Q1 2022 Lineage Cell Therapeutics Inc Earnings Call

May 12, 2022

Welcome to the lineage cell Therapeutics first quarter 2021 conference call. At this time all participants are in a listen only mode. An audio webcast of this call is available on the investors section of lineage website at www dot lineage itself Dot com.

This call is subject to copyright and is the property of lineage and recordings reproduction or transmission of this call without the expressed written consent of lineage are strictly prohibited.

As a reminder, today's call is being recorded I would now like to introduce your host for today's conference you want to hone director of Investor Relations at lineage. Mrs. Hulme. Please go ahead.

Thank you good afternoon, and thank you for joining US a press release reporting our first quarter 2022 financial results was issued earlier today May 12, 2022 and can be found on the investors section of our website. Please note that today's discussion will contain forward looking.

<unk> within the meaning of federal securities laws, including statements regarding our strategy plans aim.

<unk> objectives stocked and believe the future price of our stock our competitive advantages with respect to competitors our development program, our product candidate platform and pipeline and their potential therapeutic applications commercial potential and potential value the timing of our announcement of additional.

Candidates clinical trials data update future payment transfer of expenditures and activities under the collaboration with Roche Genentech, our ability to enter into additional collaborations or partnerships.

Anticipated benefits and opportunities from our existing and potential future collaborations the achievement of milestones anticipated regulatory meetings and interactions.

Manufacturing improvements.

Our cash management runway of need for capital.

Anticipated growth and our commercial opportunities.

<unk> 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 uncertainty.

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 on March 10, 2022, and our quarterly report on form.

<unk> 10-Q filed today May 12 2022.

With us today are Brian Kelly.

Chief Executive Officer, and Gary Ho, our senior Vice President of clinical and medical Affairs. Unfortunately, our CFO , Kevin Cook is dealing with an unexpected family of urgency and won't be able to join us.

Brian will provide some prepared remarks, and then he and Gary will be available for questions from analysts with that I'd like to turn the call over to Brian .

Thank you Juan and good afternoon, everyone. We appreciate you joining us on the call today as I did on our last call I would like to start off with some comments addressing the challenges currently facing the biotech industry. Unlike other sectors for which the supply of raw materials may become increasingly scarce or for which are typically.

<unk> or social disruption could alter its fundamentals.

Human beings will continue to get sick olden hurt and they will continue to rely on to help support the valuable innovations, which the biotech industry has delivered for decades.

We believe the current selloff in biotech is an overreaction.

Better days will return to our sector.

In the meantime, each of us need to determine what steps if any we ought to take in response to current events.

And my two aims for today are first to review how I believe lineage is very well positioned to navigate the current biotech bear market.

Second just talk about some of the steps we're taking in response to this new environment steps, which we believe will help position us to be one of the companies, which can outperform its peers this year and next.

With respect to lineage being well positioned today.

Important attributes come to mind cash on hand near term milestones and our fundamental profile.

With respect to cash we are comfortable that we have multiple years of cash on hand, and we have no need to raise money at these currently unattractive prices.

Our reported cash and cash equivalents as of Q1 were approximately $78 million.

Terrific.

Our net operating spend for each of the past two years has been less than $25 million.

While our 2022 spending is likely to be above our historic levels, given our clinical ramp and expanded pipeline. We nonetheless have multiple years of cash to support progress with each of our programs and by the way that runway does not include any of the milestones, which we may receive from the Roche Genentech deal over the next two years.

Overall, we feel quite good about our cash position.

Moving next to our program milestones with a lot of important objectives, we're working towards.

In the near term, we're working to provide shareholders with a diverse and incremental set of clinical and regulatory events, which are not dependent on the clinical performance of just one asset, but which can still provide much needed clarity on our developmental programs and in some cases can help de risk or increase the value of our assets prior.

Two they're entering subsequent clinical trials.

For specific goals for this year in the clinical and regulatory area, which I'd like to highlight for you today include first.

This meeting a clinical safety trial of our new and improved delivery device for OTC one.

As expected to enroll between five and 10 patients and which will include for the first time administering <unk> to patients with chronic spinal cord injuries, not just sub acute injuries.

Second.

Meeting with FDA to discuss improvements we've made to the OTC one manufacturing process in areas, such as purity and production scale.

Third.

Submitting an IND for our <unk> two program to support additional clinical testing of <unk> in the U S and build upon the data generated by cancer research UK and non small cell lung cancer.

Enforced generating preclinical data to support a pre IND meeting with FDA for our new auditors neuro on program.

We of course have additional goals for this year.

Score in particular represent milestones, which will provide some regulatory and spending clarity and potential derisking of our programs and we believe execution of these goals. We will continue to demonstrate our ability to successfully advance novel cell therapy product candidates, which will be an important corporate message we aimed to emphasize this year.

The third item, which I mentioned at the outset is our fundamental profile.

We believe in this challenging environment investors will work, even harder to find the companies, which they believe will outperform in an economic recovery.

<unk> identified among those screening efforts can be enhanced by having attractive fundamentals.

I have already discussed our cash position and planned activities.

Lineage offers additional characteristics, which can help make us an attractive investment.

For example, we believe our spending levels reflect our commitment to capital efficiency, which we will continue to employ.

We also have the ability to create new development programs from our platform without spending capital on external licenses and have demonstrated that capability with our new hearing loss program.

We also have proven our ability to close on corporate partnering transactions through one of the largest ever license deals in cell therapy outside of oncology, which puts us in the envious position of working to repeat the success rather than trying to achieve for the first time and we have assets, which we believe can form the basis of additional corporate partnership.

Yes.

So going back to my comments about the importance of being well positioned in three categories those categories being cash on hand, and near term milestones and events and one fundamental profile I feel very good about our overall situation.

So turning next to the second of my two aims for today.

A few things about how we're adapting to recent changes in the biotech landscape.

This also features three key principles communications operations and business development.

Starting with communication, we do not believe our company is well known and that it is important to be able to highlight what we can offer to shareholders. So.

So we have adjusted our investor targeting to better align with feedback we've received about investors mindset and we continue to refine our key messages.

I understand that sometimes is difficult to see the fruits of those labors and current share prices, but we believe these efforts have been helpful to add new owners. We welcome your new owners and we will continue to engage and broadened awareness for the company and our objectives.

We also have seen an increase in the number and quality of our investor meetings, which we believe reflects the team's recent performance and our future potential, particularly on the heels of the Roche genetic alliance and the ARVO presentation of the full set of origin clinical data earlier this month.

Secondly, we constantly review our operational plan to ensure it is appropriate for the business environment with all seen announcements lately from companies, reducing their pipelines or reducing their head count to achieve what they are calling calling operational efficiency.

Don't know why they werent being efficient to begin with but lineage always works to be efficient.

One advantage we have in this area is that our development programs share common features.

In particular, our emphasis on high quality large scale cell manufacturing. So we're able to achieve economies of scale by allocating a single highly trained team across all of our cell therapy programs and avoiding the expense or duplication of adding entire new teams for each new program, which we launched or suffering the pain of having to.

Which program to stop funding.

In fact, while I read this week that 48 biotech companies have recently announced staff reductions. This year lineage has been adding positions in key areas.

As one example, we recently made a new hire in business development, which is convenient segue to my third point.

Third point I wanted to make about adapting to the new environment is it we are putting an even greater emphasis on business development. This year.

We obviously have had some success in this area reflected by our deals for <unk> and back, but our technology platform could produce many more product candidates than what we can develop internally. We believe there may be numerous opportunities to enter into new corporate partnerships.

We also intend to explore established collaborations such as with serve either for existing programs or as the basis to launch new ones.

So for example, we are already determined that manufacturing allogeneic NK cells is significantly easier than manufacturing allogeneic dendritic cells.

We would be open to a partnership around an NK program or to work on the linear just some other exciting cell type like islet cells and <unk>.

We want to ensure there is awareness about our capabilities and our interest in working with partners in areas like this.

We've also seen recent evidence of wells funded cell therapy partnerships at the preclinical stage, which may open up a partnering pathway for auditory or photoreceptor programs or for some newly developed initiatives.

To be clear, what I'm speaking about securing funded partnerships not creating new subsidiaries with long timelines to liquidity.

The objective here given the uncertainty facing our sector is most easily described as utilizing more corporate alliances to advance our assets rather than our own balance sheet and then doing so many more shots on goal from our core technology.

So going back to whole lineage is adapting to the current landscape, we're taking steps in areas of communication operations and business development lineage has adjusted rapidly to the changing environment since the Roche Genentech deal, which we believe adds validation to our approach.

Shown we can launch new programs, which supports my frequent comments about our ability to move quickly into new areas.

Adding additional business development capabilities and imperatives, we will seek to capitalize on unlocked areas of value in our business.

Now before I move to the financial review I do want to mention just a few specific items first a few weeks ago opportune clinical data was presented at the 2022 ARVO annual meeting, notably it was reported that a total of five patients who had <unk> delivered to most or all of their geographic atrophy, including the fovea.

Showed evidence of a parent improvement of outer retinal structure, along with average gains in visual function of $12 eight letters.

Prior to the license deal announced with Roche and Genentech only for such patients had been reported by lineage.

And well controlled studies are needed. It is known that spontaneous restoration does not occur. So we believe these results support <unk> potential to stop or reverse disease progression in geographic atrophy patients something which to our knowledge no patient receiving a complement inhibitor has ever shown.

Additionally, recently, we published 10 year safety data from the first <unk> clinical trial for the treatment of acute thoracic spinal cord injury in the journal of Neurosurgery.

This is one of the longest running clinical trials in our steel providing important first in human safety data with our pure pluripotent cell lines.

10 years following treatment there have been no medical or neurological complications to indicate that the <unk> cell transplant therapy is unsafe.

There also have been no unexpected serious adverse events attributable to the OTC one cell implant.

And none of the patients enrolled this clinical trial had deterioration in neurologic motor function, which we believe to be significant given the severity of their injuries.

Overall these results provide additional evidence that <unk> cell transplants can be well tolerated and that patients are willing to participate in long term follow up.

We plan to have additional papers on OTC, one published this year, including the full clinical study results from the <unk> study of 25 cervical injury patients and an additional publication focused on the MRI findings. So those are two additional milestones, which I Didnt mentioned previously and coincidentally I just learned this morning that the.

<unk> study results were accepted for publication. So we expect that will become available online in the coming months.

Lastly, you may have seen that the lineage team this past week and participated in the Red Bull wings for life World run to raise awareness and funds for spinal cord research I want to again, thank our employees and stockholders, who supported US on this campaign. This is an annual event. It was incredibly inspirational and I hope you will consider.

<unk>, taking part with us next year.

Before I dive into our financial results I briefly want to address an item that has been on People's minds and that is concerning the supply chains that we are of course aware of reports of disruptions and delays due to global events, such as Covid and the war in Ukraine I am pleased to report that we arent aware.

Of any of these matters, specifically impacting our business, but we do know these issues are affecting our industry and may continue for some time.

Our in house manufacturing is core to our value proposition, it's particularly important that we keep that operation functioning smoothly and we have taken steps such as pre purchasing certain materials or planning for longer lead times with some of our vendors.

We ultimately have limited control over many of these matters, but for those aspects, which we can control our solution is to remain vigilant about maintaining our supplies and ensure we have backup plans in place to be.

Meet our manufacturing and development goals and public timelines.

So with that let me turn to our results.

Total revenues for the first quarter were approximately $5 2 million an increase of $4 8 million from the same period in 2021.

The increase was primarily due to licensing fees in connection with the Roche collaboration agreement. Please recall that we received the $50 million upfront payment this quarter on a cash basis, but on a book basis, we are accruing that $50 million over the course of time as we fulfill our obligations to our partner.

The roughly $5 million is what we book this quarter and we will continue to book income on a fractional basis in the quarters ahead.

Total operating expenses for the quarter were approximately $11 $5 million, an increase of approximately $4 2 million compared to the same period in 2021.

This increase was substantially driven by a $3 $5 million nonrecurring accrual related to a potential settlement of the 2019 Asterias merger litigation and that nonrecurring item shows up in G&A.

Our loss from operations for the first quarter was approximately $6 4 million a decrease of zero point $7 million as compared to the same period in 2021, resulting mainly from the two items I already mentioned these theories litigation settlement accrual offset by increased revenues from our collaboration with Roche.

The net loss attributable to lineage for the fourth quarter of 2021 was $7 1 million or <unk> <unk> per share.

I think it's 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 as well as changes in foreign currency rates.

Those are related of course to linear just international subsidiaries.

These non operational fluctuations are important we tend to utilize loss from operations is a more relevant measure of performance with regard to moving our clinical programs forward.

Turning next to the balance sheet, we reported cash and equivalents and marketable securities of approximately $80 million as of quarter end.

Accordingly, we continue to feel that our liquidity level provides us flexibility and funding to reach our value creating objectives in the years ahead and to put emphasis on this I'm being purposeful by saying years instead of months or quarters. We believe this is an environment, where having at least two years of runway is an important and attractive characteristics for investors.

We will likely see an increase in our net spending this year compared to last year, because our plan is to create value by advancing our programs towards the next clinical trials and we still have certain obligations under the Roche agreement such as supplying oxygen cells for the next clinical trial, but we will maintain the same spending discipline that we hold dear to our value prop.

Physician and we believe that spending discipline together with our current cash balance puts us in a good position to create value during this biotech storm.

And as a reminder, we also may be successful in collecting additional cash through potential development milestones available under our Roche and or ITI agreements.

Essentially also from Grant award from funding at this he's like surf or from new business development deals, which we may enter into for any of our current or future programs.

To conclude I.

Understand well that the current environment is frustrating for biotech companies and investors alike, but lineage has performed the Spi outperformed the Spi index in both good and bad markets and we will work hard to continue that streak for a third consecutive year.

Our core principle is to advance the emerging technology of cell transplants ever closer to patients and physicians by providing the product attributes and rigorous clinical testing necessary to achieve commercially successful products and to that end. We believe we have not only generated a market of data from our clinical programs, but also made.

Significant investments in and improvements to areas like production scale purity and delivery of ourselves, which overall, we believe is a proven path to creating best in class products for the end users and strong competitive advantages to protect our and our partner sales over the long term.

There's a lot to anticipate from us in the coming weeks months and years and we sincerely appreciate your support as we continue to position lineage to become a leader in cell therapy and cell transplant medicine.

Operator, we are ready to respond to any analyst questions.

Thank you Sir.

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

Our first question comes from the line of Joe Pat Goodness from H C. Wainwright. Your line is open.

Good afternoon, thanks for taking the question.

So a couple questions, Brian let me start on the dollar front.

So I know, it's just a brief comment in the prepared comments and in the press release, but I wanted to see if you could provide a little more color on the settlement of the Asterias litigation and how you would account for that because if my perception is correct.

Just really appears like there was a big overhang removed from your shares.

Yes. Thank you for the question Joe So the company has been providing disclosure on this topic for several years.

We also are being are glad to be able to move on from this as I'm sure others would be.

As a reminder, for others, who are familiar with this we merged with a serious in 2019 and it's not an uncommon.

In public company mergers, we became the defendant in a shareholder class action lawsuit related to the merger.

We have vigorously defended the litigation for years, but we also would like to move on with business and so we have agreed in principle to a settlement, which will have lineage contributing $3 $5 million out of an overall settlement of $10 $7 million that settlement would result in the dismissal of the lawsuit.

Without any admission of liability or fault by lineage.

That settlement is still subject to negotiation, we still will need to execute a settlement agreement it needs to be approved by the court.

It's not absolutely final however.

The parties involved have agreed in principle to the key terms. So it's probable enough from an accounting perspective that we want to accrue for it in our financial statements and that's why you see them appearing in this quarterly statements. So it's probably not a big shock for anyone who is accustomed to public company mergers personally I, sometimes think of it.

As the final payment in connection with an acquisition and it's somewhat the cost of doing business, which is probably something you are familiar with but I hope it is viewed as a small clearing event for us.

No. That's helpful. Thanks, and then just the other dollar question that I had was.

Obviously, you said you have at least two years of runway I guess.

How would you reconcile that statement with you've been growing your pipeline recently with additional programs. So I just want to make sure how that would be portrayed to the street with regard to any views towards increased expenses around those programs.

That's a multipart answer one part is that.

Just the nature of our technology, which is being able to manufacture specific cell types from largely common pluripotent cells.

Gives us some economies of scale, where our existing team, which has available time, because they might be working on one project, where they have to wait let's say five days before they add the next growth factor or inhibitor to a to a process.

They could be spending a lot of that time working on other programs. So we have this really nice situation with our technology, where we don't have to duplicate we can just add new programs onto existing fixed costs are fixed infrastructure.

And so that provides us some ability to keep the cost down. The other part is that these still are preclinical programs. We're of course very excited about them, but they have not yet reached the more expensive stage of human testing and so the cost to be able to advance these programs towards.

It is actually very modest and and Thats why you are seeing.

Simultaneously and expansion of our pipeline with only a marginal expansion in our spending and I hope that that is a good way of explaining it.

It certainly is and then just my just to shift gears, a second from a clinical standpoint regarding the upcoming OTC. One study I wanted to focus on the device and I'm, just bringing up that goes from the path from the original MPC. One studies. So just can you remind us is the device ready to go.

Once the studies.

Officially ready to go and are the docs trained or are they being trained and does any specific training.

Is there any specific training required.

One of the docs was an inventor, but let me invite Dr. <unk> to join the conversation and provide some some response to that question.

Sure. Thanks, Brian Thanks, Joe So yes.

As we mentioned and we would intend to do a small study.

Validate the device.

That preclinical work has been done and some of the animal work was done with the surgeons that intend to utilize the device. So though there will be ultimately a formal training process. They have not yet completed that they have had experience with the device and as Brian mentioned one of them as a co inventor.

We are prepared to have one or two potential active sites.

With those physicians and surgeons ready to go.

Great. Thanks, a lot guys.

Thank you Jill.

Your next question comes from the line of Kristen <unk> from Cantor Your line is open.

Hi, everyone. Thanks for taking the question appreciate it.

One just on the newer program P&C one in Q1.

As you've mentioned there they are very broad from the perspective that they can each go after a number of different disorders weathered blindness or hearing so wanted to ask from a.

Preclinical perspective, if youre, if youre planning to look at kind of like a basket of opportunity here before making a decision about what our lead program could look like or perhaps the D C.

<unk> across the board.

What that next direction could look like.

Yes, I'm going to again invite Gerry, but I will preface by saying that one of the things that was interesting in our dry AMD program was how we learned as we move through different patient types from the most severe most severely affected patients that had less severe disease smaller areas of that.

Fee and we learned about delivery part of the answer is going to be that you do learn while you're doing it.

But let me see if Gary you would like to add to that as well.

Yes sure so.

That point, we know that.

Optimizing delivery is important whether it's from the auditory ophthalmic perspective, we know that both of these.

Conditions auditory loss.

Obviously photo receptor.

<unk> do have unlike dry AMD.

Well established preclinical animal models.

We're right now working on how best to scale up.

These cells.

Make it much more commercially viable.

Drug formulations as we've done with all of our other products and to begin both the <unk> and.

In vitro and in vivo work.

Be necessary for an IND submission.

It does.

Discussion meetings with the FDA.

And Kristen I'd like to add also something that I think is not not always fully appreciated when using a cell transplants approach.

You can be a little bit less concerned about what the underlying or a positive issue is because you're replacing the entire cell. So for example in the setting of hearing loss, whether the cause is chemo or concerts or car bombs. If the problem is the.

Dysfunction or lack of auditory neurons, perhaps we'll find that we have a very broad addressable patient population simply by the nature of the technology.

But I think that some of those answers will come to us through the clinical testing itself.

Okay awesome. Thank you for that and then.

Just thinking about partnership opportunities like that you know should we be thinking about similar to how the operating deal took place that really as a company are looking to at least established some proof of concept first in house before any deals or how should we be thinking about.

<unk> and things like that.

This is one of the most fun parts of this job because having assets.

Could be partnered either very early in development or very late.

Some of which are you have insight into and others, which might be more conceptual or just internal to the company provides us with a lot of different possible strategies and figuring out what the right mix of those strategies is for the best results right to create the most value is actually a really fun puzzle.

So we don't we don't stick to perhaps a script that says you must generate phase one to be early efficacy and partner.

That is largely what we did with offer Gen and it's obviously worked quite well, but we're going to we're going to really look at any partnering opportunity contextually.

What is our capability to advance the program further what are the capabilities of the partner might bring.

Is it a cell type that we have abundant experience with and we feel that our probability of success is high or is it a little riskier in exploratory and when we run partner opportunities through that through that matrix. If you will.

I imagine will come out the other side with some things we elect to hold onto longer and some things that we elect to partner for different reasons and you may not always have full insight into that decision, making process, but I think if you ultimately want to get full value from a broadly applicable platform technology.

Like differentiated cell transplants from pluripotent cell lines, you have to have some mix of partners working with you because it's simply has too many opportunities for any one company to reasonably tackle on their own.

Okay and last question for me is I was actually at the ARVO Conference. This year and I felt like one of the takeaway or wet AMD.

A lot of focus on these newer and emerging therapies that really the goal is less frequent injection. So even though what AMD is a more mature market.

I guess I'll pose the question as to how you think having some of these injectable market potentially could.

Could help benefit yeah, or physician and patient awareness and education around therapy, but that also lead to the peak around receiving the frequent injection. Thanks again.

You bet Kristen I think there's two things that come to my mind.

One is that our data with opportune indicates that this is a onetime treatment. So that's obviously an incredibly compelling advantage versus frequent injections, especially people who've got severe visual impairment, even just getting to the clinic.

The other notable aspect is that we are seeing evidence of functional improvement in patients.

So in terms of compliance and patients' willingness to go and get regular injections, whether its every 123 or even six months.

I think that being able to I hope that being able to offer those patients.

Stabilization or improvement of their vision.

Is far more compelling than patient that might have a competing therapy that is doing something biological of slowing down of condition, but the patient doesn't feel anything.

Don't know that a patient can get us excited about.

Being told that well.

Your area of atrophy as five square millimeters, but we would have thought it would be five and a half seen in eight weeks.

So I do think that compliance can be a problem I think thats very favorable for us.

And what we hope to offer the market the other aspect of this.

I think it's one of market conditioning.

That is the dry AMD has no approved therapies today.

So if you're if you're a patient who received that diagnosis.

Mostly told eat vegetables, and don't smoke cigarettes, but theres nothing you can really do about it.

So we have a tremendous number of individuals' with the condition, but theyre not theyre not organized as a patient population so in.

The way, we're actually hopeful that some of the companies that are later in development that are starting to do some market awareness and market conditioning that could be wonderful for Roche and genentech not that they are massively capable of addressing a commercial opportunity.

Are able to have an approved agent in this but.

But I think that there is really something to be said for having someone out. There ahead of you who maybe has a less compelling package insert detail against and then coming in behind them and taking advantage of the fact that you already have now a more educated patient population. So I love that setup and I hope that that's.

What we're able to watch occur in the coming years.

Thanks, Brian .

Thank you Christopher.

Your next question comes from the line of Jason Mccarthy from Maxim Group. Your line is open.

Hey, Brian Thanks for taking the questions you had mentioned.

Essentially partnering solely for manufacturing.

Given your capability I think I heard that right and you had also mentioned.

NK cells.

Just briefly are you at.

Quickly looking for something in the NK space.

For the company as a space that continues to gain traction and just more generally from supporting another group's manufacturing what scale.

In lineage go up to go support somebody all the way through phase III into commercial or can you give us a little bit more color.

About the company's capabilities on the manufacturing side.

Yes, I appreciate that question Jason because.

I don't want it to be not obvious that there was an advertisement in this in this presentation.

We would like other entities out there to be aware that lineage could be a partner to other programs that are not our programs because we do have demonstrated capabilities in manufacturing that I think provide us with.

Compelling story with respect to being a partner and something changed when we announced the deal with Genentech and Roche.

Clearly there is going to be a.

A greater sentiment or expectation of quality, because we passed one of these sort of biotech hurdles, which is some some measure of validation from a big pharma that people are going to assume did abundant diligence on our capabilities. So I think that is why now is the time for us to be.

More explicit and not passively wait for a company that might want to work in another area to say hey lineage can you do this can you do this other thing and instead for us to actually be more active in that process for our business development folks.

Almost as scouts to go out and say Hey, we have capabilities and the reason for that in part.

In no small part is exactly what you said other than the cost of some of the equipment and obviously reagents and materials I do not think that there is an obvious limit on scale.

<unk> still has to keep in mind that for example in the setting of NK cells I saw a few days ago. One company reported data on is talking about going up to $1 5 billion cells as a dose that's a very large number compared to our 100000 cells that we utilized in dry AMD. So it will be indication specific and I don't want to limit. This.

<unk> topic to NK cells. However, our phones are open and I am hopeful that there might be some some folks who say you know I'd like to understand better.

What lineage is offering and what lineage is capable of doing because if it fits perhaps I can accelerate my own program and I think Brian Culley would say I could probably find a way to make a deal that is going to benefit lineage as well, obviously, we need to take great care to make sure that our more senior owned assets.

Priority at this time, but again, it's kind of goes back to that prior question about the mix of partnerships. So I'm excited about our ability to now go out there and point to some of our recent success in say, maybe you should go under confidentiality and learn what we do because maybe we could strike a partnership around some other area.

Got it.

Can you give us a little bit of an update on the.

No.

Therapeutics collaboration and what's happening there on the GBM work.

This is a terrific example of how I see the vac platform, having more value than just in back to I think it potentially is much more valuable as a delivery system.

One would choose an antigen, we obviously have the antigen test.

It is the active component in our vac to form of the of the product. However, you could use other antigens, but I want to be clear that lineage is not really equipped to go out and select antigens as well as some companies that have no machine learning artificial intelligence tool.

Pulls or more empirical ways of selecting antigens. So I would like to be able to have more programs like ITI, where ITI is the company that's bringing the antigen and we are the delivery vehicle and the question that we hope to answer as well using a dendritic cell will use.

<unk> natural antigen presenting cells, the best antigen presenting cells.

Comma will that lead to better clinical outcomes, because you can get these very high levels of activated T cells antigen specific activated T cells.

And because oncology is a very expensive and very challenging endeavor.

And keeping in mind that it can be very rewarding I think the right strategy is for us to try to find additional programs like ATI, where we are more than compensated for our contribution and.

And we have a fractional ownership in someone else's program and I think if we are able to perform as we have so far against the ITI collaboration and receiving some.

Those payments already.

I think that will allow us to attract more and more valuable.

Partnerships in the future for the Vac program.

Great. Thank you.

Thank you Jason.

Your next question comes from the line of May Yanked Pantani from B Riley Securities. Your line is open.

Hi, This is Graham wood on firm Tommy today, congratulations to the team really.

It might be updates that I'm seeing here.

Just curious.

On your OTC you won.

Safety testing with the new DSD system.

Assuming all things are fine with the FDA going forward.

<unk>.

I was just curious any thoughts you could provide on what.

The design would be for the next phase trials I know you've also mentioned chronic patients.

Maybe.

And where do you see that going.

Yes, it's a difficult question to answer right now because we havent proposed anything to the agency or decided internally one of the reasons for that is that our view in the setting of spinal cord injury is that the tools to the assessment tools.

Maybe not as sensitive as we would like some of them that are out there. Even some that are frequently used are a little bit crude in terms of their ability to detect motion.

And one of the things that we have learned in talking with patients is that even very small gains that they the patients can sometimes creatively utilize small mobility in creative ways to be able to gain higher quality of life, you wouldn't think of using necessarily the fourth finger on your left hand to manipulate.

Late your wheelchair, but if that's the only mobility you have on that hand, maybe that's good enough.

So what we're trying to do in this lead in period, while we're working on the device is we want to more closely align what is of importance to the patient with respect to quality of life and motor function and get that well collected through different assessment tools and have that aligned with ft.

Now to get back more specifically to your question what does that mean I think that that's going to lead us down toward a design that has an adaptive component there could be a lead in phase with multiple assessment tools.

All but one or two of which get dropped going into a blinded phase or Matt or controlled phase. We don't know we won't be able to guide until we do some additional market research, but it is not gating. It. This time because as you know we still have to conduct the device study because we think that device when used with our thorn inject formulation.

Will enable us to open up many more sites because we are eliminating all of the dose preparation that that used to go on in this program that we've eliminated with the creation and in future introduction of this thaw and inject formulation.

Makes sense I appreciate it and then also <unk>.

Mentioned, the recently published on your follow up.

Safety follow up from the PD one.

Curious, how you see that supporting our strategy and obesity, one obviously, but then even more broadly with our Virgin.

<unk>.

Progenitor lines Youre developing.

Yeah, I think what's really exciting about the data that's being published.

Is the is the durability the durability of these graphs, the tolerability and the safety.

There were as you've seen in presentations from the company over 500 Aes recorded in the Psystar study of 25 cervical patients and only one of those eight aes.

Potentially associated with the cells great two dysesthesia.

Which eventually cleared on its own.

I love that favorable tolerability or safety profile.

And I think that that's important because when people talk about cell therapy and think about it there are some increasingly archaic notions about using wholesales.

People will still frequently say to me Oh, but you have to go on lifetime immune suppression linear just data does not indicate that.

Or they'll say Oh, you're going to have strange things going the wrong, Oregon is going to grow in the transplant area lineage data hasn't shown that none of the none of the clinical programs that we have have had those kinds of experiences. So I like very much that we were able to point to.

Five and in some cases 10 years of safety Tolerability and patient compliance Ie reporting and continuing on study because it is just helping to derisk. The conduct of a future study and I think further that enrollment in these studies. These later stage or next stage studies isn't he.

<unk> by this long term data because if I were a patient and I didn't have a background in biology I might be scratching my head about some of these cell therapy ideas not sure how well tolerated and if someone can say well here's here's 10 years of safety data from this set of thoracic.

Final cord injury patients.

Let's walk through the profile I think that's compelling and can help with enrollment not just the spinal cord.

The program that we have as we continue to generate evidence that what is essentially a new therapeutic approach is looking promising.

I appreciate that extra extra color there.

I'll leave it there I appreciate everything and congratulations again to the team.

Thank you William.

Your next question comes from the line of Robert Lee Boyer from Noble capital. Your line is open.

I just had a question on the accounting treatment of the revenues and I know that you use it.

$50 million with obligations to the collaborators. So I was wondering if you could detail.

How much has been paid in.

Whether it's being amortized with the revenues or whether it was taken all at once and if there is any expectation for the quarterly revenue recognition going forward until.

<unk>.

The unearned revenues or the entire payments is amortized.

Well, Rob I first months. Thank you for asking a detailed financial question on the day were unexpectedly our CFO is not available, but I'm going to do my very best.

So the way that we are booking.

The upfront payment from Roche.

Is in connection with our performance obligations under that Roche agreement. So there are two major categories of performance, we are providing the clinical trial material for the next study and we also are continuing to follow the patients on the phase <unk> trial, so rather than.

Then booking all of those revenues in the first in that first quarter, we're going to spread them across on the fractional basis going forward. It is unlikely although possible that they will be equal in every quarter until exhausted.

I only say that thats possible because it is as I described dependent on how the offset of the progress that we make is accounted for or accrued over time. So our expectation is that there will be.

Some some variability in how much we book each quarter to reflect our performance under our obligations, but it probably will not be wildly fluctuating and I don't think that theres any balloon at the end I think we're going to try and spread it out in connection with our obligations under the agreement.

And I hope that that.

And in response is adequate today.

Okay, Great. That's that's plenty thank you.

Excellent. Thank you.

We have now concluded RQ Anthony.

Thank you for joining US you may all disconnect.

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Welcome to them than cell Therapeutics first quarter 2021 conference call. At this time all participants are in a listen only mode. An audio webcast of this call is available on the investors section of lineage website at www dot lineage <unk>.

<unk> Dot com. This call is subject to copyright and is the property of lineage and recordings reproduction or transmission of this call without the expressed written consent of lineage are strictly prohibited as a reminder, today's call is being recorded.

I'd now like to introduce your host for todays conference <unk> director of Investor Relations at lineage must hone. Please go ahead.

<unk> within the meaning of federal Securities laws, including statements regarding our strategy plans aim objectives and believe the future price of our stock our competitive advantages with respect to competitors, our development program, our product candidates platform and pipeline and their potential.

Therapeutic applications commercial potential and potential value the timing of our announcement of additional product candidates clinical trials data update future payment transfer of expenditures and activities under the collaboration with Roche Genentech, our ability to enter into additional collaboration.

Your partnership.

The anticipated benefits and opportunities from our existing and potential future collaborations.

Treatment of milestones anticipated regulatory meetings and interactions.

Man manufacturing improvement.

Our cash management runway of need for capital.

Anticipated growth and our commercial opportunities.

Shipments 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 uncertainty.

<unk> 10-Q filed today May 12 2022.

With us today are Brian Kelly.

Chief Executive Officer, and Gary Ho, our senior Vice President of clinical and medical Affairs, and Fortunately, our CFO , Kevin Cook is dealing with an unexpected family of urgency and won't be able to join us.

Brian will provide some prepared remarks, and then he and Gary will be available for questions from analysts with that I'd like to turn the call over to Brian .

Thank you Juan and good afternoon, everyone. We appreciate you joining us on the call today as I did on our last call I'd like to start off with some comments addressing the challenges currently facing the biotech industry. Unlike other sectors for which the supply of raw materials may become increasingly scarce or for which a.

Michael or social disruption could alter its fundamentals.

Human beings will continue to get sick Holden hurt and they will continue to rely on to help support the valuable innovations, which the biotech industry has delivered for decades.

We believe the current sell off in biotech is an overreaction and that better days will return to our sector.

In the meantime, each of us needs to determine what steps if any we ought to take in response to current events.

And my two aims for today are first to review how I believe lineage is very well positioned to navigate the current biotech bear market.

Second to talk about some of the steps we're taking in response to this new environment steps, which we believe will help position us to be one of the companies, which can outperform its peers this year and next.

With respect to lineage being well positioned today several important attributes come to mind.

On hand near term milestones and our fundamental profile.

With respect to cash we are comfortable that we have multiple years of cash on hand, and we have no need to raise money at these currently unattractive prices.

Our reported cash and cash equivalents as of Q1 were approximately $78 million and <unk>, our net operating spend for each of the past two years has been less than $25 million.

Overall, we feel quite good about our cash position.

Moving next to our program milestones, we have a lot of important objectives, we're working towards.

Can still provide much needed clarity on our developmental programs and in some cases can help de risk or increase the value of our assets prior to their entering subsequent clinical trials.

For specific goals for this year in the clinical and regulatory area, which I'd like to highlight for you today include first.

Initiating a clinical safety trial of our new and improved delivery device for OTC one.

Which is expected to enroll between five and 10 patients and which will include for the first time administering <unk> to patients with chronic spinal cord injuries, not just sub acute injuries.

Second meeting with FDA to discuss improvements we've made to the OTC one manufacturing process in areas, such as purity and production scale.

Third.

Submitting an IND for our <unk> two program to support additional clinical testing of <unk> two in the U S and build upon the data generated by cancer research UK and non small cell lung cancer and.

Enforced generating preclinical data to support a pre IND meeting with FDA for our new auditors neuron program.

We of course have additional goals for this year for these four in particular represent milestones, which will provide some regulatory and spending clarity and potential de risking of our programs and we believe execution of these goals. We will continue to demonstrate our ability to successfully advance novel cell therapy product candidates, which.

Will be an important corporate message, we aimed to emphasize this year.

The third item, which I mentioned at the outset is our fundamental profile.

We believe in this challenging environment investors will work, even harder to find the companies, which they believe will outperform in an economic recovery.

Being identified among those screening efforts can be enhanced by having attractive fundamentals.

Now I have already discussed our cash position and planned activities, but believe lineage offers additional characteristics, which can help make us an attractive investment for example, we believe our spending levels reflect our commitment to capital efficiency, which we will continue to employ.

We also have the ability to create new development programs from our platform without spending capital on external licenses and have demonstrated that capability with our new hearing loss program.

We also have proven our ability to close on corporate partnering transactions through one of the largest ever license deals in cell therapy outside of oncology, which puts us in the envious position of working to repeat this success rather than trying to achieve that for the first time and we have assets, which we believe can form the basis of additional corporate partnerships.

<unk>.

So going back to my comments about the importance of being well positioned in three categories those categories being cash on hand, and near term milestones and events.

Fundamental profile I feel very good about our overall situation.

So turning next to the second of my two aims for today I'm going to say a few things about how we're adapting to recent changes in the biotech landscape.

This also features three key principles communications operations and business development.

Starting with communication, we do not believe our company is well known and then it's important to be able to highlight what we can offer to shareholders.

We have adjusted our investor targeting to better aligned with feedback we've received about investors mindset and we continue to refine our key messages.

Second we constantly review our operational plan to ensure it is appropriate for the business environment with all seen announcements lately from companies, reducing their pipelines or reducing their head count to achieve what they are calling calling operational efficiency.

Now I don't know why they werent being efficient to begin with but lineage always works to be efficient.

One advantage we have in this area is that our development programs share common features.

Choose which programs are stopped funding.

In fact, while I read this week that 48 biotech companies have recently announced staff reductions. This year lineage has been adding positions in key areas.

As one example, we recently made a new hire in business development, which is convenient segue to my third point.

Third point I wanted to make about adapting to the new environment is it we are putting an even greater emphasis on business development. This year.

We also intend to explore established collaborations such as with serve either for existing programs or as the basis to launch new ones.

So for example, we have already determined that manufacturing allogeneic NK cells is significantly easier than manufacturing allogeneic dendritic cells.

We would be open to a partnership around an NK program or to work on the linear just some other exciting cell type like islet cells and <unk>.

We want to ensure there is awareness about our capabilities and our interest in working with partners in areas like these.

To be clear, what I'm speaking about securing funded partnerships not creating new subsidiaries with long timelines to liquidity.

So going back to how lineage is adapting to the current landscape. We are taking steps in areas of communication operations and business development lineage has adjusted rapidly to the changing environment since the Roche Genentech deal, which we believe adds validation to our approach.

We've shown we can launch new programs, which supports my frequent comments about our ability to move quickly in the new areas.

Additional business development capabilities and imperatives, we will seek to capitalize on unlocked areas of value in our business.

Now before I move to the financial review I do want to mention just a few specific items first a few weeks ago opportune clinical data was presented at the 2022 ARVO annual meeting.

Notably it was reported that a total of five patients who had <unk> delivered to most or all of their geographic atrophy, including the fovea showed evidence of a parent improvement of outer retinal structure, along with average gains in visual function of $12 eight letters.

Prior to the license deal announced with Roche and Genentech only for such patients had been reported by lineage.

Additionally, recently, we published 10 year safety data from the first <unk> clinical trial for the treatment of acute thoracic spinal cord injury in the journal of Neurosurgery.

This is one of the longest running clinical trials in our steel providing important first in human safety data with our Purion pluripotent cell line.

10 years following treatment there've been no medical or neurological complications to indicate that the OTC one cell transplant therapy is unsafe.

There also have been no unexpected serious adverse events attributable to the <unk> implant.

And none of the patients enrolled this clinical trial had deterioration in neurologic motor function, which we believe to be significant given the severity of their injuries.

Overall these results provide additional evidence that <unk> cell transplants can be well tolerated and that patients are willing to participate in long term follow up.

We plan to have additional papers on OTC, one published this year, including full clinical study results from the <unk> study of 25 cervical injury patients and an additional publication focused on the MRI findings. So those are two additional milestones, which I Didnt mentioned previously and coincidentally I just wondered.

Morning that the Psi start study results were accepted for publication. So we expect that will become available online in the coming months.

<unk>, taking part with us next year.

Before I dive into our financial results I briefly want to address an item that has been on People's minds and that is concerning the supply chains. We are of course aware of reports of disruptions and delays due to global events, such as Covid and the war in Ukraine I am pleased to report that we arent aware.

<unk> of any of these matters, specifically impacting our business, but we do know these issues are affecting our industry and may continue for some time.

Because our in house manufacturing is core to our value proposition, it's particularly important that we keep that operation functioning smoothly and we have taken steps such as pre purchasing certain materials or planning for longer lead times with some of our vendors.

Best meet our manufacturing and development goals and public timelines.

So with that let me turn to our results.

Total revenues for the first quarter were approximately $5 2 million an increase of $4 8 million from the same period in 2021 <unk>.

Increase was primarily due to licensing fees in connection with the Roche collaboration agreement. Please recall that we received the $50 million upfront payment this quarter on a cash basis, but on a book basis, we are accruing that $50 million over the course of time as we fulfill our obligations to our partner so the.

$5 million is what we booked this quarter and we will continue to book income on a fractional basis in the quarters ahead.

Total operating expenses for the quarter were approximately $11 5 million an increase of approximately $4 2 million compared to the same period in 2021.

This increase was substantially driven by a $3 $5 million nonrecurring accrual related to a potential settlement of the 2019 Asterias merger litigation and that nonrecurring item shows up in G&A.

Our loss from operations for the first quarter was approximately $6 4 million a decrease of zero point $7 million as compared to the same period in 2021, resulting mainly from the two items I already mentioned these serious litigation settlement accrual offset by increased revenues from our collaboration with Roche.

The net loss attributable to lineage for the fourth quarter of 2021 was $7 $1 million or <unk> <unk> per share.

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 as well as changes in foreign currency rates.

Our related of course to linear just international subsidiaries.

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

Turning next to the balance sheet, we reported cash and equivalents and marketable securities of approximately $80 million as of quarter end.

Accordingly, we continue to feel that our liquidity level provides us flexibility and funding to reach our value creating objectives in the years ahead and to put emphasis on this.

Being purposeful by saying years instead of months or quarters. We believe this is an environment, where having at least two years of runway is an important and attractive characteristic for investors.

We will likely see an increase in our net spending this year compared to last year, because our plan is to create value by advancing our programs towards the next clinical trials and we still have certain obligations under the Roche agreement such as supplying oxygen sells for the next clinical trial, but we will maintain the same spending discipline that we hold dear to our valve.

Proposition.

And we believe that spending discipline together with our current cash balance puts us in a good position to create value during this biotech storm.

And as a reminder, we also may be successful in collecting additional cash through potential development milestones available under our Roche and or ITI agreements.

Potentially also from Grant award from funding at this he's like surf or from new business development deals, which we may enter into for any of our current or future programs.

To conclude I understand well that the current environment is frustrating for biotech companies and investors alike, but lineage has performed the Spi outperformed the Spi index in both good and bad markets and we will work hard to continue that streak for a third consecutive year.

Operator, we are ready to respond to any analysts questions. Thank you.

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

First question comes from the line of Joe <unk> from H C. Wainwright Your line is open.

Good afternoon, thanks for taking the question.

So a couple questions, Brian let me start on the dollar front.

So I know, it's just a brief comment in the prepared comments and in the press release, but I wanted to see if you could provide a little more color on.

The settlement of the Asterias litigation.

How you would account for that because if my perception is correct.

Really appears like there was a big overhang removed from your shares.

Yes. Thank you for the question Joe So the company has been providing disclosure on this topic for several years.

We also are being are glad to be held to move on from this as I'm sure others would be.

As a reminder, for others, who aren't familiar with US we merged with a serious in 2019 and it's not an uncommon.

In public company mergers, we became the defendant in a shareholder class action lawsuit related to the merger.

Out of an overall settlement of $10 7 million.

Settlement would result in the dismissal of the lawsuit without any admission of liability or fault by lineage that settlement is still subject to negotiation, we still will need to execute a settlement agreement it needs to be approved by the court. So it is not absolutely final. However.

The parties involved have agreed in principle to the key terms. So it's probable enough from an accounting perspective that we want to accrue for it in our financial statements and that's why you see them appearing in this quarterly statement. So it's probably not a big shock for anyone who is accustomed to public company mergers personally I, sometimes think of it.

No. That's helpful. Thanks, and then just the other dollar question that I had was.

Obviously, you said you have at least two years of runway I guess how.

How would you reconcile that statement with you've been growing your pipeline recently with additional programs. So I just wanted to make sure how would that would be portrayed to the street with regard to any views towards increased expenses around those programs.

That's a multipart answer one part is that.

Just the nature of our technology, which is being able to manufacture specific cell types from largely common pluripotent cells.

Gives us some economies of scale, where our existing team.

Which has available time, because they might be working on one project, where they have to wait let's say five days before they add the next growth factor or inhibitor too to our process.

They can be spending a lot of that time working on other programs. So we have this really nice situation with our technology, where we don't have to duplicate we can just add new programs onto existing fixed costs are fixed infrastructure.

And so that provides us some ability to keep the cost down the other part is it do you still arent preclinical programs. We're of course very excited about them, but they have not yet reached the more expensive stage of human testing and so the cost to be able to advance these programs towards.

It.

Is actually very modest and and Thats why you are seeing these these simultaneously and expansion of our pipeline with only a marginal expansion in our spending and I hope that that is a good way of explaining it.

It certainly is and then just Mike just to shift gears, a second from a clinical standpoint regarding the upcoming OTC. One study I wanted to focus on the device and I'm, just bringing up that goes from the path from the original LPC. One studies. So just can you remind us is the device ready to go.

Once the studies.

Officially ready to go and are the docs trained or are they being trained and does any specific training.

Any specific training required.

One of the docs with an inventor, but let me invite Dr. <unk> to join the conversation and provide some some response to that question.

Sure. Thanks, Brian Thanks, Joe So yes.

As we mentioned we would intend to do a small study.

To validate the device.

We are prepared to have one or two potential active sites.

With those physicians and surgeons ready to go.

Great. Thanks, a lot guys.

Thank you Joe.

Your next question comes from the line of Kristen <unk> from Cantor Your line is open.

Hi, everyone. Thanks for taking the question appreciate it.

The first one just on the newer program P&C one in Q1.

As you've mentioned there theyre very broad from the perspective that they can each go after a number of different disorders, whether blindness or hearing so wanted to ask from a.

Preclinical perspective, if youre, if youre planning to look at kind of like a basket of opportunity appear before making a decision about what our lead program could look like or perhaps a D C.

Across the board.

What that next direction could look like.

Your fee and we learned about delivery part of the answer is going to be that you do learn while you're doing it.

But let me see if Gary you would like to add to that as well.

Yes sure so.

That point, we know that optimizing delivery is important whether it's from the auditory ophthalmic perspective, we know that both of these conditions auditory loss.

Obviously photo receptor.

Efficiencies do have unlike dry AMD.

Well established preclinical animal models.

We're right now working on how best to scale up.

These cells.

Make it much more commercially viable.

Drug formulations as we've done with all of our other products and to begin both the.

In vitro and in vivo work that would be necessary for an IND submission.

Interest in pre IND.

Discussion meetings with the FDA.

Yeah.

And Kristen I'd like to add also something that I think is not not always fully appreciated when using a cell transplants approach.

Dysfunction or lack of auditory neurons, perhaps we'll find that we have a very broad addressable patient population simply by the nature of the technology, but.

But I think that some of those answers will come to us through the clinical testing itself.

Okay awesome. Thank you for that and then.

Just thinking about partnerships opportunities like that should we be thinking about the similar to how the operating deals in place that really as a company are looking to at least established some proof of concept first in house before any deals or how should we be thinking about.

<unk> and things like that.

This is one of the most fun parts of this job because having assets.

Could be partnered either very early in development or very late.

So we don't we don't stick to perhaps a script that says you must generate phase one to be early efficacy and partner.

That is largely what we did with offer Gen and it's obviously worked quite well, but we're going to we're going to really look at any partnering opportunity contextually.

What is our capability to advance the program further what are the capabilities of the partner might bring.

Like differentiated cell transplants from pluripotent cell lines, you have to have some mix of partners working with you because it simply has too many opportunities for any one company to reasonably tackle on their own.

Okay and last question for me is I was actually at the ARVO Conference. This year and I felt like one of the takeaways for wet AMD.

A lot of focus on these newer and emerging therapies that really the goal is less frequent injection. So even though what AMD is a more mature market than <unk>.

That's all part of the question as to how you think having some of these injectable market potentially could.

Could help benefit yeah, their physician and patient awareness and education around therapy, but that also lead to the <unk> around receiving the frequent injection. Thanks again.

You bet Kristen I think theres, two things that come to my mind.

One is that our data with opportune indicates that this is a onetime treatment. So that's obviously an incredibly compelling advantage versus the frequent injections, especially people who have got severe visual impairment, even just getting to the clinic.

The other notable aspect is that we are seeing evidence of functional improvement in patients.

So in terms of compliance and patients' willingness to go and get regular injections, whether its every 123 or even six months.

I think that being able to I hope that being able to offer those patients.

Stabilization or improvement of their vision.

Is far more compelling than a patient that might have a competing therapy that is doing something biological of slowing down the condition, but the patient doesn't feel anything.

Don't know that a patient can get us excited about.

Being told that well.

Your area of atrophy as five square millimeters, but we would have thought it would be five and a half see it in eight weeks.

So I do think that compliance can be a problem I think thats very favorable for us.

And what we hope to offer the market the other aspect of this I.

I think as one of market conditioning and that is the dry AMD has no approved therapies today.

So if you're if you're a patient who received that diagnosis.

Told eat vegetables, and don't smoke cigarettes, but theres nothing you can really do about it. So we have a tremendous number of individuals with the condition, but theyre not theyre not organized as a patient population. So.

Way, we're actually hopeful that some of the companies that are later in development that are starting to do some market awareness and market conditioning that could be wonderful for Roche and genentech not that they are massively capable of addressing a commercial opportunity. If they are able to have an approved agent.

In this.

What we're able to watch occur in the coming years.

Thanks, Brian .

Thank you Christopher.

Your next question comes from the line of Jason Mccarthy from Maxim Group. Your line is open.

Hey, Brian Thanks for taking the question you had mentioned.

Essentially partnering solely for manufacturing.

Given your capabilities I think I heard that right and you'd also mentioned.

NK cells.

Just briefly are you.

Actively looking for something in the NK Dave.

For the company as a space that continues to gain traction and then just more generally.

Porting another group's manufacturing what scale.

In lineage go up too can you go support somebody all the way through phase III into commercial or can you give us a little bit more color.

About the company's capabilities on the manufacturing side.

Yes, I appreciate that question Jason because.

I don't want it to be not obvious that there was an advertisement in this in this presentation.

A compelling story with respect to being a partner and something changed when we announced the deal with Genentech and Roche.

Clearly there is going to be a a greater sentiment or expectation of quality because we passed one of these sort of biotech hurdles, which is some some measure of validation from a big pharma that people are going to assume did abundant diligence on our capabilities. So.

I think that is why now is the time for us to be more explicit and not passively wait for a company that might want to work in another area to say hey lineage can you do this can you do this other thing and instead for us to actually be more active in that process for our business development folks.

Almost as scouts to go out and say Hey, we have capabilities and the reason for that in part and in no small part is exactly what you said other than the cost of some of the equipment and obviously reagents and materials I do not think that there is the obvious limit on.

Scale.

One still has to keep in mind that for example in the setting of NK cells I saw a few days ago. One company reported data on is talking about going up to $1 5 billion cells as a dose that's a very large number compared to our 100000 cells that we utilize in dry AMD. So it will be indication specific and I don't want to limit. This.

Discussion topic to NK cells. However, our phones are open and I'm hopeful that there might be some some folks who say you know I'd like to understand better.

Again, it kind of goes back to that prior question about the mix of partnerships. So I am excited about our ability to now go out there and point to some of our recent success in say, maybe you should go under confidentiality and learn what we do because maybe we could strike a partnership around some other area.

Got it and just briefly can you give us a little bit of an update on the <unk>.

No.

Therapeutics collaboration and what's happening there on the GBS Mark.

This is a terrific example of how I see the vac platform, having more value than just in Vaca <unk>.

I think it potentially is much more valuable as a delivery system.

One would choose an antigen, we obviously have the <unk> antigen.

<unk> natural antigen presenting cells, the best antigen presenting cells.

Comma will that lead to better clinical outcomes, because you can get these very high levels of activated T cells antigen specific activated T cells.

And because oncology is a very expensive and very challenging endeavor.

And keeping in mind that it can be very rewarding I think the right strategy is for us to try to find additional programs like ATI, where we are more than compensated for our contribution.

And we have a fractional ownership in someone else's program and I think if we are able to perform as we have so far against the ITI collaboration and receiving.

Some of those payments already.

I think that will allow us to attract more and more valuable.

Partnerships in the future for the Vac program.

Great. Thank you.

Thank you Jason.

Your next question comes from the line of <unk> Yang from Tony from B Riley Securities. Your line is open.

Hi, This is Graham wood on firm Tommy today, congratulations to the team really.

Mike the updates that I'm seeing here so just curious.

On your OTC one.

Safety testing with the new PSD system.

Assuming all things are fine with the FDA going forward.

I was just curious any thoughts you could provide on what.

The design would be for the next phase trials I know you've also mentioned chronic patients.

Maybe expansion, where do you see that growing.

Yes.

Difficult question to answer right now because we havent proposed anything to the agency or decided internally one of the reasons for that is that our view in the setting of spinal cord injury is that the tools to the assessment tools are maybe not as sensitive as.

We would like some of them that are out there. Even some that are frequently used are a little bit crude in terms of their ability to detect motion.

Late your wheelchair, but if that's the only mobility you have on that hand, maybe that's good enough.

Now to get back more specifically to your question what does that mean I think that that's going to lead us down towards a design that has an adaptive component there could be a lead in phase with multiple assessment tools, all but one or two of which get dropped going into a blinded phase or Matt or controlled phase we don't know.

It won't be able to guide until we do some additional market research, but it is not gating. It. This time because as you know we still have to conduct the device study because we think that device when used with our thorn inject formulation will enable us to open up many more sites because we are eliminating all of the dose preparation that.

That used to go on in this program that we've eliminated with the creation and in future introduction of this thaw and inject formulation.

Makes sense I appreciate it and then also you.

You mentioned the recently published 10 year follow up.

Safety follow up for <unk>.

Just curious how you see that supporting our strategy and obesity, one obviously, but then even more broadly with our Virgin band.

Progenitor.

Youre developing.

Yeah, I think what's really exciting about the data that's being published is.

Is the durability the durability of these graphs, the tolerability and safety.

There were as you've seen in presentations from the company over 500 Aes recorded in the <unk> study of 25 cervical patients and only one of those eight aes was potentially associated with the cells great two dysesthesia.

Eventually cleared on its own so I love that favorable tolerability or safety profile and I think that that's important because when people talk about cell therapy and think about it there are some increasingly archaic notions about using wholesales.

People will still frequently say to me Oh, but you have to go on lifetime immune suppression linear just data does not indicate that.

I like very much that we're able to point to five and in some cases 10 years of safety Tolerability and patient compliance Ie reporting and continuing on study because it is just helping to derisk. The conduct of a future study and I think further that enrollment in these <unk>.

<unk> is later stage or next stage studies is enhanced by this long term data because if I were a patient and I didn't have a background in biology I might be scratching my head about some of the cell therapy ideas not sure how well tolerated and if someone can say well here's here's 10 years of safety data.

From this set of thoracic spine.

Spinal cord injury patients and.

Let's walk through the profile I think that is compelling and can help with enrollment not just the spinal cord, but in any program that we have as we continue to generate evidence that what is essentially a new therapeutic approach is looking promising.

I appreciate that extra extra color there.

I'll leave it there I appreciate everything and congratulations again to the team.

Thank you William.

Yeah.

Your next question comes from the line of Robert Lee Boyer from Noble capital. Your line is open.

Hi, I just had a question on the accounting treatment of the revenues.

And I know that you've got the $50 million with obligations to the collaborators. So I was wondering if you could detail.

How much has been paid.

And whether it's being amortized with the revenues or whether it was taken all at once.

And if there is any expectation for the quarterly revenue recognition going forward until.

The unearned revenues or the tighter payments is amortized.

Well, Rob I first months. Thank you for asking a detailed financial question on the day were unexpectedly our CFO is not available, but I'm going to do my very best.

So the way that we are booking.

The upfront payment from Roche.

Bookings all of those revenues in the first in that first quarter, we're going to spread them across on the fractional basis going forward. It is unlikely although possible that they will be equal in every quarter until exhausted.

I only say that thats possible because it is as I described dependent on how the offset of the progress that we make is accounted for or accrued over time. So our expectation is that there will be.

And I hope that that.

And in response is adequate today.

Okay, Great. That's that's plenty thank you.

Excellent. Thank you.

We have now concluded RQ Anthony.

Thank you for joining US you may all disconnect.

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