were presented on 20 patients, including eight patients in Cohort 4 of the study. We're especially interested in the Cohort 4 patients because they have better baseline vision and smaller areas of GA, which is a profile consistent with the patient profile we believe will lead to better outcomes from our treatment. The data we reported showed improvements in visual acuity in the majority of Cohort 4 patients when compared to their untreated eyes. And with the duration of benefit extending to as long as 24 months, which is the longest period for which data was available for those patients, a trend towards slower GA growth also was observed, as was previously reported structural improvements in the retina and decreases in drusen density. And overall, OpRegen continued to be well-tolerated in all patients treated to date. Last year, we also made the first known clinical report of retinal tissue restoration, which had persisted to 23 months with durable improvement in the patients’ visual acuity. This is an unprecedented finding because humans lack the ability to regrow or repair retinal tissue. Most of our competitors are attempting to slow the rate of disease progression. But data from our transplant approach supports the hypothesis that OpRegen may be able to actually reverse dry AMD and rescue tissue, especially in earlier stage patients. We've taken steps to see if we can replicate this finding in patients who were treated last fall. Those patients recently had their three-month follow-up visit, so we will be monitoring them closely because the timeframe for which we potentially would see this restoration phenomenon is now coming into range. Our plan is to evaluate these patients for changes before the ARVO Conference in May. If at that time there's something notable to report on retinal restoration, we would plan to do so in connection with that event in order to maximize awareness and evaluation of any findings. We also intend to provide another interim data update around ARVO, which we expect will be informative because although it's wonderful to see benefits as early as two or three months in, we really want to have four to six months of data before we consider a patient to be benefiting from our treatment. This means you can look forward to two separate and near-term updates from Lineage on the OpRegen clinical study: the first one towards the end of this month and then the second one in May or June. Thereafter, in the third quarter of this year, we plan to speak with the FDA about next steps for development. So overall, there will be a lot to watch for with respect to the OpRegen program. Moving next to OPC1, our oligodendrocyte transplant program to treat cervical spinal cord injury, you may have seen mention of this program in the Wall Street Journal today. I'm expecting this program will receive additional publicity as we continue to make progress with it. OPC1 is a one-time surgical implantation of specialized cells placed directly into the area of injury in the spinal cord. Acute spinal cord injury patients suffer from paralysis and loss of motor function. The lifetime cost of caring for an acute spinal cord injury patient has been estimated to run as high as $5 million. But just like dry AMD, there currently are no FDA approved treatments for spinal cord injury. Over the past year, the Lineage team successfully deployed a new manufacturing process, which led to significant improvements in the production and quality of OPC1, including two areas like scale, purity, reproducibility, and other attributes that enhance the commercial viability of this product candidate. Our team also developed a new thaw-and-inject formulation of OPC1, enabling its use at a much larger number of spinal cord treatment centers, which will help accelerate enrollment in the next clinical trial. Along the way, we were able to eliminate the dose preparation steps, reducing overall logistics of preparation at a qualified cell prep lab from several hours to just a few minutes in the OR, and in doing so, reduce the logistics costs by approximately 90%. With these manufacturing improvements in place, we next announced an exclusive option, a licensing agreement with Neurgain Technologies, a medical device company that gives us access to a novel and convenient delivery system. The Neurgain parenchymal spinal delivery or PSD system is expected to reduce a significant technical hurdle to conducting a larger scale clinical trial because it has been designed to allow for the administration of cells to the spinal cord without stopping the patient's respiration. We plan to collaborate with Neurgain in the affiliate neurosurgeons at UC San Diego on the preclinical and clinical testing of this novel system. The Neurgain PSD is expected to be a much better option than the complicated gantry which was utilized in the first clinical trial, and it will allow us to incorporate our new thaw-and-inject formulation described before, enabling faster patient enrollment by access to a larger number of clinical trial sites. Most importantly, since the PSD system can eliminate the need for a patient's respirator to be turned off during the procedure, this should facilitate a measured and targeted transplantation of cells to the affected area, which may reduce procedural risk and improve patient outcomes. Our plan is to evaluate the Neurgain PSD to safely and effectively deliver OPC1 cells to the spinal cord throughout this year. These manufacturing and delivery steps have helped us to lay the groundwork to prepare OPC1 for a later-stage clinical trial, building upon the positive data from the previous Phase 1/2a clinical trial. Looking ahead, we plan to request an RMAT meeting with the FDA during the second quarter of this year, at which we will discuss our plans to evaluate the new delivery device. We also intend to request to meet with the FDA in the fourth quarter of this year to discuss improvements we've made to the OPC1 manufacturing process, as well as our clinical development plans moving forward. Once these meetings are complete and assuming GMP manufacturing has been successfully completed as well, we expect to be in a position to initiate a large-scale comparative clinical trial next year. We believe the next study of OPC1 can be positioned as a registrational study, and we will seek to gain agreement with the FDA on this path. Next, we'll move to VAC2, our off-the-shelf dendritic cell cancer vaccine. Dendritic cells are the most potent antigen-presenting cells in the body, and we've harnessed their activity to deliver handpicked antigens, an approach that is reemerging as an attractive therapeutic modality based on the consistent safety profile and increased knowledge of how to deploy dendritic cells in a clinical setting. VAC2 is comprised of mature dendritic cells, which we manufactured from proprietary established cell banks and load with tumor-specific targets or antigens to instruct and enhance the body's immune system about which cells it should attack and eliminate. Last year, we exercised our option with Cancer Research UK to bring the VAC immuno-oncology platform in-house and thereafter we reported encouraging preliminary Phase 1 clinical results in non-small cell lung cancer patients. Specifically, VAC2 demonstrated potent induction of immune responses in all four patients tested to date, providing us with mechanistic validation and reinforcing the data obtained in autologous VAC1 clinical trials conducted by Asterias and Duke University. Antigen-reactive pentamer staining induced by VAC2 and further supported by ELISPOT data suggested that our VAC2 is highly potent, inducing significantly higher levels of antigen-specific T cells compared with the levels invoked by alternative approaches such as DNA and RNA based vaccines. Our partner Cancer Research UK is responsible for this study and enrollments at the last few patients has unfortunately been impacted by COVID restrictions across the UK. However, I'm pleased to share today that the seventh patient in the study was recently and successfully enrolled and CR UK anticipates that the final patient will be enrolled in the coming months. Following completion of enrollment, we anticipate additional data from this study will be available around the fourth quarter of this year. We believe the best path ahead for VAC2 may be to evaluate it in combination with therapies considered biologically synergistic with dendritic cell vaccines, such as chemotherapy or the immune cell protective properties offered by checkpoint inhibitors. That path could also involve a potential partner that has already commercialized such as synergistic therapy. But first, we have a number of improvements and modernizations we'd like to make on the manufacturing side, which will help prepare VAC for further trials and provide competitive advantages for any future programs we may design. Our manufacturing team was recently directed to begin work on production enhancements, which we believe will increase the commercial appeal and utility of the VAC platform just like we did to create value and competitive barriers with OpRegen and OPC1. As part of this manufacturing enhancement, we also aim to enhance the flexibility of the VAC platform because you could theoretically insert any antigenic trigger into the dendritic cells. That means the VAC platform is capable of producing nearly a limitless number of product candidates, each one being distinguished by the specific antigen that the dendritic cells are carrying to the patient's immune system. This approach also opens up a large number of potential corporate partnerships by allowing us to use our dendritic cells as carriers for other companies' antigens while simultaneously retaining the option to advance our own carefully selected antigens. An improved VAC platform could permit us in the coming years to generate a deep pipeline of unique product candidates, each targeting a different type of cancer. We feel this product platform nature of VAC will enable us to become a more prominent player in the immune-oncology field, especially as we validate and mature the production process, scale, and other attributes of the VAC platform. Overall, I believe we've made rapid and valuable progress with all three of our programs increasingly converting or beginning as interesting science projects into rigorous clinical data packages for product candidates with attractive commercial profiles. As we further advance these programs and prepare them to enter later-stage clinical trials, we believe Lineage is on the right path to create significant value for patients and shareholders. In addition to the product development strategy I just described, we also have conducted a series of business and financial transactions, which are designed to help build value over the longer term. As one example, we incubated and funded the early product development of OncoCyte, which today is a revenue-generating cancer diagnostic company with a market cap of over $300 million. Over time, we have been able to convert our ownership position in companies like OncoCyte and another public company we spun out, AgeX, and convert those ownership positions into cash to fund our clinical programs without the need for traditional financings with our broad technology platform and additional opportunities to do this in the future. More recently, we announced sales from our ATM program and when combined with sales of marketable securities we own, this has provided us as of March 5 with approximately $57 million of cash and cash equivalents. That capital is expected to fund our operations well into 2023, which will allow us to deliver multiple significant milestones and provide us with flexibility with respect to our partnership discussions. I'll highlight next, our balance sheet accounts and statement of operations for the fourth quarter of 2020 and full year 2020. A more detailed view of our comparative spending for these periods can be found within our earnings announcement filed earlier today. We ended 2020 with $32.6 million in cash and cash equivalents. During 2020, we funded our operations primarily by receiving $24.6 million from Juvenescence and by selling a portion of our positions in OncoCyte, AgeX, and Hadasit Bio-Holdings, the latter of which collectively provided us with an additional $13.1 million. We also raised more than $5 million in gross proceeds in 2020 from sales in our ATM. Between January 1, 2021, through March 5 of 2021, we continued to opportunistically utilize our ATM adding nearly $20 million of additional gross proceeds, as well as $10.1 million in additional gross proceeds from sales of OncoCyte shares. As of March 5, 2021, we continue to hold approximately 1.1 million shares of OncoCyte stock valued at $4.2 million on that date and just over 169,000 shares of Hadasit stock valued at $330,000 on that date. Consistent with our prior cash management strategies, we were able to make timely decisions about when to conduct sales of our marketable securities or the ATM in order to help fund our business. Next, I'll turn to the statement of operations for the fourth quarter of 2020. Total revenues for the fourth quarter of 2020 were $400,000, a $900,000 decrease from the same period in 2019. This was primarily due to the absence of a $600,000 upfront payment from a new license agreement in 2019, as well as the completion of NIH grant activities in 2020. Operating expenses are comprised of both research and development expenses and general administrative expenses. Total operating expenses for the fourth quarter of 2020 were approximately $6.1 million, a decrease of $1.9 million as compared to the same period in 2019. The decrease was comprised of a $900,000 decrease in R&D expenses and a $1.0 million decrease in G&A expenses. Our loss from operations for the fourth quarter of 2020 was $5.9 million, a reduction of $1 million as compared to the same period in 2019. Our net income attributable to Lineage for the fourth quarter of 2020 was $2 million or $0.01 per share as compared to a net loss of $4.5 million or $0.03 per share for the same period in 2019. The position of net income was driven by unrealized gains on our marketable securities, as well as foreign currency exchange rate fluctuations, which are largely impacted by the remeasurement of U.S. dollar denominated notes payable by Cell Cure Neurosciences to Lineage. I'll now take a brief recap of the full year 2020. Total revenues for 2020 were $1.8 million, a decrease of $1.7 million as compared to 2019. The decrease was primarily due to decreases of $1 million in grant revenue, $400,000 in royalties from product sales and license fees, and $300,000 in the sale of research products and services due to the cessation of such sales. Total operating expenses for 2020 were $27.9 million, a decrease of $14.1 million compared to the same period in 2019. The decrease was comprised of a $5.6 million decrease in R&D expenses and an $8.5 million decrease in G&A expenses. Part of our goal from the Asterias merger was to implement significant cost reductions and achieve synergies from putting the two companies together, and we were obviously pleased to see this plan pay off in terms of significant expense reductions year-over-year. Our loss from operations for 2020 was $26.4 million, a reduction of $12.4 million as compared to 2019. Our net loss attributable to Lineage for 2020 was $20.6 million or $0.14 per share as compared to $11.7 million or $0.08 per share in 2019. The variance in our net loss numbers year-over-year are significantly impacted by changes in the value of our marketable securities and equity investments for the applicable periods. While these fluctuations are important, we tend to utilize loss from operations as a more relevant measure of performance in regards to moving our clinical programs forward while effectively managing our expenses. Overall, our fourth quarter cash activity was in line with our expectations and we were able to maintain our 2020 quarterly burn of approximately $5 million due to our sustained cost reduction efforts throughout the last year. We also expect our first-quarter burn for 2021 to be in a similar range, excluding the three following additional expense items. Our second installment payment of roughly $700,000 to Cancer Research UK for the early exercise of VAC2, a $500,000 payment to Gyroscope for extending the period during which we have an exclusive right to negotiate a definitive agreement, and the payout of our annual bonus compensation. These expenditures will be offset by the 2021 fundraising activities I mentioned earlier when discussing our balance sheet highlights. So, to wrap up the financial section, I can say I’m very happy with the progress we have made in 2020 because heading into 2021, we're equipped with a healthy balance sheet, which helps us fund our operations well into 2023 and drive our clinical programs forward. So, to conclude, Lineage and others in the field of allogeneic cell therapy are helping to demonstrate the viability and commercial potential of using allogeneic cell transplants to treat or cure serious diseases or conditions that represent major unmet medical needs and large market opportunities. And as the tools and methods used to manufacture and test these therapies in patients are reaching maturity, public policy and investor support for cell therapy has moved in a positive direction. As we prepare to advance our product candidates into later-stage trials, we are working to position Lineage to benefit from this convergence of positive factors and help accelerate the development and commercialization of this novel branch of medicine. Specifically, some of the events and milestones that our shareholders can look forward to include: presenting OpRegen data from the ongoing Phase 1/2a clinical study as I said, toward the end of this month, and again, in the second quarter of 2021, planning to meet with the FDA to discuss further clinical development of the OpRegen program, which is anticipated in the third quarter of 2021, completing patient enrollment in the ongoing Phase 1 study of VAC2 which is anticipated in 2021, evaluating the Neurgain Parenchymal Spinal Delivery system, which has already begun and will continue throughout 2021, completing the OPC1 manufacturing to support a late-stage clinical trial, introducing manufacturing enhancements to the VAC2 program, which is already underway and will continue throughout this year, reporting results from the ongoing Phase 1 clinical study of VAC2 for the treatment of non-small cell lung cancer, which is anticipated around the fourth quarter of 2021, and evaluating partnership opportunities and the expansion of existing collaborations for OpRegen OPC1, and VAC2. At Lineage, we have an opportunity to make a profound impact on millions of people, and the patient serves our inspiration every day. I appreciate all of you joining us this afternoon, and we appreciate our shareholder support as we position Lineage to become a leader in cell therapy and cell transplant medicine. With that, operator, I'm ready to respond to any analyst questions we may have.

Understood. Your first question comes from Joe Pantginis from H.C. Wainwright. Your line is open.

Hi Brian and Ioana. Thanks for taking the question. Hope the two of you are doing well. Brian, I have three questions. The first one might be a simple yes or no, but I just want to make sure. Regarding your prepared comments on VAC2, you also talked about manufacturing improvements around that as well, but is it safe to assume, and I don't want to put words in your mouth that any manufacturing improvements would really impact the entire VAC platform, as you said, you can have almost a limitless amount of potential assets.

Yes, thanks for the question, Joe. I think our expectation is the answer is a simple yes, the dendritic cells are carriers. You can think of them as just the messengers. The important part is, and the specific part is the message which they carry. So, if we are able to improve things like scale, purity, reproduction, efficiency of introducing the antigen into the cells, all of those should be applicable to all of the programs which we might imagine with our own or partnered. So, it is – that's where we see a lot of value in that program is that we can conduct a series of steps that are going to be applicable to everything that we do in oncology, rather than having to go through all of those steps for each and every program. So, I think the answer is yes, we don't have a reason to think that we would have to do that and make each production or each cell line unique. We think that we can capitalize on the commonality, and then the only variable becomes the antigen. So what would need to sort out is how does that look to the regulators? Certainly, with autologous approaches, there appears to be a lot of flexibility considering that you've got essentially a different product every single time. So, we would hope to capitalize on some of those economies of scale in our production system.

No, that's helpful. Thanks. And I realized the way I asked the question might've come across as if it was a congressional hearing, where a yes or no will suffice. Sorry about that. So, my next question is just switching to your finances. You've been very active lately, obviously with different raises, selling some of your OncoCyte, etc. And you also just filed a new S-3 shelf filing. So obviously, the fact that you're well-funded well into 2023 is a good thing to project to investors in my belief. But I guess maybe can you comment on sort of the big picture of your overall financing strategy based on your recent moves and maybe looking towards the future?

Yes, sure. I'm happy to Joe, and you probably know, I'm largely incapable of providing just a yes or no answer. So we did provide a lot of detail in the press release recently, but I realized that most of that content is focused on the actual transactions and doesn't really speak to our strategy and the success that I think we've had with it. I would say there are three big takeaways from recent financing news and events. The first and foremost is that we now have more than two years of runway. When you look at what we have done in the past two years, you can imagine there are a lot of milestones we expect this capital will help us reach in the next two years, including having two separate programs in late-stage clinical trials. The second point is that rather than doing a traditional financing with the higher fees and the discounted pricing that's often associated with that option, we were able to take advantage of our rising share price and higher trading volume to raise a fairly meaningful amount of money. And that can create leverage, which we can use to oppose talk of financing overhangs or being pushed around in partnership negotiations. And third, I'd say is that a large amount of the capital we have raised has come from selling equity in public companies. We originally created like Hadasit and AgeX. We've been able to create value from non-core assets that way and use that to fund our main business. It might be forgotten, but I think it's worth mentioning that we haven't had to do a traditional financing in more than three years. I don't know how many biotech companies can say that, but I imagine it's a small number. With our large patent portfolio, we may have additional opportunities to spin out new regenerative medicine businesses. So from time to time, you're going to see things like the registration statement which we filed today because it gives us the flexibility to raise capital and management thinks it’s prudent housekeeping to have the ability to access the capital markets quickly if and when it makes sense for us to do so. But we'll invest the money in the right way. Overall, we take a creative and diversified approach to funding the business and try to do so in a minimally diluted way, which obviously helps to protect share price and create value for shareholders.

Got it. That's really helpful. And then my last question is around OpRegen obviously, well, not obviously, but since it's your lead asset and the upcoming data. So, you gave a nice teaser, I think, about the upcoming ARVO data, but I was hoping to get more color, not only around that but about what kind of expectations we might have for the data updates by the end of this month. With ultimately, I think you said we might be starting to get to the point with some of these patients of getting to the time point where we might see additional regeneration. So, I guess that's like the highest anticipation factor, which we might be getting to, but what kind of expectations do we have around data this month and in May?

Yes. I'm not surprised by that question. So, I guess a two-part answer. One is that we have for some time now said that we plan to provide a three-month update. So, we enrolled a bunch of patients in the fall and that's going to nearly double the number of cohort four patient data that we have through three months. So, people are going to want to be looking for continued trends with these additional patients. Three months is early, but if we see any patients starting off well, I think that's a good sign. We also will report on not one but two patients. That's new. I don't want to give away everything, but we're one of the two patients that had a modified immunosuppression regimen. We'll have updates on the Orbit device overall safety, but restoration I understand is what everyone is really keen to hear something about. You're correct that we first saw restoration fairly late; it was at a nine-month visit. But we don't know when it became detectable, only that it was after three months. So, we didn't see it at three months and we did see it at nine months. The reason that there's such a big window there is that in our protocol, we don't do every form of imaging at every enrollment. Too many visits can be onerous for the patients, the sites, and frankly, the GA doesn't change that much month-to-month, and then no one expected that retinal restoration was going to occur. There was no reason to put a whole bunch of atypical assessments in place. What that means is that any new evidence of restoration could become visible at month four or month six or month eight, but we wouldn't necessarily see it as soon as it's evident; you would have to wait until it gets picked up in one of these routine imaging visits. However, we do know that the timeframe was between three and nine months, and that's the same timeframe we're now in with the additional five patients who were treated in a similar way to the prior patient. So, we'd have to wait and see, and if we do see more restoration evidence, we certainly will report it shortly after it's validated by third parties. So, we're entering the zone of highest interest right now.

Now, that's really encouraging looking forward to it. And thanks for all the color, Brian.

You bet. Thank you, Joe, for the questions.

Your next question comes from the line of Jason McCarthy from Maxim Group. Your line is open.

Hi, Brian. Thanks for addressing the questions. I have a couple of inquiries, starting with the OPC1 program. We've observed positive data indicating efficacy. You previously mentioned the possibility of progressing to a Phase 2 trial, which could serve as a registrational trial in 2022. What do you anticipate the size and parameters of that trial to be? I'm asking because we're monitoring AbbVie, which is conducting a Phase 2 trial with around 50 patients. I'm unsure if that's for registration, but they did receive fast track designation for orphan status, and we might see that data while you work towards your Phase 2 registrational trial. Could you provide more insight into your thoughts on this?

Yes, that's an interesting question because we don't have any prior examples to rely on. We haven't received approval for cell therapy or for growing molecules, so it's quite uncertain. However, there are some reasonable guidelines to consider. One general principle is that the FDA typically likes to see at least 100 exposures to a therapy to adequately assess safety. There are instances, particularly in orphan indications, where a smaller patient group can still justify approval. I can't provide a definite number since we haven't yet engaged with the agency on this matter. However, I believe it is likely limited to around 100 patients, influenced by expectations of clinical benefit. Additionally, we need to consider how we balance the arms and design our statistical plan, including the assessments we choose. Different assessments can yield varying statistical power; for instance, analyzing responder rates versus continuous variables might provide more power. So, while I can't specify an exact number of patients, I think expecting around 100 is reasonable, but the specific details will become clearer later.

On the cell therapy side, you mentioned in your opening remarks what Lineage does with differentiated cells that integrate and correct the existing tissue, contrasting that with MSC. We've observed a significant shift in the cell therapy landscape, with companies like Bayer and Vertex recently entering a Type 1 diabetes study. How important is it that larger corporations are now engaging in a field where Lineage is already established, particularly since Lineage seemingly possesses the most advanced clinical assets compared to these larger entities? What does this mean for Lineage's future?

I love it. There's a little bit of the curves of the front runner here. When you are a little bit ahead of everyone, people who are looking for parallels or comparables, they simply don't have as much data or evidence or reference points to evaluate you. So, on one hand, you say, oh there's a paucity of competition; that's great. But on the other hand, how do you value a company like ours because there aren't a lot of examples? So, I would say that I am delighted to see companies like Blue Rock, and Semma, and Sana being recognized and rewarded with high valuations because I think now we have greater reference points. The fact that those companies and maybe some others that we could add to the list aren’t operating in our specific space means that we get all the benefits of technological corollary without the penalty of direct commercial competition. I think it's a good thing for Lineage, and I think that it is ultimately going to be good for the space because it's going to draw more attention and recognition that there are places, settings, and diseases for which cell therapy is probably a better choice than the traditional small molecules and antibodies.

It’s a great answer; we couldn't agree more. Thanks, Brian.

Thank you, Dr. McCarthy.

Your next question comes from the line of Keay Nakae from Chardan. Your line is open.

Thanks, Brian. I need to talk about the new delivery device for spinal cord injury. First of all, in terms of its ability to allow the practitioner to lay down both geographically with more accuracy and the amount of cells, can you talk about those capabilities?

Yes or no, and the no part is that we haven't tried it in a human yet, so we don't know. But from a design consideration, there are a number of advantages to the new device. So, the assembly itself is smaller, and it uses fewer components; it can provide single-hand operation for the x, y, z positioning. So, if you think of three axes, the needle depth, which is a really integral component here, has greater accuracy. The connections between the component parts are fewer, so you've got less, let's say, wiggle to the device. Now, really, the big advantage here is being able to administer cells more slowly. One of the things that is often underappreciated with cell therapy is it's not just the cells; it's the delivery and placement is nearly as important as the active agent. So having a tool that we think can do a better job of placing the cells into the area of injury will be beneficial. But the cells do have the ability to migrate a little bit. So, it's not like landing a rover on Mars, and you got to have it on the bottom of the crater where it's really flat. You do have a little bit of flexibility. But we think that the improvement here reflects the normal evolution of a new technology, and that ultimately, clinical outcomes will be improved as you get better at not only the quality of the cells you're putting in, but also how and where you place them. I think we're seeing that with OpRegen; and I think we're going to see that with OPC1.

And then just in terms of, I guess, the ability or how quickly the practitioner can be facile with the device, are you able to at least start on cadavers? What does that experience like in terms of how quickly the practitioner can get up to speed and feel comfortable using the device?

There's a high degree of familiarity with the device; you've got your X, Y, Z manipulator. The differences sometimes just come down to how big is the knob, but directionally, the positioning of the syringe and the microdrive assembly, which holds the syringe is very familiar. Ultimately, what you're talking about is your angle of insertion and your depth; those are the two most significant components. I think the learning curve for this will be relatively low. But that is one of the things that we are going to be investigating. There's probably a good case to be made to do extensive, first animal, and then cadaver testing to demonstrate and get specific answers to your question. We will be doing exactly that in cooperation, not only with Neurgain, but also the neurosurgeon team at UCSD, which helped to design and develop this new PDI system.

So just a final question to wrap that up. Any sense of what the FDA is going to want to know understand about these types of issues before they let you go forward in humans?

Nothing specific. It's different than what we have with, for example, the OpRegen program because there we know that the device has already been 510(k) cleared. So, we don't have that same status. When we think about approaching the FDA, one of the things that we are going to want to do in meeting packages is to provide the sort of comfort and experiential data to say that this is a good tool and that it can be well adapted. We don't yet know exactly what the testing expectations or criteria are going to be, which is why we're planning next quarter, which really isn't too far away now, to request an automat meeting to have a conversation about the device and to see what kind of learnings we need to provide to support its use. Part of that is almost certainly going to include some of the expert, call it, testimony that the device can be readily adapted to this patient population and for the delivery of our cells; that it would be beneficial to be using something like this as opposed to the original scaffolding equipment, which potentially could lead to errors because it's a little bit more complicated.

Okay, thanks.

You bet. Thank you, Keay.

That was the last question. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.