Prepared remarks
Welcome to the Lineage Cell Therapeutics First Quarter 2026 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 website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. Any recordings, reproductions, or transmissions 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 call, Ioana Hone, Head of Investor Relations at Lineage. Ms. Hone, please go ahead.
Thank you, Demi. Good afternoon, and thank you for joining us. A press release reporting our first quarter 2026 financial results was issued earlier today, 05/12/2026, and can be found on the Investors section of our website. 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. 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. The company's actual results or performance may differ materially from the expectations indicated by such forward-looking statements. For a discussion of certain factors that could cause the company's results or performance to differ, we refer you to the forward-looking statements sections in today's press release and in the company's SEC filings including its most recent annual report on Form 10 and in the Form 10-Q filed today. 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 Ann Howe, our Chief Financial Officer. I will now hand the call over to Brian.
Thank you, Ioana, and good afternoon, everyone. We appreciate you taking the time to join us today. We have a lot of great things to cover. I am going to try and keep it short so that we can have plenty of time for analyst questions. I do want to highlight the successful expansion of AlloSCOPE, our proprietary cell manufacturing platform, most notably because it led to the launch of COR1, our new wholly owned corneal endothelial cell transplant program. We also successfully met our first internal milestone with our ILT1 manufacturing initiative and established a new scientific advisory board and attracted a recognized, established cell therapy executive as its founding member. But before I share those and other updates, I will begin with the status of our lead clinical program, OpRegen. Data we reported several years ago from the OpRegen Phase 1/2a clinical study included improved anatomy of the retina, halting or reversal of atrophic progression, and improved vision in patients with dry AMD.
These are compelling data because they are not known to occur naturally in human beings. Since we made these initial reports, two additional and very important advancements have occurred in the field. The first of these is that three other companies have reported similar results with their own version of an RPE transplant, independently providing further evidence in support of the mechanism and its treatment effects. The second is that Roche and Genentech's long-term analysis of our data shows that vision gains persisted for at least three years following a single administration of cells among patients who received those cells to the target location. Taken together, these data appear to us to be consistent with continued forward progress of the OpRegen program. While we await a decision on the future of the OpRegen program, I will note that we have long believed that we may be seeing a potential functional cure for advanced dry AMD in the OpRegen program.
This month's presentation by our partners Roche and Genentech is the first time that they have used similar language to describe OpRegen as a potentially disease-modifying treatment. Discussing disease modification in geographic atrophy is exceptionally promising because dry AMD is a common condition that has not been shown to self-resolve and only leads to worsening vision. We find it notable that after adding only a single site in 2024, Genentech has now opened 11 new clinical sites starting in late 2025, bringing the ongoing study to a total of 17 unique locations. As I have explained on these calls before, we do not have a time frame to share when or whether a GAlette study data reveal and/or a public commitment to a multicenter controlled trial may occur. But we continue to be confident in our partner's commitment to the program. We believe that the work they are doing in the GAlette study to optimize surgical delivery will improve the product's profile and is intended to increase its probability of regulatory and commercial success, especially compared to the competition which appears to us to still be in early stages and not as advanced as we are in the necessary aspects of manufacturing or delivery.
Overall, we believe our powerful quartet of scalable manufacturing, proprietary delivery tools, long-term safety and efficacy data, and a partnership providing world-class commercial capabilities make us bullish on the potential for OpRegen to capture a significant portion of a multi-billion-dollar and still under-served GA market. Because all of our programs have certain features in common, we believe we can bring the same kinds of attributes to other cell transplant programs, but even more quickly. Development of cell therapies is very different than that of small molecules; we needed first to invest in our manufacturing capabilities to enable development of these other cell types. In cell therapy, the process is the product. Even seemingly insignificant changes to a process can impact your product's characteristics including its efficacy. You want to ensure that you have the right process in place before beginning clinical testing.
Making those investments too late could be fatal to a program, analogous perhaps to changing the structure of a molecule. Some companies may feel pressured to rush into clinical testing without a robust scalable manufacturing process and assume they can figure that part out later. We think that approach can create significant risks. We are choosing instead to invest in commercially viable process development before launching clinical trials so that if we do demonstrate compelling clinical activity, we believe we can be much more confident that the product which led to that activity can continue through approval and eventual commercialization. Otherwise, you may be delaying an inevitable and potentially critical shortcoming which could cause you to go back to square one with the regulators. Fortunately, while manufacturing may sometimes be an underappreciated or even overlooked area of cell therapy, it is nonetheless an integral factor in a product's success.
We believe we have made tremendous strides in this area. Our AlloSCOPE manufacturing platform utilizes a two-tiered banking system in which a master cell bank generates a working cell bank which generates the clinical material. The production capability underlying this approach is easy to understand. A single vial from a master cell bank can generate an entirely new working cell bank and any vial from that working cell bank can generate the product. That means the amount of material you can mathematically generate is multiplied at each step. So if each step has 100 vials, even just 100 times 100 times 100 is a million vial production capability. And this is not a prophetic claim about large-scale production. We have performed these individual steps multiple times. The final product from our banks has cleared the FDA requirements and been used in clinical testing. If we were to successfully perform these steps repeatedly using the full potential of our banks, we would produce many millions of vials of our product.
Importantly, this kind of scale also means our cost per dose for a particular program can potentially be in the hundreds of dollars which we believe offers advantages in terms of patient access and affordability. The potential for low-cost scale is one of the reasons we are so excited about the allogeneic off-the-shelf product candidates in our pipeline. I will now turn my focus to how we apply our manufacturing success and lessons we have learned into our pipeline of cell-based assets for other medical conditions that arise from the loss of critical cellular function. OPC1 is our second clinical-stage program designed to increase mobility for people who have suffered from a spinal cord injury by delivering new and functional oligodendrocyte progenitor cells to the site of injury. We have treated 30 individuals in two Phase 1/2 safety trials and we believe the long-term safety and efficacy data collected in those trials is both promising and worthy of further investigation.
This is a program that was created before the advent of modern cell therapy technologies and required some improvements to both the production process and product delivery. We have previously reached our goals on the production process side, generating new cell banks and producing a cleaner, potent, and uniform product on a commercially viable platform in our in-house GMP facility. We also overcame a major deficit with accessibility by inventing and introducing a new patented thaw-and-inject formulation, which we developed for and then borrowed from the OpRegen program. That material has undergone in vivo comparability testing and we expect to present that supporting data package to FDA later this year with the intention of introducing those cells into the ongoing DOSED trial. DOSED is also running in parallel to provide a separate analysis, which is to evaluate the safety and performance of a novel and proprietary delivery system for OPC1.
Our goal with the new device is to deliver the cells to the area of injury without stopping patient ventilation, something that was required in prior studies. Once the cells and device have been adequately tested, and a study design has been discussed with FDA, we expect to be in a position to conduct a larger comparative study of OPC1 either alone or with a partner. Notably, the ongoing study is the first time OPC1 has been administered to patients with chronic injuries, which are injuries that may have occurred as long as five years prior to treatment. We have treated two such patients to date, and because we will be collecting functional assessment on all patients, we have the opportunity to investigate any signals of efficacy that may arise. This is important because unlike subacute patients, most chronic patients have reached a performance plateau where further spontaneous improvements are considered unlikely and therefore any functional improvements they gain may be easier to detect.
Chronic injuries also represent a new and larger potential patient population for this experimental therapy. Importantly, the first chronic SCI participant is coming up on their one-year follow-up visit, so we expect to be able to provide an update on how they are doing on our next earnings call. While the possibility of a treatment effect in chronic patients is an exciting topic, I do not want us to lose sight of the point that the DOSED study is designed to demonstrate the safety and performance of the novel delivery device and to date that device has performed as expected with no unexpected procedure-, product-, or device-related adverse events or significant design changes required. DOSED has recently been expanded to a second site, the Rancho Research Institute located in Downey, California, in conjunction with the Rancho Los Amigos National Rehabilitation Center. We are honored to have Dr. Charles Liu, the principal investigator, and his team involved with the OPC1 program.
Moving next to ReSonance. This is our first internally developed program using the modern technology available from the AlloSCOPE platform. This is an auditory neuronal cell transplant to treat hearing loss. ReSonance was built from the beginning on our AlloSCOPE platform; it already has the features I discussed a few minutes ago. Last year, we announced a partnership for this program with William Demant Invest which is expected to fully fund the planned preclinical development plan leading to an IND filing. ReSonance is an important example that showed we could conceive of and successfully manufacture a completely new cell-based product candidate on our AlloSCOPE platform in a rapid and efficient way. From an initial investment of approximately $1 million, we generated new intellectual property and advanced ReSonance into preclinical testing in about one year. The speed and success of that project then led to a partnership with Demant, a world-leading hearing health care company which brought us access to specialized technology, auditory expertise, and a network of hearing health leaders.
Demant also agreed to fund up to $12 million of preclinical activities leading to a first-in-human regulatory filing, a portion of which has already been spent in support of the project including as reimbursement to Lineage for our contributions. We believe this collaboration demonstrated the speed, efficiency, and value creation that the AlloSCOPE platform can provide as well as highlighting productive deal making, and we hope to repeat this success with some of our other cell transplant programs. Meanwhile, our collaboration with Demant has been progressing well. I am happy to share for the first time today that we have successfully completed three engineering runs and preparations are underway to perform that process in our GMP suite. Successful manufacturing of GMP material will be an important next milestone as it is something we want to complete before speaking with the regulators about human testing.
We have also established a novel model of deafening which will enable the initiation of functional animal testing using the cells we produced under this important partnership. Moving now into the rest of the pipeline, I want to provide some context regarding the next two programs, our islet cell and corneal endothelial cell initiatives. The human body is comprised of more than 200 discrete cell types. Because pluripotent cells can become any of those 200 cell types, we have many choices about where to deploy our resources into additional product candidates. After extensively evaluating where we might generate the greatest value from our process development and directed differentiation expertise, we announced two new initiatives: one focused on addressing the issue of scale in type 1 diabetes, and a second focused on corneal endothelial disease. One of the things we like about these two initiatives is that clinical evidence demonstrating that a cell transplant can address the respective diseases already exists.
Unlike a small molecule program, where you really have no idea about clinical efficacy or the translatability of animal models until you reach those steps, there already is established data showing that functional islet cells can lead to insulin independence and that functional corneal cells can treat Fuchs dystrophy. In these areas, the clinical risk may be reduced due to these precedents and thus the business opportunity for Lineage resides where we perform best—on the process development and production side. Because islet and corneal cell transplants are currently performed using cadaver cells, we see a huge opportunity to try and develop a consistent and low-cost supply of these cells from our AlloSCOPE platform. Starting with COR1, this is a corneal endothelial cell or CENC therapy program designed for the treatment of Fuchs and other corneal dystrophies. Fuchs corneal dystrophy is a progressive condition where cells on the inner layer of the cornea die off causing swelling and vision loss.
In the advanced setting of this disease, DMEK, or Descemet's membrane endothelial keratoplasty, is a surgical option consisting of replacing the diseased cells with a donor graft often leading to improved vision. COR1 is an internally developed and wholly owned preclinical cell transplant aimed at providing a consistent and affordable supply of corneal cells to these procedures. COR1 can benefit from our ophthalmology and manufacturing expertise and highlights our approach by focusing on what we do best: large-scale, high-quality cell manufacturing. Millions of people are potential candidates for corneal transplants, but the current supply of CENCs from cadaveric sources is limited by the low availability of organ donors which by their nature have inconsistent yield and quality. Nevertheless, CENC therapy from cadaveric sources has been approved in Japan and is in Phase III testing in the U.S., providing evidence for the mechanism of action and business opportunity.
But according to JAMA Ophthalmology, cadaver sources can only serve about one in 70 patients, highlighting the unmet need. COR1 aims to solve this limitation. Existing approved CENC transplant therapy not only relies on cadaveric tissue, which is limited and variable, but also requires cells to be transplanted within 30 hours of harvesting, creating barriers to patient access. We believe there is a terrific opportunity to address the unmet need for reliable, consistent, scalable, and cryopreserved CENCs. From a manufacturing and formulation perspective, the anticipated therapeutic dose is small—fewer than two million cells per patient—which we believe is well within the capability of AlloSCOPE to deliver low cost of goods and an efficient production process. The differentiation pathway is well understood and we believe we can utilize one of our existing differentiation methods to create a proprietary position as well as potentially accelerating and streamlining product development.
As a result, in just a matter of months our team advanced the COR1 program from little more than an idea to preclinical development and was able to successfully manufacture off-the-shelf corneal endothelial cells on our AlloSCOPE platform with identity, morphological, and functional characteristics that met our initial internal criteria and support further development. We plan to advance this program first into translational models and thereafter into initial human testing. I hope at our next quarterly call that I will be able to provide a timeline for initiation of a clinical trial of COR1. Moving next to type 1 diabetes, we have been getting a lot of interest about our entry into this space. As with CENCs, the clinical data show that islet cell transplants can work. Each year, dozens of patients are reported to be functionally cured using islet cells from cadavers, meaning they can regulate their blood sugar without daily disease management.
However, islet supply is a major unsolved problem. Expansion of islets from cadaver sources cannot currently support a commercially viable source of these cells. Immunosuppression, patient eligibility, and hypoimmunity are all additional hurdles that need to be overcome. But we believe the hurdle with the least amount of progress to date is making islets at the scale required for commercial success. One reason for the supply gap is that the required dose of islet cells may be as high as one billion cells per patient. For reference, the upper limit for an optimized bioreactor process might be 10 billion cells per liter, and that is still commercially inadequate for T1D patients even at 10- or 15-liter scale. Because mature islet cells do not expand readily in culture, these optimal calculations do not even apply. Our calculations suggest that you might begin to reach commercial viability at thousands of doses per batch implying production will have to occur on the scale of at least an 80-liter reactor.
Carrying out a differentiation process in an 80-liter vessel requires feeding that vessel with many billions of undifferentiated pluripotent cells. You cannot just rely on cells to divide endlessly. They have to attain full pluripotency, genetic stability, and do so without losing their homogeneity and synchrony. That is the fundamental problem. Conventional 3D expansion in aggregates introduces heterogeneity leading to lower control, lower synchrony, and higher dissociation requirements resulting in more genetic aberrations and less effective differentiation. Generating billions of cells from conventional 2D approaches requires impractically large surface areas and high aseptic risk. There is an unavoidable conflict in islet cell production between reproducible control and sufficient scale. There is no trade-off; you have to combine the best of both worlds to produce a commercially viable product.
Our proposed solution to this problem is called ILT1, a new manufacturing initiative employing a modification of our AlloSCOPE platform into what we call AlloSCOPE 5D. AlloSCOPE 5D has the goal of generating large-scale production of pre-differentiated cells with reduced manipulation and passaging so that you capture both 2D synchronization and control of differentiation with 3D environmental control and scalability—hence 5D. ILT1 is initially focused on producing a homogenized population of undifferentiated pluripotent cells ready for synchronized differentiation, which if successful could thereafter serve as the high-feed source material for differentiation into islet cells. If we can develop a modality that can support an islet cell production process from expansion through differentiation in a dynamic culturing system, we could potentially solve a major hurdle to production and commercialization of an islet cell therapy product candidate.
With this initiative, we are inverting the traditional development paradigm by focusing on scale-up of undifferentiated cells first. Once you have shown that you can actually produce your material while maintaining its quality at scale, we believe you may be materially reducing the risk profile for the remainder of the development project. That is because multiple independent groups have already shown that islets can clear preclinical and clinical testing and become an effective intervention for people with T1D. Similarly, editing strategies and differentiation protocols already exist and can provide risk-reducing information in those respective areas. But no one to our knowledge has shown that they can scale islets to commercially relevant levels. For this reason, we think it is appropriate to focus on the unresolved scale problem rather than performing years of expensive preclinical and clinical studies while deferring the problem of scale-up for later.
For some companies, advancing into clinical testing without a robust manufacturing process may even become a significant setback. We think the value is in establishing from the beginning a process that can support downstream development. I previously reported that we met our first internal manufacturing milestone for this initiative by demonstrating what we believe is a highly homogenized, scalable, and fully suspension-based process for generating undifferentiated pluripotent cells using one of our proprietary cell lines. After this work was successful at a 0.5-liter scale, we then moved into a larger multi-liter format which continues today. If we are successful at the larger scale, we would then seek to demonstrate AlloSCOPE 5D scalability with either an internally or externally sourced hypoimmune cell line, one that is suitable to support islet cell differentiation. Or we may proceed with a non-hypoimmune line or perhaps both.
We do not need to generate islets yet; we first want to demonstrate the capability of being able to generate enough raw material that can become islets. As one final point on AlloSCOPE 5D, I will add that we do not yet know what the upper limit is for our approach, but we have already done it reproducibly at a small scale and that allows us to apply insights, IP, and process improvements to our other programs, such as by potentially making larger cell banks or driving our production costs even lower. We will do our best to keep you informed on ILT1. I can share today that we believe it is already paying off in other areas. Changing gears for just a moment, we recently announced the formation of our scientific advisory board to provide strategic counsel and insights into the development of our pipeline. The SAB's founding member is Dr. Joachim Frøbus, a recognized, established biopharma executive who brings extensive experience across ophthalmology, neurology, diabetes, and other areas of interest to us.
Dr. Frøbus helped shape cell therapy development at Novo Nordisk and BlueRock, and has led cross-functional global teams responsible for the late-stage development and commercialization of multiple approved products. We are excited to have been able to attract a leader of his caliber and look forward to providing updates on further appointments to our SAB throughout the year. In addition, we also welcome Dr. Priyantha Harath as our Senior Vice President and Head of Clinical. Dr. Harath is a board-certified specialist neurologist with extensive experience spanning early translational development, regulatory affairs, clinical development through successful Phase 3 clinical trial execution. He brings a broad clinical perspective suitable for our diverse pipeline and a deep understanding of disease penetration, progression, and meaningful outcomes. We are pleased to have attracted the support and contributions of Drs.
Frøbus and Harath to our growing and maturing company. To wrap up these remarks, our business strategy aims to efficiently leverage our AlloSCOPE platform and create a pipeline of related but discrete cell-based assets, some of which we may advance internally toward commercialization and some of which we may seek to partner during early or late development. If you are wondering how we can manage such a broad pipeline, please keep in mind that our platform generates assets which share certain essential traits in common such that each dollar we spend on innovation can apply across multiple programs. While each product candidate is intended for a different condition and each cell line behaves in a unique manner and their respective development risks vary, the early steps of banking, process development, and achieving control, purity, and scale have somewhat common features in the way we apply them.
This allows us to broadly expand the scope of our pipeline without losing the focus required to succeed in each indication and using our capital in an efficient way. I hope that business update has been informative. I will now turn things over to Jill for a review of our financials.
Thanks, Brian. As of March 31, 2026, our overall cash position was $53.4 million. This capital is expected to support our planned operations into 2028. In addition to our cash on hand, we may also receive approximately $32 million from the exercise of existing warrants, the maturity date of which will be accelerated if the intent to advance OpRegen into a multicenter trial, which includes a control comparator arm, is publicly disclosed. We also continue to remain eligible for a total of $615 million of development and commercial milestone payments under the Roche-Genentech collaboration agreement and we continue to evaluate opportunities for additional partnerships similar to our Roche or Demant collaborations, which we could elect to enter into in the future. Now I will review our first quarter results. Our revenue is generated primarily from collaboration revenues, royalties, and other revenues.
Total revenues were approximately $1.7 million, a net increase of $200 thousand as compared to $1.5 million for the same period in 2025. The increase was primarily driven by collaboration revenue recognized under our new research collaboration agreement with Demant. Operating expenses are comprised of research and development expenses and general and administrative expenses. Total operating expenses were $9.3 million, an increase of $1.3 million as compared to $8.0 million for the same period in 2025. R&D expenses were $4.2 million, an increase of $1.1 million as compared to $3.1 million for the same period in 2025. The net increase was primarily driven by $300 thousand for our OPC1 program, $200 thousand for our ReSonance program, and approximately $700 thousand for our preclinical and other programs. G&A expenses were approximately $5.1 million, an increase of $200 thousand as compared to $4.9 million for the same period in 2025.
The net increase was primarily driven by personnel costs, partially offset by services provided by third parties. Loss from operations was $7.6 million, an increase of $1.1 million compared to $6.5 million for the same period in 2025. Other income and expenses reflected other income of $2.8 million compared to other income of approximately $2.4 million for the same period in 2025. The net increase was primarily driven by exchange rate fluctuations related to Lineage's international subsidiaries and no warrant-related financing transaction costs incurred as compared to the prior year's quarter. Net loss attributable to Lineage was $4.8 million or $0.02 per share basic and $0.03 per share diluted compared to a net loss of $4.1 million or $0.02 per share for both basic and diluted for the same period in 2025. Our financial results continue to reflect our dedication to responsible fiscal management and we remain focused on balancing our cost of capital with the investments we make to grow and strengthen our pipeline. As presented earlier in the call, I will now hand the call back to Brian for concluding remarks.
Thanks, Jill. I will quickly summarize by repeating some key themes. First, we continue to remain confident in the potential for OpRegen to advance into a multicenter controlled trial. Second, with that confidence, we are making investments in our AlloSCOPE platform and launching new programs. In some cases, these new programs have a strong clinical precedent from cadaver cells, such as using islet cells to achieve insulin independence or CENCs to improve vision in patients with corneal endothelial disease. In other cases, the utility of replacing a cell is less established, but like OpRegen, might reveal a remarkable new mechanism by which we can modify or even reverse the course of a disease. In all of these programs, we believe establishing a robust manufacturing process early on with the purity, potency, and scale capable of supporting a commercially attractive cost of goods is the right strategy for both long-term internal development and for creating partnership opportunities.
As our pipeline advances, we expect to provide updates prior to as well as following any potential updates that our partners may make on the OpRegen program. For example, we are looking forward to reporting initial OPC1 data, the outcome from the ReSonance annual go/no-go decision, COR1 development plans, ILT1 scale-up progress, announcing additional SAB members, a patent issuance update, and whatever other news we might be able to generate in the second half of this very productive year. Overall, we appreciate your support and your belief in our vision. With that, Operator, we are ready to take analyst questions.
Questions and answers
Thank you. As a reminder, to ask a question, you will need to press star then the number 1 on your telephone keypad. And to withdraw your question, press star-1 again. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mayank Mamtani with B. Riley Securities. Your line is open.
Yes. Good afternoon, team. Thanks for taking our questions and congrats on a lot of progress here. So on your understanding of that being characterized as disease modifying relates to what data that was presented at the recent conference, the Foundation Fighting Blindness summit. How do you think of the photoreceptor recovery and some of the stratifying by bleb coverage data that you have integrated as part of the GAlette trial, of these learnings that you are having longer term? And then I have a follow-up.
Thank you for the question, Mayank. With regard to disease modification, because we do not have access to the data in the ongoing GAlette study, we, like our investors, look to other indicators of how things are going. A very clear indicator we had, for example, is the opening of 11 sites after initially only having six sites. We think that is consistent with planning for a larger campaign. My comments around disease modification are more nuanced. I am speaking to the conclusion slide from the CTS data which was very similar to the FFB data that came out nearly a year later. The conclusion slide at CTS, roughly nine months ago, did not include any language about potentially modifying disease. That language has been presented for the first time in the recent FFB presentation. It is a small change, but I highlight it because it is a change that I assume is intentional and purposeful, and I believe that is positive to see that kind of language being used by a partner that is running an open-label study with a clinical benefit that never happens naturally.
Even though we do not have access to those data, I think there is some utility in paying attention to how the partners describe the data they have. That also partly answers your second question. The insights that we have regarding bleb coverage and photoreceptor recovery come entirely from our own Phase 1/2a, as well as data that has been presented by other companies. It does not include any specific insights that we have on the data from the ongoing GAlette study. We form our opinions, we share those opinions, and we try to help direct investors to things that are publicly available, and then they can interpret them as they wish. We are not able to provide any specific insights from the ongoing GAlette study because we do not have that information and even if we did, we would not be able to share it at this time.
Thank you, Brian. That is helpful. On the other eye programs that you have preclinical—the corneal endothelial cell, I think you also disclosed the new photoreceptor program which looks like it is for photoreceptor cell targeting. Maybe just on the corneal program, what internal criteria you may have met here? What sort of work is underway preclinically and what things should we be watching for as you do your next steps on manufacturing and time to IND filing? And then just on ReSonance, remind us what any partner-related milestones are now that you have run the three manufacturing runs. Where does the $12 million over roughly three years start getting recognized as you get closer to IND?
Thank you. On ReSonance, two things are important. Completing the engineering runs is a gateway to doing GMP runs, which itself is a gateway to having conversations with the FDA. That is something people will be interested in knowing—when we might have our first FDA interaction for this program and what a timeline to clinical development might look like. A second thing for ReSonance is that there is a go/no-go decision baked into the alliance that occurs with the advancement of the program. If the parties are not happy with how things are going, either party has certain rights under those decisions. We have an annual go/no-go or continuation decision coming up. In certain areas we are running ahead of schedule, and we are really happy, so I am optimistic about passing that decision. The $12 million, which is over an approximate three-year term of the agreement, is roughly two-thirds reimbursement to Lineage and about one-third to Demant entities, which will be third-party organizations providing various services.
Regarding the ophthalmology programs—OpRegen for GA, COR1, and the photoreceptor program—I covered COR1 in detail in my prepared remarks. On the photoreceptor program, we have been keeping a close eye on the program under development elsewhere. We also unencumbered some of the economics of our photoreceptor program from a third party; we did not wish to rely on that third party's intellectual property anymore and therefore terminated that agreement to free the program from unattractive economics. That means we cannot utilize the intellectual property we were relying on, so it caused us to move the photoreceptor program slightly back in time and earlier stage than it was. Long term, having superior economics makes sense. Overall, we look at value creation in this space differently than some others. Especially with programs like COR1 where there is precedent, we think the value is in getting a very high-quality manufacturing process that is reproducible and not likely to need changes during development.
When that is accomplished, the risk profile from there forward is very different. Many companies get exciting early clinical data and then if they cannot manufacture the product or need to change their process, the FDA may tell them it is not the same product anymore. Because cell therapy products are sensitive to the process, we emphasize reproducible manufacturing early. The criteria we invite people to look at as we share these data are: how reproducible is your material, how scalable is it, do you have narrow specifications, and what is your potency assay. These are often not asked of companies in this space yet are integral to a product's survival. I hope that is helpful for how Lineage thinks about our business and development strategy.
Thank you. Next question comes from the line of Jack Allen with Baird. Your line is open.
Great. Thank you so much for the updates and congrats on all the progress. I will start with the RPE cell and geographic atrophy space. I wanted to ask for your thoughts on some of the competitive data that Astellas and iStem presented, updated data from their RPE cells. I also saw at ARVO there was an update from the complement inhibitor class—Eiservay from Astellas had data looking at continuation of driving eligibility at 24 months versus sham. I wanted to hear your thoughts on the broader space and then I have a follow-up.
I would start with Astellas. I consider their data update to be an important clearing event for Lineage. When you do not have information about a competitor, it's easy to fill in scary scenarios, but after the presentation I was comforted because I did not see much information about manufacturing or delivery, limited information about safety, and only one patient out of, I believe, 14 with anatomic improvement. I did not find the aggregate information particularly worrisome or threatening. This is a program they acquired in 2016 and in 2026 the data in totality is somewhat limited, so I feel comforted that we are and will continue to be in a leading position. I am thankful for the investments our partners are making in optimizing OpRegen because the more we know about the competition, the more opportunities we have to develop a superior product profile. You are talking about a surgical procedure in the eye; even modest differences in safety profiles could drive significant decisions as to which product someone might choose if multiple products were approved.
The four items I outlined earlier—scalable manufacturing, delivery tools, long-term safety/efficacy, and partnership—are working together and I hope they will lead to the best possible product profile and increase the probability of success. With respect to complement inhibitors, I view them largely the same. I think there is a treatment effect but a very small one. If I were in charge of a complement inhibitor program, I would work hard to generate evidence that it has an effect on visual function, because the data to date suggest these interventions do not have a meaningful effect on visual function. I would like to see an a priori designed study with a functional endpoint that is statistically significant, but I am not sure we will see that. Driving is a very important real-world endpoint. If you increase someone's vision, such as with an RPE transplant, you may be able to get them a driver's license back.
If you do not increase vision and they have lost their license, they will never get it back. I think RPE transplants will have more potential to restore driving ability, whereas complement inhibitors may only slow license loss.
That is a very helpful comment. I did see a picture of the Roche booth at ARVO and it seems like they were flagging the OpRegen program. Any comments there? And then my follow-up: any updates surrounding the DOSED study of OPC1 and the CIRM grant application?
Genentech did have space at ARVO, one of the major ophthalmology meetings of the year. To my recollection, there were two areas: one area that mentioned a number of product candidates where OpRegen was included, and another area dedicated to the science of RPE transplants. I do not think that area was dedicated to OpRegen per se, but I am not aware of other RPE transplants in their pipeline. Everyone can interpret Genentech's choice to utilize a significant portion of their ARVO presence to communicate about RPE transplants for themselves. My view is that it is an incredible positive: they are running an open-label study, we have multiple independent examples that show meaningful effects, and it is important to communicate that to future users of this technology. On DOSED and CIRM, we reapplied for a CIRM grant in January after not receiving one in the first cycle. We do not know if we will receive one in the second cycle but we applied; CIRM will have a decision later this summer. If we get the CIRM grant that would be a helpful pickup, but it does not have a material impact on the program. The program will continue either way, and we are looking forward to moving the DOSED study ahead and introducing our internally made cells into the ongoing DOSED trial.
Next question comes from the line of Joe Pantginis with H.C. Wainwright. Your line is open.
Hey, everybody. Good afternoon. Thanks for taking the questions. Brian, I wanted to start with the ILT1 program. I know the answer is probably we just need to do the experiment, but you mentioned how you really need to be confident around scale-up of the baseline cells. When you then take those cells and differentiate them into the islet lineage, what are the risks that differentiation could impact scale-up once you hit the ILT portion?
Joe, excellent question. If it were easy to differentiate these cells into islets we would not have a problem with scale. Islet cells are unlike RPE or auditory neurons—they do not expand in culture once they become mature islet cells. We can expand RPE after they have become RPE, but islet cells do not like to divide once they become islets, so you lose the ability to expand numbers during differentiation and after differentiation. Therefore you have to focus on pre-differentiation expansion. There is absolutely risk at every step. Everything that might impact production is a valid risk because cell production is so sensitive to process. It would be inaccurate of me to suggest that because we can make a large number of undifferentiated cells, they will easily and fully convert into islets. Differentiation of pluripotent cells into specific cell types is difficult. That said, we have had a lot of success relative to many in the field.
We have demonstrated GMP manufacturing and getting into clinic. We have reduced practical challenges that many companies have yet to overcome. We are confident in the team's ability, but simply cannot generate a commercially viable product if you cannot produce enough starting material. Our plan is stepwise: proof of concept at small scale, move to a more moderate scale (multiple liters), and then work with specific lines known to be capable of becoming islets. It is a sequential risk-reducing approach with go/no-go decision points. If we run into a problem and cannot get to a necessary milestone, we can elect to stop the program and avoid fixed investments. We have been committed to keeping spending around $30 million a year for multiple years now and will continue to be prudent. Part of our ability to manage multiple programs is that they share similarities in equipment, facilities, and teams, which allows us to run several programs simultaneously.
That is very helpful. You took the words out of my mouth about leveraging your successes. Regarding ReSonance and your novel model of deafening, any more details about this model? Is it genetic, chemical, or environmental induction? Why is it relevant to the cells you will be injecting?
We would not be putting cells into humans that have fully intact cellular capabilities; we need to model a disease condition by causing existing cells to be dysfunctional. There are multiple ways to do that. Chemical induction is common—different compounds, concentrations, and timings can be used to destroy a population of auditory neurons. You then deliver the test article and see if hearing or neural signaling is restored relative to the reduced baseline. Prior approaches in the literature have largely been unsuccessful but often used mesenchymal stem cell preparations, which may not be appropriate here. You cannot simply buy a vendor model and assume it's suitable for novel test articles. Selection of species and cochlear anatomy matters and it's difficult to develop a model that gives reliable information when introducing the test article. We believe we have now developed a model of deafening that we can use with our cells and measure whether we can restore auditory function or at least neural signaling.
If we can demonstrate effects in these models, that will be an important finding and support future development and human testing. Many years ago, I recall working at a company where we had rat data using our RPE cells and I did not think at that time we would see the kinds of treatment effects we have seen more recently. It sounds preliminary to be talking about animal models, but time goes by and you can find yourself in a very different position, so I am hopeful that some of the things we are doing in hearing loss will progress similarly.
Next question comes from the line of Sean McCutcheon with Raymond James. Your line is open.
On OPC1, can you speak to the requisite safety waiting period and challenges identifying and getting patients into the DOSED study? What are your expectations for the cadence of new patients being enrolled and treated moving forward now that the second patient has been treated? Secondarily on COR1, can you speak to the currently available intervention for corneal endothelial cell disease in the U.S. and the unmet need there, perhaps a sense for the low-hanging fruit for a cell therapy and key differences and limitations relative to procedures like DMEK? Thanks.
With respect to OPC1, we have two groups in the device study: chronic injuries (1 to 5 years) and subacute injuries (21 to 42 days). These patient journeys are very different medically and emotionally. Chronic patients are often easier to enroll because they are in the community and reachable, whereas subacute patients require a tragic incident near one of our sites and then must qualify, which makes them harder to find. Some chronic patients are excited by an opportunity to participate in a study; others decline because they are unwilling to tolerate surgical risk. Given that, it does not surprise me that the first two patients were chronic. It is helpful that we opened a second site and as we learn more we can bring additional sites online to widen our enrollment net. On COR1, DMEK uses cadaver-sourced cells. Cadaver sources are variable and temporally constrained—you have to move quickly to harvest, prepare, and deliver donor tissue—and there is an insufficient supply.
There are a number of companies working in this space; some passage cadaver cells to increase supply. If we can generate an off-the-shelf, low-cost, cryopreserved formulation, we could stockpile identical material that can be scheduled for procedures rather than relying on donor availability. That would be an attractive product profile. It is early—we are just now making these cells—but there is already precedent that corneal endothelial cells can improve vision in endothelial disease. That changes the risk profile compared to many other therapeutic areas where mechanism or clinical translatability is unknown. Our focus is on manufacturing consistency, reproducibility, and scalability to provide a reliable alternative to cadaveric tissue.
Understood. Thanks, Brian.
There are no further questions at this time. I will now turn the call back over to Brian Culley for any closing comments.
Thanks, everyone. Our focus on replacing cells that have become dysfunctional might someday reshape many treatment paradigms and we really thank you for joining us on this mission. Have a great day.
Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.