Q4 2021 Lineage Cell Therapeutics Inc Earnings Call
Yes.
Welcome to the lineage cell therapeutics fourth quarter and full year 2021 conference call.
At this time all participants are in a listen only mode.
An audio webcast of this call is available under the investors section of Linzess.
Sorry, that's www dot lineage cell dot com.
This call is subject to copyright and is the property of lineage and recordings reproduction or transmission of this call without the express 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 <unk> Hone head of Investor Relations at lineage Missoni. Please go ahead.
Thank you Blue good afternoon, and thank you for joining US a press release reporting our fourth quarter and full year 2021 financial results was issued earlier today March 10, 2022 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 of federal securities laws, including statements regarding our strategy plan aim objectives Scott.
<unk> will lead development program product candidate platform and pipeline and their potential therapeutic applications and commercial potential the timing of the announcement of additional product candidates.
Trial data update future payment transfer of expenditures and activities under the collaboration with Roche Genentech.
Anticipated benefits and opportunities from our existing and potential future collaborations we.
The achievement of milestones anticipated regulatory meetings and interactions.
<unk> manufacturing improvement.
Financing cash management and runway anticipated growth and commercial opportunities.
Statements made during this discussion that are not statements of historical facts 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 annual report on Form 10-K filed today March 10 2022.
With us today are Brian Kelley, our Chief Executive Officer, and Kevin Cook, Our Chief Financial Officer.
Brian and Kevin will provide some prepared remarks, and then will be available for questions from analysts.
That I would like to turn the call over to Brian .
Great. Thanks, Walter and good afternoon, everyone I realize there are a lot of companies reporting today. So we really appreciate you choosing to join us.
This is actually the first time that I am speaking directly to you this year and rather than providing the usual program updates I decided to frame our discussion a little bit differently, especially given the overall market conditions, we're experiencing.
Objectives today to provide some broader context around the partnering of our lead program as well as the top line view of how we plan to evolve and grow our business going forward.
Heard from many investors who are surprised are frustrated by the current share price, especially considering the transformative deals, which we entered into with Roche last year.
<unk>, which we believe validates what many of us thought for years.
Being that in the right settings.
Transplant may be able to deliver clinical outcomes beyond the reach of traditional small molecule approaches.
I think the disconnect is being driven primarily by macro factors, which are negatively affecting the overall biotech sector.
Without diminishing the importance of share price I also want to make sure that everyone understands how we believe the Roche collaboration created value for the company in other areas and how it can continue to do so for years to come.
We believe this first worldwide partnership unlocks a whole new set of opportunities for lineage and there are many reasons for optimism over the short medium and long term time frames, which I aim to describe for you today.
2021 was a successful year for our company in many respects, obviously capped off by the Roche partnership, which we announced in December .
We believe that Youll provide tangible and independent evidence of the potential for our approach to address multibillion dollar market opportunities.
A commitment of this size by a global pharmaceutical company also provides an indication that cell therapy applications outside of oncology are reaching an important inflection point as a new branch of medicine.
And we believe it also provides a testament to linear just specific capabilities in this field.
Our accumulated directed cell differentiation Knowhow contributed to this collaboration and we believe that experienced some success can be applied to other therapeutic areas, which we're working on.
We therefore are eager to transfer that knowhow to our other programs in the months and years ahead.
We also now have the strongest balance sheets in our company's history. This is the result of the combination of the Roche upfront payment capital, which we raised in 2021, when the share price was significantly higher and our continued approach to careful spending.
We take pride in the efficiency, we believe we create in terms of product development progress per dollar spent.
And we invite you to compare that metric with other biotech companies of our size and scope.
We also made significant progress during 2021 with the development of our other programs progress that we expect will allow us to move toward additional clinical trials of those products during 2022.
Because all of our programs are based on the same core technology and because we have learned a great deal to the development of op for Jim.
Our increasingly optimistic about our ability to have similar success with additional products over time.
And that success could arise in the form of additional partnerships with major pharmaceutical companies or we may elect to develop one or more of our product candidates ourselves eventually becoming a company, which collect revenues from our own product sales if doing so is in the best interest of our shareholders.
Now I'd like to take just a moment to review the operating partnership you already know that Roche is one of the largest pharmaceutical companies in the world and their products include some of the most widely prescribed ophthalmic therapies.
But outside of oncology only a small number of cell therapy companies have successfully attracted a big pharma partnership.
And to our knowledge. This was the largest license agreement ever sign for a non oncology cell therapy product candidate.
In addition to the $50 million upfront payment, which we received.
We're eligible for up to $620 million of additional cash payments for the achievement of various developmental regulatory and commercial milestones and we also are eligible for tiered double digit royalties, which could reach very large amounts in light of our expectations. The dry AMD, representing multibillion dollar <unk>.
<unk> opportunity.
In addition to all of these potential payments Roche Genentech is now leading all operating programs globally that includes clinical development regulatory interactions and of course commercialization.
Lineage also will be offsetting the majority of its future <unk> clinical and commercialization expenses.
Now let me still maintains responsibility for activities related to the ongoing phase <unk> clinical study, which you may recall completed enrollment about a year ago as well as certain manufacturing commitments and we also have a pathway to provide input via multiple joint advisory committees and if it is.
Determined to be beneficial for the program at some point during the collaboration lineage could take on responsibility for later stage manufacturing, but that would be subject to a separate and additional economic arrangement.
We are extremely pleased with the financials of this deal, but I realize that some people may feel frustrated that they no longer will receive the frequent updates, which they enjoyed well opportune was under development by lineage, but this is a common trade off for getting this program into the hands of such a capable <unk>.
One with the resources to elevate its probability of success.
That being said future public visibility into this program still will be available through channels that are required to be made public by sponsors or <unk>.
Through disclosures made directly by Roche Genentech and.
And as one example at a virtual event following the angiogenesis 2022 meeting in February a Roche representative mentioned opera Jen as one of their therapeutics in development for geographic atrophy that has the potential to restore retinal structure and improved vision.
<unk> also has now listed among roche's product development pipeline as RG 6501, and investors who are interested in learning more from this event can access the information directly from the Roche website.
We certainly look forward to being able to share information on things like the timing of the next clinical trial when those details become publicly available and we also expect the scientific papers presentations and any milestone payments, which we receive along the way will become publicly available at various times during the development cost.
Yes.
So if you are wondering how our stock could've gone down after such a transformative deal a deal that not only underlying the value of our technology, but also greatly strengthened our balance sheet and provided the potential for years of substantial cash flows well.
That alone.
Clear that the biotech sector is currently in the grip of a very bad bear market, which by some measures is among the worst in the 40 year history of the modern biotech industry.
And in this context lineage appears to have suffered alongside the vast majority of other small biotech companies, which nonetheless is frustrating however.
However.
In my experience and in the opinion of many experts.
Biotech companies that are well financed and which continue to make clinical progress without necessarily needing to raise additional capital.
Tend to be well positioned when world events settled down and investment returns to such promising biotech companies. So I think where we are today puts us in a great position relative to many other companies with respect to our ability to weather the current biotech storm.
And to support my optimism.
Note that we have been successful and outperforming our peers in both good markets like 2020 and in bad ones by 2021 and.
And whether the world mixed experiences a rebound or a recession in 2022, I think that it will be a very exciting time to be involved with lineage.
In the past.
They are thought of linear just just the dry AMD company and that is understandable.
Recently, we mostly discussed opportune and didn't emphasize our other clinical stage products or the broad potential of our technology.
But lineage has far more to offer than just opportune.
We believe we are a leader among the growing number of regenerative medicine companies advancing an entirely new branch of medicine.
And with our newfound validation of capital, we have the potential to broaden and accelerate our work.
<unk> is our first product candidate to gain prominence principally due to the restoration data, we generated with our whole cell transplant approach, but there are dozens of other cell types that we have been evaluating as potential development projects and which have the potential to address a huge unmet medical needs most.
Often related to diseases of aging for a diminished health span.
And importantly for such Big picture thinking.
We have learned a great deal from developing opportunities in some of these new opportunities share important parallels with RPE program.
So I anticipate that our future product development, maybe faster cheaper and easier than what we've accomplished already.
Our team is excited to be applying the knowledge, we gained from the option program to our work and other products.
Significantly where.
We're working to get two of those products to initiate the next clinical trials by the end of this year.
Those products are <unk> for spinal cord injury and back to our cancer therapy.
These product candidates have demonstrated promising safety and efficacy data in their initial clinical trials, but each of them required additional work to be ready for the next stage of development.
And the work needed to go from these early trials to later ones, which includes things like production efficiency and the precise cell delivery.
Can be among the less glamorous steps in drug development, but also among the most important because these are the fundamental characteristics, which are necessary to enable a cell therapy product candidate to move from being an interesting idea to becoming a bonafide competitor with a clear line of sight to a global partnership.
Our independent commercial success.
And these areas of focus also are anticipated to provide an attractive return on investment because they facilitate the ability of these assets to move on to later stages of development and greater investor visibility.
To that point.
Pace of development of our OTC wanted back programs is accelerating and I expect we'll continue to do so as the transition of <unk> from lineage. Two Roche continues to free up resources for our other assets and.
And as I stated, we are working diligently to try and get both of these product candidates to initiate the next clinical trials this year.
Yes.
For OTC, one our efforts will be focused on initiating a clinical trial involving a new delivery device.
As well as multiple interactions with the FDA to discuss cell manufacturing improvements, which we've made and.
And Additionally, our proposed design of a late stage clinical trial in spinal cord injury.
For back our current focus is on making improvements and modernization for the manufacturing process, which we believe will help prepare back to for further clinical trials and provide competitive advantages advantages to the program.
This year, we also look forward to soon to the completion of the ongoing phase one clinical trial of <unk>, two which is being conducted and funded by cancer Research UK.
As well as conducting internal efforts to support the filing of an IND for further clinical testing, which would occur under lineage as direction in the U S.
Now so far.
All of the products that I had mentioned today are products that you have heard it before.
With what we have learned from the development of operation and the overall development of our technology across all three clinical stage products.
We have been evaluating dozens of other product opportunities that are possible using our technology.
These are different cell types that could treat major medical needs that many cases represent multibillion dollar market opportunities.
And out of those dozens we have narrowed our focus to a small number which appear to be the most attractive to us in terms of features like the total addressable market the competitive landscape the commercial production viability and other many important features.
And I am excited to announce that later this month, we are planning to reveal the first of these new indications and entirely new product opportunity based on our in house efforts.
Although I'm not planning to discuss the specific application today I can share with you that we very recently put appropriate intellectual property protections in place for this new initiative and notably we didn't have to spend a single dollar to acquire any third party rights or buy someone else's asset.
This is a homegrown program.
First of its time for wins and just a couple of weeks I plan to share. The details of this new program why we're excited about it and how we were able to generate a new pipeline programs, so quickly and efficiently.
Overall I.
I believe that the combination of a valuable big pharma deal.
Continuing to advance our current clinical programs.
And then later this month, providing a first example of how our platform can rapidly and economically generate new internally owned assets will significantly elevate awareness and drive shareholder value for years to come.
So to conclude this overview our objective is to be a leader in the field of cell therapy by continuing to provide evidence that off the shelf cells like ours can generate compelling safety and efficacy data in large commercial opportunities and in some cases.
Liver outcomes beyond the reach of traditional approaches like small molecules or antibodies.
And during 2022, we will be singularly focused on the continued advancement of our current pipeline as well as strategic expansion of our novel approach in settings, where we believe we can make a significant impact on the human condition by capitalizing on what we accomplished with opportune and working to demonstrate additional examples.
Of our replace and restore therapies.
With that I'm happy now to turn the call over to Kevin for a financial update.
Thank you, Brian and good afternoon, everyone I'll.
Ill briefly review our recent financial results, but just a quick preamble before I dive into specifics.
Counting for the Roche collaboration strictly adheres to current GAAP standards.
But it isn't necessarily intuitive nor is it a perfect match to the timing of our actual cash flows.
What's important to note from a practical standpoint is that we completed the transaction in December .
And in January we received the $50 million upfront payment from Genentech.
And what we then paid out approximately $21 million to satisfy our downstream obligations related to the licensing.
Meaning we added $29 million to our balance sheet in Q1.
But for GAAP accounting purposes, we accrued all of the downstream expenses immediately upon signing of the deal in December .
And we booked those under R&D expenses as dictated by accounting guidelines.
The $50 million upfront payment, however was locked as deferred revenue and will be amortized over a longer period as we fulfill our obligations to genetics.
Because of this GAAP treatment.
Our financial statements in our earnings release reflect a big operating loss and net loss as a result of the timing mismatch of booking all of the expenses, but only a small portion of the revenue in the current period.
The important takeaway is twofold number one our operating cash flow for 2021 was negative $23 5 million, which is right in line with the guidance we provided.
And that is a testament to our diligent focus on disciplined use of capital as Brian mentioned earlier. This is one of our core operating principles.
But that $23 $5 million of actual spend in 2021 is very different from our $49 million loss from operations is that again as a result of the revenue expense mismatch via gap.
The second important takeaway is that our cash balance as of January January is $83 million.
Which reflects receipt of the $50 million upfront payment and payment of the downstream obligations. Okay. So thats my preamble now let's spend a couple of minutes on the reported results.
Total revenues for the fourth quarter were approximately $1 2 million.
A zero point $8 million increase from the same period in 2020.
The increase was due primarily to increased royalties and licensing fees in connection with the collaboration agreement.
Total operating expenses for the fourth quarter were approximately $29 2 million an increase of approximately $23 1 million as compared to the same period in 2020, but again this was substantially driven by the $21 million in accruals for the downstream obligations related to the Roche deal.
As a result, our loss from operations for the fourth quarter was approximately $28 2 million, an increase of $22 3 million as compared to the same period in 2020.
Again, a result of the mismatch of deferring the majority of the revenues, but taking all of the expenses in the current period.
The net loss attributable to lineage for the fourth quarter of 2021 was $29 million or <unk> 17 per share as compared to a $2 million net loss or a penny per share for the same period in 2020.
Turning to the full year results total revenues for 2021 were approximately $4 3 million, an increase of $2 5 million as compared to 2020.
The increase was due primarily to increased royalties and licensing fees.
Total operating expenses for 2021 were approximately $52 1 million an increase of approximately 42.
Approximately $24 2 million as compared to 2020.
Again, driven by the $21 million in accruals for the downstream obligations related to the Roche deal.
As a result, our 2021 loss from operations was approximately $49 2 million an increase of 20 to $22 8 million as compared to the same period in 2020 once again broken record sorry, a result of the mismatch of deferring the majority of the revenues, but taking all of the expenses and the <unk>.
Current period.
The net loss for lineage for 2021 was $43 million or 26 per share as compared to a $26 million net loss or <unk> 14 per share for 2020.
Turning to the balance sheet, we reported cash and equivalents of $55 7 million as of year end 2021.
And the cash and cash equivalent number as of the end of January 2022 was approximately $83 million because it incorporates receipt of our share of the $50 million upfront payment from Genentech.
Accordingly, we continue to feel that our financial position provides us with sufficient capital to reach multiple value, creating milestones in 2022 and beyond.
As we work towards these milestones we intend to continue our efficient and disciplined spending we are proud to have made considerable progress in the past few years, while maintaining a net spend level below $25 million per year.
Level, which we believe is meaningful meaningfully lower than that of most companies with similar stage pipelines as lineage.
Looking ahead to this year, we likely will see an increase in our net spending because our plan is to create value by advancing two programs towards our next clinical trials and.
And we still have certain obligations under the Roche agreement.
But nevertheless, we expect to have capital resources, well into 2024 and potentially further subject to payments. We may receive for feature for feature development milestones available under our Roche <unk> ITI agreements.
And further depending on variables like grant money, we might receive from entities like CERN opportunistic financings or additional business development arrangements, we might enter into in the future.
So that wraps up the financial section. So I. Thank you for your time and we'll now turn the call back over to Brian .
Great. Thanks, Kevin our next will wrap up with a summary of the events and milestones anticipated by lineage in 2022, and then we'll go to questions. So later this month as I explained we will announce the first area of internal expansion of our regenerative medicine.
Cell therapy pipeline.
We aim to complete GMP production of OTC, one by an improved and larger scale manufacturing process and with a new client and inject formulation, which we have developed.
We will continue to provide updates from the ongoing back to phase one non small cell lung cancer study.
We intend to meet with the FDA to discuss recent manufacturing improvements we've made to OTC one.
We are collecting data to support an IND amendment, which we expect will permit us to initiate a clinical study of a new delivery device for <unk>.
We're moving ahead on plans for an IND submission for <unk> two clinical study to be conducted in the U S.
We will continue the development of <unk> based therapeutic for Glioblastoma with our strategic partner Immunomedic Therapeutics, we will evaluate business development opportunities as both the license sore and licensee throughout 2022.
And as always we will seek to broaden the awareness of our work through participation in the large number of investor and partnering meetings met.
<unk> and industry conferences and other communication channels.
So our core principles are to advance an emerging technology ever closer to patients and physicians.
Providing the product attributes and rigorous clinical testing necessary to achieve commercially successful cell therapy products.
And to that end, we've made significant investments in areas like production scale purity and delivery of ourselves.
Our objective from these steps was to create best in class products for end users and strong competitive advantages to protect our products over the long term.
There's a lot to anticipate from lineage in the coming weeks months and years.
Sincerely appreciate your support as we position lineage to become a leader in cell therapy and cell transplant medicine.
Operator, we are ready to respond and take any analyst questions that may have come in.
Thank you at this time, so I'll ask a question you will pass star one.
Again to ask a question you will need to press star one on your telephone.
To withdraw your question just press the pound key.
Please stand by while we compile the Q&A roster.
Your first question comes from the line of Kristen <unk> from Cantor Fitzgerald. Your line is now open.
Hi, everyone. Good afternoon, thanks for taking my questions and looking forward to the update later this month.
Wanted to ask a question on OTC born.
I know that some of the changes made were based on longer term strategies in mind, including manufacturing and physician ease, but as you look to start your next trial. This year. How are you going to specifically think about measuring the level of success that comes with these updates.
Yes. Thank you Kristen that's a good question the mixed trial for OTC, one is really about.
Validating the new delivery device that is something we obtained through a license agreement and option agreement with a company called <unk>.
The advantages of that device include more precise delivery control and it's more suitable for our thaw and inject formulation because it has a.
In engineering design that allows the dose to be administered to the patient while the patients respirators still connected so there are safety and convenience components involved with that so this next trial is really just a safety study.
We're going to collect some of the conventional efficacy metrics, but it actually has a very short observation periods for its primary objective, which is to show that this new.
SPD has what we call it.
Can deliver ourselves to the right location in a safe manner.
So that's a little bit different than demonstrating efficacy in a larger study as you well understand so we have not yet made a final determination as to which.
Rich dataset, we will collect in a larger comparative study of OTC won but that actually is a very important initiative for us this year, because we have a view that.
Spinal cord injury being an area, which does not had anything approved and which frankly has not had nearly the same number of clinical investigations as some of the other more.
Unfortunately frequent or common conditions.
There probably are opportunities to improve and enhance the assessments, which are collected and that may also include the primary efficacy assessments that are used for registrational data and to seek approval from the agency. So that is something that is very important to us and we'll be in.
Important initiative for us this year, because that speaks directly to one's probability of success in that setting.
Okay. Thanks, and I have a two part big picture question without trying to ask about specific indications here.
First is just big picture, when you think about new opportunities or indications.
Do you think that the cells that are transplanted and the outcomes could differ based on whether the effect was due to sales lost from easing injury or disease.
And then the second part of that question is with with all Virgin in OTC. One experience. One finding you learned was about first time of intervention and best chance of success. So do you think that those strategies are going to follow on no matter, which indication you choose.
Perhaps at a certain time it may be too late to intervene.
Yeah. Those are very good questions I think the answer to both is yes. So we know that different cell lines behave differently.
And so and that's within the manufacturing the same type of cells. So I think it is very safe to assume that.
That.
Different indications.
Each one will be unique they'll have their own sort of tolerance with respect to how variable.
Cells that one manufacturers will be so I do think that from a.
Big picture perspective, although there is much that you can learn.
This is not.
Just kind of pipeline expansion is not carbon copy.
The way to approach this is to take the lessons in various categories and think about how each of those might be applicable to a new setting. So for example, there are certainly some parallels between RPE cells for dry AMD, an oligodendrocyte progenitor.
For spinal cord injury.
They obviously have significant differences as well, but I think that it is certainly correct that there will be an indication specific step of subtleties that will need to be worked through not only for lineage, but for any company pursuing this sort of transplants approach.
And I think it goes further and into the second question, but yes, I do expect that there is much to learn from timing just as we learned a lot about the timing and placement of cells in the setting of dry AMD.
And I think those same kinds of lessons can be applicable to other conditions spinal cord injury is another nice parallel.
The data that was generated from animal studies indicated that a window of three to six weeks post injury was the optimal window, but it's possible that that might get refined further as more human data is collected.
One can run an analysis on patient outcomes and perhaps learned that earlier is better.
Perhaps that window would get more narrow or the opposite may be later is better.
So just like small molecules have many considerations around dose and clearance.
<unk> there is a whole host of cell therapy or wholesale applications, but share many of those same challenges and I think what's important for any sponsor is to keep your eyes open don't presume that you know exactly how the cells are going to behave in the body.
That sort of.
Egocentric behavior can lead to destruction. So it's really important to let the data speak and.
And to interpret it in an objective manner and in doing so you may find some wonderful surprises as we did with the delivery of RPE cells across the whole area of atrophy in dry AMD, leading to much better outcomes than when those cells were delivered sort of farther away.
From the area of atrophy is that helpful to answer the question.
Yes, very helpful. Thanks, and I'll squeeze one last question. If I may just you mentioned a lot about evaluating partnerships for the short medium long term focus of the company do you think for opportunities that youre going to potentially look to out license should we expect something.
Similar along the lines of operating in where you would look to have some proof of concept in house first in order to get more favorable economics or deal size related to the one you had with the <unk> for example, or.
Do you anticipate these might be some earlier or is it going to be a mix.
Well in terms of the economics, so setting aside a partner's capabilities and credibility and all of that just focusing on the economics more is always better so.
Is always sort of a fun exercise to think about what is the right time in a product lifecycle to seek and hopefully enter into a corporate partnership.
One has to consider your risk tolerance do you want to offset risk are you comfortable with that level of risk I think one of the things that the partnership that we entered into for opportune provides for US is an ability to advance our programs. So that we can enjoy better economics.
Provided that the products continued to advance them and generate compelling data.
And then.
Entirely possible that we could retain any any product that could be commercialized by a smaller company is one that we could retain even farther so theres an ongoing I won't say daily, but theres a constant sort of.
Question.
We're a company or a sponsor can ask itself is this the right time to partner Whats our strategy, what's our plan and I think that how we approach the answer to that question is to maintain contact with natural most obvious potential partners. So that they are aware of what were doing without committing necessarily to an outcome a priori.
And just making sure that if we ever get to the point, where we say you know what this would be a great time for us to collaborate maybe we'll do a joint development or maybe it'll be more like the Roche deal, where they're controlling development and paying for it I really think that all all things are on the table, what I would add to it however is that as <unk>.
Much as I really like the deal that we entered into with ITI.
That is very much a back loaded deal that is.
Fractional ownership of an asset with some later stage payments that are largely success weighted.
Kind of transaction is not big enough upfront to really sustain a company like lineage over the long term, whereas the deal like what we entered into for opportunity.
But the capital that we retained from the upfront exceeds what we spent in an annual basis for several years. So.
We always would be interested as I say coming back to more being better we tried to develop products that have the attributes that can lead us to having the option to enter into those large kinds of deals.
But <unk>.
Spinal cord injury as an example.
Rare disease is an orphan condition, and so being able to hold onto an asset like that for longer because I presume it would not require.
2000 patient Registrational study.
Those are things that we can hold onto it for longer create more value internally and then if we do enter into a partnership presumably it could.
Be on the scale of something that we did with opportunity just off of phase one data.
Thanks, Brian .
Thank you Kristen.
Your next question comes from the line of my ankle Tani from really Securities. Your line is now open.
Hi, this is actually Blake.
On for Myles.
Thank you for taking our questions I know, you're really going to get the update.
On the call today.
<unk>.
So just.
One question I had when looking at your past earnings and this time it looks like that both.
Your your OTC one program your meetings with the FDA as well as your back program has been pushed back at least.
One to two quarters I'm, just curious if theres any what the justification or what's the reasoning behind those pushback, where and if thats.
Now been alleviated.
Yes, that's a good question. Thank you for that.
Including some b Riley presence on our call today.
There are several reasons I think the biggest one would be the attention that we put into completing the Roche agreement and then also there are a lot of activities that are required in order to launch that initiative. So.
The commitment and the resources available that we put into that work has had an impact on our ability to maintain the same pace with other programs.
Are there other factors like Covid and things like that sure.
Overall whats important to us as is doing things correctly and doing things well so.
I could sort of joke that if we had spent the money to maintain those timelines without any slowdown I beyond this call with questions about how much our cash is available and how much are spending went up so so.
Happy to not have to do that so I wish that those timelines had not been delayed but they've largely were delayed because we allocated resources to getting the Roche agreement for opportune in place and making sure that is launched.
Good way with their organization.
And if that meant I had to pull people off of back in OTC one.
That was a reasonable thing to do at that time, but as I shared earlier in the call I believe that those programs and their development will now accelerate as resources shift back from op Virgin onto those two clinical programs.
Right. It makes sense I appreciate the clarity there.
Also one last question on your MPC one program.
I believe in the past your past.
Clinical trials have targeted.
Mid cervical region I was curious if this has the potential to target all regions of spinal cord injuries.
<unk> thoracic lumbar.
Yeah. So I think the answer is yes to.
To be fair, you said potential so it's easy for me to say, yes.
The reason that we focus on cervical level four through seven is that Thats typically where your.
Wiring out to your upper extremities so.
Keeping in mind that we cannot address at the enormous area of trauma.
The injuries need to be.
Mauler Theyre not theyre not complete.
Complete destruction of the <unk>.
Final cord over a large area.
And in doing so by focusing on the smaller areas of injury in the area, where the wire to the upper extremities, what we're trying to do is help individuals.
Control their phones control their wheelchairs.
Clothes and feed themselves so in terms of quality of life and impact for the patient.
That is an area of great focus now everybody of course loves to think about and talk about the potential for people who are in wheelchairs to leave those wheelchairs behind I hope and expect that this field will get to that point, but this field. Currently has no therapeutics approved so we think that just trying to achieve.
Meaning for quality of life improvements for individuals in the area, where most of our spend most of our time.
What I mean by that is that most of our spend time on phones and computers.
Hobbies.
<unk> there are very few professional marathoners among us. So there is a reason why we are focused there, but I do believe that it would be normal and expected. There is a product that had an effect in that area could be applied to other areas as part of an overall lifecycle development and <unk>.
Mystically it would make sense, but I do think it would require some careful thinking about what it is you're measuring and how you collect it in order to be able to.
Link.
<unk> therapeutics that you've put in place with the outcome that has some functional benefit for the patient.
Makes sense.
For me and thanks, again, Brian and really congratulations to your team.
I appreciate that thank you very much.
Your next question comes from the line of Joe <unk> from H C. Wainwright. Your line is now open.
Everybody. Good afternoon. Thanks for taking the question, Brian I got two questions. The first one.
It's a serious question, but im going to ask it somewhat facetiously I mean, you guys are in a very supply intensive environment right now on the manufacturing front, obviously, it's a decent part of your burn So I guess when you consider.
In this day and age and all the problems with supply chains. I mean are you getting everything you need in a timely basis.
Yes. The facetious aspect is are any of your supplies.
Laying on train tracks strewn across in Los Angeles.
I know I can always count on you for good questions like that.
Aside from a personal delay for a door.
I'm not aware of any lineage related supply issues.
No.
Already are aware that our manufacturing facility is located in Israel, and so we have global acquisition capabilities, meaning if we need a particular reagent is possible for us to obtain that through U S channels and ship it to Israel or obtain it directly in Israel, So that gives us an edge.
Point of flexibility.
We also.
A considerable amount of money pre purchasing certain critical reagents in anticipation of continued delays and problems associated with Covid.
Needed with supply chains, we certainly did not anticipate what's happening in eastern Europe .
But nevertheless, I am not aware of any supply interruptions or slowdown of work.
At our manufacturing facility, thus far but of course that is something that we will need to continue to monitor as it is it is a big concern I will add and this is not lineage specific although it does affect us that one of the things that has been interesting is that it's become more difficult to.
Get your contract slots for animal studies.
That has been.
Frustrating I think for a lot of companies you can't quite move as quickly as you would like so it just means you have to plan a little bit earlier.
Anticipate these things.
That's actually very helpful and good to hear on the planning.
Side of things and I guess I just wanted to switch gears to talk I guess to the totality of the back program and obviously you have a platform there.
Hopefully looking for some nice expansion over the coming years I guess, how should we look at look at it right now with regard to youre, bringing back to in house, but more specifically do you.
Envision that you might do some internal backed programs even outside of oncology potentially versus.
The ratio of having more BD at the moment potential.
Well I might be saying too much but let me tell you where I would love to see back go.
From a big picture perspective.
That is to refer you to some of these mega deals.
Done based on platform technologies. So from earlier in my career Gosh, It's now a long time ago, but I remember when target discovery and target validation was really hot and you would see some of the large oncology companies would do 10, 20, or even 50 asset deal.
These were really big deals around a whole cluster of potential targets that were coming from platform technologies. So one of the reasons that I talk about us introducing manufacturing enhancements and improvements in modernizations into the Vac program is I would like that.
<unk>, Hi, E. Specifically, the DC delivery platform of antigen presenting cells that are allogeneic I would like that platform to become so robust and flexible that it will open the door for us to be able to secure one of these mega deals where a company comes in.
Hey.
Have more antigens that I know what to do with I have intelligently refine them down to my favorite 10 lineage. How would you like to do a deal for 10 antigens I'm going to use your back platform for every single one of them.
That is really what I would consider to be a wonderful success, because you can imagine that the economics from that kind of a deal could certainly fund and internally owned program whether for an antigen that we currently have or an antigen that we maybe have.
And interest in or an antigen that we haven't even discovered yet so the company's efforts today are to continue to generate data and validate that the vac platform can be powerful and can deliver these very significant large T cell.
<unk> and doing that with the current antigen hurt, but also making sure that the platform as a whole from the R&D portion the electroporation, the manufacturing efficiency and yield that all of that is nice and robust so that we might have an opportunity.
To enter into these deals that can help fund our own internal development.
Fantastic I appreciate the color and I'm glad you did say more.
Thank you Joe I appreciate it.
And your next question comes from the line of David Wang from F&B. Your line is now open.
Hey, Brian and team thanks for the update and taking my questions.
I had two one on the pipeline and then a financial question. So let me, let me start with the pipeline one and.
In terms of OTC, one in spinal cord injury.
And I think it's still early days I am just trying to think down the line a little bit in terms of.
Adoption and uptake.
Do you have any sense of how many centers you would like to see this product administered and be available at in terms of achieving commercial.
Commercial success and is that.
Given you have a device and then the need to administer cells and then is that something that you think internally lineage would be able to commercialize yourself without a partner.
Let me go through it backwards, but I think the short answer is yes, I think spinal cord injury 18000 per year is the size and scope.
A lineage not lineage in current form obviously today, but a company like a lineage.
Could handle.
The commercialization of a product like that.
And anticipating that whether it's ours or whether it's partnered.
One of the things that we have done is that we have created a thaw and inject formulation, which eliminate the dose prep steps.
That is really important because that allows you to open a larger number of centers and conductor larger clinical trial.
Also are working on this new device and the.
The device essentially sits directly on the patient and you'd say well is that really novel, Brian is that a big deal. Yeah. Do you have any idea how many different size beds. There are it trauma centers.
And so you can't really make this you can't use this giant contraption all the scaffolding that we've used in the past because its not turnkey you have to almost make it bespoke for every facility and that really fights against the commercial utility. So when I was talking in my prepared remarks about how we invest in some of the less glass.
Amorous attributes of product development. These are exactly the kinds of things and I highlighted that they provide a good return on investment because if a partner or an investor or our own interest in raising capital in launching products like this it's going to be driven by the product profile.
How easily or difficult it is to deploy that product into the field. So I think its really exciting that is a smaller not smaller in terms of dollar I think the dollar opportunity is very high because there's a huge unmet need from a patient perspective, but I think it's exciting that the number of patients in the frequency.
Our are such that this is the kind of asset that can really help the company become tremendously successful I should add that we have much better third party economics associated with LTC. One then we had an offer Jim so theres, even more reasons, why we might want to hold onto it for longer.
Thanks, a lot for that that's really helpful. And then just my second question.
I did see you mentioned you did have some.
Downstream commitments with with.
With the upfront payment from Roche on <unk>, and just wondering does that split extend to the future milestone development regulatory and then royalties should we kind of expect.
More split in terms of the commitment in terms of how much you bookend.
Another third party would receive.
Yes.
Yes go ahead, Tim. Thanks, Yes. This is Kevin I can jump in.
And here in the answer the short answer is yes.
The long answer is it.
There are a few.
No changes that might happen from a milestone a milestone but its basically in the same Zip code.
Once we get the royalties there is a different formula.
And I think that's spelled out in the contract, but between now and sort of the lifetime of our milestones it's roughly in line with what Youre seeing here.
Okay got it.
Really helpful. Thanks for taking the questions.
Thanks, David we appreciate you joining today.
Your next question comes from the line of Michael <unk> from Maxim Group. Your line is now open.
Hey, Brian Thanks for taking the question.
And Michael.
And so.
I'd like to start off with a big picture question with the Roche deal coming in what seems like a really opportune time.
Have OTC one at essentially the same place where op regeneron really gain steam and now you have back advancing.
How should we look at lineage going forward should we think about of obese.
OTC and back of the New main focuses are given the strength of your balance sheet and a new candidate to be announced should we expect a more broad approach to cell therapy for lineage going forward.
The thing Thanks for your question Michael The thing that makes me very happy about the deal that we did for Apo. Jim is it allows me to share with you that the answer is both.
We can more rapidly advance our vac and <unk> programs and we can expand the scope of what we do one of the nice things about new programs is that initiating them is very inexpensive.
Our huge economies, which we enjoy in our manufacturing because if you were to ask me what the.
You spend youre the most amount of time in.
Factoring is spent waiting for sales to grow right.
Spanned the cells in number and we differentiate them and type well. It takes many weeks. So if you hire someone whose job it is to manufacture RPE cells and I don't want it makes it sounds like a diminishing the arch and the talent of these individuals, but they really do spend.
A lot of time watching sales grow.
So that's a fixed cost for that individual if you can have that person in parallel working on other programs. You got this wonderful economy in your manufacturing side of your business so for us to be able to launch new programs I.
I don't have to go and validate a target I don't know if the screen 10 million small molecules I don't have to do.
A year of structure activity relationship work, we know what the valid target is it's a cell type.
It is indisputable.
So for us to be able to inexpensively plant some seeds with some some early stage programs that over over time over years, we will get more and more maturation behind them and they want themselves get into phase one clinical trials.
The great thing for us to be doing now because it's very efficient and economical to do so in the meantime, we will continue to advance our other two related programs of RPC one in back because <unk>. When I joined it also had problems. It was not enrolling quickly there were one.
Issues with respect to how to develop it but we were able to get past those and obviously, we found a great home for it and some of that same kind of work is currently ongoing with <unk> and back end I think that the other side of that bridge, we're going to find that we've got some very attractive assets.
Alright, Thank you Brian .
Just one more I'd like to see if you could provide.
A bit more color on some of the areas youre looking at regarding aging and aging related diseases without revealing anything to cat. Obviously this is an interesting space, where youre seeing a lot of silicon valley money pouring in with Alto and Calico and we've also seen self therapy on the signaling side targeting inflammation related diseases. So could you talk.
About what aspect of Adrian the lineage platform, maybe a quick to address would this be largely looking at cell replacement for <unk> tissues, and just give your thoughts on that.
That's a really interesting question.
I don't know where the distinction lies between what we're doing which I'll characterize as cell replacement.
And something like what let's say alto slabs is doing they have a lot of visibility.
Where where does manufacturing a replacement cell tissue, Oregon, where does that cross over to be coming.
To address aging I'm not sure that there is a clear distinction I think it's a continuum because the aging folks if you will permit me to speak for them.
Appropriately focused their efforts on improving health span so not so much that you want to live to 200, but if you do live longer than people live typically.
You will live well.
So in many regards I feel like we're farther along in a lot closer to the goal.
Cause if I'm going to live to 120 years old.
I want to have replacement RPE cells.
Yes.
And there are some other applications that you could you and I could go through.
Parts of the body and say well would it be good.
Likely to break down is let's just say liver because it's.
It's a big area.
So I think that there is not so much it's clear distinction because really all of the companies outside of pure live longer companies I think all of US are trying to make people live better whether thats tied to your overall survived.
Will or not I'm not sure it matters so I.
I frankly, I don't know if its views would be shared by anyone but I feel like we're more advanced aging company than many of these agent companies that have been launched.
Alright, Thank you very much Brian I appreciate the answers and looking forward to the updates later this month.
Thank you Michael.
Your last question comes from the line of Robert K Boyer from Noble capital. Your line is now open.
Good afternoon, and first let me say that I am planning to live to 120, and if you rely on us for mining.
RPE cells.
But my question has to do with.
The FDA and some of the time.
All lines that you've laid out for the FDA and the manufacturing filing an IMD and as best as anyone can at this point could you give some expected timeframes for those milestones and also.
Given the situation with the FDA.
And all of the changes in the last year or two.
Could you give some background as to how the agency has changed in terms of timeframe truck timeframes level of scrutiny and.
This is whether the agency is better worse or.
On the same kind of schedule as it was before.
Yes, Thanks, Rob appreciate your participant safety.
The answer that I can give is that we.
We are working to initiate.
The next clinical trial of OTC, one end of that this year.
I would like to be able to narrow that but the harsh reality is that the interactions that you have with FDA really define how long your timelines are going to be so for example.
If the agency says they want to see.
Three batches of certain material instead of two batches or one batch your timeline gets longer so I don't like to provide guidance that I can't meet but I also know that I can't say nothing so what I'm comfortable saying is that we are trying to have.
Those two next trials initiated this year.
With respect to the agency because I just explained that they are the critical determinant of timing.
I think the agency is getting much better in the area of cell and gene therapy I don't know that they were deficient I just think that there is a.
A massive surge of new.
Well.
And.
Obviously, our new because the ice stands for initial but there is a massive number of new clinical programs that are being started in cell and gene therapy and the agency has been working very hard to try to keep up with respect to that flow and the guidance and expectations and I sat on <unk>.
Seminar just yesterday, there was a patient focused seminar specifically around cell and gene therapy.
And I think that the.
The old sort of guideline of ask the agency what it is you need to do and then go do it stands.
It's higher than let's say the occasional.
Trends toward being more flexible or less flexible depending on who commission. The commissioner is and things like that so our view of regulatory activity is.
Ask the right questions and then when you told.
They'll do those activities and then share that with your audience I EU and others. So that so that everybody knows what the what the steps are in the expectations are so we will try to commit to being open with respect to what we hear from those interactions.
And provide as accurate guidance as we can especially as we get further into this year.
Okay, great. Thank you very much.
I appreciate it Rob will work on your your healthy lifespan as well.
I'm counting on you so please.
Phase.
They are on target.
[laughter].
Excellent.
There are no further questions at this time, ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Yes.
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