Lineage Cell Therapeutics, Inc. Q2 FY2025 Earnings Call

Welcome to the Lineage Cell Therapeutics Second Quarter 2025 Conference Call. 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, reproductions, or transmissions 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, Desiree. Good afternoon and thank you for joining us. A press release reporting our second quarter 2025 financial results was issued earlier today, August 12, 2025, 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 sections in today's press release and in the company's SEC filings, including its most recent annual report on Form 10-K and in subsequent SEC filings. 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 appreciate you taking the time to join us on the call today. I will begin with some recent updates on the OpRegen program, then say a few words about how OpRegen's progress is driving a new strategic direction for the company. Then I will review details around the first participant we treated in our spinal cord program before handing off to Jill for financials and then Q&A. As a reminder, OpRegen is an off-the-shelf RPE transplant for patients suffering from dry AMD with geographic atrophy. Last quarter, our partners, Roche and Genentech, provided an update on patients treated in Lineage's Phase I/IIa clinical trial, which showed that the anatomical and functional benefits, which we first reported have lasted for three years. Notably, the five patients who received full coverage of OpRegen across their area of atrophy had a mean gain of vision of nine letters. In contrast, these patients' untreated eyes lost eleven letters, which means that at three years, there is a twenty-letter difference in mean visual acuity between OpRegen treated and untreated eyes in individuals who received OpRegen cells across their GA. These effects were also reported at one year and two years, reflecting a consistent and durable treatment effect. And because vision gains are not known to occur spontaneously in the natural course of this disease, we believe these effects are increasingly validated with each analysis, especially as the untreated eyes continue to worsen. Importantly, the loss of eleven letters in the untreated eyes on this trial matches recent results reported in the journal Retina, which showed data on more than 18,000 dry AMD patients' eyes for as long as three years. Human beings have not shown themselves capable of regrowing retinal tissue or reversing the damage from dry AMD on their own. So, with each passing year, the maintenance of vision gains and the growing delta between treated and untreated eyes seems to be adding support to OpRegen having the potential in some patients to be a one-time functional cure and challenging the long-held view that GA is an irreversible condition. In addition to these exciting results, we can now point to three other companies with RPE suspensions in clinical development, which this year followed Lineage and reported that they too have observed gains of vision in GA patients following an RPE transplant. Notably, one of those companies is Astellas, a global leader in regenerative medicine. So while this is admittedly an entirely new therapeutic approach, there are now four independent groups reporting vision gains from an RPE transplant, which in the aggregate reflect more than 20 individuals exhibiting an effect which is known to not occur naturally. From our perspective, these new reports of positive outcomes using RPE cell transplants are welcome because they provide independent validation of this mechanism, but they do not create a lot of concern for us because not only is Lineage the farthest along in clinical development, we also believe we are in the best overall position to capture the large commercial opportunity offered by GA, an opportunity which does not appear to be being satisfied by the currently available anti-complement drugs. In particular, we expect that our alliance with Roche and Genentech will provide the clinical and development expertise and the financial backing to conduct the trials necessary for approval, and if approved, the commercial infrastructure to launch an ophthalmology product on a global basis. To support our partner, our recently reported accomplishments in cell manufacturing have produced a GMP banking and production platform capable of generating millions of doses of our product candidates in a xeno-free 3D culturing system. And as a fourth competitive advantage, we believe the ongoing Phase IIa clinical trial being run by Genentech will provide insights into surgical procedure and delivery methods, which may further extend our existing leadership position. While there is still much to be done and no guarantee of positive results continuing, we do note, in addition to the data and positioning I just described, that there is a growing list of events which seem consistent with things moving in a positive direction for OpRegen. This list consists of our partners seeking and obtaining RMAT designation, adding additional sites to the ongoing Phase IIa trial, acquiring proprietary delivery technology and engineering expertise from a third party and continuing to highlight OpRegen results at major medical meetings. All this activity has occurred against a rigorous pipeline prioritization, which Roche conducted last year, leading to the termination of multiple programs and alliances, but which, to our knowledge, has not impacted the OpRegen program. We are, of course, encouraged by what these data and events may indicate, but I will remind everyone that we do not have access to the data from the ongoing Phase IIa trial, and we do not know the timing for any such updates or other development decisions which may get announced. But given what appears to be a growing list of asymmetrically positive indicators for the successful continuation of the OpRegen program, we are increasingly thinking about how we can continue to grow and capitalize on the clinical, technical and financial success that we're anticipating from OpRegen. To that end, we have taken preliminary steps into several new therapeutic areas, which we think can capitalize on our directed differentiation expertise and recent manufacturing accomplishments. As we demonstrated with the resonance program for hearing loss, we were able to generate an entirely new cell type and advance it into preclinical testing in about one year, and with an approximate R&D investment of just one million dollars. That program continues to advance in the preclinical setting, and we think we can leverage that experience to work on additional cell types and have those programs built from the start on our preferred proprietary platform. If we're successful, this strategy may be able to create additional opportunities for early-stage funded partnerships while, at the same time, expanding and diversifying our pipeline beyond OpRegen. There are three main reasons why we plan to move in this direction. The first is that if OpRegen continues to advance, we believe we will not only receive the approximately thirty-seven million dollars in proceeds from the exercise of issued warrants, but also we'll be transitioning our manufacturing and quality activities to Genentech, which frees up capacity and capital for us to do other things. The second reason to launch new programs is that Lineage has reduced to practice a platform capability consisting of both manufacturing and directed differentiation. And that platform is not limited to just RPE cells. We have invested in technology and innovation using RPE cells as the prototype, but our platform technology resides above the generation and administration of RPE cells. So, we can take the discoveries that have already been funded by our prior investments and apply them to new programs, thereafter potentially attracting additional funded partnerships. Third, because the biotech markets remain challenging, we want to be mindful of our cost of capital. Over the past few years, we have invested only about thirty million dollars per year, which is lower than the total annual burn of many of our peers, but we remain in a prolonged period of sector underperformance. So, we want to be considerate of the dilution of traditional capital raises and be more aggressive about funding our progress through non-equity dilutive transactions. That means we'll be focusing on five things. We want to enter into deals which partly or completely fund existing product candidates. We want to create new assets which can attract such funding. We want to capitalize on our unique manufacturing capability to solve issues which impede others' programs. We want to obtain grants like the CIRM CLIN2 grant we applied for in June. And finally, we want to complete activities required to collect milestone revenues from our partnership with Roche and Genentech. These are all strategies we are evaluating or employing, to help us reduce our dependency on the equity capital markets while still advancing our programs through significant milestones. Overall, while we will always remain open to all sources of capital, we believe successfully employing this strategy is the best path toward increasing the value of the company's shares. Moving on, I next will provide an update on OPC1, our off-the-shelf cell transplant program designed to increase mobility for people who have suffered from a spinal cord injury. To date, OPC1 has been administered to thirty-one individuals with acute severe spinal cord injuries in Phase I/II clinical trials. And the long-term safety and efficacy data we have collected so far is both promising and worthy of further investigation. However, we had two areas of improvement we wanted to complete before we would feel ready that OPC1 could successfully complete a later-stage trial. The first area of improvement is delivery, and the second is manufacturing. Regarding delivery, last week, it was a privilege to announce that we had administered OPC1 for the first time to a chronic injury participant. This is an important milestone because chronic injuries represent an additional and larger potential addressable population for this experimental therapy. Treatment occurred in what we call the DOSED study, which is the third clinical study of OPC1 and is evaluating the safety of a novel system designed to deliver our proprietary cells without stopping ventilation during treatment. The first participant in DOSED was neurologically complete SCI injury AIS Grade A, with a single neurological level of injury between T1 and T10, and the novel delivery system successfully administered the intended one-time injection of ten million OPC1 cells. In addition to the safety and performance of the new device, we also will be collecting functional assessments, which gives us the opportunity to investigate any signals of efficacy that may arise. We believe the device we are testing in the DOSED study will be superior to the original delivery system in two ways. First, it's easier to use and deploy to clinical sites. But more importantly, the new device is intended to allow a dose of cells to be administered over four to five minutes without stopping the participant's respiration. Previously, it was necessary to stop ventilation when you deliver the cells. So if this device is proven to be safe and effective, this would be a significant enhancement to the safety of the procedure. In addition, this delivery system is compatible with a forthcoming immediate use formulation of OPC1 that we developed and which eliminates the complex DOSED preparation steps required with the original clinical material. Importantly, the first time we used this device in a clinical setting, it successfully delivered the cells to the target locus, which was an important risk-reducing event for this new device. We still need to conduct this procedure in a range of injury types, but having the first administration via success was a great milestone for the team. And with some increased confidence, we next look forward to opening the study at additional sites and building on the promising work and results observed in prior studies of OPC1. The second area of OPC1 improvement I mentioned is our new manufacturing process for which we have increased the scale, purity and control of the cells we make, and we developed a new immediate use formulation, which eliminates the lengthy dose preparation steps that were required with the original clinical material. Subject to clearance from the FDA, our plan is to introduce the cells from this new and improved process into the open enrollment phase of the ongoing DOSED trial. In parallel with DOSED, we also are working on the design of a larger clinical trial with a focus on collecting specific and clinically relevant endpoints, which would help address the well-documented challenges of data collection in this patient population. When all three of these activities have been concluded, the design, the device and the cells, we believe we, either alone or with a partner, will be in a position to conduct a larger clinical trial of OPC1. And finally, at the end of June, we also submitted a clinical grant application to CIRM to request support of the ongoing DOSED study and are currently awaiting updates from the CIRM review process. With that, I'll turn things over to Jill for a review of our financials.

Thanks, Brian, and good afternoon, everyone. As of June 30, 2025, our overall cash position was $42.3 million. This capital is expected to support our planned operations into Q1 of 2027, which we believe will allow us to reach multiple milestones and events. As we have previously discussed, we may receive $37 million of capital if Roche and Genentech publicly disclosed the intent to advance OpRegen into the next trial, provided our share price is above $0.91 and other customary conditions are met. And as Brian just reviewed, we also continue to pursue non-dilutive sources of funding such as the milestone payment we are eligible for under the Roche-Genentech collaboration agreement, program grants like the CIRM grant and additional collaborations, which we may elect to enter into the future. Now, let me review our second quarter results. With respect to our second quarter operating results, we largely came in line with our historic periods. Total revenues were $2.8 million, a net increase of $1.4 million as compared to $1.4 million for the same period in 2024. The increase is primarily driven by more collaboration revenue being recognized from deferred revenues under the Roche agreement, as well as from deferred revenues recognized following termination of the VAC platform-related collaboration agreement. Operating expenses were $22.5 million, an increase of $5.2 million as compared to $7.3 million for the same period in 2024. The overall increase was non-cash and driven by a $14.8 million expense recognized for the loss on impairment for the intangible asset related to the VAC platform. R&D expenses were $3.1 million, an increase of $0.2 million as compared to $2.9 million for the same period in 2024. The net increase was primarily driven by greater activities in our preclinical programs compared to last quarter. G&A expenses were $4.6 million, an increase of $0.2 million as compared to $4.4 million for the same period in 2024. The net increase was primarily driven by more costs incurred for services provided by third parties. Loss from operations was $19.8 million, an increase of $13.9 million as compared to $5.9 million for the same period in 2024. This increase in loss was primarily driven by the impairment expense of $14.8 million related to the VAC platform, which is a nonrecurring transaction. Other income reflected other expense of $10.6 million compared to other income of $0.1 million for the same period in 2024. The net change was primarily attributed to the quarterly fair value remeasurement of the value of the warrant liabilities of $12.7 million, primarily due to an increase in our share price as compared to the prior quarter, and this was partially offset by $1.7 million for exchange rate fluctuations related to our international subsidiaries. The net loss was $30.5 million or $0.13 per share compared to a net loss of $5.8 million, or $0.03 per share for the same period in 2024. The change was primarily driven by the loss on impairment expense related to a 2019 acquisition and the quarterly fair value remeasurement of the warrant liability. As you can see from our financial results, we continue to demonstrate a commitment to fiscal discipline and always are seeking to strike a balance between our cost of capital and any investments we make in our pipeline. With that, I'll hand the call back to Brian.

Thanks, Jill. I will summarize by saying that we remain confident in the potential for OpRegen to drive positive clinical outcomes in dry AMD, and we're encouraged by our partners' continued signs of commitment to the program. We also believe the independent evidence generated by other RPE cell transplant trials supports and elevates the evidence. Second, we're planning for a successful future by seeking to capitalize on our investments in our cell transplant platform and use recent manufacturing achievements as a foundation from which additional programs can be advanced via funded partnerships or independently, depending on what makes sense at the time. And third, we are steadily advancing OPC1 by ensuring it has the necessary attributes to qualify for later-stage clinical testing. As always, we appreciate your support and belief in our vision. And with that, operator, we are ready to take analyst questions.

And our first question comes from the line of Jack Allen with Baird.

Congrats on all the progress made over the course of the quarter. Maybe the first one I'll ask is on the DOSED study. Congratulations on getting that first chronic patient DOSED. I guess, I'd love to hear some more context around how quickly you can enroll patients in this trial. Are there any staggers for the initial couple of patients DOSED? And then kind of looking down the road here, but how should we think about the potential cadence for disclosure of data? I've long thought that if you could see a meaningful result in a chronic patient, that could be quite meaningful. I'd love to hear any thoughts you have there as well. And then I have a quick follow-up as well.

Thank you for your question, Jack. We currently face challenges in predicting enrollment because we lack prior experience with chronic patients; our experience is primarily with subacute patients, and there aren't many relevant trials we can reference. We believe there are compelling reasons for patients to participate in a study like this, and generally, patients with spinal cord injuries tend to be supportive of exploratory or experimental treatments. However, predicting enrollment is challenging. Our main goal with the first patient was to ensure successful administration, gather learnings, and make any necessary adjustments for subsequent patients. The FDA supports this approach, as we have a staggered enrollment process. The first patient we treated was an ASIA level A, which was a requirement, while the second patient will be ASIA level B, and the third can be either A or B. We do have specific criteria, and our plan is to stagger four patients. Following the first administration of OPC1, we will review the data with a safety monitoring board after about thirty days, which will allow us to proceed with enrolling the next patient. There will be some weeks or even months of waiting, especially when we reach the subacute phase, but we aim to mitigate this through effective enrollment strategies and additional locations. We chose not to implement these strategies until we had enough information to justify the investment. Now that we have that information, I see this as a significant risk reduction event since we successfully administered a new device. Regarding the timing of data release, it will coincide with the enrollment process. Historically, we have been very transparent with data sharing, as we did with OpRegen, and I expect we will maintain that approach with OPC1. It would be fascinating and exciting if a chronic patient shows improvement in their functional performance. However, we want to ensure that any initial signs of progress have stabilized and that we thoroughly understand them. Thus, this might not be something discussed in just a few weeks, as we will be monitoring these patients for up to a year. If we find something noteworthy to report, we will do so with a solid level of confidence, just as we did initially with OpRegen when we first saw evidence of what we termed retinal restoration. It took several months before we felt comfortable sharing that publicly, as it was a significant claim about the potential of the therapy. We want to be cautious before making any bold statements to ensure we fully comprehend any observations. Nonetheless, we are optimistic that a patient receiving a clinical dose of OPC1 may experience noticeable performance improvements during this trial.

Got it. Got it. Yes. Very exciting to see that really get into the clinic and get underway here. Maybe just two more quick follow-ups for me. I guess the first one I'll toss out there and see if I get any response. But any additional color as it relates to the enrollment in the Phase IIa study? I know it's being run by Roche, but I know that's a key catalyst for investors following the lineage stock. And then the other question I had was on the manufacturing progress you made over the course of the quarter. How are you thinking about timelines to potential partnerships? Are there any discussions ongoing at this point? Or is it really in the infancy as it relates to reaching out to potential partners?

So, thank you for those questions. So, I will have no comment on enrollment for all the good reasons that I've explained several times, but I appreciate your boldness in asking the question. But with respect to manufacturing timelines, manufacturing is, in fact, core to those five strategies that I outlined earlier on the call. When I am describing those strategies as important areas of focus, I'm referring to that being a 2025 effort. It can certainly continue into 2026, but I would be profoundly disappointed if we haven't put up some valuable points that fit into those five strategies before we get to the end of the year. So, I don't want to be very specific. Obviously, some conversations are going to be more advanced than others, and there could be no guarantee that anything we're working on is going to come through. For example, the CIRM grant, I think, is a really great initiative, but I think the timing of that for a decision is probably November. Everything else is to be determined. But what I described there is not speculation lacking basis. We have active conversations, and we think we're going to be able to meet some of these internal objectives in these areas of focus before year-end.

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

Brian, so one question on OPC1. You gave a lot of great answers there. With regard to enrollment, how are you working with the sites hand-in-hand to be able to identify patients, especially since we're assuming, and you've told us that the sites have been already trained on the new device.

Thanks, Joe. We have a team with a lot of experience in conducting clinical trials. I'm not an active operator on that initiative, but I also have a lot of experience having successfully completed the largest to-date clinical trial in sickle cell disease, and that was in seventy-five sites in fifteen countries, almost four hundred people participate in that study. One of the core tenets that I've developed over the years is really around the relationship. And I think that Lineage has done a truly exemplary job through some of the relationships we've established with the leading groups in spinal cord injury. Of course, the Christopher & Dana Reeve Foundation comes to mind, but we also have a number of other very strong relationships in the space. Owing in part to the spinal cord injury Investor Symposium that we've now successfully produced three years in a row. So a deep understanding of the motivations, incentives and obstacles that patients have to participating in studies as well as having not just the patient perspective, but also a real commitment to addressing site-by-site issues. So site-specific hurdles and objectives. As one kind of interesting example, you might imagine a site could be on the border and there could be a lot of people who speak a different language. And so having your materials in multiple languages. I don't know that it's necessarily relevant to this particular study, but it is an example of sort of a nuanced thinking about making sure you're making it easy and accessible for the patient. So, we'll employ a lot of these strategies. Most of them are inexpensive. Of course, additional sites can help. CIRM involvement can help. And I think if we take all of these initiatives in the aggregate, it gives us the best opportunity to secure not only the initial thoracic injury patients but also thereafter, the cervical injury patients. And we imagine that approximately half of the patients on the study will be chronic and approximately half will be subacute. The important distinction there, and I'm pretty certain you're aware of this, is that chronic patients can be more easily identified because they exist. They're under care and varying degrees, whereas subacute patients have a window of opportunity where you have to sort of catch them in the net. So, I think as a general matter, subacute is more difficult, but we think we'll be able to get everything we need in order to clear the use of this device in larger settings.

No, that's helpful. I appreciate that. My other question relates to your prepared comments about the pipeline and the future. First, your manufacturing capabilities and the potential for business development are very promising. Hopefully, we'll see something in the near future. Specifically regarding your own assets, you have been discussing hearing loss for some time, and I believe I, along with others, have asked you about it. When do you expect to see preclinical data from this program? Additionally, regarding other programs and new cell types, have you had any early inquiries or outreach in terms of business development?

It's a great question, Joe. Generally speaking, outbound efforts are definitely more applicable here because our company isn't as widely recognized as some others in the same field. This is frustrating for me since we put in a lot of effort to raise awareness. As such, we are more inclined to engage in outreach, which is normal. We had to promote OpRegen to make our efforts known, ultimately leading to valuable transactions with Roche and Genentech. However, there's another aspect that may not be fully appreciated: our extensive insights from years of manufacturing and directed differentiation work, which give us a unique perspective on where to best apply our technology, especially in scenarios where advancements wouldn't be possible without it. We have compelling narratives to share with potential partners. But just like attracting investors, it's about presenting data and having extensive discussions before meaningful relationships form. Based on my professional experience, I don't take business development conversations lightly unless I'm certain about the potential for follow-through. We bring more to the table than just being open for business; we employ a strategic approach in our conversations about our capabilities to identify the best uses for our technology, especially since we can't manage multiple campaigns simultaneously. We have become more selective with our initiatives. Over the past year, we've established a rigorous system for assessing what should be kept in-house longer versus what might be better suited for partnership. I hope this answers your question adequately.

No, it certainly is. And I just wanted to just go back a little bit to see if there's any potential guidance on preclinical data from the hearing program.

Thank you for circling back on that. I neglected to mention the preclinical work is absolutely ongoing this year. We don't have guidance yet as to when we think there could be some reportable information. But as soon as we have such information, I'm sure we would enthusiastically talk about it. But we do not have that kind of data in our hands yet, but that work absolutely does continue.

Our next question comes from the line of Madison El-Saadi with B. Riley Securities.

Congratulations on your progress. Can you provide an update on your achievements in in-house GMP production? What are the next hurdles or milestones for your internal manufacturing scale-up? Should we anticipate that this will not only accelerate potential partnerships, but also lead to more platform-based partnerships in your framework? Alternatively, could these partnerships be asset or single-cell based? I'm curious if this could result in Lineage capturing greater economic benefits during the early negotiation phases.

Yes. Thank you, Madison. I think there are some really interesting specific ways of answering the question that you and others will need to wait a little bit further for. But as a general matter, I think there's insufficient appreciation of the difficulty of the purity, scale, reproducibility of a GMP banking system and production system. So, without going into a lot of detail about specific hurdles for specific cell types, although those certainly do exist, I think manufacturing as a general matter needs to be viewed shoulder to shoulder with generating provocative clinical data. Right now, I think that there's so much attention on clinical data that people tend not to ask tough questions about manufacturing. We welcome tough questions on manufacturing because we're very confident in what we've been able to do, and we're happy to have those conversations. With respect to platform versus asset, I think that the true value creation is the ability to generate multiple assets from what is at least partly an identical platform. That maximizes the return on your investment, and that maximizes the efficiency of your business because if you have a single facility and even a single, albeit large team that are working on different cell types, you are cranking out a lot of different discrete assets from a fixed cost, and that makes your proportional investment into each of those assets a lot smaller. And by the way, it's hard for me not to mention that compared to the process of developing a new small molecule where you might have to generate and screen a library of compounds. You have to develop a potency assay. You've got structure activity relationship. You have so much work. In our case, it's about capitalizing on our lessons and intellectual property that is tied to the directed differentiation and control of discrete cell types. So, I think that the platform is the engine by which discrete assets can be generated, and that's the maximum monetization of this platform outside of an acquisition exercise. With respect to the economics, as we demonstrate greater and greater capabilities and as our expertise is validated by others and as we learn more, I think our ability to extract greater value from deals is supported and enhanced. There are some specific examples which come to mind but they are part of our business development strategy. So, they're hard for me to point to. But again, as a general matter, when you enter into a deal, whether it's with a large pharmaceutical company or a smaller company with a very innovative and novel technology, inevitably, things creep up, which you can learn from and say, okay, I'm going to do this a little bit differently next time. So, I think similar to the question that was asked previously, I think our understanding about the challenges with specific cell types gives us somewhat of an edge in thinking about where the opportunities lie and the mix of opportunities that we would have in a basket of a pipeline that has diversity. And I think that overall, that is the right way to generate value from this platform and make this a very successful business.

Got it. Secondly, regarding your recent visual acuity data, it seems that greater coverage leads to better results. Should we assume that most patients will benefit from this increased coverage? I'm curious if graft coverage is the main factor contributing to differences in efficacy among various peer programs.

That's an important question as it opens up the discussion about whether everyone can benefit from this therapy. There may not be genetic variants or off-target effects like those seen with small molecules. What Lineage demonstrated in its Phase I/IIa trial is that placing the cells thoroughly in the area of atrophy yields the most significant and positive results. Delivering the cells away from this area may have some benefits, but it is clearly less effective than targeting the cells comprehensively within the area of atrophy. Genentech's surgical optimization study supports this perspective, as increasing the successful delivery rate of these cells should lead to improved clinical outcomes if you believe that these cells work through direct transplantation rather than indirect effects. Our company emphasizes that we are not using undifferentiated cells just to modulate immune responses but likening our work to bone marrow transplants, which have proven to be life-saving for many decades. I believe that anyone with this condition could potentially benefit if the cells are placed correctly and remain functional and durable. This is exciting because it contrasts sharply with many gene therapies or other approaches that require market segmentation to find their target audience. We aren't aware of any genetic or other factors that would exclude anyone who meets our enrollment criteria from being a suitable candidate. Ultimately, the direction of this will be determined by our partners, and currently, this remains an experimental therapy in clinical testing. While it's difficult to provide definite answers, we believe that delivering the cells to the intended target site is crucial across various conditions, including spinal cord injury and dry AMD with GA. This understanding influences how we explore new opportunities, reinforcing our belief that this is a transplant technology rather than traditional cell therapy.

Next question comes from the line of Jason McCarthy with Maxim Group.

Congrats on the great progress. So, I just wanted to start off. You mentioned that you wanted to expand the sites for the DOSED study. About how many sites do you anticipate on expanding to?

Yes. Thank you for the question. We don't yet know. It will actually connect back to the first question that we received from Jack Allen insofar as we definitely want to go to experienced and capable sites. But unless we know what the enrollment rate is going to look like, it's hard for us to say how many sites will be necessary to complete enrollment in a reasonable time. Our objective initially was just to get a first site up and to get that first patient treated and show that the device could be used successfully before engaging in any meaningful expansion. Although to be clear, we have already initiated the process with our second site, and it's moving along well. So we'll at least expect to have a second site open a little later this year. And then we'll start asking questions about whether we're going to three, four, five, six and how many sites would be needed. But ultimately, with the total enrollment between six and ten patients, we don't think that it's going to need to be a very large number. And we are focusing, by the way, on California centers as those are the sites that are more eligible for CIRM support for the grant that we applied for recently.

Yes, absolutely. And I noticed in your previous studies that you guys have followed up seven years, thirteen years. So, beyond your one-year follow-up, do you guys anticipate to follow and evaluate these patients for longer? And if so, how much longer do you expect?

Yes, we will follow these patients for at least ten years. I appreciate you acknowledging that we have one of the longest clinical follow-up periods in our spinal cord studies, with patients followed for not just seven but up to thirteen years. I don't think anyone else in the field has this level of robust safety data. We follow patients not just because the FDA mandates it, but because it is interesting to observe how the treatment effects become more apparent over time, especially in programs like OpRegen for dry AMD. While the FDA has approved agents for dry AMD with just twelve months of follow-up, our data at thirty-six months shows significantly stronger results than at twelve months. There is a scientific and efficacy rationale for longer patient follow-ups; stimulating transplanted cells for spinal cord injuries could lead to more than a year of improvement as patients utilize and build on these new functional cells. We are still uncertain about multiple dosing and don’t know the upper limits of what this technology can achieve, but there are substantial reasons to monitor patients over several years. The good news is that following up is relatively inexpensive—after the initial period, it typically involves just a phone call and some basic assessments, so it is not overly burdensome. However, it sometimes raises concerns for investors who interpret a ten-year follow-up as a lack of data for that duration. It's essential to note the primary endpoint for the studies, as that indicates the main reporting deadline. For our DOSED study in spinal cord, the primary endpoint is only thirty days, while typical efficacy follow-ups for spinal cord and dry AMD are generally around twelve months.

Right. Absolutely. And lastly, just kind of touch upon what you briefly mentioned. Do you think there's a difference in what threshold of benefit you'd need to see, for example, the subacute group and the chronic group in order to consider it meaningful? For example, would you think that you would need to see a smaller benefit on the chronic to be easier to resolve than the subacute based on its disease trajectory?

That's a great question. These patient populations are indeed distinct, primarily based on when their injuries occurred, and they have different needs. It's essential for any therapy being developed to address the specific requirements of each group. For chronic patients who have reached a plateau in their functional abilities, what is considered clinically meaningful will likely differ. It's easier to detect improvements in chronic patients because they have a personal reference point, such as not being able to perform a specific task for the past eighteen months. After treatment, if they can perform that task, it's a clear indicator of progress. This internal control isn't available for subacute patients, who require an external control since their injuries are recent, and their baseline was full and normal functionality before the injury. We see these groups as separate in terms of data analysis. The FDA actually recommended using this new delivery system for chronic patients, and we were happy to accept that advice.

And our last question comes from the line of Sean McCutcheon with Raymond James.

You mentioned bridging to the new formulation of OPC1 within the DOSED IND. Can you speak to the steps you're taking to that end and kind of when within the study you think you'd be able to do that? And then beyond the device study, what insight do you have into how the FDA may be thinking about endpoints in the SCI population, whether that's subacute or chronic given the general lack of precedent here?

Yes, those are two important questions, Sean. To begin with the new cells and our updated manufacturing process, we will conduct a comprehensive set of comparability testing and present the findings to the FDA. This will include in vivo testing, where we perform surgeries in preclinical models to demonstrate activity and treatment effects. That work is mostly complete, and we are currently compiling the information to present it to the FDA in a clear and thorough manner. The wet lab work is finished, and we are now focusing on some bioinformatics, which has significantly advanced since the inception of this program with a different sponsor. Ultimately, we aim to introduce the new formulation and manufacturing process in the latter part of the ongoing DOSED study. There are at least four patients involved in the staggered approach before moving to open enrollment. Whether we are ready with patient five or need to wait until patient ten depends on the FDA's feedback. We haven't set up a meeting with the FDA yet to discuss this, but we will share that information when we do because it will help clarify the timeline for the new cells. Overall, the comparability work is nearly done, and we are pleased with the results, which we believe the FDA will also appreciate. The new process is much cleaner, and we've significantly increased the scale, some of which has already been shared in our corporate presentations. Regarding the FDA's perspective on subacute or chronic patients, I must say it's challenging to gauge their current stance given the turnover among key personnel. We haven't met with the FDA yet to discuss the design of a controlled or larger study, and our previous meetings with prior sponsors don't necessarily reflect the current agency outlook. It's unclear if their approach will be more or less flexible moving forward. When we are ready, we will initiate discussions with them. We're optimistic about the initiatives in the field, including those led by Lineage, seeking to create a patient-focused drug development dialogue with the FDA. This is essential for having open discussions about suitable endpoints. From our side, we engage with individuals suffering from spinal cord injuries and have consistently observed that even minor improvements in mobility can greatly enhance quality of life. This key information needs to be carefully presented to the agency, ideally not just by Lineage but also by various independent experts, to emphasize how even slight treatment effects can significantly change lives. Given the diverse nature of spinal cord injuries, we must find innovative and thoughtful ways to assess endpoints, which will elevate the program's value. As we progress through standard and expected procedures, we will share our insights. However, speculating about outcomes is difficult at this moment due to the considerable turnover in the agency, which we hope will stabilize and reduce risks when we eventually engage in those conversations.

That concludes the question-and-answer session. I would like to turn the call back over to our CEO, Brian Culley, for closing remarks.

Thank you, Desiree. Nothing more to add. I appreciate everyone, and please stay tuned. I think we're going to have a very exciting second half of 2025.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.