Lineage Cell Therapeutics, Inc. Q2 FY2023 Earnings Call

Welcome to the Lineage Cell Therapeutics Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investors section of Lineage's website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage and 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 call, Ioana Hone, Head of Investor Relations at Lineage. Ms. Hone, please go ahead.

Thank you, Mandeep. Good afternoon and thank you for joining us. A press release reporting our second quarter 2023 financial results was issued earlier today, August 10, 2023, and can be found on the Investors section of our website. Please note that today's remarks and responses to your questions reflect management's views as of today only and will contain forward-looking statements within the meaning of federal securities laws. Statements made during this discussion that are not statements of historical fact should be considered forward-looking statements, which are subject to significant risks and uncertainties. The company's actual results or performance may differ materially from the expectations indicated by such forward-looking statements. For a discussion of certain factors that could cause the company's results or performance to differ, we refer you to the forward-looking statements section in today's press release and in the company's SEC filings, including its most recent annual report on Form 10-K and its subsequent quarterly reports on Form 10-Q. We caution you not to place undue reliance on any forward-looking statements, which speak only as of today and are qualified by the cautionary statements and risk factors described in our SEC filings. With us today are Brian Culley, our Chief Executive Officer; Jill Howe, our Chief Financial Officer; and Gary Hogge, our Senior Vice President of Clinical and Medical Affairs. With that, I'd like to turn the call over to Brian.

Thank you, Ioana and good afternoon, everyone. We appreciate you taking the time to join us today. I'm happy to share that I'm feeling very good about how things are going. A lot of the items that I will comment on today reflect a business that continues to be on track with its development plans and has many reasons to be excited about the future. I'm going to kick off as usual with OpRegen. In particular, I want to comment on recent developments in the dry AMD space and how I see those events positively affecting our lead program. As you no doubt are aware, there have been safety issues disclosed recently related to the use of Syfovre, the first FDA-approved agents available to treat geographic atrophy secondary to dry AMD. I'm not going to speculate on the root cause of these safety issues because the story is still evolving, but I am going to highlight that a rare but serious side effect is exactly the sort of thing that can derail a product when it only offers a small clinical benefit. As we all know, the clinical experience to-date with complement inhibitors shows that at best, if you actually receive all of your monthly or any other monthly shots in a given year, you may see about a 20% reduction in GA growth compared to your expected growth. And in terms of the patient experience, you are unlikely to feel any differently when taking it and you continue to lose your vision, which is why there was so much debate about whether the product would have enough clinical benefit to be approved. But it did receive marketing authorization and the early signs where there was going to be a very successful launch due, of course, to the absence of other choices, and the high unmet need in this condition. But drugs with small clinical benefits can be highly susceptible to safety issues, whether you're the FDA, a prescriber or an individual patient, the utility of a given drug stems from its benefits and its risks. When the rewards are small and perhaps require years to observe, even rare side effects can be devastating to a product, so while the initial launch of Syfovre was compelling, and highlighted the extraordinary enthusiasm, which exists on the demand side, its Achilles heel may end up being its limited clinical benefit, which is unable to overcome the risks of catastrophic vision loss. While this risk appears small on an absolute basis, the use case for a product is not limited to its risk, but rather the benefits, which must outweigh that risk. I think the key takeaway is that both patients and prescribers care incredibly deeply about vision. The hope for preserving even a small bit of vision, even if that takes several years to be achieved is capable of driving enormous demand. But the risk of losing vision is so unacceptable that the market opportunity may remain unfulfilled until a product is approved for which the gains are more clearly worth the risks. For investors, that means finding a therapy, which is safer, more effective or ideally both. Overall, I think this most recent chapter in the dry AMD story highlights three things. First, it has provided prescriber level evidence of an enormous market opportunity. Before the risk of vision loss due to vasculitis was disclosed, the early sales of Syfovre were impressive and helped to validate widely held commercial projections in dry AMD. Second, despite the approvals of Syfovre and now also Izervay, we've heard from prescribers and thought leaders that there continues to be a need for more effective agents to treat dry AMD. These complement inhibitors appear to be temporary and incomplete solutions. More exciting, effective, and infrequently dosed candidates are needed. And if you're a regular on these calls, you've heard me talk about the unprecedented clinical benefits, which were achieved by patients in our Phase 1/2a trial who received OpRegen cells across substantially all of the area of GA and with a single surgical administration. As investors begin to look beyond the recent approval of first-generation agents and into the pipeline of future dry AMD programs, we believe Lineage is ideally positioned with a potential best-in-class and first-in-class product candidate with a proposed treatment profile, which in such patients doesn't merely slow progression, but can, in some cases, stop or even reverse GA and do so with an increase in visual acuity starting in weeks and lasting for years. While every product has its benefits and risks, we believe a commercially approved agent with a significantly larger clinical benefit would more easily tolerate a low-frequency risk of adverse events. The third highlight is that this makes us feel even stronger about our partnership with Roche and Genentech. Roche has extensive clinical experience with complement inhibitors, but the development of those assets were discontinued. Meanwhile, they added a completely new approach to treating GA via the licensing deal we signed for OpRegen. When it comes to treating GA, I believe Roche was right to move on from the complement pathway and embrace agents with larger potential clinical benefits. For reasons I've shared previously, I'm not yet able to provide details about the ongoing Phase 2a trial of OpRegen, but Roche continues to enroll patients. As a reminder, the primary endpoint occurs just 90 days following each transplant. Roche has nearly two quarters of enrollment experience behind them and additional sites are expected to come online this year, which you can follow at clinicaltrials.gov. I'm not able to guide to when top line data will be available, but we continue to be hopeful that the data will show, that Roche is able to reproduce the clinical benefits, which Lineage reported in the Phase 1/2a trial and that they also will build upon our early success with additional insights into the safest and easiest way to deliver OpRegen. Moving next to OPC1, our Spinal Cord program, as we expected, we recently received a response from FDA to our Type B meeting submission. This submission was conducted to discuss and clarify that the use of a new Spinal Cord Cell Delivery Device. I'm pleased to share with you today, that based on the content of that response, we do not need to conduct additional back-and-forth discussions with the agency on this topic. Our next step will be to submit the IND amendment for this new system and through that amendment, we will be permitted to provide some final content and clarifications that were requested in the FDA's response. The agency also said that the clinical design seems acceptable and technically agreed that no additional non-clinical in-vivo studies would be needed. In light of this feedback on our proposed trial, we remain on track to submit the OPC1 IND amendment in the fourth quarter. Assuming no further comments arise in the 30 days following that submission, that will permit us to proudly bring OPC1 back into clinical testing, by initiating the dose study in subacute and chronic patients. Related to OPC1, I briefly want to provide a follow-up on the first Annual Spinal Cord Injury Investor Symposium, which we created and hosted in June. The event brought together therapeutic area experts, researchers, corporate representatives, individuals with live experience, caregivers, advocacy organizations, investors, analysts and members of the public and the media and alongside presentations and panel discussions, we heard from people who have participated in SCI Clinical Trials and what they would like to see in future trials. The response to this event has been far beyond our expectations, and we already have begun thinking about how we can improve it next year, including by inviting representatives from regulatory agencies. Moving next to VAC2, we recently received data on the eight patients with advanced non-small cell lung cancer who were enrolled in the UK-based Phase 1 trial conducted by Cancer Research UK. The most notable points from those data were that the VAC2 product candidate appeared to be well tolerated in all treated patients and the adverse events we observed were modest and ones which we expect from a therapy designed to generate a robust and durable immune response. Five of eight patients demonstrated the best response of immune-related stable disease; and three demonstrated immune-related progressive disease. ELISpot assays indicated that two patients had durable responses and two others had transient responses against segments of the telomerase tumor antigen, which has been loaded onto the allogeneic dendritic cells. As a whole, these data provide an important connection between the proposed mechanism and the clinical observations in this trial. And while this was a small sample, three of the eight patients, all of whom had refractory disease, reached the two-year survival endpoint. This was an important trial to assess the tolerability and mechanism of VAC2 and the overall safety and efficacy data, which was collected, affirms our belief in the potential for allogeneic cell therapy to address certain types of cancer. We appreciate the patience and the team at Cancer Research UK for their efforts to complete this study. In terms of our path forward, because many different antigens could be employed in our allogeneic dendritic cell system, we believe strategic alliances offer us the best way to advance the VAC platform and our BD team continues to be engaged in exploratory discussions for the development of VAC assets. While there is no assurance that any partnerships we're exploring will come to fruition, we note encouraging clinical results have recently been reported in the neoantigen vaccine space. So, in addition to the BD talks, we intend to continue monitoring this landscape to help inform our corporate strategy and determine the best development path for VAC2 or any other VAC platform programs which we may pursue. Lastly, we recently received information indicating that VAC2 development could be eligible for serum funding and have begun to evaluate that avenue, as well as the others I just mentioned. For ANP1, which is our cell transplant program for hearing loss, preclinical testing is ongoing through a collaboration with the University of Michigan. Our initial objectives from this collaboration are to evaluate the engraftment of our cells in certain anatomical destinations and assess how lung cells can survive after transplantation to those locations. I don't always get ahead of myself on this today, but the initial findings from the study have been encouraging, and we plan to provide an update on this program later this year. As some of you may have seen, just a few days ago, another hearing loss company was acquired, making that two early-stage gene therapy hearing loss acquisitions in the past year. We believe these recent acquisitions in the hearing loss space serve to validate our decision to expand the Lineage platform into hearing loss and will provide competitive comparators for the AMP1 program. As I've previously said, I think cell therapy can have advantages over certain kinds of gene therapy because replacing the entire cell means you don't have to select for patients who carry a specific genetic defect. We think this offers cell therapy larger addressable markets, while matching the advantages of the one-and-done treatment schedule of gene therapy. So to wrap up this part of the call, I want to mention a few of the ways in which we will be working to create near-term value for Lineage shareholders. I believe one of the questions for investors at the moment is whether Roche will independently reproduce our findings of improved retinal structure. So we will be doing everything we can to help support their efforts to enroll and conduct that study. In parallel, we will be working closely with Roche and Genentech employees to transfer our production process to them, which will enable them to manufacture OpRegen in-house, which continues to be part of the overall plan for OpRegen development. And thirdly, we expect some additional data updates from the Phase I/IIa study of OpRegen to be presented at medical meetings this year, which is always helpful for increasing awareness of our program and to demonstrate our partners' commitment to it. With respect to our pipeline programs, the most notable item will be getting the IND amendment for OPC1 submitted before the end of the year. We also expect to have updates from other areas of our business, as we always aspire to reach newsworthy milestones from across our portfolio. And while we do try to make a lot of progress each quarter and reach those milestones, we also try very hard to keep our spending under control. So with that, serving as a transition, I will now hand the call over to Jill for a discussion of our financials.

Thanks, Brian, and good afternoon, everyone. Beginning with our balance sheet, I'm pleased to report that we have continued to be smart with our spending and are well capitalized to conduct the near-term activities, which Brian just outlined. Our reported cash, cash equivalents and marketable securities as of June 30, 2023, totaled $45.9 million, which is expected to support our current plan operations into the fourth quarter of 2024. Please note, this cash amount does not account for any of the Roche and Genentech milestone payments for any business development or grant revenues, which we may receive during the same period. Next, we will review our second quarter operating results. Our revenue is generated primarily from licensing fees, royalties, collaboration revenues and research grants. Total revenues were $3.2 million, a net decrease of $1.4 million as compared to approximately $4.6 million for the same period in 2022. The decrease was primarily driven by lower collaboration and licensing revenue recognized from deferred revenues from the Roche agreement. Operating expenses are comprised of research and development expenses and general and administrative expenses. Total operating expenses were $8.1 million, a decrease of $0.5 million as compared to $8.6 million for the same period in 2022. R&D expenses were $3.9 million, a net increase of $0.6 million as compared to $3.3 million for the same period in 2022. This increase is primarily driven by a $0.4 million in higher OpRegen program-related expenses and $0.3 million in nonclinical related expenses to support the OPC1 program. G&A expenses were $4.2 million, a net decrease of approximately $1.1 million compared to the $5.3 million for the same period in 2022. This decrease was primarily driven by $0.5 million in lower litigation and legal expenses and an overall reduction in costs incurred for services by third parties, consulting costs, and stock-based related compensation expenses. Loss from operations was $5 million, an increase of $0.8 million as compared to $4.2 million for the same period in 2022. Other income and expenses included other expenses of $0.2 million, compared to other expenses of $2.5 million for the same period in 2022. This change was primarily driven by exchange rate fluctuations related to our international subsidiaries, fair market value changes in marketable equity securities and interest income from our marketable debt securities. The net loss was $5.2 million or $0.03 per share compared to a net loss of $6.8 million or $0.04 per share for the same period in 2022. Overall, we continue to maintain our same spending discipline as we have adhered to for years and which has served us well in the past. As the biotech markets continue to face uncertainty, we believe that maintaining discipline in our spending will continue to allow us to maintain our plan to reach meaningful milestones, make important progress and create value for shareholders from our investments in our programs. Now, let me hand the call back to Brian.

Thanks, Jill. To wrap up, we believe Lineage is pioneering an approach, which has large commercial opportunities, but few analogous competitors. While stem cells were once thought to represent a powerful new kind of therapeutic in and of themselves, the reality may be that the true value from stem cells isn't using them as medicine, but using them as starting material to generate other cell types, including cell types which can and in certain cases, already have shown the ability to generate clinical efficacy outcomes that do not occur by chance and vastly exceed the best available alternatives. Most of the success stories to date in cell therapy can be found in oncology or transplant medicine. But data reported recently in non-cancer indications such as Type 1 diabetes and Parkinson's disease, as well as our own achievements in dry AMD with GA suggests that advancements in the tools, understanding, and best application of differentiated cells in a replace and restore approach maybe on the cusp of an exciting era. I continue to believe Lineage is making good decisions in a challenging biotech environment. We've been conservative and disciplined with our spending, and we're advancing our programs in a responsible way. Our collaboration with Genentech and Roche is progressing extremely well. And one of the things we will be particularly excited to work on this year will be continuing to support them in the further clinical development of OpRegen. As always, we sincerely appreciate your support of the company as we look to position Lineage to become the leader in cell therapy and cell transplant medicine. And with that, Mandeep, Jill, Gary and I are ready to take analyst questions.

The floor is now open for your questions. Our first question comes from Jack Allen from Baird. Please go ahead.

Great. Thanks for taking the question. Congratulations to the team on all the progress made over the course of the quarter. Maybe to start, I know, Brian, you talked a lot about the GA opportunity with OpRegen. Could you maybe speak a little bit more finally about what you can do to help your partner enroll this Phase 2a study as expeditiously as possible? I know it's hard to talk about timelines, but any specific activities you can do to help aid in their execution of this trial?

It's limited when I'm able to share specifically, but what I can note is that to-date, Genentech has relied on the same clinical centers, which we had used in the Phase 1/2a study. So, there's certain familiarity, relationships, know-how, understanding that could be beneficial. But with respect to the specific activities that we perform, I would characterize those as more contributory or contributional in nature and not as much the frontline decision-making. And as you already know, Roche is paying for the clinical development of OpRegen in this study and any future studies which they conduct. So we don't have any of the burden, but we actually look for opportunities to go beyond what is contractually expected of us in any creative way to try to be helpful in the furtherance of the OpRegen program.

Thank you for that update. It's encouraging to hear that you are actively working to advance that asset. Regarding OPC1, it's good to know that you've received feedback from the FDA and are planning to move forward with the device and the IND amendment. Could you share your long-term goals for OPC1? My understanding was that you intended to start dosing a few patients with this new device before possibly moving into a larger study. Could you provide more details about your 3- to 5-year plan?

The key question regarding OPC1 that we aim to address is the extent of benefits patients may experience from the oligodendrocyte cells we produce. To respond to this, we will need to carry out a larger, controlled study, although the exact study design is still undecided. At this stage, it is too early for us to establish it. However, we have a couple of important steps to complete first before we can conduct this larger study. One of these steps involves deploying and proving the effectiveness of our new delivery system, which is smaller, has fewer components, is easier to use, and offers potential safety and efficacy benefits. The second step is to introduce the new cells we manufacture at Lineage. As many are aware, I have previously discussed the significant progress made by our manufacturing team regarding the production of OPC1, particularly in terms of reproducibility, scale, control, and purity. Once we complete these two elements, we will engage with the FDA to design and propose a larger comparative study. We believe there are a few manageable challenges to overcome, and once we do, we will be ready to conduct that larger study to determine if this therapy can assist individuals in regaining mobility after a spinal cord injury—something they might not achieve without these cells being administered to their spinal cord.

Great. Thank you so much for the question and all the color. Congratulations again on the progress.

Thank you, Jack.

Hey, everybody. Good afternoon. Thanks for taking the questions. So Brian, my first question, I promise there is no pun intended, but do you envision or any potential complementarity between OpRegen and Syfovre?

I've heard a lot of vision jokes in my five years here, and that is certainly one of them. I'm going to refer the question to Gary to talk about the compatibility and how our therapy could be used in addition to or instead of a complement inhibitor.

I think it's clear that the launch of Syfovre has highlighted a significant unmet need, so there's a substantial opportunity here. OpRegen could potentially be utilized alongside any of the two approved complement inhibitors, or we could use a complement inhibitor first and then follow up with OpRegen, or the other way around. We believe there may be a synergistic effect among the two products, or even three products, and that both might benefit from being administered together. We will need to conduct co-administration studies eventually, but we don't anticipate that this will create any issues; rather, it could enhance both methods for treating dry AMD.

No, that's helpful. Thank you. And then I wanted to switch over to the VAC platform. I guess, how should we view or what are you doing to percolate sort of the platform concept behind the scenes other than sort of having inbounds and marketing it as a platform? Are you doing any particular scientific work to be able to help market it? Do you have the potential to be able to hand cells out in an NDA situation where a third party can sort of do their own experiments? So, how is the platform being percolated?

The answer is that it is being viewed through a number of different prongs. So, one of those would be thinking about working with another party to use a different antigen or combination of antigens, which could be presented on the surface of the dendritic cells. And you could imagine that idea can range from work that has been done at academic centers for more of the pan-cancer antigen like a TRC or you could imagine harnessing some of the discoveries that are coming out of the AI field and machine learning to rationally select the antigen that you might use either on an individual patient basis or again, more collectively for antigens that could serve this purpose more broadly. We have other prongs that we are considering, which include manufacturing. We think that there is still a lot of room to improve the production and drive down the costs of the dendritic cell system. And we think that from a clinical perspective, there's a prong that can be viewed with the dendritic cell as a tool because it essentially goes beyond the first step of the immune system, which is we are prepackaging the antigen into the dendritic cell. So, rather than using lipid nanoparticles or if you are concerned that your antigen is not tickling the immune system quite in the right way, utilizing nature's previously designed system for presenting those antigens could be beneficial. It is extremely difficult to tackle all of those prongs simultaneously with all of their individual permutations. But when I say that the BD people have exploratory conversations, these are the kinds of prongs that they are thinking about and talking about with various parties, each of which in isolation could be beneficial in the VAC program and help elevate the visibility and importance of that program and which altogether could provide us with some de-risking by having multiple approaches, partly supported by partnership and then perhaps partly supported by lineage.

Appreciate the color Brian. Thanks a lot.

Hi. Good afternoon. This is Jason Bouvier on for Kristen. Thanks for taking our questions. I have two questions. Just going back to the Phase 2a trial being managed by Genentech. Do you have any information on the number of patients or subjects that have been enrolled sort of the rate of enrollment and how many are left? And the second question is how are you thinking about prioritizing earlier-stage programs and any potential projects that are not yet out in the pipeline? Thanks.

We're unable to provide specific details regarding enrollment, so you'll need to make your own estimates and projections. Regarding the balance between our lead program and other initiatives, we aim to prepare for success because not planning for success would mean planning for failure. It's clear that we are focused on building a company that will benefit from the future success of OpRegen and dry AMD. However, the current environment for the biotech industry is challenging, so we must be careful with our investments in pipeline programs. We have multiple assets at different stages of clinical or preclinical development, and we can adjust these stages to match our financial commitment appropriately. We believe that some areas offer a high return on our investments and value for our business. A notable example is our decision to invest around $1 million to kick off the ANP1 program and advance it to preclinical testing with that modest amount of R&D spending. I've also mentioned some promising early-stage acquisitions relating to single-asset hearing loss programs. We apply a disciplined approach and critical ROI evaluation to manage our spending effectively. We continually assess whether to pursue grant funding, consider partnerships, or proceed cautiously with advancing projects while anticipating promising future data from the OpRegen program.

Hi, guys. Madison on for Mayank. Thanks for taking the call and congrats on the progress. Just a quick question. Once you submit your IND amendment in 4Q in the 30 days past, how long will it be before you actually move into the clinic there? And then secondly, it sounds like you guys will no longer be responsible for production as you're transferring capacity to your partners regarding OpRegen, I'm just wondering how long that transport process would take? Thanks.

Thank you for the questions, Madison. Regarding OPC1, we strive to reduce the time between receiving clearance to open a site and completing the contracting process to actually launch the site. Unfortunately, a significant portion of the delay often occurs on the site, legal, and contracting sides. Generally, sponsors are efficient in handling their documentation, but each site presents its own unique challenges. We do everything possible to initiate these trials promptly. I do not believe there would be any advantage to us from a delay. While this study will involve a small number of sites, we will work diligently to begin soon after the 30-day clearance period. However, some centers opt not to fully engage until an IND is open, which can be frustrating. Others are more flexible, allowing for parallel preparations while anticipating when they will be ready. In multi-center trials, various challenges arise, but our best approach is to plan ahead and be ready to move quickly, employing redundancy and parallel work before the 30-day period. As for your second question, I cannot estimate the time needed to transfer a cell therapy production process to a large pharmaceutical partner, as we have not done it previously. However, I trust our manufacturing team and their ability to train skilled collaborators effectively. Manufacturing cells consistently and reliably is quite challenging, and there have been numerous failures globally. Yet, our in-house manufacturing team has achieved remarkable successes, including developing a differentiation protocol for ANP1 rapidly and significantly scaling production for OPC1. They also made substantial improvements in purity and scale for the OpRegen program. These examples across different programs demonstrate our manufacturing team's capabilities. I have no reason to think that Roche and Genentech lack resources; in fact, I expect they are well-equipped in this area. Although transitioning is complex and requires close collaboration rather than simple documentation handoffs, I cannot predict when this process will be finished. However, we will focus on this task and closely cooperate with our partner to enhance their chances of success.

Hey, Brain. Thank you for taking my question and congrats on the progress this quarter.

Thank you, Michael.

I think to start off, I'd just like to ask a little bit about the VAC2 program and to see if you could kind of prime us for the full data from that study with the additional analyses ongoing at your UK partner, which of those particular analyses do you consider to be the most important for both validating the platform as a whole as well as the VAC2 program itself.

Thank you, Michael, for the question. I will refer to Dr. Hogge to respond to you.

So their ongoing investigations are looking at biopsies from the tumors to look for tumor infiltrating lymphocytes. We're keenly interested in those data. We're looking at skin biopsies at the site of administration to see what type of cell influx occurred post first administration all the way up to six administrations. So that'll be interesting if that profile changes over time. Additionally, we're looking at different laser panels. We look to see if we have a Th1 or a Th2 cytokine profile shift that wasn't there at baseline. And all these would be indicative of a potential immune response to the antigens of interest and may show that there was at least some anti-tumor effect as well that we're certainly interested in looking at. So those data are being analyzed and we wait to report from Cancer Research UK.

Thank you for that. I would like to ask about the auditory disease space, where you have gene therapy gaining significant attention. Do you believe having more one-and-done therapies available will make it more appealing for the development of ANP1? Also, could you provide any additional information on specific indications you might consider pursuing once this moves towards clinical trials?

Thanks, Michael. I have a two-part answer. The refinement of the indication and the intended patient population will be driven by the data which we collect initially pre-clinically and then evolving into the clinic. It's difficult for us with such a new approach to be incredibly definitive about how we see the best use of this intervention. And we're quite aware that there are many types of hearing impairment, some of them chemical, some of them physical, some of them more reflecting aging and degenerative processes. The notable aspect of other approaches and let's call it success that we're seeing in approaches for hearing loss, I think, is very beneficial to our earlier program because it's beginning to establish the existence and refine some of those questions about what are the right clinical endpoints to use and what are the economics of a program look like because, ultimately, if we're going to get credit for what today is a preclinical program, that's going to come through some sort of a valuation exercise, which is going to need to have some sort of an addressable market, which is going to need to have some refined patient population. So while it's exciting to go into a new area with an incredible paucity or dearth of other competitive threats, the trade-off for that is we don't have a mature and established commercial market that we can point to with certainty and say we know exactly what patients we're going after. So in light of the options of a mature and crowded space compared to this new area, I'm delighted to be going into this new area because we can partly define it for ourselves rather than be forced into following others, but I think there's a lot to learn in the hearing loss space from some of the early forays that we are seeing, in particular in gene therapy. And as I described earlier, even if a gene therapy is able to wonderfully address one specific deficiency in the genome through some sort of repair or replacement of that genetic information that is going to leave many other kinds of hearing loss available to an approach that is replacing the entire genome through the transplant of a cell.

Thank you. I appreciate your insight.

Great. Thanks again for taking the questions and the follow-up here. You just drive a thought as one of my peers was asking a question about Roche's execution of enrollment of the OpRegen Phase 2a study. I know you mentioned in response to my question that you have a lot of experience with the sites that are being utilized by the collaborator. I guess, any historical context you could speak to as it relates to the ability of those sites to enroll patients in your Phase 1/2 study?

One aspect I previously highlighted is that the initial phases of this study had a slow enrollment, primarily due to a limited number of sites open and the fact that the early patients were pioneers in receiving this therapy. By the end of the study, the Lineage team had successfully managed enrollment, opening additional sites that allowed us to enroll the last four patients within a very short span of six to eight weeks. This demonstrates considerable variability in enrollment pace, occurring not only at the study level but also at individual sites. Several factors have worked in our favor, particularly in how prospective patients communicate with the treatment center and the surgeon today. We are now discussing a program with established pharmaceutical credibility and a wealth of accessible data, rather than being the first of its kind. However, I must emphasize that this remains an optimization study, and I believe Roche aims to limit the number of variables to gather as much data as possible. Consequently, it is not surprising that they have chosen to initially work with sites we had previously used. I anticipate that their site selection will expand over time, although I do not have specific details on that. Overall, I am optimistic that Roche and Genentech bring more resources and experience to this trial compared to what we had during our Phase I, even though we were pleased with the successes we achieved then.

Great. That's great color. Thank you again for taking the follow-up.

I appreciate that, Jack. Thank you.

Hey, guys. Thanks for taking the follow-up as well. So when you're looking at the AMP 1 program, I wanted to dive in a little bit here. Can you describe, sort of, a little more of the models you're looking at right now and what's planned? And I, sort of, want to correlate that with the takeouts that you referred to Akouos and Decibel. Now they are using gene therapy, as you alluded to. They were very focused on targeting of their AAVs and in very specific mutations, which you don't necessarily need to do. So they were looking at animal models, in particular like Otoferlin models or what have you. What kind of models would you look to do to be able to address a broader hearing loss concept? Thanks.

Thank you, Joe. It's a great question. We do plan to provide an update on ANP1 later this year. And probably the question is even more suitable at that time because at this point, our focuses and our emphasis is primarily on the delivery of our cells and the durability of our cells. As everyone knows, if your cells aren't present, they're not going to be functional, and that's where we need to go. So we're not at the level where we are designing our own functional tests or main comparisons to studies that have been done in the space. We really are just focused on stepwise progress here, which means ensuring that we can get the cells where we want them to go and ensuring that they are still present after a clinically relevant amount of time and using the models that are quite conventional in this space, which are various forms of rodent models. But I think when we do a more fulsome update, it will be easier to be able to begin to draw parallels across what we're doing and what some of the other folks are doing. But I do think that to the extent you're thinking about gene therapy needing to repair genetic defects and models having to have a specific defect so that gene therapy companies can show that they can fix that DNA and then have a clinical outcome from that. Our approach would be that we do not need to have such difficulty that we can use what I would characterize as cruder forms of deafness because we aren't trapped by or forced into the narrow segment of a single gene being responsible for the absence of effective hearing.

That makes great sense. I appreciate that. And I'm just going to just focus on one of your D words, and that's the delivery. Obviously, you need the experiments to look at durability. So AAV is much smaller than cells and you're dealing with a very limited volume environment, are you looking at what's essentially been relatively standardized surgical techniques. Now I know this is pretty forward-looking, or is there something more unique to cells that we'd have to consider, or is it too early to really even go down that tally?

You're asking a great question because cells are significantly larger than viral vectors. One area where this is particularly interesting is in the eye. We know that viral vectors can cross the optic chiasm and show up in the opposite untreated eye, which complicates control arms in that area. In terms of delivering to the ear, it’s remarkable to see what can be achieved with small needles and steady hands. We do face challenges in delivery, similar to those with the spinal cord or eye, because if the material doesn’t reach its intended target, it won’t be effective. We plan to share some of our findings and methods in an update later this year. Generally speaking, we haven’t needed to develop anything new to carry out these preclinical studies. I hope this response is helpful in the meantime.

No, it certainly does, Brian. Thanks a lot. I can't wait to hear about it.

Thank you, Joe.

That concludes today's analyst call. I would now like to turn the call over to Brian Culley, for closing remarks.

I would just like to say thank you, everyone. It's exciting to have such great interest in all the things that we're doing. And we will continue to work hard to make this company interesting and exciting and successful. Thank you. And have a great afternoon.

Thank you. Ladies and gentlemen, this does conclude today's call. Thank you for your participation. You may now disconnect.