Welcome to the Lineage Cell Therapeutics’ First Quarter 2021 Conference Call. At this time, all participants are in a listen only mode. An audio webcast of this call is available on the Investors section of Lineage's Web site at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. Any recordings, reproduction or transmission of this call without the expressed written consent of Lineage are strictly prohibited. As a reminder, today's call is being recorded. I would now like to introduce your host for today's conference, Ioana Hone, Director of Investor Relations at Lineage. Ms. Hone. Please go ahead.

Thank you, Ioana, and good afternoon, everyone. We always appreciate you joining us on these calls. It has been an extremely productive start to the year for us. We continued to deliver positive clinical results with our lead program OpRegen and we entered into two strategic partnerships, which expand and support our clinical pipeline programs, OPC1 and VAC. We also strengthened the overall team through the appointment of two individuals to our Board of Directors, both of them possess significant medical and healthcare experience. As a reminder, Lineage is pioneering a new branch of medicine based on the transplant of whole cells and simultaneously positioning ourselves as an important leader in this rapidly growing field. Our approach is to manufacture differentiated cell types and transplant them into the body to restore or improve function, which has been lost due to injury or disease. Simply put, we believe that if retina cells are dying, you need to transplant retina cells directly to the eye. If spinal cord cells are damaged or missing, you need to provide replacement spinal cord cells directly to the area of injury.

Thank you . Your question comes from the line of Kristen Kluska from Cantor Fitzgerald.

So first one I had was in regards to the patient who had the retinal tissue restoration now at about three years out. Wondering what work you might look to understand the particular effects or characteristics around this patient? And then can you discuss the importance of evaluating the long term trends that you've observed relative to other approaches in the space?

What we think is most notable about the retinal restoration patient beyond the initial observation of retinal restoration and the truly fantastic durability of that observation is that their procedure was unlike the patients which preceded them. And by that, I mean specifically, they had a fairly thorough or complete coverage of OpRegen cells right across the area of GA, and that has never happened before. We then -- one of our advisors was going through those OCT images, which I mentioned before, because again, you don't see restoration by using just FAF. And he observed in the nine month images these benefits that have been thoroughly discussed by us previously. So as we gained confidence in that observation and we had it vetted by additional imaging experts and experts in ophthalmology generally, we then advised or asked our investigators if they would work to try to get more aggressive delivery or more complete delivery of OpRegen across the area of GA. And so that was different because in the early patients we tended to stay fairly far away from the area of atrophy, because we wanted to be careful that we didn't disrupt the patient’s preferred retinal locus, we want to make sure that we didn't cause any harm or disrupt their baseline vision. But I think what we discovered with that particular patient is that it may not be the case that OpRegen’s effects can work at their best at a distance, and that means the cells may need to be truly replacing right there in the area of the dead cells or in the diseased cells, or the cells that are not functioning fully. And so the patients which followed that extraordinary finding they are now past four and half months, so they are getting into the same timeframe where we think this observation of restoration can occur. And all of them, we ask the investigators to try to get more complete coverage. And in some cases, they were successful and in some cases, they were unsuccessful. So we have a mixture, which is kind of an interesting test, where we will be looking, in particular for restoration patients that had more complete coverage of the OpRegen cells across the area of GA and we will be able to prepare those with patients that did not have as complete coverage across the area of GA. So we do think that placement of cells is very important in terms of obtaining the best outcomes. With respect to your other question the importance of trends. Reaching into my background, originally, as a scientist, as a bench scientist, as you work a problem it was always very interesting if -- you couldn't get too excited about a single observation. But as more and more observations, especially using different methodologies, as each of them sort of piled on and were directionally correct or directionally facing the right way. Even if any one of them was not statistically significant, you can start to build a lot more confidence. So for example, if you're seeing BCVA benefits and GA benefits and you're seeing quality of life benefits, and you're seeing low light reading speed benefits. If everything is sort of directionally going your way, it is much easier to be confident that you're having an effect. Even within a single assessment such as BCVA, you cannot choose just single time point, three months, six months, nine months and say, 25 letter game, you really need to look at the area under the curve and say, okay, maybe that patient was many letters at month six, how were they at month nine and three and 12. And I think by looking not only within each assessment but across multiple assessments, you get a much more fulsome picture. And I think that's what we're enjoying and that is why I referenced that I feel like every time we thought out an interim update, it is a more it is a picture of our data which can provide greater confidence and conviction that delivering the OpRegen cells to these patients is driving a benefit in them in support of a further development.

And then I know there are no approved therapies for dry AMD. But perhaps from what's been observed in the field of wet AMD, based on the discussions you've had with physicians and KOLs, how do you imagine both the day and their patients might rank or evaluate the importance of these different endpoints that you're observing in the trial, as well as items like safety and convenience?

Yes, there are several important parameters. Ultimately, the patients care most about seeing better, because avoiding falling down a flight of stairs in dim light or being able to use your cell phone and watch your grandchild their piano recital those quality of life issues are -- there is nothing more important than those. But the burden of proof is sometimes more easily achieved with other methods. So for example, anatomical methods, improvements in the anatomy and the structure of the retina. So the patients and regulatory guardians of these markets are not always perfectly aligned. In our case, I'm encouraged because I think that we're going to be able to demonstrate that we can provide both of those. But I do think that there is imperfect alignment. The overall objectives of safe and effective therapies is really going to be FDA’s judgment. But the individual patients, they are going to have their own criteria in terms of their risk tolerance. Where are they in the disease? How important is it? How are they getting along, one eye or both eyes? There are many factors there. But I think that something that’s notable about cell transplant approach is generally, and of course OpRegen specifically, is I believe that ultimately we're going to be able to deliver both. I believe we're going to be able to demonstrate improvements to the retina, which give us a good basis for regulatory evaluation and I think we're also going to be able to demonstrate some degree of visual acuity improvements. So it's a complicated situation because there is no regulatory precedent, as you know and so there is no clear path. But I do want to mention that we will remain open, just because one sponsor decides to pursue a certain endpoint does not set that as the bar for every other sponsor. Ultimately, you need to align your therapy and your therapies’ attributes and benefits with some sort of primary efficacy endpoint. And so there is a long history, not just enough analogy but more generally for ethical pharmaceuticals of trying to figure out what's the right way to measure the benefit that you are conferring and be able do that in the context of a clinical trial, which is affordable and enrollable and convincing. So that's a very long answer. But I do think that -- I hope that I touched on all the points that you made there.

Next question comes from Joe Pantginis from H.C. Wainwright.

Brian, I want to go to some of your prepared comments and then also some of your commentary about the restoration of patients. So first, let me go to your prepared comments about your decision to not exercise your option for gyroscope and then link that to a direct question about the restoration patient. Do you feel then now that the PPV delivery is maybe more appropriate to deliver more accurately to cells to cover the area of GA?

I think the short answer is yes, I think that we've had couple of years of data to review and we've learned a lot of things with this new technology. And I think that we feel that having the flexibility or better replacement flexibility is really important, because it is ultimately going to be tied to the clinical outcome. So I think the answer to that question is yes.

And then sort of going forward with that restoration patient. How are you going to be able to share some, let's call it, delivery data for the current patients to describe how and where the cells were delivered? Because like you said early on you were avoiding the area of GA and have each patients subsequently been getting closer with regard to their delivery in the areas of the GA that you could be able to see restoration. As time progresses, I guess it really comes down to, what can you share at some point with regard to where the delivery occurred versus where the GA was?

Yes, it's a nice question, because the company historically has been extremely transparent with its data, we have provided patient level data at essentially every single endpoint with all of our exploratory assessments. So it will be no problem for us to provide not only the clinical outcomes but to match those up with some sort of scale or score plus minus type analysis on placement of cells. And that's the case not only for restoration but more generally for how the patients are performing. So even if what we see is that patients with the best BCVAs also had the better placement of cells, that's incredibly validating of the direction that we're going in and affirms for us that cell transplant and cell replacement is really driving this that it's not so much trophic effects, or again, cells operating at a distance, which, frankly, has been our philosophy throughout this and it's across all of our applications. That's not to say that there maybe some factors, some biological factors that are coming from our cell lines that are beneficial and contributing to clinical outcomes, we just don't think that they are sufficient for optimal outcomes. So obviously, the home run here is being able to show restoration and more restoration, the better. If restoration only happens with great placement, that's fine. That's the direction we're going in any way. If we do not show restoration, if we can still show clinical benefits that can lead to an improved product and we're showing those that are happening with superior placement or more exquisite placements then I think all of those are victory or winning scenarios. And I should add or I can add that one of the other things that we've learned is around patient selection. So I think we're seeing some signals as to which kinds of patients might be more likely to, respond to our therapy, and we're starting to refine our thinking there. It used to be just earlier is better. And although I agree that earlier is still better, we're starting to even be able to think about, well, maybe we could spore the Bruch’s membrane health in some way and sort of have a selection criteria for patients and so forth. These are still very much a work-in-progress, because again, this is a new technology and so we are learning while doing. But I also think that's incredibly encouraging, because we have a lot of areas where we can get better, because we have a new technology. So I hope that is responsive to your question.

No, it certainly is. And actually your statement of new technology is a great segue to my next question, and I want to ask about the regulatory topic and split it into two parts. So first since we're on OpRegen, if you're going to go into the FDA meetings and talk about a potential registrational study. How much are you willing to disclose right now about what your wish list looks like, since it is a new technology? What would you like a registrational study to look like and hope that the FDA agrees to maybe with some tweaking or what have you? And then the second part of that is with regard to your OPC1 upcoming regulatory interactions. If I heard you correctly on your prepared comments, you said that this potential registrational study would be a comparative study, and I just wanted to verify would be compared to what?

So it's such a fun question that you're asking there. I think the regulatory directions kind of fall across two parameters. There is visual acuity in all this different variations, reading letters on an eye chart, reading speed, low light reading. So there is visual acuity and we're seeing benefits in visual acuity. So that's on the table. Then there is GA growth or GA area some sort of GA change. And I want to keep it kind of broad, because we need to keep open that it's not just the circumference of the circle that we're looking at, one of the things that, we think that we can bring are changes to the depths or the health of the retina, I think of the retina like it’s a eight layer birthday cake. And if you've got all these layers that have smushed together and they're dysfunctional, if you can inflate those. I'm using really poor terminology, but you know the little kids’ going to be a lot happier with a cake that’s inflated rather than one that’s collapsed. And that doesn’t always, as I described, doesn’t always translate easily in the aerial views that a lot of us use to look at GA. So there’s a GA component here. But you asked me a different question. You said, what's my ideal. My ideal is very . My ideal is, I want to collect, I want to have evidence of retinal restorations and then I would like to use high res OCT to be able to demonstrate that there are anatomical changes to the retina, which never occur naturally. And I think that that would be so incredibly powerful and it would be a really great win if we're able to have a study like that. But there are a lot of requirements there, we need to see it, we need to be convinced of it, we need to figure out ways to measure it. But you asked me for my wish and so that's my answer.

And then the OPC1 comparator wish?

OPC1 competitor, I mean, I don't know. The challenge with OPC1 is how do you do a sham control with a surgical procedure. My opinion, and I think the opinion is shared by most. There are surgeons here is that, it is not ethical to make an incision and do a sham procedure for spinal cord injury patients. Now a statistician is going to have a different view, because they're holding on to the elephant’s trunk or the tail. But I think that there are ways of doing partial blind studies. Maybe the family knows if there's an incision under the bandage but maybe the person who’s doing the assessment, who’s collecting the data on mobility or sensation, maybe they’re blinded. So there are sort of hybrid ways or pseudo bindings that are probably capable. We are obviously in the early days of sorting out what we think would be the most compelling and powerful way of doing that. But I do hope to avoid having to enroll a large number of semi matched patients and essentially doubling the size of the study. But ultimately, we need to go to FDA with a compelling case and a compelling story about why that is the right way to go. And it's similar with dry AMD. I mean I think the best comparator in the case of dry AMD is actually a match patient population that you observe what happens to their GA in real time. And I was just complaining a little bit earlier that we're matching our data against the contralateral eye that we always know starts out better. And it seems a little unfair but it's what we have, it's the only comparison which we can make. But what if we have a population, a control population of patients who come in at baseline with the same size of atrophy and they have similar stage of disease but they are untreated and we just monitor what happens. That for me would be a much better comparison as to changes that occur with OpRegen compared to this contralateral eye. And I think that's the case for both GA and for BCVA.

Next question comes from the line of Robert LeBoyer from Noble Capital.

I had a question about the presentation of the OpRegen data and the additional interim analysis that's going to be presented. I was wondering whether it was going to be presented in a press release or at a scientific conference, and then when would the full data set be presented?

A final decision hasn't been made, but we do not currently have major medical conference planned for the next update. So what I believe would be most likely is that we would provide a press release, which in our case, typically would link out to a slide deck that we would make available, so that you would be able to see more of the totality of the evidence over time. So we're too early for me to say exactly what we'll do. But looking real world, that is one way that we've been able to provide more information than you can really pack into just a press release with some top line data.

And just in the few minutes that remained, just quickly could you just summarize what the time frame for the OPC1 program and the milestones might be after the end of the year assuming everything goes well?

The two major activities on OPC1 are our RMAT meetings. So we have to talk with FDA about this new Neurgain PSD. So we have an RMAT interaction, which is scheduled for next month. So that's not very far away. And then we want to, around the end of the year, talk about the manufacturing improvements, which I described previously or another calls. We just want to make sure that we've got good alignment with the agency that the process that we have developed, which has much greater purity and control and scale, we want to make sure that the agency is comfortable with that process creating cells and those cells going into patients. So those are a couple of things that you can look forward to. And then we always keep an open line of communication going with the California stem cell agency or CIRM that's always sort of a side thing that could be part of our part of our news flow as we go forward, but there's nothing specific or imminent on that topic today.

Next question comes from the line of Keay Nakae from Chardan.

Brian, I want to talk to you about your decision about the Orbit device. And we appreciate that you guys are finding that better coverage of the geographic atrophy area is advantageous. So if we think about then the trade offs of why the Orbit device was first thought to be beneficial in terms of the epi retinal membrane formation. Are you comfortable that utilizing PPV is something that your surgeons can do the procedure and minimize that trade off of the injury versus the better coverage?

That is definitely an astute question. So with respect to retinal surgeon experience, PPV is widely used. All retinal surgeons have extensive experience with this. I was told by one in particular, that is a requirement. You want to graduate from retinal surgeon school, you need to be able to perform a PPV. So we've continued to use PPV while evaluating the Orbit device in parallel. We didn't have very much data two years ago when we entered into the evaluation agreement. Since that time, there have been 12 more patients which have been treated about half PPV and half Orbit. And we've seen some interesting things as referenced in Dr. Riemann’s ARVO presentation, the PPV procedure always only needed a single device to successfully deliver the cells and had a high rate of success doing so. We didn't have ourselves timeout while using PPV. There was a single case of CNV which arose in a PPV patients but that occurred two years post treatment, and we don't think that was in any way associated with our cells or the procedure. But the primary reason that we even explored alternatives a couple of years ago is that PPV is associated with high rate of epi retinal membrane formation. But not only are the majority of the ERMs in our study clinically insignificant, but we also demonstrated that a severe ERM, which needed to be removed, could still result in an improvement in visual acuity after its removal. So we think the totality of the data at this time supports the continued use of PPV to deliver OpRegen. As I said, we would continue to be committed to exploring ways that we can improve our therapy. There may be alternate or improved sub-retinal delivery solutions out there. But we did allow that option agreement with the manufacturer to expire in May in accordance with its terms. And we're already in the process of exploring two areas of potential improvements to the PPV procedure, which might further improve outcomes. So we think that PPV, using PPV to deliver OpRegen, is going to ultimately be a better choice for patients and for surgeons, as well as for lineage.

There are no further questions at this time. Brian Culley, you may proceed with your closing remarks.

So I thank you, everyone. I really appreciate -- thank you Mary. And I appreciate everyone’s participation. We'll keep working hard for you. And we'll look forward to our upcoming events and milestones, and our continued communication with all of our shareholders. Thanks and have a great afternoon.

This concludes today's conference call. Thank you all for your participation. You may now disconnect.