Q3 2024 Lineage Cell Therapeutics Inc Earnings Call
Speaker Change: Welcome to the Leading Cell Therapeutics 3rd Quarter 2024 Conference Call.
Speaker Change: At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the WebVSTR section of the Leenage website at www.leenagetal.com.
Speaker Change: This call is subject to copyright and is the property of Lineage.
Speaker Change: and recordings, reproductions, or transmissions 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, Ioana Hone, Head of Investor Relations at Lineage. Ms. Hone, please go ahead.
Ioana Hone: Thank you, John. Good afternoon and thank you for joining us. A press release reporting our third quarter 2024 financial results was issued earlier today, November 14, 2024, and can be found on the Investors section of our website.
Ioana Hone: Please note that today's remarks and responses to your questions reflect management's views as of today only, and will contain forward-looking statements within the meaning of federal securities laws.
Ioana Hone: Statements made during this discussion that are not statements of historical fact should be considered forward-looking statements, which are subject to significant risks and uncertainties.
Ioana Hone: The company's actual results or performance may differ materially from the expectations indicated by such forward-looking statements.
Ioana Hone: For a discussion of certain factors that could cause the company's results or performance to differ, we refer you to the forward-looking statement sections in today's press release and in the company's SEC filings.
Ioana Hone: including its most recent annual report on Form 10-K and its subsequent quarterly reports on Form 10-Q.
Ioana Hone: We caution you not to place undue reliance on any forward-looking statements which speak only as of today and are qualified by the cautionary statements and risk factors described in our SEC filings. With us today are Brian Culley, our Chief Executive Officer, and Jill Howe, our Chief Financial Officer. I'll now hand the call over to Brian.
Brian Culley: Thank you, Iwona. Good afternoon, everyone. We appreciate you taking the time to join us on this call.
Brian Culley: As I normally do, I'll provide an update on Oprogen today, along with some comments about our pipeline. But I want to begin by highlighting that we have updated the guidance for our cash runway, which we now expect to support our planned operations into Q1 of 2026.
Brian Culley: An extension of our runway into 2026 may be unexpected for many of you because it indicates a longer runway than we guided to last quarter. The pickup is partly attributable to our fiscal discipline but also is a result of the additional interactions we had with FDA regarding the startup of the DOST study for OPC-1.
Brian Culley: It's been a very long review process, but I'm pleased to share today that we held a meeting with FDA reviewers just two days ago, and during that meeting, which I attended, we believe we obtained a clear and straightforward path to commencing enrollment in the DOST study.
Brian Culley: I'll provide some details on that later in the call, but the main takeaway is that we completed many of the startup activities while waiting for FDA's input, which has provided us with more cash than we previously expected at this point.
Brian Culley: Moving now to our lead program, Oprogen for the Treatment of Dry AMD. I assume everyone on this call is acutely aware of the ongoing Phase 2a study, which our partner Genentech is currently conducting at five sites in the US and one site in Israel.
Brian Culley: The primary and secondary endpoints for this open-label study occurred three months after treatment and Genentech treated its first patient more than 18 months ago.
Brian Culley: Therefore, while we are not aware of any efficacy analyses they may have conducted, we believe it is reasonable to assume that some amount of preliminary efficacy data from this open-label study has been collected by the Genentech team.
Speaker Change: I want to be clear that Genentech does, excuse me, that Lineage does not have any such interim data. And we do not know when or where interim data or full data will be made available to us. But there are several public disclosures from Roche and Genentech which occurred this year.
Speaker Change: which we believe are consistent with the Phase 2a trial looking promising and at the least appears supportive and explanatory of their increased investment in the OPERGEN program.
Speaker Change: I want to briefly review four reasons for our optimism but before doing so I just want to emphasize that what we're providing today is management's perspective of the current situation based on our assumptions, experience, and Genentech Erosh's publicly available actions and statements.
Speaker Change: which we believe, in the aggregate, are consistent with positive progress happening with the OPERAGEN program.
Speaker Change: So first, Roche conducted a pipeline prioritization process early this year. They terminated approximately 20% of their developmental programs in order to enrich for what they describe as first-in-class and best-in-class assets.
They refer to these as, quote, high-impact programs.
Speaker Change: Not only was Oprogen maintained, but after Roche terminated a competing anti-complement program, Oprogen has become, to our knowledge, the only clinical stage GA program in Roche's pipeline.
Speaker Change: We believe this is meaningful given Roche's longstanding commitment to ophthalmology.
Speaker Change: Second, in May, Genentech entered into a new and additional services agreement with Lineage to provide certain activities for the benefit of the Operation Program.
Speaker Change: To be clear, we did not reopen or renegotiate our original agreement. This was a separate agreement which provided capital to support activities like additional training of their staff.
Speaker Change: opening more clinical sites in the Phase 2a study, and following patients in Lineage's Phase 1-2a study for an additional five years.
Speaker Change: These are medium and long-term actions which we believe are consistent with Roche's ongoing commitment to Oprogen.
Speaker Change: Third, the current study began only at clinical sites which had prior experience with Oprigen.
Speaker Change: Starting off with a smaller number of sites can help reduce variability which may be particularly important for smaller early stage studies and especially for assessing novel surgical techniques.
Speaker Change: We believe Roche's clinical strategy supports that goal and we're pleased to welcome the two clinical sites which came on board earlier this year. We also believe there may be additional sites being added to the ongoing trial.
Speaker Change: Given the effort required to open and train a site, we believe expanding the study to additional sites this far into a trial and broadening surgeons' experience with the product could be a signal that things are going well.
Speaker Change: Fourth, we noted that during Roche's recent Pharma Day, our partners spoke about Oprogen's potential and they highlighted that they had recently obtained RMAT designation for the program.
Speaker Change: RMAT designation provides a number of potential regulatory benefits, which I encourage everyone to be familiar with, as it may provide insights into Roche's plans.
Speaker Change: I won't cover those benefits today, but again, we find it encouraging that more than a year and a half into the ongoing Open Label Phase II trial, Roche was marshalling regulatory and medical resources to successfully obtain this designation.
Speaker Change: We believe those four indicators I just described may signal how oprogen is faring, but there are additional smaller items which further contribute to our view of how things are going. Even things like just a few weeks ago giving the ongoing trial a name seems encouraging to us.
Speaker Change: By the way, the trial is now known by Roche and Genentech as the Galette Study, and they told us that that is how it will be referred to by them when it is brought to scientific podiums in the future.
Jill Howe, Brian Culley
Speaker Change: I should mention that lineage having incomplete information is a completely normal arrangement for a pharma partnership.
Speaker Change: What is perhaps slightly different in our case is that we continue for now to be the manufacturer of the product, so we spend a lot of time with our partner.
Speaker Change: And overall, we believe that Roche and Genentech continue to be fully committed to the development of OPERGEN, and we're encouraged by the public actions and statements made by them to date.
Speaker Change: I now wanna shift gears and talk about something we've been working on, which I think can highlight the unique capabilities of this company.
Speaker Change: Specifically, I want to address the topic of commercially viable manufacturing.
Speaker Change: Now, investors naturally get excited about clinical data, but cell therapy experts understand that commercial success can only occur if it is accompanied by affordable manufacturing.
Speaker Change: And to be clear, I'm not talking about products which expand donor cells to tens, hundreds or even thousands of doses because those approaches still need to solve for donor variability and product consistency and inefficient cost.
Speaker Change: And I'm certainly not talking about individual treatments which require a unique donor for each dose, because from a cost and comparability perspective, those manufacturing chains more closely resemble autologous therapy.
Speaker Change: I'm talking about capitalizing on the consistency and cost advantages of a bona fide off-the-shelf solution, which can provide millions or tens of millions of therapeutic doses, all from a single starting cell line.
Speaker Change: and the milestone of reducing to practice, not just promising or predicting future production levels, but actually manufacturing and releasing GMP material from a stable working cell bank.
Speaker Change: which itself was derived from a stable master cell bank and thus credibly demonstrating a commercially scalable manufacturing process from start to finish is a massive undertaking. So I like to listen carefully to what other companies are saying about this topic.
Speaker Change: As one recent example, I listened to a talk on this subject given at a Goldman Sachs conference last month by the CEO of a large, well-funded cell therapy company.
Speaker Change: That CEO described four challenges of developing an allogeneic therapy which his company faces.
Speaker Change: He highlighted the requirement for 1, a stable master cell bank, 2, material to support phase 1 studies, 3, overcoming rejection, and 4, having the purity, potency, and yield needed to support commercial-scale manufacturing.
Speaker Change: And he explained that even foundational step one, establishing a stable master cell bank quote, took a few years and that it wasn't yet guaranteed they had one.
Speaker Change: His overall message when talking about what lies ahead, and I'll use his words, was that their investors were quote, probably going to be frustrated for a long time. And by the way, this view comes from a company which raised almost $700 million in their IPO.
Speaker Change: Now I agree with that CEO about those four major challenges and I admire his honesty to define the technical hurdles he faces.
Speaker Change: that the lineage manufacturing team is working right now, not on the first three hurdles, but on the fourth and final hurdle, ensuring purity, potency, and yield necessary to support commercial scale manufacturing.
Speaker Change: We're not aware of any company which has demonstrably completed these steps with an off-the-shelf allogeneic product, but we believe we are on track to accomplish this milestone next year.
Speaker Change: My point is this. Lineage has the experience necessary for succeeding in this new field.
Speaker Change: I believe that manufacturing expertise is a massive barrier to entry in cell therapy, too often mistakenly shoved into the background by the optimism of new capital, which perhaps finally is beginning to accept and understand production expertise as necessary but difficult table stakes for this field.
Speaker Change: All of that, if true, would seem to favor the experience of a lineage, and so it makes sense for me to highlight this point of view from time to time. If we can reduce to practice what every allogeneic cell therapy company is promising, we can
Speaker Change: And if the clinical data being generated by Genentech supports further development of Oprigen.
Speaker Change: We will be well positioned for late stage trials and can apply this success to our other programs as well.
I'll now transition to the remainder of our pipeline.
Speaker Change: I highlighted at the beginning of the call that Genentech has obtained R-MAT designation for Oprogen.
Speaker Change: So, as an example of how that designation can be helpful to sponsors, we took advantage of the RMAT designation we obtained for OPC-1, our cell transplant for spinal cord injury, to hold an informal call with FDA to try and help them complete their review of the OPC-1 IND amendment.
Speaker Change: That call was held two days ago and went very well.
Speaker Change: The call included reviewers from both CBER and CDRH divisions with the purpose of aligning on any items which would need to be completed prior to us being able to initiate the dose study.
Speaker Change: We already reached alignment with the agency on the clinical aspects of the dose study, so this meeting was focused on the novel delivery device which we intend to test.
Speaker Change: During that meeting, which I attended, we believe we reached alignment on the final user tests which the agency requested.
Speaker Change: Those tests have been completed and we previewed their findings on the call, so we have no additional lab work to perform, just preparing and submitting the data which we expect should be completed in a few weeks.
Speaker Change: More importantly, FDA also indicated at this meeting that they do not expect to send us additional requests for information.
Speaker Change: Therefore, we currently anticipate that the agency will complete its review of this amendment in Q1 of 2025, and we currently plan to commence enrolling patients in the GOST study as soon as feasible after submitting these updates.
i
Speaker Change: As a reminder, once the IND amendment review is complete, that means we can submit our CIRM grant application for approximately 60% financial support of the DOST study.
Speaker Change: We continue to be very excited about the possibility of significantly reducing the cost of this trial via a CIRM CLIN-2 grant. However, the CIRM grant portal is currently closed.
Speaker Change: CIRM indicated they expect the portal to reopen in the spring, so that timing works well from our perspective.
Speaker Change: Based on this week's call with FDA, we can continue our site activation process while the agency finalizes their review of our submission in parallel, and because the CIRM grant portal doesn't open until spring, we aren't spending significant capital on things which otherwise could be reimbursed through a grant.
Speaker Change: And we have the benefit of additional prep time to work with the planned sites.
Speaker Change: For the sake of time, I'll just provide a brief mention of RESONANCE, also known as ANP1, our cell transplant program, to address sensorineural hearing loss.
Speaker Change: In September, we presented preclinical data at the 59th Annual Ear Biology Workshop Conference, showing successful administration and survival of resonance into multiple locations of the inner ear.
Joseph Pantginis, Sean McCutcheon,
Speaker Change: In parallel with generating that data, our team successfully manufactured resonance via a proprietary process which we developed in-house at phase one clinical scale and with relevant in vitro functional activity.
Speaker Change: Thank you for watching. And I'll see you in the next video.
Speaker Change: We also generated a cryo-preserved, ready-to-administer THON-inject formulation at a clinically testable dose, a formulation which supported successful engraftment and survival in the pre-clearing hearing loss model.
Speaker Change: I've already explained that we see manufacturing excellence as equally important as clinical evidence, but this work is additionally important.
Speaker Change: Because it shows how we are able to rapidly and successfully apply the technical achievements we made with Oprogen onto our other pipeline programs.
Speaker Change: What we've done with Resonance really captures our overall approach to running this business.
Speaker Change: We intend for the success and future value of the Oprogen program to help support our efforts to advance multiple cell transplants in areas of high unmet need and where we have even more favorable economics.
Speaker Change: We believe Oprigen Data has the potential to validate our technology and our business plan.
Speaker Change: But we continue to remain mindful of macro and sector factors which affect our outlook.
Speaker Change: Overall, we may move faster or slower in any given quarter, but the progress we've made during the past few years is exciting, and if Oprogen proves itself in the ongoing study, we believe we'll be able to move even faster and with greater confidence than ever before.
Speaker Change: And with that, I'll turn things over to Jill for a review of our financials.
Jill Howe: Thanks, Brian, and good afternoon, everyone. Our reported cash, cash equivalents, and marketable securities of $32.7 million as of September 30, 2024 is expected to support planned operations into Q1 2026.
Jill Howe: As Brian mentioned, our expected runway is a quarter longer than we reported last quarter and as a result of not only managing our spend as it relates to OPC-1 development, but also a reflection of our ability to be flexible in how we manage our cash resources to support
The Achievement of Important Milestones
Now I will review our third quarter operating schedule.
Jill Howe: Our revenue is generated primarily from collaboration revenues, royalties, and other revenues.
Jill Howe: Total revenues were $3.8 million, a net increase of $2.5 million, as compared to $1.2 million for the same period in 2023. The increase was primarily driven by more collaboration revenue, recognized from deferred revenues under the Collaboration and License Agreement with Roche.
Jill Howe: Our operating expenses are comprised of research and development expenses and general and administrative expenses. And total operating expenses were $7.6 million, a decrease of $0.3 million as compared to $7.9 million for the same period in 2023.
Jill Howe: R&D expenses were $3.2 million, a net decrease of $0.6 million as compared to $3.7 million for the same period in 2023.
Jill Howe: The net decrease was primarily driven by $0.6 million for our OPC-1 program, $0.4 million for our preclinical program, and partially offset by $0.5 million for our OPRGYN program.
Jill Howe: G&A expenses were $4.4 million, a net increase of $0.4 million, as compared to $4 million for the same period in 2023. The net increase was primarily driven by $0.3 million for personnel costs and $0.1 million for stock-based compensation expenses.
Jill Howe: Lost from operations were $3.8 million, a decrease of $2.9 million as compared to $6.7 million for the same period in 2023.
Jill Howe: Other income and expenses reflected other income of 0.8 million compared to other expenses of 0.4 million for the same period in 2023. The change was primarily driven by exchange rate fluctuations related to our international subsidiaries.
Jill Howe: Our net loss is $3 million, or $0.02 per share, compared to a net loss of $7.1 million, or $0.04 per share, for the same period in 2023.
Brian Culley: Now, Brian, I'll hand the call back to you. Yeah, thanks, Jill. So, I'll summarize today's call in just three points. First, we interpret Roche and Genentech's recent actions as potential indicators that things are proceeding well for Oprogen.
Speaker Change: As that trial continues to collect data, we will continue to monitor the information landscape and share insights as we are able.
Speaker Change: The second, we finally appear to have a clear path to initiating enrollment in DOST, where we will be testing a new delivery system for OPC1.
Speaker Change: Because DOST is an open-label study, we likely will have preliminary safety data reading out after commencement, which will be exciting for everyone to watch for.
And third, the manufacturing work.
Speaker Change: We've quietly been performing behind the scenes, progressing nicely, and we hope to be in a position to highlight some technical and production milestones for you in the first half of next year.
Speaker Change: As we bring those milestones forward, we believe they will help position lineage as a pioneer in allogeneic product development, which ultimately is a path we believe will lead to new therapies for patients and greater awareness for our efforts.
Speaker Change: I really appreciate your attention today, and with that, Operator, we're ready to take analyst questions.
Jill Howe, Brian Culley
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the Q&A session. If you are dialed in and would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Thank you.
Speaker Change: Our first question comes from the line of Mayank Mampani with B. Reilly. Please go ahead.
Speaker Change: Hi, this is William Wood from Montani. I appreciate you taking our questions and congrats on a very nice quarter. Just two from us, I think. Just a little bit unclear on the timeline on your OPC-1, getting that running. It says you just went through it and said...
Speaker Change: The submitting or the amendment review will be completed in first quarter of 25 and then you submit and and then and then they have to wait for another review. Maybe walk me through that timeline and we can actually expect this back into the clinic.
Speaker Change: Yeah, I'm happy to do so. Thank you for the question. The meeting that we had, we presented some top-line information from use of the device.
Speaker Change: The agency's evaluation of that was that it appeared to be sufficient, but of course, you know, as is normal, they would want to see the full data.
That's sort of part one.
Speaker Change: Part 2 was, we asked the question directly, is there anything else that, you know, that you've got questions about, you know, should we expect any further comments or requests for information?
Speaker Change: The normal answer that you would expect, the best possible answer is no, but send us the full data so that we can evaluate it. So there's always a caveat built into anything that is yet to be delivered to FDA. However,
Speaker Change: We did share the takeaways from those studies and we have no reason to believe they will not be acceptable because that was essentially the message that we heard.
Speaker Change: Now I will remind you and everyone else that we do have an open IND so we are not prohibited from proceeding.
Speaker Change: But, what we want to do is strike a balance between startup activities that we conduct somewhat at risk and actually dosing a patient. So the way that I would expect the events to unfurl from here is we will summarize and compile and present and submit.
Speaker Change: The data that I just described to FDA, and we have no reason to expect that that cannot be completed in the next few weeks, so that will be done before the end of the year.
Speaker Change: Members of the government are going to have a normal holiday schedule and then they presumably would be picking it up in earnest early next year. Typically, the agency might take 30 to 60 days to review information.
Speaker Change: During that time, we still could be advancing the initiation activities of the study. We wouldn't dose a patient in that window, but we can get our sites all geared up.
We probably can conduct activities like training.
Speaker Change: And then after that period has cleared, it would be hopefully as little time as possible before we do actually identify the first patient for the study and are able to treat.
Speaker Change: So, there's some overlapping activities that are in there, but generally speaking, I can narrow the guidance to say I would expect that the agency would be able to be able to complete this. It won't be a very large information package, and they've already reviewed substantially all of the remainder of it.
Speaker Change: over the last year. So I think that we are fully expecting that there will be no surprises or new requests for information because that was conveyed to us. But again, until we actually get to that point.
Speaker Change: You know, we just remain mindful that everything is always subject to the information and content in the submission. But again, we're quite confident, and the reason why we're sharing it so explicitly is we think that what I just described is exactly how things will go.
Speaker Change: Got it. I appreciate that extra color. And then just an additional question. This is on your Resonance, your ANP1 program. You know, just thinking about what you've learned in OperaGen about needing the cells to really be fully covered, not partially or around the edges, but really getting a good coverage, I believe you call it a bleb, over it, you know,
What gives you confidence maybe taking what you've learned?
Speaker Change: and translating that and making sure that these cells get fully coveraged in the cochlea, which is quite a bit different from an eye.
Speaker Change: Thank you. That is a spectacular question. We haven't been asked that before. One of the surprising findings from the preclinical study was that the transplanted cells, which we were able to track their location,
did appear to migrate.
through and around some of the curves of the cochlea.
Speaker Change: Perhaps that shouldn't be surprising because we do know that OPC-1.
Speaker Change: can migrate a little bit, so, you know, if you deliver the cells into the modiolus and you get some spread beyond that, you know, what does that tell you about percent coverage? I don't think it will be quite as
Thank you.
Speaker Change: defined as it is in dry AMD where we could we could really look at the images and say we've got
Speaker Change: 100% coverage of the area of atrophy, or maybe just 5 or 10% coverage of the area of atrophy. I think in the setting of the eye...
Speaker Change: We have the benefit of high-resolution imaging technology, which allows us to track the cells. And I think in the spinal cord, we've got the advantages of MRI to help us locate the...
Speaker Change: The transplanted cells, with respect to the inner ear, it is very much unknown, at this point, what percent coverage.
Speaker Change: in and around some of the curves of the cochlea and we would presume that that would be beneficial because otherwise trying to spray paint around corners it would be considerably difficult.
Speaker Change: Got it. I appreciate that extra color. Thanks again, Brian, and looking forward to updates. I'll hop back in queue. Thanks.
Thank you.
Speaker Change: Our next question comes from the line of Joe Pantinis with HC Wainwright. Please go ahead.
Speaker Change: Hey everybody, good afternoon. Thanks for taking the questions. Brian, you made some important, I guess, anecdotes, gave us some important anecdotes and made some important observations with regard to Genentech's progress and activities with OperGen. So I guess maybe I'll take that a further step. So you have your services agreement with them. So can you maybe provide first a little bit of details as to your activities?
Speaker Change: And do you think that the activities or potentially increased activities also could act as a proxy for Genentech's progress?
Joseph Pantginis, Sean McCutcheon,
Speaker Change: Thank you, Joe. I think that while remaining within the boundaries of public information,
Speaker Change: I think that there are some some insights that one can take away. The one that I think is probably most poignant here is that we'll continue to follow the patients on the lineage phase 1-2a trial for an additional five years.
Speaker Change: You know, one might surmise that, you know, the logic behind that is that
Speaker Change: already for perhaps as long as five years in some cases.
Speaker Change: Why would you not want to continue following that? It just doesn't really make sense if the theory was that the effect was wearing off after two or three years and patients were at baseline or they were deteriorating by year five.
Speaker Change: What's the point on adding on five more years? Now, they're safety questions that maybe could be answered over long term, but this is elective following. This is not FDA requirement to follow these patients for additional years. So we really we're trying to be careful that we're not
Speaker Change: only looking at the optimistic side or the optimistic interpretation of any activity, but rather looking at the constellation of multiple
decisions, requests, actions, and statements.
Speaker Change: by our partner, which we think in the aggregate are more likely to reflect supportive progress rather than the contrary.
Speaker Change: No, that's helpful, thanks. And then with regard to OPC-1, like you alluded to, I mean the FDA can always come up with surprises, but it just seems that the the amendment is almost locked in there, just pending, like you said, the data and then just...
Speaker Change: completing the package, but as the study moves forward and you start to see, you know, safety and then potential efficacy, what are your current views with regard to business development around the program?
Joseph Pantginis, Sean McCutcheon,
That's a really good question. I think that every asset
where it's going to be able to
Speaker Change: attract a partner, and it's almost, it's logical, right? Too early, you're not getting paid well enough.
Speaker Change: too late and, you know, you've been holding through the risk of failure. So people need to really think carefully about when and how they conduct a partnership. My perspective on that with respect to OPC-1 is, firstly, having the optionality to partner is the most valuable thing. Not the requirement or obligation.
Speaker Change: I think we felt a certain obligation to partner Dry AMD because it's such a big indication.
Speaker Change: I think we could feel differently about spinal cord, right? A smaller company can establish a, you know, a very...
Speaker Change: You know, bespoke field force and launch a smaller product, but having the option to partner makes a lot of sense, especially.
Speaker Change: If you're a company that has a platform that can spin out, you know, a flywheel of different opportunities.
Speaker Change: But I think that if you want to get the highest and best value, it often makes sense to make modest investments
Speaker Change: to get past important milestones. So in the case of this product, Candidate OPC-1, I think if we had sought to partner it over the past year or so...
Speaker Change: We really wouldn't get the economics because we're putting the burden of fixing the cell production and fixing the delivery and designing a study onto a partner.
Those three things that I just mentioned
Speaker Change: Compared to clinical trials are actually fairly affordable. So I think that the work that we have invested in and the capital that we have put into
Speaker Change: and a much more commercially viable product, and then the thought and experience that we're bringing in parallel into study design.
Speaker Change: I think would end up creating a partnership package which would, you know, frankly pay us much better.
Speaker Change: So, it's a wonderful question. It never has a straightforward answer because it's not just the asset and its fundamental value but of course the environment and the interest from potential partners and how many of them.
Speaker Change: Who's in charge of HHS? I mean, there's a thousand things that one might consider with respect to partnering. But from our view, having partnership optionality and trying to get yourself to that.
Speaker Change: optimal point where you put as little money into as get as most the most out We really think that's the right way to view these programs
Speaker Change: or Kuos or even in Europe, Sensorian. So, you know, how does ANP1 differentiate with regard to potential population targeting?
Speaker Change: I feel like I've indulged three questions. I'm going to... Sorry. No, I'm a huge fan. I'm going to try to answer them all.
We would want to conduct a pre-IND meeting.
Speaker Change: Many of the animal models may not be applicable. You can put a small molecule into all sorts of different species and assess its effect, you know, teratogenicity, etc. But when you put human cells into other species, it can be much more difficult to apply some of the same models.
Thank you.
Speaker Change: We saw this even when we had to develop an immunosuppressive regimen for a porcine model. So, you know, we're going to collect enough data to make us feel good about going to the agency and having that pre-IND sort of, you know, first...
First Communication, Understand Expectations for an IMD.
Thank you.
Speaker Change: Why would we do that? Yeah, it kind of feeds into your second question around you know takeouts and the opportunity in the hearing loss field. A number of companies that had promising starts really didn't get very far and perhaps, perhaps, that is attributable to the fact that
Speaker Change: They were all focusing on single pathways. So these are standard conventional molecular approaches to treat hearing loss. It would not surprise me to learn that those are insufficient.
Speaker Change: in the setting of hearing loss because again you have fundamentally the loss of an important and necessary cell type.
Speaker Change: and adding a molecule in there might be able to modify the behavior of any residual cells, but it's not replacing the cells that are lost. So just like, I think it's fair to say that the anti-complement therapy, which focuses just on one pathway for the setting of dry AMD,
can bring about a clinically detectable
Speaker Change: It really leaves an awful lot of clinical benefit on the table for others. And so I think we're really nicely positioned to look at failures of small molecules or antibodies in the setting of hearing loss. But you're also asking about a company like Aquus. So when when gene therapy
Speaker Change: goes to address hearing loss, which in some ways is still targeting a single pipeline or single pathway.
Although I am incredibly excited.
to see the...
Gene therapy can be disease-modifying.
Speaker Change: It remains limited by the fact that you're hitting just one gene. So, the headline is, Hearing Restored in Hearing Deficient Child.
Speaker Change: But when you drill down and understand what the number of individuals with that one particular otoferoin deficiency are, and you start to calculate the investment required and the addressable market and the pricing, things don't look quite as rosy.
Speaker Change: In contrast, when you think about cell transplantation, we might have a much larger addressable patient population because, frankly, we don't care what gene is broken.
Speaker Change: And that really does speak to the heart of one of the key advantages in cell therapy. And part of our job is figuring out where the highest and best opportunities lie. Because we're not going to do 210 different cell types. You know, we look very carefully at the past on NK cells, for example. But I think that auditory neurons...
Speaker Change: ticks enough of the attractive boxes that we're really excited. And it remains a fairly sparse field with respect to competitive threats. I'm only aware of one other company that is utilizing this approach. So very excited that we see the same sort of.
Speaker Change: dearth of competitive threat and elevated opportunity to succeed by using a more profound and greater horsepower intervention.
Great, really appreciate the details, Brian. Thanks a lot.
Thank you, Jill.
Thank you.
Speaker Change: Our next question comes from the line of Jack Allen with Baird. Please go ahead.
Speaker Change: Great, thanks for taking the questions and congrats to the team on the progress.
Speaker Change: I have a couple to start on Oprogen and then a follow-up on the ANP1 program.
Speaker Change: I guess first on Oprogen, any color you can provide as it relates to what data was shared with the FDA surrounding the R-MAT designation that your partner was able to ascertain? Was that the Phase 1-2 data or was there any data from the Phase 2a study shared? Do you know? And then another one on Oprogen about...
Speaker Change: When we may have three-year follow-up in that data set, I know we had two-year data presented this spring. Do you have any context around when three-year data from the Phase I-II study could be available?
Speaker Change: I admire the thoughtfulness of the questions and I feel handcuffed with my ability to respond.
Um...
Speaker Change: We have some information with respect to the RMAT content, but I am unable to comment on it. Certainly unable to comment in the form that I think you would like me to be the openness and clarity you'd like.
Speaker Change: And similarly, with respect to 36-month data, all I can say is that Roche and ENTTEC seem very comfortable doing 24-month data. In fact, that is some of the most
Speaker Change: significant data that we have seen to date, patients gaining and retaining vision for two years and having increased layers of retinal tissue. We cannot guide at this time as to when 36-month data could become available if ever because
Speaker Change: That is under the control of Roche and Genentech, those disclosures, publication strategies, conference selection, etc.
How should we be thinking about future disclosures?
Speaker Change: And then briefly on the AMP1 program, very interesting approach here. I wanted to ask if you've seen any kind of...
Speaker Change: examples of hearing regeneration in nature or natural models may be outside of those used in the lab. I think there are some species of animals that do regenerate their hearing. I think that'd be interesting proof of concept for the basic science you're looking to pursue here.
Speaker Change: Yeah, the regulatory question, you know, that is their privilege to decide what the regulatory strategy is. I am incredibly encouraged that in the United States...
Speaker Change: The bar for approval and dry AMD and the regulatory precedent
Speaker Change: I love that there's a precedent there, but I have to also say that I love that, you know, our patients, you know, it's a small number, but this just doesn't happen naturally. Our patients see better, and they're seeing better at two years.
Speaker Change: compared to 7, 8, 9 letters of vision loss that you would expect even on therapy. And I think that's fair to say the reason why anti-complement has not been approved in Europe.
Speaker Change: And that's because AVERIC conducted a Phase 2B, which essentially served as the first of two Phase 3 studies. They had a large Phase 2B, and they agreed with the agency that it could serve as the first of two.
Speaker Change: controlled studies, adequate well-controlled studies to support approval. So I think everything's on the on the map up to Roche and Genentech, but my approach, if we had retained the asset, would have been to conduct a larger Phase IIb, to seek agreement with FDA that that could serve as the first of two registrational studies, because again,
Speaker Change: you're not going to have an event rate on the control arm that's anywhere close to your treatment arm because people don't regrow their retinas spontaneously.
Speaker Change: So, I think that there is a massive opportunity to show very compelling statistical evidence.
of a treatment effect.
Speaker Change: that could get you approved on that basis in the U.S. and then have secondary endpoints, maybe hierarchically, you know, no vision loss, five-letter gain, ten-letter gain, whatever you do, so that you could send an MSL team out and you could detail this product as the only product proven to improve.
Speaker Change: vision in patients while not necessarily having that as your first primary endpoint, although...
Speaker Change: That would obviously be definitely the way to go if you're thinking globally about the U.S. and Europe. So I don't know. I can only just answer that in the terms of what I think we would have done as a smaller company.
Speaker Change: The Science of Regeneration works, you know, we think about species like axolotl or starfish regrowing arms, certainly platyhelminthes, the planaria species. Hearing loss, actually there is a species, it's fascinating, birds.
Speaker Change: I don't know if it's all birds, but birds have an ability to regenerate their hearing capabilities. I don't know if it's all birds, but birds have an ability to regenerate their hearing
You know, this all comes back to...
The evolutionary differentiation and expression of different genes
Speaker Change: At this time, we are just scratching the surface and talking about things like editing the cells that we make. We mostly just use, let's call them natural control measures to differentiate cells. But I do think that there's an interesting question about whether we should have some higher order species logo like a bird if the hearing loss program picks up steam. Probably the axolotl has already been used by more than one company because it's an adorable little thing. But you're right to think about it that way, Jack, because...
Speaker Change: You know, people, human beings have to lose their regenerative capability.
Speaker Change: because if you continue it, we all die of cancer very quickly. So it is necessary to turn that off, but it's in there, it's still present. And if you can turn it back on, that's the holy grail of in vivo reprogramming, which is in its infancy and I don't consider it a threat today, but everything we're talking about is really just fascinating science and there are precedents for it. And perhaps there are precedents in humans as well, we just may not be aware of them.
Speaker Change: Yeah, yeah, definitely. Thanks so much for all the color, Brian.
You bet. Thank you, Jack.
Speaker Change: Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald. Please go ahead.
Speaker Change: Hi, this is Ayaan on the line for Kristen. Thank you so much for taking our questions. Congratulations on the Aramat designation. Has your partner at all shared how they might utilize this to get in front of the FDA more often? And if so, what topics of discussion are most important to them to align with?
Speaker Change: Thank you, Ian. I don't know exactly how they intend to use it. I can only go so far to make the presumption that they didn't do it for, you know, a bullet point on the resume, so to speak.
But RMAB designation...
Speaker Change: You can have discussions about endpoints that maybe are not obvious. There are a lot of different things.
Speaker Change: for Oprogen, but we certainly view it as a beneficial thing to have in your quiver, and we're certainly hopeful to learn what their intents are as soon as possible.
Speaker Change: Thank you for that. And my second question is, we understand that specific timelines are not disclosed, but are you able to share if the company could receive any potential milestones upon completion or the waiting out of the Phase 2a study?
Speaker Change: Thank you. Yeah, thank you for the question. We remain eligible for all 620 million dollars of Milestones, those are both developmental and commercial We are unable to disclose what they're tied to and we are unable to disclose the amounts And we don't for for sake of of being
conservative, we don't factor them into
Speaker Change: And we wouldn't until they're received or very likely to be received. So I think that that is just something that you'll have to wait until dollars hit, and then you would see those in our filings. And that's normal and expected because...
Speaker Change: If Roche and Genentech want to do a similar deal with someone else, they don't want to use our deal as leverage, as information leverage, to try and strike something better. So I think it's normal that it's set up this way, but I appreciate the question. We wish we could share it, but we're unable to do so.
Thank you again for taking our questions.
Our pleasure. Thank you and Holy Christmas.
Speaker Change: Our next question comes from the line of Michael Ockenbich with Maxim Group. Please go ahead.
Michael Ockenbich: Hey guys, thank you for taking my questions today and congrats on the progress this quarter.
Thank you, Michael.
Michael Ockenbich: I guess with regards to the CIRM grant, right, if that portal you're expecting to be open up in spring, but you're approved to proceed with the study, the dose study before that, would you expect to start ahead of receiving approval on that grant?
Michael Ockenbich: Would you be able to get reimbursed for any expenses prior to the actual date of the agreement?
Speaker Change: Yeah, it's a very insightful question and it really speaks to being thoughtful and careful with your cash management. So, there are definitely things.
Speaker Change: that we can do, and we should do, prior to applying for a CIRM grant and prior to the trigger event that allows us to get reimbursed.
Speaker Change: What we do not want to do, is we don't want to open the fire hydrant fully, without better clarity as to where we are with that.
Speaker Change: What we do want to do is ensure we are not sitting passively and burning capital and burning clock time when we have a reason to believe and confidence that we will ultimately get.
a significant amount of capital through that grant process.
Jill is tasked with balancing these trade-offs and understanding which.
Speaker Change: The ability to move forward at risk while not spending at a rate that makes us feel a little bit uncomfortable if there's additional offset of that capital in the future. If all of that hopefully makes sense.
Speaker Change: No, certainly. Thank you for the additional color. And then just looking at...
Speaker Change: And in particular, the fact that you have already done testing with a Thon Inject.
Is there an expectation?
Speaker Change: process for these in-house developed candidates could be faster than those you brought in since you're able to design them from the ground up with those optimization features that you learned from developing OPERAGEN.
Abso-freaking-lutely. I'm really proud of how the team...
Speaker Change: was able to go from the day that we decided to commit to auditory neurons, right? So we do market analytics, and we do background work, and then we, you know, we decide, we're going to do this program. Within 12 months, we were in animal testing.
Speaker Change: with the material that I described, right? A process that we developed. This is a program we own. And so I absolutely see this company going through
this acceleration where in the earliest programs like Oprogen
Speaker Change: Where you might have to say to someone hey these cells have never been in a human being before we have no idea What's going to happen? Do you mind if we implant them into your eyeball? You know you're going to have a lot of screen failures People might be scared to do that
Speaker Change: Now, we're at the point where maybe that's not quite a problem that it was when the prior sponsor first started. Similarly, when looking at the spinal cord program,
Speaker Change: We didn't like their process. You know, we acquired this from Asterios. We were not happy with their process. We didn't think it was commercially viable, so we had to change it. But going forward, programs like ANP1, we take those lessons.
Speaker Change: And my goodness, can we move so much faster now? Now, not every cell type is going to be amenable to cell transplantation.
Speaker Change: But there probably are a number of them that we've not talked about, some of which are pursued by other companies, which doesn't scare us, and some of which we think might represent, you know, isolated territory where we could really break ground. But in all cases,
Speaker Change: and the knowledge and know-how that we've developed over 20 years is absolutely a massive and underappreciated advantage. And I think ANP1 is a really good example of applying that technology to be able to move quicker.
Speaker Change: All right. Thank you very much for taking my questions today, Brian.
Thank you, Michael.
Speaker Change: Our next question comes from the line of Albert Lowe with Craig Helm. Please go ahead.
Life!
Hi guys, thanks for taking my questions.
Speaker Change: It was really great to hear the discussion about how your existing experience and platform helped this rapid development for this auditory program. I was wondering if perhaps you know this preclinical work for your photoreceptor program is ongoing and whether we might be able to hear about this story sometime in the near future.
and Brian Culley.
Brian Culley: Yes, thank you for the question, Albert, and thanks for joining. We're really delighted to have you along.
Brian Culley: Photoreceptors is an interesting program. We actually created some separation between us and an innovator to create some space and increase our share of ownership.
of the photoreceptor program.
Speaker Change: And there is another innovative company out there that recently had some news on their photoreceptor program moving forward.
Speaker Change: Photoreceptors is not getting a large amount of our capital today. It is really one of our lower priority initiatives, but we invested a meaningful amount of time in developing a very nice process.
Speaker Change: One of the challenges that I think we're still grappling with is really trying to understand delivery and the best indication and setting for a photoreceptor.
Speaker Change: There are some who believe that photoreceptors are best married with RPE cells. Well, we already, you know, we have 50 million up front and hundreds million of eligibility and royalties for partnering RPE cells. So we can't do that because we've licensed off commercial rights to the RPE program.
Speaker Change: But photoreceptors as a standalone asset or perhaps going back to that same company and seeing if they want to add photoreceptors or all sorts of other ideas are still things that we're working on.
Speaker Change: You know, we are a little bit capital constrained, so we don't have the same allocation of investment into photoreceptors, but something that we did do recently...
Speaker Change: some of the original licenses that we did not feel we needed.
Speaker Change: and that improves significantly our economic share of that program. So, in the future you may hear more about that. It's certainly worth thinking about.
Okay, great, thank you.
Speaker Change: Can you tell us more about some of the exploratory endpoints that are going to be used in the dose study?
Speaker Change: I guess whether there's new ones from the prior trial and which ones might be most informative for the clinically meaningful endpoints for this larger trial that I know you have planned.
Speaker Change: So that we could go into a larger comparative study, which of course is going to answer much more exciting questions compared to just the safety of delivery using the same needle in the same location.
Speaker Change: But the agency, the FDA, was abundantly clear, they essentially insisted that the
that we also collect.
Speaker Change: some important functional measures and some, you know, quality of life measures and efficacy data points on those patients.
Speaker Change: And so we're doing that, and so some of them are, they're all, excuse me, they're all exploratory because on its face it's a safety study.
Speaker Change: But what's really exciting to us is that we are going to collect efficacy data and the FDA has already agreed that some of those patients can have older injuries. So some of the patients are going to be chronic injury patients, not subacute. So subacute is three to six weeks for us.
Speaker Change: and chronic could be one to five years. The details of those will be forthcoming when the protocol gets posted to clintrials.gov or maybe we'll talk about it sooner than that. The only reason I want to wait is that even though we feel that we've got a clear agreement on the protocol with FDA,
Speaker Change: I just want to be mindful that you never know, we're awfully close, if everyone can just wait a little bit longer, we'll be able to get the protocol information out so that you can see what we'll be measuring. But we thought it was pretty exciting that FDA really did want to see efficacy metrics collected in what is ostensibly just a really straightforward safety trial. And they could be informative. You know, the mind wanders to what happens if someone with a chronic injury who has been plateaued with their capabilities for three years
Speaker Change: suddenly gains a little bit, you know, a few more degrees of activity in one way or another, that could really, you know, rip open the lid on what is possible in the setting of chronic spinal cord injury.
Speaker Change: Great. Thanks. Yeah, that's really exciting. Looking forward to, yeah, seeing some of those data. So if I can squeeze in one last one.
Speaker Change: I know that you mentioned you'd be able to support commercial-scale manufacturing at some point next year. I guess I just wanted to clarify, is that maybe within your own internal facilities or with Roche's preparations?
Speaker Change: You know what I'm describing is something that is entirely performed by us in our own facility
Speaker Change: But I'm not aware of any company that is actually reduced to practice that they can take a master bank
Speaker Change: That they can develop a working cell bank and that they can then make their product.
Speaker Change: And the reason why that's a big deal is that the multiplication in scale is extraordinary when you go through that, right? You might have a hundred vials of a master bank.
Speaker Change: If you make a hundred vials of a working bag from that, that's a hundred times a hundred. And then if you make a thousand vials of product from that, right, you get into really silly numbers. And allogeneic companies, and I mean in this case...
Speaker Change: off-the-shelf, ready-to-use allogeneic. Again, I can't stress enough. I don't mean someone that takes a source, divides the cells and, you know, can make a hundred doses and then has to go get a new source.
Speaker Change: I mean a single source that is permanent forever for the life of your product to be able to scale to, you know, many tens or even hundreds of millions of doses
Speaker Change: is something that once someone reduces it to practice, you know, I really think that they have achieved something notable in this field. So, I don't want to say that we've done that yet, but I do want to say that we feel we're getting very close.
Speaker Change: And this is something that we aim to do over and over. The challenge of doing that with ANP1 or resonance in hearing loss is going to be vastly lower because as somebody asked earlier, you know, we're already building in the right formulation and growing the cells in bio-reactors instead of plates and all these other features that we've already worked out. We've even had people approach us to try to license some of the little actual property that we developed.
Speaker Change: for some of these technologies. So, you know, it's absolutely the case that it's a big threshold and if we're going to claim that we're a leader in cell therapy and cell transplantation, these are the kinds of things that we need to show people and I think it puts the burden on everyone else.
Speaker Change: Because if I can get lineage to do this and I can show analysts and investors here's what we've actually done Then I want them to take it to the other places where people are deploying capital and say hey Can you do this and I think that's just one of our many strategies with respect to investor relations and managing the business
For more information, visit www.FEMA.gov
Speaker Change: Okay, yes, I understand. Thanks for that explanation. I can see what you mean and really going from start to finish in the whole process here.
Jill Howe, Brian Culley
Speaker Change: It's a great way of describing it and thank you Albert, appreciate it.
Speaker Change: Our next question comes from the line of Sean McCutcheon with Raymond James. Please go ahead.
Jill Howe, Brian Culley
on that IND amendment for OPC-1 for the dose study.
Speaker Change: versus the prior communications you've had with them that led you to believe that you would be able to start the study in the second quarter of this year. Were these user tests a sticking point previously discussed with the FDA?
Speaker Change: And then the second question is, what are your expectations and plans for what you'll need for a comparability study for OPC-1 with the newly manufactured product? Thanks.
Thanks, John. Good questions. My confidence stems from two places.
One is I went to the meeting.
Speaker Change: And so I heard exactly what was discussed and what was said. So I'm quite comfortable today.
Speaker Change: you know supporting the comments that I made about our ability to start this study.
Speaker Change: The other thing is, and you're clever to note it, I appreciate you paying close attention to our business in this way.
Speaker Change: We had at the meeting quite a number of representatives from CDRH, so not just CBER.
Speaker Change: which is, you know, where our cells are being viewed, but CDRH, which is on the device side, they weren't around at the beginning of the process, so we had poor visibility into anticipating what their needs were going to be or their expectations were going to be.
Speaker Change: And unfortunately, because there's quite a chain of communication going from us to the sponsor, to our project manager, and to CBER, and then out through individuals who help bridge and facilitate these cross-divisional interactions,
Speaker Change: A lot of time is consumed and, you know, I think urgency.
Speaker Change: The regrettable process of going through pretty much start to finish with CBER and then having to start with a start to finish process with CDRH. So hopefully we're at the finish.
Speaker Change: With respect to your second question around the comparability of the cells, we have conducted
Speaker Change: the comparability studies that we believe would be sufficient. We're now actually doing additional studies, mostly in the form of some bioinformatics work. This would be supplemental. It just really helps hammer home the point. I think we have an excellent information package to demonstrate that the cells that we're making compared to the cells that were made in the past
Speaker Change: look and perform at least as good as the original material. In a way, I don't want them to be significantly better because they might be viewed as too potent. We do have to consider that if FDA deems our
Processed to be
Speaker Change: vastly different than the original process, they may encumber us with some additional studies.
Speaker Change: that that reflects a very compelling comparability package. But we have intentionally not delivered that data to FDA yet because we have been focusing them on the device and getting the dose study up. But once that study is up and going...
Speaker Change: We will prepare the documentations, request the meeting. We wouldn't be able to introduce the new cells right away anyway. We have committed to using some older cells for this study. But we are eager to get them in because it's not unreasonable to think that they could be better.
Speaker Change: So we're pretty excited about those and we're glad to see that the data package is substantially complete, but we don't want to be putting too many things in front of the agency simultaneously.
Got it. Thanks, Brian.
You bet. Thank you, Sean.
Speaker Change: And that does conclude the Q&A session for today. I would like to turn the call back over to Brian Culley for any closing remarks.
Brian Culley: It was excellent. We had so many questions. Thank you everybody for attending the call and you know really glad about what we're doing and we look forward to being in touch. Thank you.
Speaker Change: That concludes the meeting. Thank you for your participation. You may now disconnect.
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