LCTX - AMEX

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 Investor's section of Lineage website at www. lineagecell.com. This call is subject to copyright and is the property of Lineage 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 conference, Ioana Hone Director of Investor Relations at Lineage. Ms. Hone, 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 12th, 2022, and can be found on the Investors section of our website. Please note that today's discussion will contain forward-looking statements within the meaning of federal securities laws, including statements regarding our strategy, plans, aims, objectives, thoughts and beliefs, the future price of our stock, our competitive advantages with respect to competitors, our development programs, 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 updates, future payments, transfer of expenditures, and activities under the collaboration with Roche-Genentech, our ability to enter into additional collaborations or partnership, anticipated benefits and opportunities from our existing and potential future collaborations, the achievements of milestones, anticipated regulatory meetings and interactions, planned manufacturing improvements, our cash management runway and need for capital, our anticipated growth and our commercial opportunities. Statements made during this discussion that are not statements of historical fact should be considered forward-looking statements, which are subject to significant risks and uncertainties. Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to known and unknown risks and uncertainties. We caution you not to place undue reliance on any forward-looking statements which speak only as of today and are qualified by the cautionary statements and risk factors in our filings with the SEC, including in our annual report on Form 10-K, called on March 10th, 2022, and our quarterly report on Form 10-Q filed today, May 12th, 2022. With us today are Brian Culley, our Chief Executive Officer, and Gary Hogge, our Senior Vice President of Clinical and Medical Affairs. Unfortunately, our CFO, Kevin Cook is dealing with an unexpected family emergency 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, Ioana, 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 scarcer for which a technological or social disruption could alter its fundamentals, human beings will continue to get sickled and hurt and they will continue to rely on and support valuable innovations which the biotech industry has delivered for decades. So 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 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. And 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, 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 on attractive prices. Our reported cash and cash equivalents as of Q1 were approximately $78 million. And for reference, our net operating spends for each of the past two years as in 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. So 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 toward. In the near-term, we're working to provide shareholders with a diverse, and incremental set of clinical and regulatory events with 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 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 improved delivery device for OPC1 which is expected to enroll between five and 10 patients and which will include for the first time, administering OPC1 to patients with chronic spinal cord injuries, not just some cute injuries. Second, meeting with FDA to discuss improvements we've made to the OPC1 manufacturing process in areas such as purity and production scale. Third, submitting an IND for our VAC2 program to support additional clinical testing VAC2 in the U.S. and build upon the data generated by Cancer Research UK in non-small cell lung cancer. And fourth generating pre -clinical data to support a pre-IND meeting with FDA for our new auditorium RON program. We of course, have additional goals for this year, but this floor 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 will continue to demonstrate our ability to successfully advanced novel cell therapy product candidates, which will be an important corporate message we aim to emphasize this year. 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 I believe Lineage offers additional characteristics which can help make us an attractive investment. For example, we believe our spending levels reflects 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 and cell therapy outside of oncology, which puts us in the NVS position of working to repeat the success rather than trying to achieve it for the first time. And we have assets which we believe confirm the basis of additional corporate partnerships. So going back to my comments about the importance of being well-positioned in three categories. Those categories being, cash on hand, near-term milestones and events, and one's fundamental profile, I feel very good about our overall situation. So turning next to the second of my two aims for today, I want 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 that it's important to be able to highlight what we can offer to shareholders. 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. Understand sometimes it's difficult to see the fruits of those labors in current share prices, but we believe these efforts have been helpful to add new owners. We welcome you new owners, and we will continue to engage and broaden the 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-Genentech alliance and the ARVO presentation of the full set of opportune clinical data earlier this month. 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 headcount to achieve what they are calling operational efficiency. And I don't know why they weren't 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 choose which programs 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 higher business development, which is a convenient segment to my third point. Third Point, I wanted to make about us adapting to the new environment is that we're putting an even greater emphasis on business development this year. We obviously have had some success in this area reflected by our deals for OpRegen and VAC, but our technology platform could produce many more product candidates than what we can develop internally. When we believe there may be numerous opportunities to enter into new corporate partnerships. We also intend to explore established collaborations such as with CIRM, either for existing programs towards the basis to launch new ones. And 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 Lineage, just some other exciting cell type like islet cells. And we want to make sure there is awareness about our capabilities and their interest in working with partners in areas like these. We've also seen recent evidence of well-funded cell therapy partnerships at the pre -clinical stage, which may open up a partnering pathway for auditory or photo receptor programs, or for some newly developed initiative. To be clear, what I'm speaking about is 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 in doing so get many more shots on goal from our core technology. So going back to how 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 ads 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. And by adding additional business development capabilities and imperatives. We'll seek to capitalize on unlocked areas of value in our business. Now before I move through 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 OpRegen delivered to most or all of their geographic atrophy, including the phobia, showed evidence of apparent improvement of outer retinal structure, along with average gains in visual function of 12.8 letters. Prior to the license deal announced with Roche and Genentech, only four such patients had been reported by Lineage. And while controlled studies are needed, it is known that spontaneous restoration does not occur. So we believe these results support operations 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 OPC1 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 field, providing important first in human safety data with our Pluripotent cell line. Ten years following treatment, there have been no medical or neurological complications to indicate that the OPC1 cell transplant therapy is unsafe. There also have been no unexpected serious adverse events attributable to the OPC1 cell implant. And none of the patients enrolled in 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 OPC1 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 OPC1 published this year, including full clinical study results from the SCiSTAR study of 25 cervical injury patients, and an additional publication focused on the MRI findings. So those are two additional milestones which I didn't mention previously. And coincidentally, I just found this morning that the SCiSTAR 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 weekend 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'll consider 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. And we are of course, aware of reports of disruptions and delays due to global events such as COVID and the war in Ukraine. I'm pleased to report that we aren't 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. 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. 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 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, 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. So the roughly $5 million is what we book this quarter and 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 non-recurring accruals 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 $0.7 million as compared to the same period in 2021, resulting mainly from the two items I already mentioned, the Asterias 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 $0.04 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 Lineage's international subsidiaries while these non-operational fluctuations are important, we tend to utilize loss from operations as a more relevant measure of performance with regard to moving our clinical programs forward. Turning next to the balance sheet, we've 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, we're 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 toward the next clinical trials. And we still have certain obligations under the Roche agreement, such as supplying OpRegen cells for the next clinical trial. But we will maintain the same spending discipline that we hold dear to our value 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 awards, from funding entities like CIRM 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 XBI -- outperformed the XBI 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 in 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. With that Operator, we are ready to respond to any analyst questions. Thank you.

Thank you, sir. Our first question comes from the line of Joe Pantginis from H.C. Wainwright. Your line is open.

Hey, everybody. Good afternoon. Thanks for taking the question. So a couple of questions, Brian. Let me start on the dollar front. So I know it's just it was 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 Asturias litigation and how you would account for that? Because if my perception is correct, this 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. And we also are being 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 this, we merged with Aserias in 2019 and it's not uncommon and public company mergers, we became the defendant in a shareholder class action lawsuit related to a merger. We have vigorously defended the litigation for years, but we also would like to move on with business. 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 settlement agreement. It needs to be approved by the court. So it's not absolute 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 accustom 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're 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 manufacturers 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 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 or fixed infrastructure. And so that provides us some ability to keep the cost down. The other part is that these still aren't pre -clinical programs where of course they're 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 toward an IND is actually very modest and that's why you are seeing these simultaneously. An expansion of our pipeline with only a marginal expansion in our spending and I hope that is a good way of explaining it

No, it’s certainly is. And then just to shift gear the second from a clinical standpoint regarding the upcoming OPC1 study. I wanted to focus on the device and I'm just bringing up echoes from the path, from the original OPC1 studies. So just can you remind us, is the device ready to go to be -- once the study's officially ready to go, and are the docs trained, are they being trained and does any specific training -- is there any specific training required?

I heard one of the docs was an inventor, but let me invite Dr. Hogge to join the conversation and provide some response to that question.

Sure. Thanks, Brian. Thanks, Joe. So, yes. We've -- as we mentioned, we've intended to a small study to validate the device. Much of that pre -clinical work has been done and some of the -- that animal work was done, but there's surgeons that intend to utilize that 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 is a co-inventor. So we're 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 Kluska from Cantor. Your line is open.

Hi, everyone. Thanks for taking the questions. Appreciate it. The first one is just on the two newer programs, OPC1 and ANP1. As you've mentioned, they're very broad from the perspective that they can each go after a number of different disorders, whether the supply nets are ceiling. So I wanted to ask from a pre -clinical perspective, if you're planning to look at a basket of opportunity here before making the decision about what a lead program could look like or perhaps, if you see effect across the board, what that next direction could look like?

Yeah. I'm going to again invite Gary, but I'll 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 severely affected to patients that had less severe disease, smaller areas of atrophy 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 would like to add to that as well.

Yes. Sure. So to that point, we know that optimizing delivery is important, whether it's from an auditory or an ophthalmic perspective. We know that both of these conditions, auditory loss, not obviously flood receptor deficiencies, do have, unlike dry AMD, well-established preclinical animal models. So we're right now working on how best to scale up these cells to make it much more commercially viable. Thaw-and-inject formulation as we've done with all over other products. And to begin both the in vitro and in vivo work that would be necessary for an IND submission and some pre -IND discussion beings with the FDA.

And, Kristen, I'd like add also something that I think is not always fully appreciated. When using cell transplant approach, you can be a little bit less concerned about what the underlying or causative 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, should we be thinking about they're similar to how the opportune deal displace that really as a company you are looking to at least establish some proof-of-concept first and house before any deals or how should we be thinking about staging and things like that?

This is one of the most fun parts of this job because having assets that could be partnered either very early in development or very late some of which are do 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? Create the most value, is actually a really fun puzzle. So we don't stick to perhaps script that says you must generate Phase 1-2b early efficacy and partner that is largely what we did with OpRegen and obviously worked quite well. But we're going to really look at any partnering opportunity contextually. What is our capability to advance the program farther? What are the capabilities the partner might bring? Is it a cell type that we have abundant experience with and we feel that our probability of success as high, or is it a little riskier and exploratory? And when we run partner opportunities through that matrix, if you will, we, I imagine will come out together 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 as 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 for wet AMD was a lot of focusing on these newer and emerging therapies that really the goal is less frequent injection. So even though whether AMD has a more mature market than GA I guess I'll pose the question as to how you think having some of these injectables on the market potentially first could help benefit you through physician and patient awareness and education around therapies, but then also they put this fatigue around receiving the frequent injection. Thanks again.

You bet Kristen. And I think there's two things that come to my mind. One is that our data with OpRegen indicates that this is a one-time 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 a patient's willingness to go and get regular injections, whether it's every 1, 2, 3 or even six months. I think that being able to -- and I hope that being able to offer those patients a stabilization or improvement of their vision is far more compelling than a patient that might have a competing therapy that is doing is something biological of slowing down the condition, but the patient doesn't feel anything. I don't know that a patient can get as excited about being told that, well, your area of atrophy is five square millimeters, but we would've thought it would be five-and-a-half CNA weeks. So I do think that compliance can be a problem. I think that's very favorable for us. And what we hope to offer the market. The other aspect of this I think is one of markets conditioning. And that is the dry AMD has no approved therapies today. So if you're a patient who receives that diagnosis, you're mostly told eat vegetables and don't smoke cigarettes, but there's nothing you can really do about it. So we have a tremendous number of individuals with the condition, but they're not organized as a patient population. So in a 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 aren't massively capable of addressing a commercial opportunity if they are able to have an approved agent in it, 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 to 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, Kristen.

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

Okay. 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 had also mentioned NK cells briefly. Are you actively looking for something in the NK's cells for the company as a space that continues to gain traction and just more generally, from supporting another groups manufacturing? What scale in Lineage go up to? Can you go support some muddy all the way through Page 3 and to commercial or can you give us a little bit more color about the company's capabilities on the manufacturing side?

I appreciate that question, Jason, because I don't want it to be not obvious that there was an advertisement in this presentation. I 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 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 greater sentiment or expectation of quality because we passed one of these sort of biotech hurdles, which is some measure of validation from a big pharma that people are going to assume that 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 an obvious limit on scale. One still has to keep in mind that, for example, in a setting of NK cells, I saw a few days ago, one company reported data and it is talking about going up to 1.5 billion cells as a dose, that's a very large number compared to our 100,000 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 folks who say, 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 Brian Culley would say, I could probably find a way to make a deal that it's going to benefit Lineage as well. Obviously, we need to take great care to make sure that our more senior owned assets have priority at this time, but again, it 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 and say, maybe you should go under confidentiality and learn what we do, because maybe we can strike a partnership around some other area.

Got it. Just briefly, can you give us a little bit of an update on the Immunomic Therapeutics collaboration. And what's happening there on the GBM work?

That's a terrific example of how I see the VAC platform having more value than just in VAC 2. I think it potentially is much more valuable as a delivery system. One would choose an antigen. We obviously have the turret antigen that is the active component in our VAC 2 form of the products. 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 machine learning, artificial intelligence tools or more empirical ways of selecting antigen. 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 is, will using a dendritic cell, will natural antigen presenting cells, the best antigen presenting cells, 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 -- is a very expensive and very challenging endeavor, and keeping in mind that can be very rewarding, I think the right strategy is for us to try to find additional programs like ITI, 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 Mayank Mamtani from B. Riley Securities. Your line is open.

Hi, this is William Wood on for Mayank Mamtani today. Congratulations to the team. Really, like the updates that I'm seeing here. So just curious on your OPC1, the safety testing with the new PSD system. Just 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 going?

Yeah. It's a difficult question to answer right now because we haven't 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. 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 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 leading 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 FDA. 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 leading phase with multiple assessment tools All but one or two of which get troughed going into a blinded phase or a controlled phase. We don't know, we won't be able to guide until we do some or additional market research. But it's not gating at this time because as you know, we still have to conduct the device study because we think that device when used with our thaw-and-inject formulation, will enable us to open up many more sites because we are eliminating all of the dose preparation that used to go on in this program that we've eliminated with the creation and future introduction of this thaw-and-inject formulation.

Makes sense. I appreciate it. And then also you mentioned the recently published 10-year follow-up and safety follow-up for OPC1. Just curious how you see that supporting your strategy in OPC1 obviously, but then even more broadly with OpRegen and then the new progenitor lines you're developing.

I think what's really exciting about the data that's being published 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 SCiSTAR study of 25 cervical patients and only one of those AES was potentially associated with the cells great to dysesthesia, which eventually cleared on its own. So I love that favorable tolerability of safety profile. And I think that that's important because when people start talk about cell therapy and think about it, there are some increasingly archaic notions about using wholesales. People will still frequently say to me, but you have to go on lifetime you need suppression, Lineage just data does not indicate that or they'll say, you're going to have strange things grow -- the wrong organ is going to grow in the transplant area. Lineage data hasn't shown that. None of the clinical programs that we have had those kinds of experiences. So I like very much that we're able to point to five and in some cases, 10-years of safety tolerability and patient compliance, i.e. reporting and continuing on study because it is just helping to de -risk the conduct of a future study. And I think further that in enrollment in these studies, these 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 these cell therapy ideas not sure how well tolerated. And if someone can say well, here's 10 years of safety data from this set of thoracic spinal cord injury patients and let's walk through the profile, I think that's compelling and can help with enrollment, not just in spinal cord, but in any program that we have as we continue to generate evidence that with essentially a new therapeutic approach is looking promising.

Appreciate that extra color there. I'll leave it there. I appreciate everything and congratulations again to your team.

Thank you, William.

Your next question comes from the line of Robert LeBoyer from Noble Capital your line is open.

Hi, I Just have a question on the accounting treatments for 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's any expectation for the quarterly revenue recognition going forward until the unearned revenues for the entire payment is amortized?

Well Rob l first must thank you for asking a detailed financial question on a day where 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're providing the clinical trial material for the next study. And we also are continuing to follow the patients on the Phase 1-2a trial. So rather than booking all of those revenues in the first -- in that first quarter we're going to spread them across on a fractional basis going forward. It is unlikely, although possible, that they will be equal in every quarter until exhausted. I only say that that's 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 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 there's 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 stand-in response is adequate today.

Okay. Great. That's plenty. Thank you.

Excellent, Robert. Thank you.