Lineage Cell Therapeutics, Inc. Q1 FY2024 Earnings Call

Welcome to the Lineage Cell Therapeutics First Quarter 2024 Conference Call. An audio webcast of this call is available on the Investors section of the Lineage website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage; 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.

Thank you, John. Good afternoon, and thank you for joining us. A press release reporting our first quarter 2024 financial results was issued earlier today, May 9, 2024, 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 risk 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 annual report on Form 10-K for the year ended December 31, 2023. 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; and Jill Howe, our Chief Financial Officer. I'll now hand the call over to Brian.

Thank you, Ioana. Good afternoon, everyone. We've had an exciting week, and I appreciate you taking the time to join us on this call. We have many positives to cover today, including the news we just shared a few minutes ago, but I want to begin with the recent data update on OpRegen. Data is a major driver of value, and that data was notable for several reasons, and I just want to ensure those points are clear for our new and existing shareholders. Last Friday, on behalf of Roche and Genentech, Dr. David Telander presented 24-month results from the Phase I/IIa trial of OpRegen for dry AMD. As you know, dry AMD is a degenerative disease that never resolves spontaneously. Dry AMD currently has no treatment options that can improve vision or even maintain vision regarding the number of letters read on an eye chart, which is a standard way to assess visual performance in these patients. In fact, according to a recent publication in the Lancet reporting on a clinical trial of more than 1,200 dry AMD patients, sham-treated patients with baseline disease characteristics similar, although not identical, to those OpRegen patients reported by Dr. Telander lost an average of 7 letters of visual acuity after 24 months. Patients who received the best available treatment with an FDA-approved complement inhibitor still experienced a mean loss of vision of 8 or 9 letters over the same 24-month time period. In comparison, among the 24 patients treated in the OpRegen Phase I/IIa study, we focus on the 12 patients, which we call Cohort 4, and these are patients who were not already legally blind at baseline. Ten of those 12 patients had data available at 24 months, which, therefore, somewhat matches those reported in the Lancet publication. And those OpRegen patients actually gained an average of 5.5 letters. I think it's worth repeating this point. This cohort of OpRegen patients gained back an average of 5.5 letters of visual acuity while comparable patients on anticomplement therapy or no therapy at all lost 7 to 9 letters. So if you compare these time-matched outcomes, our experimental therapy was, on average, 14 letters better than the best available therapy. More importantly, these OpRegen patients gained vision while those others lost it. Digging further, if you look only at the 5 patients who received more thorough coverage of OpRegen across their areas of GA, that difference moves even farther in our favor with an average gain of 7.4 letters of BCVA at 24 months. Coupled with those gains in visual acuity were the anatomical changes, which were also reported by Dr. Telander. I won't repeat his entire presentation, which is available on our website, but a summary version of it is that some of these OpRegen-treated patients who should all be experiencing degradation of their retinal tissue have shown imaging evidence of retaining or even gaining critical layers of their retina 2 years after receiving a single transplant of OpRegen RPE cells. While this observation did not occur in a large number of patients, it's important to keep in mind that this is a phenomenon that never occurs in the natural course of this disease. Additionally, our pharma partner is reporting these observations independently by accessing and evaluating raw data collected from our study at multiple sites for multiple surgeons and even using significantly different delivery techniques. Now we all know that small data sets from early-stage studies are not as conclusive as large studies, but that does not mean that small data sets aren't valuable. It depends on their context and the consistency of the information that they provide. For this reason, I think it's worthwhile to put two things into perspective. First, the data set I'm comparing us to is not small. The complement data I just mentioned includes more than 1,200 patients. We believe the vision loss experienced by those patients is both relevant and reliable to use as context for our data. Second, while our data reports on a cohort of 10 patients rather than the large number of patients used to determine findings of safety and efficacy for marketing authorization, it's certainly encouraging to us that these 10 patients with dry AMD treated at 6 different clinical sites in 2 countries by 8 different surgeons and using 2 different routes of delivery, as a group and also as a majority, showed improvement in an unavoidably degenerative condition. Moreover, the visual acuity improvement over untreated eyes which also had dry AMD was present as shown in the presentation last week at 6 months, 12 months and now demonstrated also at 24 months. OpRegen is a treatment designed and intended to accomplish exactly this kind of replace-and-restore outcome. While additional data will be needed to determine the future value of our treatment, it seems to us at Lineage that the stream of incremental evidence of a beneficial and durable clinical effect is continuing, and it gives hope for the future. Taking the future as a segue for the next topic, we had a second significant and positive event this week. We announced just a few minutes ago that we have entered into a new services agreement with Genentech, which will provide additional support to the ongoing development of OpRegen. To be clear, we did not renegotiate our existing license agreement; this is a new additional agreement under which Lineage will be providing certain clinical, technical training and manufacturing services, expanding beyond the scope of the existing license agreement that also further supports the ongoing advancement of the OpRegen program. These additional services will be fully funded by Genentech, and they include activities to support the ongoing Phase I/IIa and the currently enrolling Phase IIa studies as well as additional technical training and materials related to Lineage's cell therapy technology platform, which can support commercial manufacturing strategies. We believe this additional commitment provides an important signal of our partners' support for our approach at a time when they are making difficult decisions about their developmental pipeline. Specifically, we noted that Roche representatives recently stated they are focusing on 'high-impact assets,' which is supported by recent actions they have taken to prioritize their pipeline toward first-in-class and best-in-class assets. We welcome that as our view is that OpRegen satisfies both of those criteria. For today, I'll summarize my updated view of the OpRegen program with these three points. First, we announced additional validating data this week, which offers implications for both the clinical benefit and durability of our lead product candidate. Second, we've entered into a new services agreement with our partner, which will expand the investigation and understanding of OpRegen and further deepen the valuable relationship we struck on this groundbreaking project. Third, despite safety concerns with current FDA-approved treatment options, the commercial market for a dry AMD therapy continues to grow and is creating a more informed patient population. We believe all of these factors combine to position us well for a promising and potentially revolutionary approach to treating dry AMD. While dry AMD is a compelling opportunity and OpRegen may have applications in additional ocular diseases, we believe our cell transplant approach is not limited to ocular conditions. We believe the fundamental science of cell replacement offers advantages over small molecules and antibodies in certain situations, advantages which could be applied to many areas of the body. As Genentech's Vice President and Global Head of Ophthalmology Product Development recently said on a podcast, and I'll again quote, 'Antibodies can't replace dead cells. Only cells can replace dead cells.' I couldn't agree with them more. Clearly, cell therapy has already revolutionized oncology treatment, and there are many other indications where it could have a positive impact on chronic degenerative diseases. There's abundant evidence from the biotech and pharma world to support that statement. We can point to large companies like Bayer, Roche, Astellas or Vertex, who've made significant investments in this emerging field, but we also look to newer entities which raised substantial capital from high-caliber investors to explore what is possible using cell transplant technology. While we welcome these new entrants for the validation they bring to our approach, we're also comforted by our experience, which indicates that the learning curve for this form of cell therapy, especially doing affordably scaled and well-controlled manufacturing, is extremely steep and lengthy. For this and other reasons, we believe we can remain a leader in this new branch of medicine by advancing our growing pipeline of opportunities while pointing to the continued success of OpRegen. Our most advanced example of making investments in our pipeline is, of course, OPC1, our cell transplant program for spinal cord injury. The objective of this program is to replace the cells that comprise the spinal cord and restore or provide function to people who have been paralyzed by a spinal cord injury. This is an approach of great interest and importance to the SCI field, and there have been a number of attempts to use stem cells in this patient population. However, those efforts all utilized undifferentiated or mesenchymal stem cells. At Lineage, we don't use undifferentiated stem cells in any of our clinical programs because those aren't the cells which are destroyed or lost to disease. Instead, we are manufacturing and transplanting cells which closely match the identity of cells found naturally in the body, and specifically, in this case, those found in the spinal compartment. By the way, this is the same fundamental approach that has yielded positive results in the ocular compartment with our dry AMD program. We manufacture our spinal cord product candidate at a cGMP facility, which we control. Alongside the advantages of having in-house manufacturing, we're not aware of anyone who has a longer set of safety data in cell therapy for spinal cord injury. We've collected and published as long as 10 years of safety and efficacy data on our patients and believe the adjustments we've made to increase the purity and control of our cells in our manufacturing process will further improve the quality profile we've already demonstrated for this program. In addition to improving the material we transplant, we're simultaneously investigating superior ways to deliver our cells to patients. To that point, the next clinical trial we plan to run in spinal cord injury will focus on the safety and performance of a novel delivery system, which we will initiate as soon as we receive final clearance from the FDA. We have already submitted the requisite IND amendment information and received comments from the FDA. Typically, it takes us only a few days to respond to those comments. However, the FDA has explained that their heavy workload is causing delays. Their review of our submission has continued past their initial expectation of April 26. We believe we are approaching the end of this portion of the regulatory process. In parallel, we are continuing to perform the necessary start-up activities for the clinical study. If FDA clearance does become likely to affect our target start date this quarter, we will provide that information around that time. Currently, we believe we remain on track to open our first clinical site for this study in June. There are three important aspects of this trial I want to note today. First, the delivery system we're testing has been designed to deliver cells without stopping patient ventilation. Prior trials, including the two previous trials of OPC1, required the patient's ventilator to be stopped during cell administration. We consider keeping the patient connected to the ventilator to offer an obvious safety advantage over therapies that do not have this feature. This new approach is also compatible with our proprietary thaw and inject formulation, which has eliminated costly dose preparation steps and the associated counting and handling of cells in favor of a simple 5-minute thawing procedure followed by a slow manual push of the cells via an off-the-shelf needle. Thirdly, and probably the most exciting point among the three is that this study will be the first time OPC1 is administered to patients with chronic spinal cord injuries. That will be a significant milestone for this program because most chronic injury patients have reached a plateau in their recovery. If we happen to observe any functional recovery in a patient who has plateaued, it can significantly broaden the addressable patient population for this therapy. So in addition to the safety and performance of the new device, we also will be collecting functional assessments on the patients to investigate whether any signals of efficacy are present among chronic injury patients. As our technology and know-how increases, as our lead program adds validation to our approach, and as our internally developed programs reach clinical testing, we are positioning ourselves to retain a growing share of the economics of our success. For this reason, we plan to continue investing in our pipeline and partnerships, which are aligned with this strategy. For example, our alliance with Eterna to generate a hypo immune cell line for future cell transplant programs is making good progress, and that could be something we discuss in our next call. An additional comment I wanted to make today was to provide an update on the second Annual SCI Investor Symposium. We created this conference with input and support from the Christopher & Dana Reeve Foundation and California Institute for Regenerative Medicine as part of our efforts to expand collaborative partnerships and drive greater awareness of the SCI field. To our knowledge, this investor-facing conference is the only one of its kind in spinal cord injury, and we're delighted by the quality of speakers and companies that have confirmed to present. In addition to molecular interventions such as the cell transplant and small molecules being developed by Lineage and AbbVie, we have added companies from the electrical stimulation and BCI fields. Most of the thought leaders who presented last year have already committed to return, and we are continuing to add speakers. The event aims to provide a comprehensive view of issues and opportunities in spinal cord injury. You can expect an update from us on this conference in the coming weeks, and I hope that some of you will consider joining us for it in San Diego on June 26 and 27. Before handing the call over to Jill to review our financials, I wanted to add a few words about the passing of our long-serving Chairman, Mr. Al Kingsley. Al played a pivotal role in this company's journey. He was incredibly dedicated and creative in his work, and our deepest condolences go out to his family, friends and countless colleagues. Al was a man of great faith and charity in both his personal and professional lives, and we intend to honor his dreams for this company through the inspiration and dedication that his memory provides for us each and every day.

Thanks, Brian, and good afternoon, everyone. Starting with our balance sheet, I am pleased to announce that we remain sufficiently capitalized to carry out the near-term activities in our current operating plan. Our reported cash, cash equivalents, and marketable securities of $43.6 million as of March 31, 2024, are expected to support planned operations into the third quarter of 2025. Next, I will review our financial operating results for the first quarter. Our revenue is generated primarily from collaboration revenues and royalties. Total revenues were approximately $1.4 million, a net decrease of $1 million compared to $2.4 million for the same period in 2023. The decrease is primarily driven by lower collaboration and licensing revenue recognized from deferred revenues under the collaboration and license agreement with Roche. Our operating expenses are primarily comprised of research and development expenses and general and administrative expenses. Total operating expenses were $8.1 million, a decrease of $0.9 million compared to $9 million for the same period in 2023. Research and development expenses were $3 million, a net decrease of $1.2 million compared to $4.2 million for the same period in 2023. The net decrease was primarily driven by $0.4 million for our OPC1 program, $0.3 million for our preclinical programs, and $0.2 million for our OpRegen program. Another $0.3 million of the decrease was attributable to other research and development expenses primarily related to reduced manufacturing activities. General and administrative expenses were $5 million, a net increase of $0.3 million compared to approximately $4.7 million for the same period in 2023. The increase was primarily driven by $0.2 million in stock-based compensation expenses and an overall increase in costs incurred for consulting services. Our loss from operations was $6.7 million, an increase of $0.1 million compared to $6.6 million for the same period in 2023. Other income and expenses included other income of $0.1 million compared to other income of $0.4 million for the same period in 2023. The net decrease was primarily driven by the employee retention credit recognized in the prior year, partially offset by exchange rate fluctuations related to our international subsidiaries. Our net loss was $6.5 million or $0.04 per share compared to a net loss of $4.4 million or $0.03 per share for the same period in 2023. Moving ahead, our aim is to uphold our commitment to fiscal discipline. We are confident that this continued approach will support our plans towards achieving pivotal milestones and generating shareholder value through ongoing investments in our programs. Now I'll hand the call back to Brian.

Thanks, Jill. To summarize three key points for today. One, we continue to be extremely happy with our now recently expanded alliance with Roche and Genentech, not only for their commitment to advancing OpRegen through the clinic but also for enhancing awareness of the program at medical and scientific meetings. Two, we're excited to be putting a second cell transplant program into active enrollment this year in a disease with an enormous unmet need and limited competition. Three, we will continue to look for ways to build value from our early-stage pipeline through thoughtful investments in experimental studies and methods as well as from strategic collaborations, which can help advance our programs and validate our approach. I appreciate your attention and time today. And with that, operator, we are ready to take analyst questions.

The first question comes from the line of Jack Allen from Baird.

Congratulations to the team on all the progress made throughout the quarter. I guess my first question is on the new Roche agreement. It seems like a very interesting investment from a company that's already partnered with you on OpRegen. To what extent can you provide some more color on the scope of the agreement and any financial terms tied to that agreement as well? And then I have a quick follow-up as well.

Thank you, Jack. I think in an environment where many biotech companies have been struggling, we are delighted to see this agreement showcase an increased commitment to the partnership and expand the scope of work and investigation into the OpRegen program. Some areas of activity that are covered by this agreement include extending the follow-up period of the ongoing Phase I/IIa trial that can provide further information about the potential activity of OpRegen beyond 5 years. Genentech is planning to expand to one or more sites in Israel. We are uniquely positioned to provide support with that expansion in so far as we have feet on the street in Israel. More generally, Genentech is looking to continue to evaluate the operational needs of the study. So we don't have detailed financial information to share at this time, but those are examples of some of the scope of work that will be funded by Genentech and that will contribute back to the ongoing investigation value of the program.

Got it. Great. And then for more of a scientific side, I know we talked quite a bit about the clinical data that was announced, but there was also some preclinical data that your collaborators at Genentech looked at in a pig model, looking at different methods of administration. I'd love to hear any thoughts you have as it relates to how high a percentage of patients do you expect could be optimized to gain complete coverage of the GA lesion as we've seen that provides better clinical results. And then one other quick clinical question I had as well was we saw 24-month data last Friday. When might we be able to see 36-month data? I mean it seems like this is durable, but as the data continue to evolve to show great durability, it'd be great to see that data as well.

I'm smiling because I'm just thinking about like the Roman Colosseum, and no matter what you give them, they want more. So let me go in reverse. So 36-month data is to be determined. People know when the study began and when it ended. I guess I would say probably it would not take another year from now to come up with 36-month data, but it has not been determined by us or, together with our partner, when that would occur. The pig study you mentioned, and I didn't put it in the script, not because it's not important, but it reflects another example of Genentech's commitment to the program that they are conducting not just the ongoing clinical trial but also evaluating how OpRegen RPE performs in various animal models. The pig study, the mini pig study and delivery is, I imagine, intended in part to help improve the delivery by testing various techniques. There are a number of models or forums where such studies can be done, of course, in the context of a clinical trial. One can also deliver cells into a cadaveric eye or a pig eye or a rat eye. There are many different ways to test out different methods or techniques to ultimately try to drive a wedge between the clinical effect of a therapy and the safety and tolerability of a therapy, and that's what all of us in this field want to do because that is the threshold for obtaining marketing authorization and then having a financially successful product. So I think about this much in the same way that LASIK surgery, which, when I was a young person, sounded very scary and dangerous. But as more and more people received it and there was more and more experience with it, it became almost routine. Perhaps it is routine at this point. I'm comforted by the fact that surgical/procedural methods seem to be more likely to yield to investment and offer success than trying to come up with, for example, a small molecule to have activity in a very complex disease. So I like very much that an area of great attention is how to achieve very good delivery of these cells because, of course, that's one of the significant findings from the Lineage Phase 1 that if you get the cells to the right place, they really seem to drive exceptionally strong clinical outcomes.

The next question comes from the line of Mayank Mamtani from B. Riley.

This is actually William Wood on for Mayank. I would appreciate you taking our questions, and congrats on a very nice quarter. I want to step back and just play a bit of a devil's advocate here. When looking at the agreement that you have, the new agreement with Roche, should this be looked at potentially negative, where Roche is needing to rely on your services, your experience, and your techniques more to get it done because they're having trouble? Or is this really the wrong way to look at it, and this really is a positive, and they're just trying to get to the best outcome?

I view this situation entirely positively. The additional activities are advantageous for our program from Lineage's perspective. There might be some convenience, like the work in Israel, but there's also an extra element to consider. It's important to note that this is not a typical license agreement. In traditional deals, larger pharmaceutical companies often do not require much input from smaller companies because of their extensive capabilities and expertise. This typically does not further the program. However, we are engaging in something quite unique. While you're seeing more instances of this approach, our efforts are built on nearly two decades of experience. If you consider whether companies like Roche and Genentech can benefit from a continued relationship and ongoing dialogue with us as innovators, the answer is yes. We see this as a significant advantage because it indicates that there are competitive barriers that may be challenging for others to overcome, allowing us to stay more actively involved in the program. This could foster interest in further work or campaigns. The broadened agreement reflects companies' careful investment strategies, actively seeking high-impact, high-value programs, especially at a time when others are cutting jobs or scrapping projects. Here, we see strong signs of commitment, which is entirely positive. In the bigger picture, we recognize that we can never match the resource level that Genentech or Roche can deploy for this program; our contribution is still relatively small. However, we bring unique offerings that can benefit not only the OpRegen program but also many others, underscoring our value in this sector. Currently, we are well recognized for our partnership on the dry AMD program with Roche and Genentech. Looking ahead, the insights and advantages we gain from this platform will extend to additional programs as they develop or enter partnerships, providing exciting growth potential from an investor's viewpoint.

I appreciate that answer. It was very nice and helpful. When we look at the 24-month data, we like to compare it to a control arm. How should we evaluate the patients in your trials with the contralateral eye? Do these eyes also have geographic atrophy, making them a sort of in-person control? Should we view this as a direct comparison to other trials we've seen, perhaps in complement? Additionally, is there a point in late-stage development where the control eye could be injected with a low dose of complement or a standard of care treatment? Any further details would be appreciated.

That's a great question. I should start by noting that there will always be some variations among data sets, which can stem from your criteria for including or excluding data, or simply the number of patients you're examining, leading to variability. There isn't a perfect comparison, but I appreciate your inquiry as it’s a valid one. Despite the relatively small patient group, we can still draw some insights. The most significant takeaway is that the images and effects we have discussed are not part of the natural disease progression. We have a strong connection between the therapy and the changes we've noticed, which we view as positive. Additionally, when considering the untreated eye in our patient group, it's important to clarify that, on average, this typically has a smaller area of atrophy. Although the other eye also has dry AMD, it is generally the better functioning eye, and there is a notable difference in visual acuity: on average, untreated eyes were around 20/60 or 20/80, whereas treated eyes could be 20/100 or even 20/200. There is an inherent bias since the treated eye starts in a worse condition. Another point is that all treated eyes in our study involved foveal involvement, while this was not the case for all patients taking well-tested complement inhibitors, potentially impacting baseline visual acuity metrics. We do acknowledge these imbalances, as they can affect the informativeness of the data. If partial analyses point towards the same findings, it can be exciting and enhance our confidence despite being fewer than 200 patients, as we believe much of this is directionally accurate and promising. Regarding your question about treating a control eye with a complement inhibitor as a comparison to OpRegen, while that decision falls to our partner, I believe it doesn't matter much. The clinical and anatomical differences we’ve observed with OpRegen compared to both untreated eyes and those receiving anti-complement treatment are substantial, going in opposing directions, so I’m not overly concerned about the likelihood of success, regardless of the comparison. This holds true over varying observation periods, whether that be 12, 18, or 24 months, including assessments at 6 months. To summarize, visual acuity and anatomical changes are closely linked but do not progress at the same rate, making direct comparisons challenging, especially with different subsets. We prefer a broader approach, focusing on the overall direction of effects over the long term and whether they are likely due to chance or our therapy.

The next question comes from the line of Joe Pantginis from H.C. Wainwright.

Brian, I just want to start with a housekeeping question first on the services agreement. Are you disclosing what the duration is or when it could be renewed?

No, we have shared what information we are able to at this time.

Okay. Now with regard to OpRegen, I think a key point that you've been making here is that Roche is now doing everything independently, presenting the 24-month data independently, doing their own pig study independently. So I guess I would ask the question this way, and I know I'm asking you to speak for Roche, so I apologize for that. Since they're basically seeing all of this data and doing these experiments live, do you feel that any of these can impact their own internal program by pressing the brakes or pressing the accelerator on any particular aspects as they've been looking to optimize the program on their own?

Well, you do know that I cannot speak for Roche or Genentech. What I can say is that it was always contemplated from the beginning that there would be a long-term handoff of this program, partly because the manufacturing process is complex, and you don't just learn that overnight. We've always anticipated that there would be a transition of both clinical activity, manufacturing activity, and ultimately on to commercial activity. However, when they entered into the agreement and committed to the upfront payment and the other economics that we are eligible for, they were able to acquire discretion to make those choices. Of course, most license agreements have provisions around things like terminations and clawbacks and commitments to continue to make commercially reasonable efforts, and most of that is typically redacted in the filed copies. What I can say is that even those of us at Lineage, to a certain extent, look at external indications for signs of whether we think our partner is accelerating their interest, decelerating their interest, or maintaining their interest. We continue to be very happy and appreciate that Roche and Genentech go to lengths to talk about this program and share data. I'm not sure that every company does that with every program, and it does not necessarily mean anything. We presume that reflects some enthusiasm for the program. Thus, it may be tea-leaf reading or, in this case, perhaps the leaves are palm fronds, which are much larger. But ultimately, where the program fits into their pipeline and their strategic value, their urgency, or their decisions on budget year-to-year are things that they will decide through their own contemplation of their corporate objectives. However, there was a reason we wanted to go with this organization. It's because they understand ophthalmology. They have been exceptionally successful in ophthalmology, and we think that they are as committed to getting this product out and changing lives as we are.

No, that's very helpful. I appreciate that. And then on OPC1, I was wondering if you could walk us through the steps for site activation, specifically when are the physicians trained, have they already had some broad training across the sites already, general device availability? Are they essentially stockpiled, ready to be sent to the sites? So that's the top end of the question. And then financially speaking, can you just remind us where things stand with regard to the CIRM application cycle?

Yes. Thank you, Joe. I'll just say, for CIRM, there really has not been any update that we've received yet. We continue to wait for the next Board meeting, which is scheduled for the end of June. We expect that by the end of June, we will have more information that we will be able to share. With respect to onboarding sites, there's a very long list of activities. Of course, the contracting around the schedule of fees, not only with the site but also with the many vendors involved with the clinical trial. The product has been manufactured and is ready to be shipped to site. Site initiation visits, device training, all of these are steps that are required prior to a patient being treated, surgically or manually. What's fortunate for us is that the site we think will be the first to open has been part of this study several years ago, and some of the very same people are involved. In fact, I would frankly say that is something we found, as we evaluated different sites, that people who were involved with this program before were enthusiastic about being involved again. I think that's a good indicator. I don't think there's anything particularly prohibitive with this clinical trial in terms of operational execution. I would add for everyone's sake that some steps, such as actually soliciting patients, cannot and do not occur until the full clearance has been obtained with the FDA or at least until the risk of having a clinical hold has been diminished to a very small level. There are certain steps that are antecedent to others. However, generally speaking, there's a lot that you can do to prepare in parallel, making it economically efficient to move forward. But you are still working with academic centers that often do not have the same expectations around turnaround time due to their volume of activity.

The next question comes from the line of Kristen Kluska from Cantor Fitzgerald.

This is Rick Miller on for Kristen. We just have one here. From a big picture market perspective and with the caveat of all the differences between OpRegen and the complement inhibitors, do you have any thoughts on the Apellis market penetration stats for Syfovre showing around 77,000 injections in the first quarter? Specifically, does this tell you anything about the overall market size and appetite for a therapy in the space, and maybe appetite for new therapy options in the space?

Thank you, Rick. I believe the Syfovre launch offers valuable insights into the potential within dry AMD. Their product, while facing safety concerns that are likely familiar to everyone here, has seen a solid uptake. This indicates significant demand and potential for new therapies. I agree with your observation about our differing product profile—we offer a one-time therapy that could either restore vision or halt the progression of the disease. The ultimate commercial profile of this product is still uncertain, but I'm encouraged by the performance of a product that has been shown to only slow disease progress by roughly 20% a year. While I know there are various products with monthly or bi-monthly dosing and that I’m generalizing here, they have shown limited clinical benefit. Yet, they managed a strong performance last quarter, reinforcing the idea of a multi-billion-dollar opportunity in dry AMD. This highlights the strong demand for new therapies and the quick adoption from both healthcare providers and patients. However, we have yet to see how well patients will adhere to monthly or bi-monthly eye injections in the long term. That said, OpRegen does not require such a schedule, eliminating that concern for our expected product profile. Overall, I feel we are in an excellent position, especially as a theoretical commercial opportunity is becoming a tangible one right in front of us.

The next question comes from the line of Michael Okunewitch from Maxim Group.

I guess to start off, I do want to ask about, with the dose study gearing to start up in the near future, could you just remind us of how many centers you're targeting and provide any additional color on what you're expecting in terms of the enrollment rate?

Yes. Thank you for that question, Michael, and your time today. We only need to enroll—or we're only planning to enroll, rather—6 to 10 patients. So it will only presumably be a handful of sites, although we initially reached out to more than 10 when we were doing our initial feasibility discussions and evaluations of site capabilities. The harder question is around the enrollment rate. There aren't many precedents, but I think we benefit from the fact that unlike the first time that this therapy was administered to patients, it was known to be a subclinical dose. You are discussing with a patient about having an additional surgery, and they are being told they will not benefit from it. That creates a significant hurdle to overcome. Nonetheless, the prior sponsor successfully completed the study. Today, we have the benefit of 30 individuals who have been exposed to this therapy for upwards of 5, 7, and even more than 10 years of safety experience. I think the conversation with patients might be a bit easier. We will also include approximately half of the patients on the study with chronic conditions, and unlike subacute patients, who you need to catch in a window of 3 to 6 weeks after their injury, chronic patients might have 1, 2, 4, or even 5 years of injury, making them easier to identify. However, there is a confounding factor; perhaps someone living with their injury for 5 years isn't as interested in clinical trials as they may have been when they were coming to grips with their new circumstances. I can’t make projections, not because I don't want to, but because it's very difficult to predict what it will look like with this particular design. I have been involved in and successfully completed the largest ever clinical trial in a hematological disorder while running a small company, and I was going head-to-head with Pfizer with a very similar 350-patient study. My organization was able to successfully complete our study faster than Pfizer, despite all their resources. So I believe we have a great team here. We have some new hires, and I think that will put us in the best possible position to get that enrollment as quickly as possible and get those answers so we can move on to what we're more excited about: the ultimate question of a controlled study and how much benefit patients get from this treatment.

On that, just given you have the free—essentially a free look now at the thoracic and chronic patients, which you haven't really previously been exploring. Do you have any idea of what sort of improvement you would want to see to consider developing those indications further?

Yes. The right answer, informed by many conversations with people with spinal cord injury, is anything. The non-lived experience community has this idea that therapies should allow people to throw away wheelchairs and run marathons. It's unfortunate because when you spend time with individuals who have spinal cord injuries, you learn that often they want just the next little thing. Whether that is more mobility for independence or creatively using it to achieve some personal goal doesn't matter. The consistent message we hear is, 'Boy, wouldn't I give anything to have just a little bit more.' It could be bladder control or improved upper extremity mobility. So I think that if we observed anything in someone who had confirmed plateaued and that we felt there wasn't conflicting information from, for example, becoming vigorous again on a physical therapy routine they previously abandoned, I believe that any signal would drive some new investigation into animal models and perhaps a small pilot study of that larger patient population.

The next question comes from the line of Sean McCutcheon from Raymond James.

Can you speak to the 2 patients that you don't have 24-month data follow-up for within the limited lab coverage subgroup in the Phase I/IIa? Can you give some balance for the variability on the coverage within that subgroup and how much of the target lesion was covered? And then additionally, what's your commentary on the trajectory of the BCVA in the extensive coverage group from month 12 to month 24? It looks like you are starting to see a decrement there, maybe in parallel with the fellow eye group.

Thanks, Sean. I appreciate those questions. Those 2 individuals opted not to continue in the study for personal reasons, I suppose. They were not part of any serious adverse event or something like that, and neither of them was among the 5 'specials' that we have widely discussed. Regarding the BCVA trajectory, I wouldn't place much emphasis or analysis behind the movement from 7.6% to 5.5%, although it may reflect light erosion of treatment effect. If it does, I actually think that's great because that means at 36 months, they might be plus 3, and at 48 months, they might be plus 1, right? It suggests that it shows a slow tail of change in visual acuity. Two letters probably more accurately reflects noise in the system within a relatively small patient population. I would similarly point to the contralateral eye, which, of course, as I've stated before, won't follow a perfect trajectory. Still, the fact that it was 2 letters under at 24 months could have very easily been 1 letter above or 5 letters below. I think within a small number of letters you can rightly say it's noise and not conclusive. I wouldn't have been entirely surprised if at 24 months, it had been 9 letters instead of 5 letters, and I also wouldn’t have been surprised if it had been 2 letters instead of 5 letters. A critical takeaway is that 24 months is a significant amount of time. Trying to read into what happens between 12 and 24 months reminds me of some of our peers that now have approved therapies who have been very clever with some of their subgroup analyses. I am trying to take a more generalized view of what we are seeing compared to the natural course of the disease and say, look, we know that sham-treated or untreated patients essentially lose much more than this. Maybe we lost 2 letters going from 12 to 24, but the patients that we think are the best match lost 7, 8, or 9 letters over those 24 months. Therefore, we think that’s a 13, 14, 15 letter difference compared to where we are. Now, you're starting to look at numbers that likely are attributable to the intervention we provided.

Got you. And just one quick follow-up on that. You said that the patients at baseline had foveal involvement within the treatment group and that the patients in the fellow eye had better vision. Do you know the proportion of fellow eyes that had foveal involvement?

I do not. I don't know if the fellow eye was required to have foveal involvement. As I know, the treated eye, in all cases, did have foveal involvement, but we would have to circle back with you and provide that, which we're willing to do. I just don't know it off the top of my head. Appreciate that question, Sean. Thank you.

At this time, I will hand the call back to Brian Culley.

Excellent. Well, thanks, everyone. We've done a little more than an hour, so we'll wrap up. I appreciate your time and thanks for your continued interest in this exciting work. We look forward to our next call.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.