Q2 2021 Lineage Cell Therapeutics Inc Earnings Call

August 12, 2021

[music].

Welcome to the lineage cell Therapeutics second quarter 2021 conference call at this time, all participants are in a listen only mode.

A webcast of this call is available on the investors section of the lineage website at www dot lineage cell dotcom.

This call is subject to copyright and is the property of lineage and recordings reproduction or transmission. So for this call without the express we can consent of lineage are strictly prohibited.

As a reminder, today's call is being recorded.

I would now like to introduce your host for todays conference you want a home direct or if I'm the director of Investor Relations at lineage Ms. Hao. Please go ahead.

Good afternoon, and thank you for joining us.

Yes release reporting our second quarter 2021 financial results was issued earlier today August 12, 2021 and can be found on the investors section of our website. Please note that today's discussion will contain forward looking statements within the meaning.

Our federal Securities laws, including statements regarding our strategy goals product candidates clinical trials data announcements and updates anticipated regulatory meetings and interactions planned manufacturing improvements financing Kashi management and.

Runway anticipated collaboration opportunities and benefits and commercial potential.

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 actual results or performance may differ materially from the expectations indicated by our forward looking statements due to known and unknown.

Risks and uncertainties, 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 in our filings with the SEC, including in our quarterly report on Form 10-Q filed today August 12.

And our annual report on Form 10-K for the year ended December 31, 2020, presenting today is Brian Culley, our Chief Executive Officer, and Kevin Cook, Our Chief Financial Officer, Brian and Kevin will provide some prepared remarks, then take questions from analysts with that I'd like to.

I turn the call over to Brian.

Thanks, Warner and good afternoon, everyone. We always appreciate you joining us on our quarterly calls.

The lineage team continued to execute on its aggressive business plan, making significant operational and clinical progress during the second quarter.

Most notably we delivered additional positive clinical data from our <unk> program to treat dry age related macular degeneration with geographic atrophy.

We made substantial progress moving our spinal cord injury program toward further clinical testing.

We generated revenue from the first milestone payments under our new Vac based cancer Alliance and we even monetize some of our non core assets.

I'm also very happy that we have strengthened our leadership team through the appointment of Kevin Cook as our new Chief Financial Officer, and as you wanted just mentioned Kevin is joining me on the call today and I appreciate the immediate impact it has had on our organization.

As I say each call lineage is pioneering a new branch of medicine. Our approach is to manufacture differentiated cell types and transplant those cells into the body to restore or improve function, which has been lost due to injury or disease.

But we believe that if retina cells or spinal cord cells are dying off or dysfunctional you need to replace those specific types of cells.

This regenerative medicine platform, which we own is both broad and powerful not only for the value of our current indications, but also because our cell transplants approach might someday be applicable to a large number of different cell types and address many different unmet needs.

Manufacturing different cell types and demonstrating their safety used in clinical trials. So that they can be commercialized and reach patients is vital to our long term goal of becoming the leading cell therapy company.

All of our cell therapy programs yourselves, which we manufacture from NIH approved cell lines, which were established to characterize decades ago.

Because our sales are pretty potent and have never been differentiated they can surpass the hayslett a principal of cellular Adrian the.

He's like limit.

States that a normal human cells can only replicate 40 to 60 times before it breaks down by a programmed cell death.

The self manufactured from our pluripotent cell lines can be replicated far above the ceiling.

Simply put this means we can generate enough material to supply, even the largest commercial markets without ever sourcing new material or changing our starting materials.

That's a very different from what some of the competing allogeneic companies do with adult cells or mezzanine Kamal cells. When you start with American kind of sales or adult cells. There is a limit to how many times you can divide them before you have to obtain new starting material.

I don't believe the advantages, which lineage enjoys in this area are fully appreciated yet, but as our programs continue to advance through clinical trials and show additional promise I believe people will start to ask increasingly detailed questions about the limits of various approaches and discovered that our endless supply itself.

Provides us with an advantage over companies, which have to change their starting material every 10.100 or even 1000 patients.

Using the same starting cell line for the entire lifetime of a program should provide lineage with fewer regulatory complications superior quality control and of course lower lifetime cost of manufacturing.

These advantages of our true off the shelf platform or even greater when compared to autologous or individual patient specific approaches where therapy is created for just a single person.

Every bit as important as cost effective scale up our approach also avoids the risk of genetic manipulation, which many of you will certainly have noticed recently has reemerged in the news due to serious unexpected safety issues associated with certain gene therapies in ophthalmology clinical trials.

Instead of manipulating the genome and potentially causing changes, which we can't track or control, we utilized directed guided differentiation to manufacture ourselves.

With directed guidance differentiation, we harness the natural steps in the developmental pathway in order to manufacture only our desired cell types, we never modify the genome as part of our manufacturing process, because it simply isn't necessary.

Our sales are tested to ensure they have the attributes needed to perform the job of the cells. They are replacing without changing their genome and uncontrollable ways.

And to date, we have never documented a single case of rejection of ourselves from any of our patients even up to five years after treatment.

These advantages to help establish our belief that our technology platform has potential not only in the indications. We currently are pursuing which are valuable in their own right. But also may produce additional product candidates beyond dry AMD spinal cord injury in cancer.

And as we continue to generate encouraging data on both the safety and efficacy of our three current cell transplants will consider opportunities to investigate new applications of our technology and potentially address new or related diseases, either on our own or through strategic alliances.

I now will turn to doing a quick review of our recent accomplishments and set some expectations for the remainder of this year.

I will as usual begin with <unk>, our lead product candidate intended to treat dry AMD with Ta a disease with no FDA approved treatments.

Our approach to treating this disease is to transplant healthy new retina cells to replace or support the ones that have died off or dysfunctional.

Replacing the entire cell avoids risks and limitations inherent in approaches that just target a single pathway, which may prove to be their own pathway or approaches that target a certain mutation, which might only be relevant to a small subset of patients.

I've said many times that we believe our approach may be able not only to slow the disease process, but may even be able to halt or reverse it and we now have evidence of this clean occurring in multiple patients.

We also believe that origin, which currently is contemplated as a one time treatment performed in about 30 minutes under local anesthesia has an enormous advantage in terms of compliance and convenience over traditional drugs being developed by competitors that required monthly or semi monthly injections.

Since the beginning of the phase Iia clinical trial for opportunity, we have provided a cascade of positive updates from its use.

We believe our data set has improved with each update as the amount of evidence has grown.

And more and more time has lapsed from the date of treatments and we intend to continue providing these interim updates moving forward in fact, our next update.

Showing with at least nine months of follow up on all treated patients is expected later this quarter.

As I just mentioned we have reported three separate cases of retinal tissue restoration in dry AMD patients treated with <unk> and.

And specifically what this means is that outer retina layer restoration has been observed using clinical high resolution optical coherence tomography your Oc tea.

And this was evidenced by the presence of new areas of RPE model layer with overlying ellipsoid zone external limiting membrane and outer nuclear layer, which were not present at the time of baseline assessment.

These findings suggest integration of the new RPE cells, the opportune therapy integration.

Integration with functional photo receptors in areas that previously showed no presence of any of these cells.

Remarkably these outcomes occurred in three out of the four patients who received their dose of opportunity throughout the trophic area rather than placing the cells.

Way from or even adjacent to the atrophic area.

None of the other 20 patients received cells in this manner. So we believe the correct way to measure our event rate for this finding is three out of four patients demonstrated restoration or 75% and of course, the higher your event rate the easier. It is to demonstrate statistical significance in the context of a click.

Trial.

Now the totality of these findings support the view that atrophic AMD is not an irreversible degenerative condition and that some portion of diseased retinal tissue may be recoverable if the right intervention is used.

And to our knowledge. Despite many hundreds of patients with dry AMD NGA, having been treated in clinical trials by different sponsors.

Lineage is the only company that has shown even a single case of retinal tissue restoration.

And then we have three cases, each one adding durability with each passing day.

In light of these unprecedented findings, we hosted a call with therapeutic area experts to discuss the results in detail and we really encourage those who have not listened to this replay of the call to do so by visiting the events and presentations section of our website.

In addition to retinal restoration, which is an anatomical observation. We also have seen functional improvements and the majority of treated patients is with 83% of all cohort four patients continuing to exhibit stable or improved best corrected visual acuity or be CVA at least six months post.

Treatment.

Meanwhile, visual acuity declined or worsens and the majority of the patients untreated eyes.

And to further support the anatomical restoration data and the visual acuity data. We have collected we also have reported that we now have micro perimetry data collected at the year, two and year three post treatment study visits of one of our restoration patients and which indicated improvements in the patient's ability to discern different intent.

Cities of White.

This patient also experienced clinically significant improvement in visual acuity for more than two years at one point, gaining 12 letters on an early treatment diabetic retinopathy scale or <unk> scale, the standard assessment measurement tool.

Altogether. The data set we are collecting includes both functional and anatomical evidence, which further reinforces our belief that a suspension of operation RPE cells can generate clinically meaningful outcomes in patients with Tri AMG with Ta and particularly in those with earlier stage atrophic.

Disease.

For those of you who for whom the subtleties of the details of OTT imaging and Drs.

Drs scores, it's a little too technical we would also just invite you to visit our web site.

<unk> watched the two patient testimonials, we recently posted.

We realize that there is a lot of attention on competitors' attempts to slow the growth of atrophy.

But despite hundreds of treated patients those approaches have failed to report both the structural and functional benefit to patients vision.

In contrast, we have patients in our trial, who have not simply slowed the growth of <unk>, but actually reversed it and have benefited from an improvement in their vision at the same time.

Looking ahead for.

The promising origin program. In addition to the regular updates that we provide we plan to provide additional updates at important medical conferences. This year, including the 54th annual retinal Society scientific meeting, which takes place in Chicago September 29th through October 2nd as one looks at the 2021 annual Academy of Ophthalmology annual meeting the largest ophthalmology.

Meeting in the World, which takes place in New Orleans November 12 through the 15th.

We also are working with our advisors and preparation for a meeting with the FDA in the fourth quarter of this year, where we intend to discuss our proposed next steps for further clinical development of <unk>.

Overall, the data we have generated to date.

Forces, our belief that RPE cell transplants can provide outcomes beyond the reach of traditional pharmaceutical approaches which are limited to a subset of biological pathways in which may fail to provide the maximum worst sort of benefit available to patients.

We continue to work to position physician opportune RPE transplants as the best available option in the race to address the large unmet medical need in dry AMD with <unk>.

And moving next to OTC, one our allogeneic cell transplant program to treat spinal cord injuries.

<unk> is a one time administration of specialized spinal cord cells called oligodendrocyte progenitor, <unk>, which are delivered directly into the area of injury spinal cord patient.

Final cord injuries can lead to paralysis and loss of motor and sensory function and the lifetime cost of care for in Sci patients has been estimated to be as high as $5 million.

But like dry AMD. There currently are no FDA approved treatments for spinal cord injury.

Because the material used in the prior clinical trial of OTC won by a different sponsor was not manufactured through a process compatible with late stage clinical and commercial development.

The lineage team needed to develop a new manufacturing process, which let successfully to significant improvements in the production quality and scale of <unk>.

These are improvements, which we expect will enhance the commercial viability of a future approved product.

We also developed a niche thaw and inject formulation simplifying logistics are enabling investigational use broadly at any spinal cord treatment center, which we expect will help accelerate enrollment for late stage clinical trials.

And specifically this new formulation will allow us to eliminate the dose preparation steps and the need for a specialized facility and train staff, which will reduce overall logistics of preparation from several hours in a lab to just a few minutes in the or.

And reduce costs by approximately 90%.

This new process, which we developed has been established into our in house GMP facility at a scale necessary to support the next clinical trial phase and we are working through the steps to increase our production scale to eventually support commercial operations.

In parallel with this work.

We are focused on completing our manufacturing comparability plan, which is intended to demonstrate that our new process has maintained the same safety and activity attributes as the material, which was previously cleared by FDA for clinical use.

At the same time that we are fulfilling these FDA requirements to introduce our new manufacturing process into the next phase of clinical development. We plan to initiate an interim clinical safety study of a new delivery device through our collaboration with <unk> technologies.

The near game Parenchymal spinal delivery your PFD system is expected to reduce a significant technical hurdle to conducting any larger scale clinical trials because it has been designed to allow for the administration of cells to the spinal cord without stopping the patient's respiration.

And it can accommodate our new thaw and inject formulation.

We currently are conducting preclinical studies and a large animal model to validate this device and we intend to submit an amendment to our investigational new drug or IND application for <unk> in the fourth quarter of this year to initiate a clinical safety study in Sci patients.

And we have already received feedback from FDA in June 'twenty June of this year under the regenerative medicine advanced therapy or <unk> program for such a study and as an added benefit from that FDA interaction. We learned that in addition to patients with sub acute injuries, which are the patient characteristics treated previously.

We anticipate that patients with chronic spinal cord injury also will be eligible for enrollment in the safety study.

This larger patient population will not only provide safety and device performance data across a broader range of patients and injury types, but also made enrollment because chronic patients are generally easier to identify and enroll in patients who would need to have had an injury within a few weeks or months prior.

Overall these.

These data will be more informative to the program and support further product and device development.

Testing this new delivery system and a small study will simplify the design and execution of a subsequent controlled study introducing LPC one manufactured with our new process.

There are few options for Sci patients to enroll in clinical trials. So we believe this is an important program for the entire field of spinal cord injury, and we will be working closely with the Sci community to launch it on a successful trajectory.

Now thirdly, I will move to back to our investigational off the shelf dendritic cell cancer vaccine.

Back to as many of you will recall is comprised of mature dendritic cells, which we manufacture from proprietary and establish cell banks, which are then loaded with a tumor specific target or an antigen to instruct enhance and deploy the body's immune system about which sells it should attack and eliminate.

Last year, we exercised our option with cancer research UK to bring the Vac immuno oncology platform in house and not long thereafter, we reported encouraging preliminary phase one clinical results.

Non small cell lung cancer patients and in which <unk> demonstrated potent induction of immune responses, providing us with additional mechanistic validation and reinforcing data obtained in the autologous back one clinical trials conducted previously.

Our partner Cancer Research U K is responsible for this study and with enrolment impacted by Covid restrictions across the U K. They are still working on enrolling the final patient into the study, but following completion of enrollment we anticipate additional clinical data from this study will be available and reported.

Meanwhile, our focus is on making improvements and modernization to the vac manufacturing process, which will help prepare back to for further trials and provide competitive advantages for any future back programs. We may design in advance.

This manufacturing focused investment is fairly similar to what we did successfully with both at Virgin and OTC, one and is very core to the highest competencies at lineage.

As part of the manufacturing enhancement process, we aim to enhance the flexibility of that platform because one could theoretically insert any antigen into our dendritic cells and we believe the back platform is capable of therefore, producing nearly a limitless number of product candidates with each one being distinguished by the specific antigen.

Which the dendritic cells are carrying to the patient's immune system.

So this opens up a large number of potential corporate partnerships by allowing us to use our dendritic cells as carriers for other companies antigens and while simultaneously retaining the option to advance our own carefully selected antigens.

Example of us implementing that exact strategy and.

In April we announced our first collaboration for our Vac platform with immuno make therapeutics, our ITI <unk> with whom we are collaborating to generate a novel product candidates derived from our <unk> platform and targeting a proprietary antigen construct provided by ITI <unk> and this would be for the treatment of Glioblastoma multiform.

As of early August we have already achieved the first technical milestone under this agreement, which triggered a payment to lineage of a $5 million and allows us to continue working towards the achievement of subsequent milestones, which by the way includes another $1.5 million, which we are working to receive within the next year.

This illustrative collaboration represents the first of many partnerships, we hope to enter into with our <unk> platform and we believe it helps to further validate back not only as a promising new therapeutic vaccine platform, but also as an engine for partnering.

The early success demonstrated in our first ITI collaboration provides real world validation of this approach and our plan is to leverage our technology to generate additional fact drive cell therapies for our pipeline and capitalize on the strength of linear inches recent manufacturing and cell transplant accomplishments.

These alliances can diversify our oncology pipeline across more programs and provide new opportunities for success without the financial burden of independent development.

And I'll continue with the theme of corporate partnering and add that in June we announced an option agreement with a massive therapeutics a privately held biopharmaceutical company for our high stem technology and for the development and commercialization of therapies for local treatment of solid tumors.

We believe that many tissue engineering in regenerative cell based therapies will require the delivery of therapeutic cells in a matrix or a scaffold for accurate placement retention and then grafting.

And through this agreement, we have an opportunity to provide a market with access to our clinical grade <unk> material to support the development of oncology related products.

Alongside a previously announced deal with advanced bio matrix. This deal represents the second highest stem related transaction, we have entered into over the past two years.

As many of you will recall lineage has an extensive intellectual property portfolio and from it we will continue to seek opportunities to unlock value from our non core assets.

In June we reported that we had been added to both the Russell 3000 index as well as the Russell Microcap Index. These.

These additions reflect the continued progress we have made in establishing ourselves as a leader in cell therapy, and regenerative medicine and should help us benefit from the tremendous growth that we foresee in the field of cell therapy.

Our addition to the Russell indexes can expand awareness of our corporate mission and objectives, among a broader audience of investors and could help drive an increase in the liquidity of our stock enhancing our own internal market awareness efforts.

Overall, I believe we have continued to execute and generate valuable progress advancing all three of our clinical programs and further strengthening the company's capabilities. So with that I am happy to now turn the financial section over to our new CFO, Kevin Cook, Kevin brings lineage more than 20 years of significant strategic.

And operational experience and he has executed over $30 billion of capital raising and corporate development transactions and Kevin will walk you through the financial update before joining me for our Q&A session.

Thank you, Brian and good afternoon, everyone I'm excited to be here and I look forward to connecting with many of you more closely in the months ahead.

In the meantime, let's talk about some of our recent financial results.

Total revenues for the second quarter were approximately $500000.800000 increase from the same period in 2020.

The increase was due primarily to a $200000 increase in booked collaboration revenues from the new immuno therapeutics licensing agreement plus a $100000 increase in royalties offset by a reduction in grant revenues, resulting from the completion of NIH grant activities in the prior year.

Total operating expenses for the second quarter of 2021 were approximately $7.5 million.

An increase of approximately $800000 as compared to the same period in 2020.

The increase was primarily primarily related to an increase in general and administrative expenses due to higher investor relations expenses, a stereo merger related expenses and other legal costs.

Our loss from operations for the second quarter was approximately $7.1 million an increase of $700000 as compared to the same period in 2020.

This increase was mostly due to higher G&A expenses incurred in the second quarter of 2021.

The net loss to lineage for the second quarter of 2021 was $4.8 million or.

Our <unk> per share as compared to $6.5 million net loss or <unk> <unk> per share for the same period in 2020.

It is important to remind investors that the variance between our loss from operations and our overall net loss is impacted by changes in the value of our investments in acre site and hottest seat as well as foreign currency exchange rate fluctuations related to lineage as international subsidiaries.

Additionally, in the second quarter, we recognized a gain of half a million dollars related to the extinguishment of debt for our paycheck protection program loan, which was forgiven in full.

While these non operational fluctuations are important.

Tend to utilize loss from operations as a more relevant measure performance with regards to moving our clinical programs forward.

Turning to the balance sheet. The company ended the quarter with approximately $68.7 million in cash cash equivalents in marketable securities.

Accordingly, we continue to feel that our liquidity level provides us flexibility and funding to reach additional value, creating milestones in the months and years ahead.

That wraps up the financial section. So thank you for your time and we'll now turn the call back over to Brian.

Thanks, Kevin.

We believe that the field of cell therapy is poised for explosive growth and thats scalable allogeneic off the shelf approaches have the ability to provide significant commercial advantages over autologous or patient derived methods.

Lineages objective is to be positioned for the rapid growth of this emerging grants branch of medicine by providing evidence that off the shelf cells can generate safety and efficacy data in large commercial opportunities where small molecules have not succeeded.

Some of the events and milestones, which shareholders can look forward to include.

With respect to the opera Gen program. The presentation of additional interim data from the Phase <unk> study, which is anticipated during this quarter and the next quarter of this year.

We also plan to meet with FDA to discuss further clinical development and that is anticipated in the fourth quarter of this year.

With respect to the OTC one program in spinal cord injury, we will be evaluating the near gain PSD device in both preclinical and then clinical testing.

We are conducting GMP production of OTC one buy.

And improved manufacturing process, and we will be conducting release testing to support a late stage clinical trial.

And we have an FDA interaction to discuss manufacturing improvements, which is anticipated around the end of this year, maybe early next year.

And then just to wrap up again on the back program. We're looking for the completion of enrollment in the ongoing phase one study in non small cell lung cancer and then of course reporting results from that study and we will continue to evaluate new opportunities for <unk> product candidates based either on internally identified or partnered tumor antigens.

And overall, we will look continue to look and evaluate partnership opportunities and ways to expand either existing collaborations or identification of new collaborations to fully enjoy the benefits of our platform.

Here at lineage, we're immensely proud to have the opportunity and responsibility to advance this new and exciting branch of medicine, and we aim to make a profound impact on the millions of people who serves our inspiration. So for those of you who would like to understand better about what it means on a personal level I really encourage you to check out the media.

Section of our website, where you can hear directly from the same patients that we aimed to help.

You very much for joining us. This afternoon. We appreciate your support as we position lineage to become a leader in cell therapy in transplant medicine.

And with that operator, we are definitely ready to respond to any analyst questions, which we may have.

Ladies and gentlemen, if you have a question at this time. Please press. The Star then the number one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Okay.

For our first question, let me have Kristen <unk> from Cantor Fitzgerald. Your line is open.

Hi, good afternoon, everyone. Thanks for taking my question.

The first one I have hey.

The first one I have is on OTC, one so with your recent announcement that chronic spinal cord injury patients will be eligible for enrollment in the study could you discuss if there will be any different clinical parameters and measuring the effect for these patients or perhaps what would be considered a meaningful result for them.

And then how do you anticipate the inclusion of these patients could change the addressable market opportunity.

Thank you Kristen for the question. So the study that we will that we're planning to conduct next in four <unk>. One is the device study and so the objective of that study is to demonstrate not just the safety of that device, but its ability to be able to <unk>.

Successfully deliver cells into the correct location in the spinal cord.

We intend to collect some efficacy data in that study, but that's not the purpose of the study. So it won't be large enough to have a lot of statistical findings, but what I like in particular about the design and the inclusion of chronic patients is that chronic patients.

<unk> have typically plateau, you don't often see.

Meaning full spontaneous recovery in a chronic patient.

So we have what I think is a very asymmetric setup to this study extensively we're there to make sure that we can deliver the cells to the right place in the spinal cord. However, if we see some sort of signal.

In even a non statistical signal in a chronic patient.

I think that opens up an incredible new and exciting area for us, which would certainly have a large impact on the addressable commercial opportunity because our current expectation for this therapy is that you would want to administer it between 21% and 42 days after an injury.

But if we can have some benefit even a small benefit in patients that were injured three months ago three years ago 33 years ago.

Now you get to not just include the the.

The incidence of the condition, but also the prevalence of the condition. So it would be multiples larger.

If we were able to treat and provide a benefit to chronic patients.

But the real advantage for us on its face is that we can we are just trying to make sure that the that the new system.

Is effective and safe at delivering the cells and that we can do that in a chronic patient because it really is more of an anatomical question that we're getting an answer to rather than an efficacy question does that does that makes sense.

Yes. It does thank you for that and then on the upper Jan one of the potential benefits you've cited outside of efficacy and safety is on durability and convenience does this treatment doesn't entail frequent injections. We've seen for other trials. So wanted to ask how long you intend to follow up with these patients in cohort four.

Or to determine how long the effects could be maintained in order to determine if future procedures will be needed on a couple of years basis or do you think this is really going to have to be evaluated more on an individual patient basis.

So what we plan to do with the current protocol. This followed these patients for five years.

If we decided to make a change at some point in the future and followed them for longer that that's fine I think we would like to eventually answered the question as to what is the mean length of benefit how durable is the therapy and when you do get out to five years, you kind of assuming its lifetime, but.

At present, we would follow these patients for five years.

We don't.

That obviously is not.

A clinically.

Sure.

Punishable period of time from which to build a study for the purposes of approval. So thankfully. The FDA has conveyed to a number of sponsors that are 12 month observation period would be appropriate in the setting of dry AMD. So we intend to continue to collect anatomical and functional.

<unk> data on patients.

Which started monthly and then its going through quarterly and eventually to become an annual assessment, but ultimately reaching out for five years.

But we don't intend to use five years as a clinical trial endpoint, we I would expect completely that we would follow the standard path of a 12 month observation period. So we'll collect the data I expect that we will continue to report that long term data, but for people who are wondering.

<unk> data point, they should pay the most attention to.

Six months and 12 months data points are the ones that are the most well established as being relevant to a regulatory process.

Thank you and just on that note now that you've observed a number of patients beyond six months and you have long term follow up for many others.

Are there any other important takeaways or observations that you think will be important and as you look to meet with the FDA to discuss the next steps around this program I know of course, you've highlighted the.

Placement of the cells and the importance there and how this has translated for the cases right in all tissue restoration, but anything else that you've found to be notable.

Yes, you mentioned placement I think that's really important the other one that I think is very important is how you image the patients so the traditional way.

Which I think is going away is to use Fas, which is sort of like an area of picture the.

The future and certainly our intended futures to use OTT because youre getting a cross section you can see all of the layers almost almost at the level of histology you can see the cross section so for us having the ability to.

<unk> or tissue and be looking to measure the functional.

Activity of that tissue in areas, where it wasn't present, you actually can't see that using ethane, we cannot see that using SaaS because ourselves to not flores under Fas. So we feel that we are in a.

We are aligned with the future and it's not a distant future. This is hits more presence, but we are aligned with the future of how to measure and evaluate geographic atrophy and that would be to use optical coherence tomography or OTT rather than Fas. So that's an important consideration for us going forward and I think where it is.

Most striking is some some data we have one slide that we shared not too long ago.

It shows about a 30% benefit for our patients it reduces their area of atrophy by about 30%. When you look at it using Fas, but again, that's that's sort of imperfect aerial view when you look at the same patient at the same time points using OTT you can see that their area of atrophy is unchanged.

Hundred percent.

That's a stopping a ceasing of growth of atrophy. So clearly there is more information to be learned from using OTT. So I think placement of cells.

And I think that the.

Measurement tool the assessment tool are really important ones other ones like the frequency of assessment.

Some of the characteristics of patients those are a little bit more straightforward and conventional.

Great. Thank you Brian.

You bet. Thank you Kristen.

Next question, we have telephone Internet from H C. Wainwright Your line is open.

Hey, guys. Good afternoon, thanks for taking the question.

A couple of questions on opera Gen and a shorter question on back to so first on op region I.

I guess I wanted to focus on do you have.

Some feedback you can provide us to kols feedback or physician feedback that you've had now that you have three patients that have shown restoration.

Which has been unheard of until this up until this point that you're using for feedback ahead of your.

Upcoming FDA meeting and this is beyond say the the physicians that you've had on your recent K O L events, and then secondly, with regard to offer Gen I guess.

As Youre looking to your FDA meeting.

Your wish list.

What kind of endpoints are you looking for for a primary endpoint, there's been a lot of evolution from the FDA with regard to ocular endpoints.

You mentioned micro Perimetry before the FDA is focusing on that more and more say versus <unk>, which has been a lot of the wet AMD study. So how do you think it might play out or whats your wishlist around that.

Yeah, Great Hi, gentlemen, thank you for the question so with respect to.

[noise] therapeutic area experts and their input.

We've been delighted with with what we have heard.

And in some cases it's.

Yes sort of extraordinary comments, we're not planning to.

Build a meeting package for FDA around their extraordinary comments, we'll build that around the data, but the benefit for US is it this is heavily anatomical data.

So.

Going in and and bringing visual acuity data or patient reported outcome comes data that's fine that's useful and informative, but everybody knows that those those assessments the tools and how they are collected.

They tend to be a little bit more subjective, but anatomy does not change.

Change, but for the fact that you've got this ramp in the back of your are getting bigger.

You can take images collect images and you can line them up exactly the same based on where vessels are and you can really see these changes and so youre able to separate from some of the.

Let's say placebo effects of clinical assessments or separate away from some of the more subjective factors you've got one one.

On data collector, who lets the patient lean forward a few inches when they are reading the chart youre not allowed to do that so.

It can be difficult to get really clean data when you have somebody suggested subjective assessment.

Which is what puts us in such a good place with respect to go into the FDA with an emphasis around dental restoration, because it's an anatomical observation for which the individual has no ability to influence you cannot regenerate retinal tissue by wishing for it praying for it et cetera. So I think that although we have heard some really wonderful I'm reluctant.

Even restate some of them because they're almost too much to believe but I think that although we've heard some really wonderful comments from some thought leaders in the field.

Particular ones that have been very close to the data and been able to really dig into it we will.

Don't rely on that for the discussions with FDA, we will rely on just the pure observations of there was elm's here.

Wasn't elm's six months ago, where did that come from what happened six months ago that was our intervention. So I don't feel that mean that we need to rely on some of that that is the result of the data that they saw so we'll let the data do the work for us with respect to the endpoint I kind of touched on it a little bit in that answer.

I think the division director of the Ophthalmology has been quite clear that.

Let's see.

Changes in the growth rate of geographic atrophy would be an approvable endpoint I saw a competitor recently had a special protocol assessment conducted that would suggest to me that the FDA is supportive of that anatomical endpoints.

On its face it might be viewed as a secondary marker of efficacy, but it's also inevitable if that area definitely gets really big you will lose your vision. So I think that being able to use an anatomical endpoint is where we want to be I do not want to use visual acuity to into my mind visual acuity is this among.

<unk> secondary endpoint that might give us overwhelming commercial power. If we have if we have evidence of a benefit in vision or no loss of vision compared to a control arm.

That is an extremely powerful talking point for for.

Commercializing an asset if that's included in the package insert, but I think that our probability of clinical success and regulatory approval is really going to be driven more by our ability to halt or even reverse the growth.

Excuse me of these atrophies, and so that's where I want us to be and I think that's the best place for us to be and it's funny for me to say that because 12 months ago.

I had to be very vague about it I couldn't tell you if I thought we would be a GE story or visual acuity story, because we didn't have enough data we have enough data now that it's very easy to say, we want to be a G E growth inhibition story.

With the added benefit of being able to look at a functional improvement for the patient or absence of loss for the patient either of which would be something that I have not seen the competition being able to deliver again.

No no I really appreciate that and it's been nice to see the evolution of these answers. So thanks for that and I said my question on that too would be a little bit shorter because I think you might be a little circumspect with regard to your answer.

Obviously as you alluded to in your prepared comments and in prior calls.

This really is a platform type of technology. So I guess I wanted to and you've already shown your ability to attract business development activities. So I guess with that said I know you can't be qualitative.

Can you I'm, sorry, you can't quantify per se, but maybe some qualitative type comments as to any potential in additional inbounds, you've been having on the platform.

I will be evasive about that.

Only because.

Only because they prefer.

You can always be close to deals and sometimes they can go away. So we will communicate any additional back to deals. After they are signed but I think it represents a very.

The compelling growth area, not only because it's oncologist.

For which there is a lot more precedent in cell therapy.

And a lot of activity and interest in investor enthusiasm I mean oncology. There are a lot of reasons why that is an attractive area for us.

But also because it does allow as I said in my previous remarks, it does allow us to be able to increase our development pipeline by fractional ownership or partial ownership or joint ownership or even majority ownership with a bunch of other companies because there are literally billions.

A potential antigens and one of the great challenges in our field is trying to figure out which antigens would actually be the ones that are most selective in the most antigenic and so forth in their whole company is built around trying to figure out what's a good thing to stick in front of a patient's immune system to get a response.

So our ability to use the dendritic cells as carriers.

I'm delighted that we have the first case of of this that we've got a partner that.

From which we are.

Generating revenues and delivering against that partnership and I would be really happy to have a bunch of those so it is not the number one priority at the company by any means but it is a really exciting area of growth, where we can capitalize on prior investments to spin out our flywheel style, a bunch of new programs and maybe maybe the others will do the development, maybe we will do.

The development I don't know what I'd love to see a combination of different structures you could even create a whole new company just around the oncology side of what we do so really the sky's the limit it comes out of the conversations that we have with various parties.

Look I really appreciate the color. Despite yourself described evasiveness evasive, just Brian but thanks, a lot I appreciate it. Thank you for the space Josef Thank you.

Next question, Sir we have Dane Leone from R. J F. You line is open.

Hi, Thanks for taking my questions.

That's on all the progress.

Just one question for me could you just maybe detail what the interactions with the FDA have been around <unk> and what the next meeting is planned for and what's going to be discussed at that meeting.

Thank you.

Yeah of course, Dan Thanks for the question there haven't been many.

The interactions that occurred shortly after I joined the company tended to be.

Protocol amendments, we introduced the new thaw and inject formulation.

We introduced the the orbit sub retinal delivery system into the protocol. So we've not had a formal end of phase two meeting.

So that's something for everyone to look forward to and it's planned for Q.

Q4 of this year because it would be the first time that we would have Frank discussions around.

Endpoint study design et cetera. So.

The phase one two study, which has now completed enrollment is essentially a trigger to go onto the next higher level of discussion. So that is that's where we are and I think it's actually a pretty important event because it will speak to.

What the questions are that we will ask next from a regulatory perspective and of course from that the size of the study the cost of the study the duration of the study the importance and significance of the study all of that will precipitate out of that meeting I hope. It will so it's a it's an important meeting for us to look forward to and prepare for.

Is that I'm, sorry, one follow up is that.

That meeting is has a set date as about.

We've not called the meeting and we have not said what.

What.

Category I'm sure you're familiar there's type ABC, there's different character.

<unk>.

Categories under which you can request meetings that is work that is ongoing we're preparing our side before we set our gate.

But we would presumably once we have a meeting confirmed and on the calendar, we would presumably make everyone aware of when that will occur. So that people can anticipate that we would have some follow up from from minutes et cetera from that meeting.

Okay.

Now <unk> is your internal target not something actually on the calendar with FDA.

That is correct and as you know, but maybe some listeners don't know there is also a waiting period.

Queen when you request the meeting and when the meeting is actually granted it can be 30 to 60 days it can be in between that it really varies according to a number of different parameters I won't go into but just so that people know you don't just pick up the phone and say hey can I can see it tomorrow for lunch.

Perfect. Thank you so much you bet.

Thank you Dan.

I am showing no further questions at this time I would now like to turn the conference back to Mr. Brian Kelly for closing remarks.

Well. Thank you. Thank you everyone for joining I think we had a great quarter I'm very happy about it and excited about <unk>.

<unk>.

Next quarterly update in the meantime, we'll get back to work and keep moving the company forward. Thank you all very much and enjoy your afternoon and EBIT.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.

[music].

Yes.

[music].

Welcome to the lineage cell therapeutics second quarter 2021 conference call at this time, all participants are in a listen only mode.

The audio webcast of this call is available on the investors section of the lineage website at www dot they need so that comp.

This call is subject to copyright and is the property of lineage and recordings reproduction or transmission. So for this call without the express we can get a sense of lineage are strictly prohibited.

As a reminder, today's call is being recorded.

I would now like to introduce your host for today's conference you want a home director from the director of Investor Relations at lineage Ms. Hao. Please go ahead.

Good afternoon, and thank you for joining US a press release reporting our second quarter 2021 financial results was issued earlier today August 12, 2021 and can be found.

And on the investors section of our website.

Please note that today's discussion will contain forward looking statements within the meaning of federal securities laws, including statements regarding our strategy goals product candidate clinical trials data announcements and updates anticipated regulatory meetings in it.

Our actions planned manufacturing improvements.

Financing cash management, and runway anticipated collaboration opportunities and benefits and commercial potential.

And uncertainties, 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 in our filings with the SEC, including in our quarterly report on Form 10-Q filed today August 12.

And our annual report on Form 10-K for the year ended December 31st 2020, presenting today is Brian Culley, Our Chief Executive Officer, and Kevin Cook, Our Chief Financial Officer, Brian and Kevin will provide some prepared remarks, then take questions from analysts with that I'd like to.

Turn the call over to Brian.

Thanks, Warner and good afternoon, everyone. We always appreciate you joining us on our quarterly calls.

The lineage team continued to execute on its aggressive business plan, making significant operational and clinical progress during the second quarter.

Notably we delivered additional positive clinical data from our <unk> program to treat dry age related macular degeneration with geographic atrophy.

We made substantial progress moving our spinal cord injury program toward further clinical testing.

We generated revenue from the first milestone payments under our new Vac based cancer Alliance and we even monetize some of our non core assets.

I'm also very happy that we have strengthened our leadership team through the appointment of Kevin Cook as our new Chief Financial Officer, and as you wanted to just mentioned Kevin is joining me on the call today and I appreciate the immediate impact he has had on our organization.

Simply put we believe that if retina cells or spinal cord cells are dying off or dysfunctional you need to replace those specific types of cells.

All of our cell therapy programs used cells, which we manufacture from NIH approved cell lines, which were established to characterize decades ago.

Because our sales are very potent and have never been differentiated they can surpass the hayslett Linda a principal of cellular aging.

Like limit states that a normal human cells can only replicate 40 to 60 times before it breaks down by a programmed cell death.

But self manufactured from our pluripotent cell lines can be replicated far above the ceiling.

If we put this means we can generate enough material to supply, even the largest commercial markets without ever sourcing new material or changing our starting materials.

Very different from what some of the competing allogeneic companies do with adult cells or mesenchymal cells. When you start with nothing kind of cells are adult cells. There is a limit to how many times you can divide them before you have to obtain new starting material.

<unk> provides us with an advantage over companies, which have to change their starting material every 10.100 or even 1000 patients.

These advantages of our true off the shelf platform are even greater when compared to autologous or individual patient specific approaches.

Or a therapy is created for just a single person.

Okay.

Instead of manipulating the genome and potentially causing changes, which we can't track or control, we utilized directed guided differentiation to manufacture ourselves.

With directed guidance differentiation, we harness the natural steps in the developmental pathway.

Order to manufacture only our desired cell types, we never modified the genome as part of our manufacturing process, because it simply isn't necessary.

Our sales are tested to ensure they have the attributes needed to perform the job of the cells. They are replacing without changing their genome and uncontrollable ways.

And to date, we have never documented a single case of rejection of ourselves from any of our patients even up to five years after treatment.

These advantages help establish our belief that our technology platform has potential not only in the indications. We currently are pursuing which are valuable in their own right. But also may produce additional product candidates beyond dry AMD spinal cord injury in cancer.

And as we continue to generate encouraging data on both the safety and efficacy of our three courage cell transplants will consider opportunities to investigate new applications of our technology and potentially address new or related diseases, either on our own or through strategic alliances.

I now will turn to doing a quick review of our recent accomplishments and set some expectations for the remainder of this year.

I will as usual begin with oxygen our lead product candidate intended to treat dry AMD with Ta a disease with no FDA approved treatments.

Our approach to treating this disease is to transplant, helping new retina cells.

Place or support the ones that have died off or just functional.

I've said many times that we believe our approach may be able not only to slow the disease process, but may even be able to halt or reverse it and we now have evidence of this claim occurring in multiple patients.

We also believe that origin, which currently is contemplated as a one time treatment performed in about 30 minutes to under local anesthesia has an enormous advantage in terms of compliance and convenience over traditional drugs being developed by competitors that require monthly or semi monthly injections.

Since the beginning of the phase <unk> clinical trial for opportunity, we have provided a cascade of positive updates from its use.

Believe our data set has improved with each update as the amount of evidence has grown.

And more and more time has lapsed from the date of treatments and we intend to continue providing these interim updates moving forward in fact, our next update.

Killing with at least nine months of follow up on all treated patients is expected later this quarter.

As I just mentioned we have reported three separate cases of retinal tissue restoration in dry AMD patients treated with origin and.

And specifically what this means is that outer retina layer restoration has been observed using clinical high resolution optical coherence tomography your OCD.

These findings suggest integration of the new RPE cells, the opportune therapy integration.

Integration with functional photo receptors in areas that previously shared no presence of any of these cells.

Remarkably these outcomes occurred in three out of the four patients who received their dose of oxygen throughout the trophic area rather than placing the cells.

Way from or even adjacent to the atrophic area.

None of the other 20 patients received cells in this manner. So we believe the correct way to measure our event rate for this training is three out of four patients demonstrated restoration or 75% and of course, the higher your event rate the easier. It is to demonstrate statistical significance in the context of a click.

Trial.

And to our knowledge. Despite many hundreds of patients with dry AMD NGA, having been treated in clinical trials by different sponsors.

Lineage is the only company that has shown even a single case of retinal tissue restoration.

And then we have three cases, each one adding durability with each passing day.

Treatment.

Meanwhile, visual acuity declined or worsens and the majority of the patients untreated eyes.

Cities of light.

This patient also experienced clinically significant improvement in visual acuity for more than two years at one point, gaining 12 letters on an early treatment diabetic retinopathy scalar ETE Drs scale, the standard assessment measurement tool.

Altogether. The data set we are collecting includes both functional and anatomical evidence, which further reinforces our belief that a suspension of operation RPE cells can generate clinically meaningful outcomes in patients with dry AMG with ta and particularly in those with earlier stage atrophic.

Disease.

For those of us for whom the subtleties of the details of OTT imaging and ETF Drs scores, it's a little too technical we would also just invite you to visit our website and watch the two patient testimonials, we recently posted.

We realize that there is a lot of attention on competitors' attempts to slow the growth of atrophy.

But despite hundreds of treated patients those approaches have failed to report both the structural and functional benefit to patients vision.

In contrast, we have patients in our trial, who have not simply slowed the growth of ta, but actually reversed it and have benefited from an improvement in their vision at the same time.

Looking ahead for the promising origin program. In addition to the regular updates that we provide we plan to provide additional updates at important medical conferences. This year, including the 54th annual retinal Society scientific meeting, which takes place in Chicago September 29th through October 2nd as one looks at the 2021 annual Academy of Ophthalmology.

Annual meeting the largest ophthalmology meeting in the World, which takes place New Orleans November 12 through the 15th.

Overall, the data we have generated to date reinforces our belief that RPE cell transplants can provide outcomes beyond the reach of traditional pharmaceutical approaches which are limited to a subset of biological pathways in which may fail to provide maximum where sort of benefit available to patients.

We continue to work to position physician opportune RPE transplants as the best available option and the race to address the large unmet medical need in dry AMD with <unk>.

Now moving next to OTC, one our allogeneic cell transplant program to treat spinal cord injuries.

<unk> is a onetime administration of specialized spinal cord cells called oligodendrocyte progenitor cells, which are delivered directly into the area of injury spinal cord patient spy.

Spinal cord injuries can lead to paralysis and loss of motor and sensory function and the lifetime cost of care for an STI patient has been estimated to be as high as $5 million.

But like dry AMD. There currently are no FDA approved treatments for spinal cord injury.

Because the material used in the prior clinical trials OTC won by a different sponsor was not manufactured through a process compatible with late stage clinical and commercial development.

The lineage team needed to develop a new manufacturing process, which let successfully to significant improvements in the production quality and scale of <unk>.

These are improvements, which we expect will enhance the commercial viability of a future approved product.

And reduce costs by approximately 90%.

In parallel with this work.

The near game Parenchymal spinal delivery your PFD system is expected to reduce a significant technical hurdle to conducting any larger scale clinical trials because it has been designed to allow for the administration of cells to smile court without stopping the patient's respiration.

And it can accommodate our new thaw and inject formulation.

We currently are conducting preclinical studies and a large animal model model to validate this device and we intend to submit an amendment to our investigational new drug or IND application for <unk> one in the fourth quarter of this year to initiate a clinical safety study in Sci patients.

And we have already received feedback from FDA in June to June of this year under the regenerative medicine advanced therapy or <unk> program for such a study and as an added benefit from that FDA interaction. We learned that in addition to patients with sub acute injuries, which are the patient characteristics treated previously.

We anticipate that patients with chronic spinal cord injury also will be eligible for enrollment in the safety study.

This larger patient population will not only provide safety and device performance data across a broader range of patients and injury types, but also made enrollment because chronic patients are generally easier to identify and enroll than patients who would need to have had an injury within a few weeks or months prior.

Overall these.

These data will be more informative to the program and support further product and device development.

Testing this new delivery system and a small study will simplify the design and execution of a subsequent controlled study introducing LPC one manufactured with our new process.

Thirdly, I will move to back to our investigational off the shelf dendritic cell cancer vaccine.

Last year, we exercised our option with cancer research UK to bring the Vac immuno oncology platform in house and not long thereafter, we reported encouraging preliminary phase one clinical results in non small cell lung cancer patients and in which <unk> two demonstrated potent induction of immune responses.

Providing us with additional mechanistic validation and reinforcing data obtained in the autologous back one clinical trials conducted previously.

Our partner cancer Research UK is responsible for this study and with enrollment impacted by Covid restrictions across the U K. They are still working on enrolling the final patient into the study, but following completion of enrollment we anticipate additional clinical data from this study will be available and reported.

This manufacturing focused investment is fairly similar to what we did successfully with both at Virgin and OTC, one and is very core to the highest competencies at lineage.

Which the dendritic cells are carrying to the patient's immune system.

Opens up a large number of potential corporate partnerships by allowing us to use our dendritic cells as carriers for other companies antigens and while simultaneously retaining the option to advance our own carefully selected antigens.

As an example of us implementing that exact strategy.

In April we announced our first collaboration for our <unk> platform with <unk> Therapeutics, our ITI <unk> with whom we are collaborating to generate a novel product candidate derived from our <unk> platform and targeting a proprietary antigen construct provided by ITI and this would be for the treatment of Glioblastoma multiform.

As of early August we have already achieved our first technical milestone under this agreement, which triggered a payment to lineage of a $5 million and allows us to continue working towards the achievement of subsequent milestones, which by the way includes another $1.5 million, which we are working to receive within the next year.

The early success demonstrated in our first ITI collaboration provides real world validation of this approach and our plan is to leverage our technology to generate additional fact drive cell therapies for our pipeline and capitalized on the strength of linear inches recent manufacturing and cell transplant accomplishments.

These alliances can diversify our oncology pipeline across more programs and provide new opportunities for success without the financial burden of independent development.

And I'll continue with the theme of corporate partnering and add that in June we announced an option agreement with a mass of therapeutics, a privately held biopharmaceutical company for our high stem technology and for the development and commercialization of therapies for local treatment of solid tumors.

And through this agreement, we have an opportunity to provide a market with access to our clinical grade <unk> material to support the development of oncology related products.

Alongside a previously announced deal with advanced bio matrix.

This deal represents the second highest stem related transaction, we have entered into over the past two years.

As many of you will recall lineage has an extensive intellectual property portfolio and from it we will continue to seek opportunities to unlock value from our noncore assets.

In June we reported that we had been added to both the Russell 3000 index as well as the Russell Microcap Index. These.

Overall, I believe we have continued to execute and generate valuable progress advancing all three of our clinical programs and further strengthening the company's capabilities. So with that I'm happy to now turn the financial section over to our new CFO, Kevin Cook, Kevin brings lineage more than 20 years of significant strategic.

Thank you, Brian and good afternoon, everyone I'm excited to be here and I look forward to connecting with many of you more closely in the months ahead.

In the meantime, let's talk about some of our recent financial results.

Total revenues for the second quarter were approximately $500000.800000 increase from the same period in 2020.

The increase was due primarily to a $200000 increase in booked collaboration revenues from the new immuno <unk> therapeutics licensing agreement plus $100000 increase in royalties offset by a reduction in grant revenues, resulting from the completion of NIH grant activities in the prior year.

Total operating expenses for the second quarter of 2021 were approximately $7.5 million, an increase of approximately $800000 as compared to the same period in 2020.

The increase was primarily primarily related to an increase in general and administrative expenses due to higher investor relations expenses asterias merger related expenses and other legal costs.

Our loss from operations for the second quarter was approximately $7.1 million an increase of $700000 as compared to the same period in 2020.

This increase was mostly due to higher G&A expenses incurred in the second quarter of 2021.

The net loss to lineage for the second quarter of 2021 was $4.8 million or <unk> <unk> per share as compared to $6.5 million net loss or <unk> <unk> per share for the same period in 2020.

It is important to remind investors that the variance between our loss from operations in our overall net loss is impacted by changes in the value of our investments in acre site and hottest seat as well as foreign currency exchange rate fluctuations related to lineage as international subsidiaries. Additionally.

Additionally, in the second quarter, we recognized a gain of half a million dollars related to the extinguishment of debt for our paycheck protection program loan, which was forgiven in full.

While these non operational fluctuations are important we tend to utilize loss from operations as a more relevant measure of performance with regards to moving our clinical programs forward.

Turning to the balance sheet. The company ended the quarter with approximately $68.7 million in cash cash equivalents in marketable securities.

We continue to feel that our liquidity level provides us flexibility and funding to reach additional value, creating milestones in the months and years ahead.

That wraps up the financial section. So thank you for your time and we'll now turn the call back over to Brian.

Thanks, Kevin.

And lineages objectives is to be positioned for the rapid growth of this emerging brands with branch of medicine by providing evidence that off the shelf cells can generate safety and efficacy data in large commercial opportunities where small molecules have not succeeded.

Some of the events and milestones, which shareholders can look forward to include.

With respect to the <unk> program the presentation of additional interim data from the phase <unk> study, which is anticipated during this quarter and the next quarter of this year.

We also plan to meet with FDA to discuss further clinical development and that is anticipated in the fourth quarter of this year.

With respect to the OTC one program in spinal cord injury, we will be evaluating the near gain PSD device in both preclinical and then clinical testing.

We are conducting GMP production of OTC one.

And improved manufacturing process, and we will be conducting release testing to support a late stage clinical trial.

And we have an FDA interaction to discuss manufacturing improvements, which is anticipated around the end of this year, maybe early next year.

Lineage, we're immensely proud to have the opportunity and responsibility to advance this new and exciting branch of medicine, and we aim to make a profound impact on the millions of people who served as our inspiration. So for those of you who would like to understand better about what it means on a personal level I really encourage you to check out the media.

Section of our website, where you can hear directly from the same patients that we aimed to help so thank you very much for joining us. This afternoon. We appreciate your support as we position lineage to become a leader in cell therapy in transplant medicine.

And with that operator, we are definitely ready to respond to any analyst questions, which we may have.

Okay.

For our first question, let me have Kristen <unk> from Cantor Fitzgerald. Your line is open.

Hi, good afternoon, everyone. Thanks for taking my question.

The first one I have hey.

How do you anticipate the inclusion of these patients could change the addressable market opportunity.

Thank you Kristen for the question. So the study that we will.

We're planning to conduct next in four <unk>. One is the device study and so the objective of that study is to demonstrate not just the safety of that device, but its ability to be able to successfully deliver cells into the correct location in the spinal cord.

And typically plateau, you don't often see meaningful spontaneous recovery in a chronic patient.

We have what I think is a very asymmetric setup to this study extensively we're there to make sure that we can deliver the cells to the right place in the spinal cord. However.

If we see some sort of signal.

In even a known statistical signal in a chronic patient.

That opens up an incredible new and exciting area for us, which would certainly have a large impact on the addressable commercial opportunity because our current expectation for this therapy is that you would want to administer it between 21% and 42 days after an injury.

But if we can have some benefit even a small benefit in patients that were injured three months ago three years ago 33 years ago.

Now you get to not just include the.

The incidents of a condition, but also the prevalence of the condition. So it would be multiples larger if.

If we were able to treat and provide a benefit to chronic patients.

But the real advantage for us on its face is that we can.

Just trying to make sure that the new system is effective and safe at delivering the cells and that we can do that in a chronic patient because it really is more of an anatomical question that we're getting an answer to rather than an efficacy question.

Does that makes sense.

Yes. It does thank you for that and then on the upper Gen. One of the potential benefits you've cited outside of efficacy and safety is on durability and convenience does this treatment doesn't entail frequent injections, we've seen for other trials.

Wanted to ask how long you intend to follow up with these patients in cohort four to determine how long the effects could be maintained in order to determine if future procedures will be needed.

A couple of years basis or do you think this is really going to have to be evaluated more on an individual patient basis.

So what we plan to do with the current protocol. This followed these patients for five years.

If we decided to make a change at some point in the future and followed them for longer that's fine I think we would like to eventually answered the question as to what is the mean length of benefit how durable is the therapy and when you do get out to five years, you kind of assuming its lifetime, but.

At present, we would follow these patients for five years.

It's not.

A clinically.

Sure.

<unk> data on patients.

Which started monthly and then its going through quarterly and eventually to become an annual assessment, but ultimately reaching out for five years.

But we don't intend to use five years as a clinical trial endpoint.

Would expect completely that we would follow the standard path of a 12 month observation period. So we'll collect the data I expect that we will continue to report that long term data, but for people who are wondering.

Which data point, they should pay the most attention to.

Six month, and 12 month data points are the ones that are the most well established as being relevant to a regulatory process.

Thank you and just on that note now that you've observed a number of patients beyond six months and you have long term follow up for many others.

Placement of the cells and the importance there and how this has translated for the cases right in all tissue restoration, but anything else that.

You've found to be notable.

Yes, you mentioned placement I think that's really important the other one that I think is very important is how you image the patients so the traditional way.

Which I think is going away is to use Fas, which is sort of like an area of picture the.

The liver tissue and be looking to measure the functional.

Activity of that tissue in areas, where it wasn't present, you actually can't see that using ethane, we cannot see that using SaaS because ourselves do not flores under Fas.

So we feel that we are in a.

We are aligned with the future and it's not a distant future. This is it's more presence, but we are aligned with the future of how to measure and evaluate geographic atrophy and that would be to use optical coherence tomography or OTT rather than SaaS. So that's an important consideration for us going forward and I think where it is.

Most striking is some data we have one slide that we shared not too long ago, where it shows about a 30% benefit for our patients it reduces their area of atrophy by about 30%. When you look at it using Fas, but again thats that sort.

Sort of imperfect aerial view when you look at the same patient at the same time points using OTT you can see that their area of atrophy is unchanged at 100%.

That's a stopping a ceasing of growth of atrophy. So clearly there is more information to be learned from using OTT. So I think placement of cells.

And I think that the.

Measurement tool the assessment tool are really important ones other ones like the frequency of assessment.

Some of the characteristics of patients those are a little bit more straightforward and conventional.

Great. Thank you Brian.

You bet. Thank you Kristen.

Next question, we have telephone Internet from H C. Wainwright Your line is open.

Hey, guys. Good afternoon, thanks for taking the question.

Couple of questions on <unk> and a shorter question on back to so first on op region I.

I guess I wanted to focus on do you have.

Some feedback you can provide us to kols feedback or physician feedback that you've had now that you have three patients that have shown restoration.

Which has been unheard of onto this up until this point that you're using for feedback ahead of your.

Upcoming FDA meeting and this is beyond say the.

The physicians that you've had on your recent K O L events, and then secondly, with regard to offer Gen. I guess as Youre looking to your FDA meeting.

Your wish list.

What kind of endpoints are you looking for for a primary endpoint, there's been a lot of evolution from the FDA with regard to ocular endpoints.

You mentioned micro Perimetry before the FDA is focusing on that more and more say versus B CVA, which has been in a lot of the wet AMD study. So how do you think it might play out or whats your wishlist around that.

Yeah, Great Hi, Joe and thank you for the question so with respect to.

Therapeutic area experts and their input.

We've been delighted with with what we have heard.

And in some cases it's.

Yes sort of extraordinary comments, we're not planning to build a meeting package for FDA around their extraordinary comments, we'll build that around the data, but the benefits for US is it this is heavily anatomical data so.

Going in and in bringing visual acuity data or patient reported outcome comes data that's fine that's useful and informative, but everybody knows that those those assessments the tools and how they are collected.

They tend to be a little bit more subjective, but anatomy does not change.

Change, but for the fact that you've got this right in the back Youre getting bigger.

You can take images collect images and you can line them up exactly the same based on where vessels are and you can really see these changes and so youre able to separate from some of the.

Let's say placebo effects of clinical assessments or separate away from some of the more subjective factors you've done one one.

On data collector, who lets the patient lean forward a few inches when they are reading the chart youre not allowed to do that so.

It can be difficult to get really clean data when you have somebody suggested subjective assessment.

Even restate some of them because they're almost too much to believe but I think that although we've heard some really wonderful comments from some thought leaders in the field.

Particular ones that have been very close to the data and been able to really dig into it.

Don't rely on that for the discussions with FDA, we will rely on just the pure observations of there was elm's here.

I think the division director of the Ophthalmology has been quite clear that.

Let's see.

<unk> secondary endpoint that might give us overwhelming commercial power. If we have if we have evidence of a benefit in vision or no loss of vision compared to a control arm.

That is an extremely powerful talking point for for.

Excuse me of these atrophies, and so that's where I want us to be and I think that's the best place for us to be and it's funny for me to say that because 12 months ago.

I have to be very vague about it I couldn't tell you if I thought we would be a GE story or visual acuity story, because we didn't have enough data we have enough data to know that it's very easy to say, we want to be a G. A growth inhibition story.

With the added benefit of being able to look at a functional improvement for the patient or absence of loss for the patients either of which would be something that I have not seen the competition being able to deliver yet.

Obviously as you alluded to in your prepared comments and in prior calls.

This really is a platform type of technology. So I guess I wanted and you've already shown your ability to attract business development activities. So I guess with that said I know you can't be qualitative.

Can you I'm, sorry, you can't quantify per se, but maybe some qualitative type comments as to any potential in additional inbounds, you've been having on the platform.

I will be evasive about that.

Only because.

Only because they prefer.

You can always be close the deals and sometimes they can go away. So we will communicate any additional back to deals. After they are signed but I think it represents a very.

The compelling growth area, not only because its own ecology.

For which there is a lot more precedent in cell therapy.

And a lot of activity and interest in investor enthusiasm I mean oncology. There are a lot of reasons why that is an attractive area for us.

But also because it does allow as I said in my previous remarks, it does allow us to be able to increase our development pipeline.

Fractional ownership or partial ownership of our joint ownership or even majority ownership with a bunch of other companies because there are literally billions of potential antigens and one of the great challenges in our field is trying to figure out which antigens would actually be the ones that are most selective in the most antigenic.

And so forth in their whole company is built around trying to figure out what's a good thing to stick in front of a patient's immune system to get a response, so our ability to use the dendritic cells as carriers.

I am delighted that we have the first case of of this we've got a partner that from which we are.

Generating revenues and delivering against that partnership and that would be really happy to have a bunch of those so it is not the number one priority at the company by any means but it is a really exciting area of growth, where we can capitalize on prior investments to spin out our flywheel style, a bunch of new programs and maybe maybe the others will do the development, maybe we will do.

The development I don't know I'd love to see a combination of different structures you could even create a whole new company just around the oncology side of what we do so really the sky's the limit it comes out of the conversations that we have with various parties.

Look I really appreciate the color. Despite yourself described evasiveness invasive just Brian but thanks, a lot I appreciate it. Thank you for the space Josef Thank you.

Next question, Sir we have Dane Leone from R. J F. You line is open.

Hi, Thanks for taking my questions.

That's on all the progress.

Just one question from me could you just maybe detail what the interactions with the FDA have been around up or down and what the next meeting is planned for and what's going to be discussing Amit. Thank you.

Yeah of course, Dan Thanks for the question there haven't been many.

Interactions that occurred shortly after I joined the company tended to be.

Protocol amendments, we introduced the new thaw and inject formulation.

We introduced the the orbit sub retinal delivery system into the protocol. So we've not had a formal end of phase two meeting.

So that's something for everyone to look forward to and it's planned for Q.

Q4 of this year because it would be the first time that we would have Frank discussions around.

Endpoints study design et cetera. So.

Is that I'm, sorry, one follow up is that.

That meeting is has a set date.

Now.

We've not called the meeting and we have not said what.

What.

Category I'm sure you're familiar there's type ABC, there's different character.

<unk>.

Categories under which you can request meetings that is work that is ongoing we're preparing our side before we set our gate.

Okay.

As it stands now.

<unk> is your internal target not something actually on the calendar with FDA.

That is correct and then as you know, but maybe some listeners don't know there is also a waiting period.

Perfect. Thank you so much.

Thank you Dan.

I am showing no further questions at this time I would now like to turn the conference back to Mr. Brian Colley for closing remarks.

Well, thank you and thank everyone for joining I think we had a great quarter I'm very happy about it and excited about <unk>.

Rejoining.

Next quarterly update in the meantime, we'll get back to work and keep moving the company forward. Thank you all very much and enjoy your afternoon and evening.

Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.

Q2 2021 Lineage Cell Therapeutics Inc Earnings Call

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