Lineage Cell Therapeutics, Inc. Q4 FY2025 Earnings Call

Welcome to the Lineage Cell Therapeutics Fourth 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. Recordings, reproductions, 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, Jamie. Good afternoon, and thank you for joining us. A press release reporting our fourth quarter and full year 2025 financial results was issued earlier today, March 5, 2026, 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 filed today. We caution you not to place undue reliance on any forward-looking statements, which speak only as of today and are qualified by the cautionary statements and risk factors described in our SEC filings. With us today are Brian Culley, our Chief Executive Officer; and Jill Howe, our Chief Financial Officer. I'll now hand the call over to Brian.

Thank you, Ioana, and good afternoon, everyone. We appreciate you taking the time to join us on the call today. We have a great call planned, highlighted by recent warrant exercises that further extend our runway and a positive result for our initial go/no-go development milestone in our islet cell research initiative. I want to start by reminding everyone that we have a significant number of employees who live and work in Israel. And while our manufacturing facility is not located near a metropolitan center, some of our staff do commute from larger cities. Their safety is our top priority, and we are, of course, monitoring the situation. To date and as expected, a few employees and employee spouses have been called into military service, which is similar to what we've experienced and successfully navigated in 2023. We cannot know what the future holds, but thanks to the incredible dedication of the team we've hired, our operations are continuing, and we expect things will continue to progress. Thank you also for the many messages of concern and support I've received from our colleagues and shareholders alike. Moving ahead, as many of you know, cell therapy has revolutionized oncology, saving lives and creating tremendous shareholder value. But the use of cell therapy in oncology is maturing, while the application of cell therapy in fields outside of cancer remains in the early stages. For this reason, we are focused on delivering the next wave of innovation and value creation in this emerging branch of medicine. We'll begin with the exciting results seen from our lead program in geographic atrophy as a testimonial to what cell therapy is capable of. And as that program matures, we have begun turning our focus to how we can apply our manufacturing success and the lessons we have learned from the OpRegen program to evaluate other medical conditions that also arise from the loss of critical cellular function. Our focus on replacing cells that have become dysfunctional or destroyed may fundamentally reshape many treatment and recovery paradigms. Based on our conviction that the OpRegen program has the potential to drive future value, we believe we are uniquely positioned to capitalize on opportunities to develop other kinds of mature differentiated cells for patients, which, in our view, could lead to clinical outcomes currently beyond the reach of conventional approaches. Our work was productive last year, highlighted by us achieving the first milestone under our Roche and Genentech alliance, entering into a funded research collaboration for preclinical development of ReSonance, which is our first internally developed product candidate, and more recently, the launch of our new islet cell research initiative, something I will provide an update on later in the call. But first, I want to discuss two developments in particular from last year that reinforce our confidence in the company's long-term outlook and which helped shape our plans for 2026. First, after relying on just seven clinical sites for more than two years, Roche and Genentech have somewhat suddenly opened ten new clinical sites in the GAlette study in the past nine months, including one announced earlier this week at Duke Eye Center. While we don't have any guidance to share on the timing of any additional trials or data disclosures, we view this surge of site openings as a favorable sign because this activity could support preparations for later-stage trials. And as I've shared on prior calls, there are other actions and readouts that have occurred in the past year that similarly suggest positive forward progress of OpRegen could be underway. The second item we enjoyed last year were the enhancements and milestones we hit with our manufacturing platform, AlloSCOPE. AlloSCOPE purposefully stands for Allogeneic, Scalable, Consistent, Off-the-shelf, Pluripotent Cell Engineering. This acronym highlights the key elements of our core technology. Many of you are familiar with the challenges of autologous cell therapy, such as its high manufacturing cost and donor variability. But with AlloSCOPE, we address those challenges by using the same source cell line for all patients built on a platform we believe is capable of scaling into millions of doses and trillions of cells. This is something that has long been aspired to or sometimes even promised by the field of allogeneic cell therapy. But to our knowledge, very few companies, possibly none, have actually shown that they can perform a large-scale pluripotent cell production process in a GMP setting and use that resulting material in an FDA-cleared clinical trial. But here at Lineage, we successfully established a GMP master cell bank from which we established a GMP working cell bank and generated product that has been used in the clinic. And because the hundreds of vials, which comprise those banks are identical, we are confident that we can successfully repeat the process as many times as needed. We believe this achievement provides credible evidence that the AlloSCOPE cell banking system we built is capable of generating millions of vials of our product candidate. This is no small achievement because it's easy to say you plan to rely on the self-renewing capability of pluripotent cells to generate Phase I trial material. But with complex biologics like cell therapies, the process is the product. So if your early clinical process isn't capable of satisfying commercial scale, then you're developing a product candidate that won't be able to supply the market. This is an essential but often overlooked aspect of cell therapy product development and requires certain investments and commitments to occur in the early stages. As a company with many years of experience in this field, we have had the time to make these investments. This also explains why we embrace the mantra of 'better from the beginning.' We strive to only initiate programs that have a clear line of sight to commercial scale and other critical product features. And from these two significant developments, specifically, the evidence supporting OpRegen's potential advancement by Genentech, along with the successful demonstration of commercially viable pluripotent cell production, we have developed the conviction to apply our platform to the furtherance of developing other cell-based products with the potential to treat various diseases and conditions. I will say a few things about our recent and planned pipeline development later in the call. But first, I want to briefly review the status of our lead programs, OpRegen for dry AMD with geographic atrophy, OPC1 for spinal cord injury, and ReSonance for hearing loss. OpRegen is the most advanced program in our pipeline and serves as a critical case study for our approach to cell transplantation. Dry AMD with geographic atrophy is an increasingly established indication but suffers from underwhelming treatment options. Initial reports from our Phase I/IIa clinical study included improved anatomy, halting of atrophic progression, and improved vision in patients with dry AMD and were unprecedented at the time. From Roche and Genentech's additional analysis of our Phase I/IIa data, it has been observed that a single dose of OpRegen cells can provide visual improvement lasting for at least three years among patients who received the cells at the target location. This is an exceptionally promising finding because dry AMD is a condition that has not been shown to self-resolve and only leads to worsening vision. Equally importantly, three independent groups pursuing RPE transplants have recently reported short-term outcomes similar to ours, providing further evidence in support of this novel mechanism. Although data remains forthcoming from GAlette, Roche and Genentech's ongoing Phase IIa study, it is encouraging to see that our partners have continued to expand the retinal communities exposure and experience with OpRegen. As a reminder, GAlette is a surgical optimization study designed for approximately 60 patients. This study has been running for three years and is an open-label study for which all primary and secondary outcome measures are captured in 90 days. So we infer that Roche has collected and reviewed long-term data from patients treated in that trial, which we expect has informed their recent site expansion decisions. Specifically, after adding only a single site in 2024, Genentech suddenly increased its pace and opened nine new clinical sites in 2025, bringing this study to a total of 17 unique locations, including the new site just added last week. In addition, Genentech previously acquired novel and proprietary surgical delivery devices from a competitor and sought and received RMAT designation for OpRegen. We believe these are all positive indicators that support our expectation of Roche and Genentech's continued advancement of the OpRegen program. And in December, Lineage received its first $5 million payment from the achievement of a development milestone, highlighting our contribution to this process. When you aggregate these and other publicly available actions, we believe they point to a positive future. OpRegen represents a new technology, and we believe that our scalable manufacturing, proprietary delivery tools, long-term safety and efficacy data, and a world-class partnership provide us with valuable clinical insights and commercial capabilities. These factors contribute to our optimism about OpRegen's potential to tap into the multibillion-dollar and largely unmet geographic atrophy market. We are also working towards replicating this promise with other cell types. Moving on to our next cell type, oligodendrocyte progenitors, we are developing OPC1, which is an off-the-shelf cell transplant aimed at enhancing mobility for individuals with spinal cord injuries. OPC1 has been administered in two Phase I/IIa safety trials with sub-acute patients, and the long-term safety and efficacy data we have gathered so far is both encouraging and warrants further investigation. We are currently enrolling participants in the DOSED study, the third clinical study of OPC1, which assesses the safety and innovative delivery system designed to transport our cells to the injury site without interrupting patient ventilation. In addition to evaluating the safety and functionality of the new device, we will be gathering functional assessments from all participants to identify any potential signs of efficacy. This is crucial as we treated our first chronic spinal cord injury patient last year, marking an important milestone since chronic injuries encompass a larger potential patient population for this experimental therapy. Unlike subacute patients, many chronic patients have reached a functional plateau, making any physical improvements more detectable and reliable. DOSED is an open-label study, and the first participant I mentioned recently completed their six-month safety follow-up visit without any significant safety issues reported after treatment. Furthermore, the device operated as intended, which substantially reduces the risks associated with the device we will use in a larger trial. Last month, we broadened the DOSED study to the Greater Los Angeles area by opening a second clinical site at the Rancho Research Institute in collaboration with Rancho Los Amigos National Rehabilitation Center. Jill and I recently had the pleasure of dining with Dr. Charles Liu, the principal investigator, and his team, and we are very excited to involve them in the OPC1 program. Moving next to ReSonance. This is an auditory neuronal cell transplant being developed to treat hearing loss and also marks our first internally developed program. One of our goals during 2025 was to strike deals that partly or completely funded existing product candidates. We accomplished this goal through the partnership we announced with William Demant Invest, which is expected to fund all planned preclinical development for the ANP1 program up to the IND stage. ReSonance was an important test for our business model because it demonstrated that we could conceive of and successfully manufacture a completely new cell-based product candidate on our AlloSCOPE platform in a rapid and efficient way. With a modest investment, we were able to generate new intellectual property and advance ReSonance into preclinical testing within one year. This early data was sufficient to establish a partnership with a world-leading hearing health care company, which also brought us access to specialized technology, auditory experience, and a network of hearing health leaders. We believe this collaboration was an important demonstration of the speed, efficiency, and return on investment that the AlloSCOPE platform can provide and evidence of our ability to replicate our OpRegen collaboration success with another cell transplant program. I next will spend just a moment on AlloSCOPE to provide context to my upcoming remarks about our new islet cell initiative. AlloSCOPE describes a platform on which we can bank and scale pluripotent cells to great numbers before differentiating those cells into discrete types of cells of the human body. It delivers what we consider to be the table stakes necessary to create a commercially successful allogeneic cell therapy, and it is being applied by us across multiple programs and cell lines. AlloSCOPE is a proprietary differentiation and production platform on which our cell-based products are derived from a single initial cell line, conferring consistent, cost-effective, and scalable production. These features should enable us to support the production of millions of doses of a consistent and cost-effective cell-based product. Using AlloSCOPE, we have successfully completed a cGMP production run from our two-tiered cell banking system for two of our product candidates, one of which has been utilized in the clinic. This achievement is notable because it demonstrates our ability to scale a process with the purity, potency, and regulatory quality required to support clinical use, a standard, which we believe sits beyond the reach of many companies and which can become a valuable differentiator for Lineage. With that background provided, I'll remind you that the human body is composed of about 200 different cell types. Because pluripotent cells can develop into any of those 200 types, we have numerous options for directing our resources into creating additional potential product candidates. When considering where we might generate the most value from our process development and directed differentiation capabilities, we recently announced a new research initiative in Type 1 diabetes, specifically targeting a significant problem in achieving successful Type 1 diabetes cell transplant treatment. We have received many inquiries about our entry into this field, so I will take this opportunity to outline our plans in detail. The key point is that we have reached our initial internal development milestone, which means we will proceed to the next phase of internal development. This is important because we already understand that islet cell transplants can be effective. Each year, dozens of patients achieve functional cures using islet cells from cadavers, allowing them to manage their blood sugar without the need for constant and active disease management. However, a significant unresolved issue is the supply. Cadavers cannot provide a commercially viable source of islet cells. Additional challenges such as immunosuppression, patient eligibility, and hypoimmunity also need to be addressed, but we believe the major issue is that no company is currently able to produce islets at the scale needed for a commercial product. We think that the greatest value in the islet cell transplant market will go to whoever can solve the scaling challenge. The reason for this gap is that the necessary dose of islet cells for each patient may reach as high as one billion cells, but mature islets don’t grow easily in culture. Our estimates suggest that commercial viability starts at thousands of doses per batch, meaning that processes must be conducted on a large scale, such as at least an 80-liter bioreactor. However, implementing a differentiation process in an 80-liter vessel requires supplying that vessel with billions of undifferentiated stem cells, which maintain their full pluripotent capabilities and genetic stability. This is where the challenge lies. Traditional 3D expansion can lead to excessive passaging, risking loss of control and genetic changes, while producing billions of cells with conventional 2D methods demands impractical surface areas and poses high aseptic risks. There is an inherent conflict and trade-off between achieving reproducible control and scaling up. Our strategy involves two key components. The first is to use the AlloSCOPE platform to combine the control advantages of 2D culture with the volumetric efficiency of 3D systems, or what we refer to as 5D engineering. I'm proud to report today for the first time that we have actually achieved this milestone and reduced it to practice multiple times at 0.5 liter scale, successfully reaching our first go/no-go decision point with this initiative. We're now evaluating whether we can translate this capability to the next step up into a multi-liter vessel. Demonstrating reproducible performance at an even larger scale is the next step on the path to feeding 80-liter bioreactors of scale, which should be capable of producing thousands of therapeutic doses of islet cells per run. Importantly, this work is all being done pre-differentiation, which means this stage of development is not dependent on finalizing our immune suppression strategies. The second important aspect of our strategy is that we are looking to tackle the bioreactor feeding problem first. We are inverting the traditional development paradigm by focusing on the scale-up of undifferentiated cells first, because once you've shown that you can actually produce your material at scale, we believe the risk profile for the rest of the islet cells project changes materially. That's because we already know that islet can be an effective intervention and have been shown by multiple groups to be successful in preclinical and clinical settings. Similarly, editing strategies and differentiation protocols already exist and provide risk-reducing information in those areas. We may be able to leverage that information if our scale initiative is successful. But no one yet has shown that they can scale islets. We think it's far more prudent to focus first on the unresolved scale problem rather than performing years of expensive studies and deferring the issue of scale for later. Our strategy doesn't fit easily onto a bumper sticker, but if we wanted to print one, it might say 'better from the beginning.' That is how I describe our development philosophy. We enter fields only when we can see the entire path from cell banking through commercial delivery. We look to identify clear go/no-go decision points along the way and we strive to include improvements or solutions to existing methods, processes, delivery, or to the cells themselves in order to have the best overall product profile. I'll conclude by saying that our platform generates assets that share certain essential traits in common, so that each dollar we spend on innovation may apply across multiple programs. While each product candidate is, of course, intended for a different condition and each cell line behaves in a unique manner, the early steps of banking, process development, control purity, and scale have somewhat common features in the way we apply them, which allows us to expand the scope of our pipeline without losing the focus required to succeed in each indication, and uses our capital in an efficient way. I hope that it helps explain our exciting business update. And with that, I'll turn things over to Jill for a review of our financials.

Thanks, Brian. Before presenting our financial results, I want to address some points that may have caught your attention. The reported net loss for the full year is approximately $45 million higher than in 2024. This increase is mainly due to noncash charges linked to our rising stock price over the year, which resulted in higher warrant liability. Additionally, we incurred a noncash charge relating to an asset we acquired in 2019, which we elected to no longer develop. You may have also noticed that the reported costs for OpRegen are higher this year. This is due to a standard accounting treatment applied when recording the expense associated with our downstream obligations after we received the first milestone from Roche and Genentech. If you look at the expenses without this cost, the OpRegen developmental expenses were lower year-over-year. As of December 31, 2025, our overall cash position was $55.8 million, which together with the approximate $5.4 million in proceeds from warrants exercised this March is expected to support our planned operations into Q2 of 2028. This is a significantly higher runway than we guided to during our last call, with the biggest contributors being the $21 million in gross proceeds received from an ATM block trade in November, the warrant exercise of $5.4 million this week along with the achievement of the first $5 million milestone under our Roche collaboration. This revised guidance also does not take into account any other potential sources of funding, including additional milestone payments we are eligible for under our Roche collaboration, or any additional partnerships, which we may elect to enter into in the future. Separately, a large additional source of potential capital is the approximately $32 million remaining of underlying warrants priced at $0.91 per share, which is below our current trading price and which gets accelerated if Roche or Genentech publicly disclosed their intent to advance OpRegen into a clinical trial with the comparator arm. Now I will review our fourth quarter and full year results. Total revenues for the fourth quarter were approximately $6.6 million, a net increase of $3.7 million as compared to the same period in 2024. The increase was primarily driven by higher collaboration revenue recognized under our collaboration and license agreement with Roche, following the achievement of the first milestone, along with the new research collaboration agreement with WDI. Total operating expenses for the fourth quarter were $13.2 million, an increase of $5.2 million as compared to the same period in 2024. R&D expenses for the fourth quarter were $8.2 million, an increase of $4.8 million as compared to the same period in 2024. The net increase was primarily driven by $2.1 million for our OpRegen program expenses and $2.7 million for our preclinical and other undisclosed programs. G&A expenses for the fourth quarter were approximately $4.8 million, an increase of $0.4 million as compared to the same period in 2024. The net increase was primarily driven by personnel costs. Loss from operations for the fourth quarter was $6.5 million, an increase of $1.4 million as compared to the same period in 2024. Other income expenses for the fourth quarter reflected other income of $2.2 million compared to other income of approximately $1.9 million for the same period in 2024. The net increase is primarily driven by exchange rate fluctuations related to Lineage's international subsidiaries. No warrant-related financing transaction costs were incurred compared to the prior year's quarter, and this was partially offset by the noncash quarterly fair value remeasurement expenses of the warrant liabilities. The net income loss attributable to Lineage for the three months ended December 31 was a net income of $0.9 million or $0.04 per share compared to a net loss of $3.3 million or $0.02 per share for the same period in 2024. Next, I'll spend a few minutes reviewing the full year operating results. Total revenues for the year were $14.6 million, an increase of $5.1 million as compared to the same period in 2024. This increase was primarily driven by higher collaboration revenue recognized under the Roche agreement following the achievement of the first milestone along with a new research collaboration agreement with WDI. Total operating expenses for the full year were $51.2 million, an increase of $20.2 million as compared to the same period in 2024. This increase is primarily driven by $14.8 million of expenses recognized during the year for the loss on impairment of the intangible asset related to the VAC platform. R&D expenses for the full year were $17.7 million, an increase of approximately $5.2 million as compared to the same period in 2024. The increase is primarily driven by $1.6 million for our OpRegen program, $0.7 million increase for the ANP1 program, and $0.2 million for our OPC1 program, and $2.8 million for our preclinical programs and other undisclosed programs. G&A expenses for the full year were $18.5 million, an increase of approximately $0.3 million as compared to the same period in 2024. The net increase was primarily driven by $0.2 million in personnel costs and $0.1 million for services provided by third parties. Loss from operations for the full year was $36.6 million, an increase of $15.1 million as compared to the same period in 2024. Other income expenses for the full year reflected other expenses of $32 million compared to other income of $2.9 million for the same period in 2024. The net change of $34.9 million was largely attributable to the noncash fair value measurement expense of the warrant liabilities of $37.9 million, primarily due to an increase in our share price as compared to the prior year period. This increase in expense was partially offset by exchange rate fluctuations related to Lineage's international subsidiaries and lower warrant-related transaction costs incurred as compared to the prior year in connection with the November 2024 financing. The net loss attributable to Lineage for the year ended December 31, 2025, was $63.5 million or $0.28 per share compared to a net loss of $18.6 million or $0.09 per share for 2024. The difference was primarily driven by the noncash fair value remeasurement of the warrant liabilities and the loss on impairment expense related to a 2019 acquisition. Our financial results continue to reflect our ongoing dedication to responsible fiscal management, and we remain focused on balancing our cost of capital with the investments we make to grow and strengthen our pipeline. Let me hand the call back to Brian for concluding remarks.

Thanks, Jill. I'll quickly summarize by repeating two key themes. First, we continue to remain confident in the potential for OpRegen to drive positive clinical outcomes in dry AMD, and we're encouraged by our partner's signs of commitment to the program. We also believe the independent evidence generated by others' RPE cell transplant trials supports and elevates our replace and restore philosophy. Second, we're preparing for a successful future by making new investments in our cell transplant platform and using our recent manufacturing innovations as a foundation from which additional pipeline programs can be advanced either by funded partnerships or independently. We believe our approach offers powerful optionality, which we consider essential for a company at our stage of growth and development. We appreciate your support and belief in our vision. With that, operator, we are prepared to take analyst questions.

Your first question comes from the line of Joe Pantginis with H.C. Wainwright.

Actually, Brian, I have three questions, a strategic one, a technical one, and probably a question you can't answer. So first, on the strategic question, I mean, you have many ongoing programs now with specific cell types, and you also have this broader AlloSCOPE program with pluripotent cells ready to go. How do you look to potentially translate, say, over the longer term with regard to business development strategy around all your various options?

Thank you, Joe, for the first of those three questions. Again, excellent business development team. Clearly, I can point to the Roche and Genentech transaction. I can point to the Demant deal. And of course, these are just things that you've seen. It is normal and common for us to have other interactions, maybe deals that could come together but don't for various reasons. So they're a reliable and productive group. What we can do, what we have the opportunity to do is to take the AlloSCOPE platform and apply it in different ways to generate a basket of assets. Then we can make some decisions that are good for the company in terms of partnering or retaining. We don't have a particular objective to launch any of the products we manufacture, although that's certainly not off the table either. We are really being mindful of our cost of capital, spending, the risk, and our own capability to make decisions about what and whether to partner and what time, assuming that there is an appropriate economic arrangement to be struck at all. So I think the way to maximize the value of the platform that we have developed is in part to generate new assets that can be partnered fairly early and to use some of that capital to offset our needs to rely on traditional capital markets. Through that mix of creating assets that are funded by others as well as adding programs and taking them a little bit further, I think we may be solving to optimize for the best return on invested capital that we can with the technology that we have developed here at Lineage.

That's extremely helpful. And then I guess my technical question is, without giving away the secret sauce here, for the islet cell component that you're working on here, what would you consider to be the rate-limiting step or steps with regard to moving beyond the 0.5 liter scale?

That's an excellent question, and the very nature of the exploratory work is that we do not know. So we cannot predict the linearity of going from half a liter to multi-liter to ultimately up in the neighborhood of 80 liters or 300 liters. There are incredible new technologies that are available that help companies with this work, but it's very difficult to say. I would say this, though, I do think going from 0 to a 0.5 liter was a much larger achievement than what I expect going from a 0.5 liter to 2, 3, or 4 liters will be. The reason for that is that it hadn't been done before. As I explained earlier on the call, it's very hard to get the control that you want from a 2D process and apply it into the scale of a 3D process. So to be clear about one thing here, AlloSCOPE describes our basic platform, our banking, or manufacturing. AlloSCOPE 5.0 is the application where we're essentially tricking cells to think that they're being grown in a 2D environment while actually putting them in a 3D environment. Quite simply, 2 plus 3 equals 5. Perhaps the additional dimensions are scale and cost in that situation. What's exciting about the next step is that if you do have control in the lower mid-liter scale, you could begin to have discussions about pooling that output and feeding maybe an 80-liter reactor, or it could give you some insights and confidence about the linearity as you scale. Not every cell line is going to be amenable and can adapt to these larger scales, and perhaps some of the technologies don't fit well depending on the cell type that you plan to differentiate. So it's very much unexplored territory, which is why I wanted to spend a lot of time talking about it today.

Very helpful. And then I think we're essentially done because I think the next one is unanswerable, as I said. But with regard to the GAlette study, I'm sure you get questions on this all the time. But is there any visibility or anecdotes you could provide with regard to the types of deliveries that Roche might be testing or methods?

There have been presentations at conferences that showcased images of various devices. I'm not certain if those presentations were made publicly accessible online or if they were restricted to conference registrants. Generally speaking, the two primary approaches are delivering transvitreally through the front of the eye or using a suprachoroidal approach, which involves accessing the subretinal space from below. Each method has its own advantages and disadvantages. I won’t delve into all the trade-offs now, but that's a fundamental perspective on delivery to the subretinal space. Within that, there are also more specialized techniques involving different types of needles or methods. If you request the 2025 CTS slide deck from us, you'll find examples of technologies that Genentech has acquired. This is a reminder that the study in question is focused on surgical optimization. They will be examining various patient cohorts to determine what methods are effective. They may experiment with some approaches that may not yield positive results and choose to abandon those, which is a sensible decision. They might also discover methods that perform well and decide to explore them further, which is both reasonable and encouraged. This study is not about analyzing responders, so it's not a matter of achieving a specific success threshold from a sample of 60. We understand that optimal results occur when the cells reach the subretinal space. Hence, it’s logical to try to simplify that process as much as possible before advancing to larger trials. We are optimistic that the developments so far indicate positive progress. If things were going poorly, there would have been ample opportunity to discontinue this initiative. We also remain confident that our partners are adept at balancing risk and reward while progressing as swiftly as they can, without compromising their leadership in this field.

Our next question comes from the line of Jack Allen with Baird.

Congrats to the team on all the progress made over the course of 2025. Looking forward to a productive 2026. Just two quick questions from my end. The first one is on the OPC1 program. I was hoping if you could provide some more color on the timing of the functional measures? And anything you can also add as it relates to the baseline characteristics of that first participant in the study there being a chronic participant. I'm curious as it relates to their baseline functionality. And then secondly, on OpRegen. I know you guys have presented 3-year data in the spring of 2025. I'm curious if 4-year data could be on the docket as it's been great to see the continued durability response as it relates to OpRegen.

Thank you, Jack. I'll address your second question regarding our partner. I'm not sure about their plans for the 4-year data. However, we are pleased that the benefits observed in year one have persisted into years two and three, which logically aligns with the idea of a transplant that is not rejected. This is a promising indicator, especially given that the untreated eye of the same patient continues to deteriorate in vision. The difference in clinical benefits and our confidence in those benefits seems to improve over time. Regarding OPC1, I want to remind everyone that the OPC1 study focuses on safety and performance, rather than efficacy. We are collecting a limited range of functional measurements, including the E-ISNCSCI exam and quality of life metrics; SCIM is among the assessment tools we are using in this trial. We gather baseline data before administering the cells and then conduct some early functional assessments, although it's too soon to expect significant results. These assessments within the first 90 days help confirm our baseline measurements and ensure that no decline is occurring. We typically wait until the one-year mark to conduct functional assessments because the study is not set up for regular check-ins every 30, 60, or 90 days. When we gather these one-year assessments, any changes observed may carry more significance if they happen at 12 months rather than at 3 or 6 months. Interestingly, we have some information from a reliable source suggesting that a chronic patient has experienced improvements in certain measures. This is anecdotal and not officially part of our clinical data communication; however, individuals can share their own experiences in clinical trials. So, you may find some interesting information out there. We will provide actual data from our trial once it is available. As for your specific question, the patient qualifies under our criteria as ASIA Impairment A. I should mention that we faced challenges in identifying the next patient for the stagger, and we recently updated the protocol to permit a second impairment level of A for the enrollment of the second patient in this study. The difficulty in enrolling a second patient stemmed from finding an appropriate candidate that met the agreed stagger with the FDA. We amended the protocol to allow for another A to be treated, and we have identified a candidate who may receive treatment in the coming weeks. I believe we will be back on track with this trial. Thank you for your insightful questions, Jack.

Awesome. Maybe if I can just follow up one more on AlloSCOPE. But before I do, it's great to hear about the anecdotal progress of the OPC1 program. While it's not necessarily well-vetted clinical data, there's a high unmet need in spinal cord injury. So that's great to hear that there's some enthusiasm there. On AlloSCOPE, I just wanted to ask very briefly how you think about ramping expense of that program as you move up from the half-liter bioreactor. I know it gets more expensive as you move into larger reactors. How are you planning to contain cost there?

It's not too difficult. The cells are eating the media that we feed them, and we have done a lot of batches and the multi-liter batch size, I've spoken frequently about OpRegen already being manufactured at a 3-liter scale. We have abundant experience at that scale. I think where it starts getting really exciting is when you go up one level beyond; I don't want to get ahead of myself at this point. There still are risks and uncertainties associated with this. But one of the really powerful attributes of our approach of inverting our development plan and focusing on manufacturing is that we are able to put a relatively modest amount of capital to work to get answers as to the scalability of these lines. If we were doing it the other way, if we were conducting very expensive animal studies or very expensive human studies, and we were deferring the important questions around scale, we would be spending a tremendous amount of money running studies that others have already shown can be successful and not necessarily proving anything about our viable product candidate in terms of its ability to meet the commercial demand. If instead we follow the Lineage approach and say, well, I'm going to answer the question of scale first, then you are looking at the risk profile of your subsequent preclinical and clinical studies from a different view because you already know you can make a lot of your material. I really like the overall approach; I think it's prudent and investor-friendly. From our perspective, we have experienced a lot at a single-liter or multi-liter scale production. We have a well-trained team that can fill and finish vials out of that scale in a GMP environment. So we'll have to see. But as Jill said, we're very committed to high returns on our invested research dollars and trying hard to maintain something close to our historic investment of capital on an annual basis.

Next question comes from the line of Mayank Mamtani with B. Riley Securities.

Thanks to your company employees and their families in Israel. Brian, could you elaborate on the insights gained from the OpRegen work since its start, particularly in relation to the Roche partnership? Additionally, can you highlight the milestones we should be monitoring for identifying potential candidates? Is this being utilized by a strategic partner, considering the significant interest it would attract?

Thank you, Mayank, for that multipart question. Yes, the inverted risk, I think, as I say, is attractive because we're putting what I believe is the least expensive and most challenging step first. We're trying to invert the risk profile of the islet cell transplant product initiative or campaign. The specific learnings and lessons from the OpRegen program are coupled with independent lessons we have because, of course, we have other programs that we've had to solve different problems for, whether that's our hearing loss program or our spinal cord program. Altogether, a lot of these have taught us some clever and sometimes patentable material and insights. Overall, I would say that AlloSCOPE is comprised of three components. There are physical or engineering-type components, so these are the physical properties of how we do the manufacturing. There are biological aspects to it, i.e., exactly what we expose the cells to and when. The other is an engineering component, which is a little bit more of like the know-how. It is not that there's a magical molecule that makes AlloSCOPE work or a special coding of plastic or type of plastic that makes everything click. It is the combination through years, in fact, decades of experience finally being able to show that this capability can legitimately make millions of vials, as I said, trillions of cells, and then applying it in a unique way to solve a specific problem in the setting of islet cells. I don't envision that being a fee-for-service business for our company. I'll never say never, because our job here is to create value; it's not necessarily to make medicine. If we see an opportunity and it makes sense, we may pursue it. What we would envision with AlloSCOPE in partnerships is enjoying significant ownership of any program that's going forward. We are bringing tremendous value to partnerships. We're a healthy company that can carry its own weight in development. We want to ensure that we're never viewed as a CDMO. Not that there's anything wrong with that business; it's just very hard to price that kind of product when the probability of success is unknown as you go into those alliances. We also have limited GMP space and a highly trained team. This is not an off-the-shelf skill set that we just grab from some recent college grads. We have to be very selective in where we apply our technology. You also asked a very important question in there, which is additional programs, and it occurs to me now in this moment that I have previously said that we had some additional cell types that we are going to talk about and it didn't even make it into my prepared remarks, which gives you a sense of how much exciting stuff is happening here. But we do have plans to reveal another new cell type, that could be as early as in the next three to six weeks. It's coming together; it's maturing; I'm very excited about it. But it is as yet undisclosed.

Yes. No, that new cell type would be great to learn about that. Thank you for that level of detail. And then on the OpRegen program, if that was to theoretically start a Phase III tomorrow, like, what's your capacity for the amount of doses you can provide because these could be very large trials, at least historically that have been done? Do you have any visibility of regulatory interaction that has occurred beyond the RMAT designation that was secured last year or two years ago?

Thank you for that additional question. Unfortunately, again, that's a question that really can only be answered by Roche and Genentech. I am not a party to regulatory strategy discussions or regulatory interactions that they have regarding OpRegen, so I cannot say because I do not know.

Okay. And one last for Jill. In your cash runway, how much of the additional warrants are factored in? If you could just clarify.

Yes. So of the existing runway that we talked through today, it only includes the $5.4 million in warrants that we collected this week on an exercise. The approximately $32 million remaining is not factored into our future runway at this point.

Mayank, I neglected to answer the remainder of your question. I'm happy to say that perhaps one of the least of my concerns at this company is being able to manufacture sufficient material. It speaks to the power of our technology. We literally are manufacturing more OpRegen than we can reasonably fill and finish in a day's work. I do not think that the supply of clinical material will be gating because the two-part banking system and the production vessel scale that we're at really does generate a very large number of cells on each run that we perform.

Next question comes from the line of Albert Lowe with Craig-Hallum.

I was wondering how you'll be applying the hypoimmune cell line that you recently received from the partnership with Factor? I believe this is an iPSC line. Can you please also speak on some advantages of using an induced pluripotent stem cell line?

Thank you for your question, Albert. The hypoimmune line we obtained through our partnership with Factor was specifically designed for a neurological condition, which I cannot disclose at this time. I can't confirm whether it's related to the indication I mentioned might be coming out in the next few weeks. You are correct that it is an iPSC line. The advantages of iPS cells over ES cells, or vice versa, are still unclear. We believe it is important to follow the data and behavior of these lines. There are various attributes that might make one type more appealing, but there haven't been enough approved therapies to definitively determine which is superior. Generally, when researchers work with a particular line type, they tend to favor that source. We, however, are indifferent as we have both types of pluripotent lines. Factor's experience with gene editing and hypoimmunity with iPS cells has been beneficial, and we also added a relevant edit to the line. This allows us to leverage valuable capabilities without needing to develop them internally. Since our cells are fully characterized before patient use, we are confident in applying different editing technologies, ensuring they meet the designed specifications before we use them and invest in scaling up the production.

Next question comes from the line of Sean McCutcheon with Raymond James.

This is Yang for Sean. We have one quick question. Could you speak to the process of getting a new OPC1 formulation into the DOSED study? And how much do you think that may shorten the timeline versus bridging study? Are you in dialogue with the FDA on that front?

Thank you, Yang, for your question. We decided to keep the new device we are testing separate from the new cells we have manufactured. We have finished the manufacturing process for those cells and completed the necessary comparability testing, including in-life comparability and all features required for the FDA meeting package. However, we have not yet submitted this information to the FDA to initiate bridging studies. We thought it would be wise to gain some experience with the new device so that attention could eventually shift from the device to the new cells. We are optimistic that the new device will function as intended in the initial patients. Our plan is to propose to the FDA that we switch to the new manufacturing process for the last few patients in the DOSED study. If this is successful, it could save us a significant amount of time and eliminate the need for a separate safety cohort with our new cells. The extensive bioinformatics data, animal studies, and analytical work we have conducted to support this transition aim to maximize our chances of success in expediting the process. To conduct a larger study, we believe that deploying this superior device is essential, as well as utilizing our higher quality, greater purity, and better controlled OPC1 cells. That is our strategy. Once this is accomplished, I believe we will be ready to conduct a larger study of spinal cord injury patients, either independently or through a partnership.

There are no further questions at this time. I will turn the call back over to Brian Culley, CEO, for closing remarks.

Thanks, everyone. I know it was long and complicated, but it's very important, and I think also very exciting. So stay tuned. Clearly, we have some exciting stuff coming up not too far away. Thank you for your interest and support of the company, and we'll talk again soon.

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