Lineage Cell Therapeutics, Inc. (LCTX) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Lineage Cell Therapeutics conference call. [Operator Instructions] Please be advised that today's conference call is being recorded. [Operator Instructions] I'd now like to hand the conference over to your host for today's conference call, Mr. Brian Culley, CEO of Lineage Cell Therapeutics. Thank you. Sir, please begin.

Well, thank you so much, and thanks, everyone, for joining us today. I think we're going to have a great call. With me today on the line, we're very fortunate to have the time of Dr. Christopher Riemann. Dr. Riemann is an accomplished vitreoretinal surgeon from the Cincinnati Eye Institute and University of Cincinnati School of Medicine. He also is an expert on and a named inventor on the patent for the Orbit SDS device. So very relevant background. He's also a delightful person who has a great skill at translating the sometimes complicated anatomical matters of the retina into very easy-to-understand information. So I will just have 3 slides and then get out of everyone's way and hand things over to Dr. Riemann. I can let you know that the first slide will be my forward-looking statements. We may be making some forward-looking statements today. So we'll refer you, first, of course to our safe harbor clause, and you can find more about the company at the SEC website. The second slide is just a reminder about OpRegen for dry-AMD with geographic atrophy. OpRegen is comprised of a suspension on allogeneic RPE cells, these cells are transplanted to replace the RPE cells that are dying and degrading and to restore their functions. Our clinical-grade cells are manufactured from a pluripotent cell line. This is a line that was NIH approved and established more than 20 years ago and has undergone extensive characterization, and we make no genetic modification to these cells. What we do is, we direct their differentiation, we instruct their lineage and we are able to generate from that differentiation process more than 99% pure populations of RPE cells. These highly specialized cells can be immediately thawed and used. So pulling out of the freezer, you can pull out a vial of these cells and just minutes later can be injecting them into a patient. And at our current scale, we are able to manufacture approximately 5 billion cells in a 3-liter bioreactor. And to give you a sense of that production, 5 billion is about 50x larger than the current clinical dose, and we could additionally scale up in larger reactors or more frequent runs. I have one slide to give you an idea about our manufacturing, and the reason why I wanted to say something about manufacturing at the outset is I think it's an underappreciated key competency at Lineage. Our cells are able to be converted at great numbers into pure populations. And whether we're looking at their identity, meaning the self-surface markers or we're looking at their function, we're going from cells that essentially have more resemblance to RPE cells, to cells, which are more than 99% pure. And that shift in that population from below or outside of that blue line to above or within that blue line is showing the power and the fact that we are already at a 5 billion per batch scale, means that I have great confidence that if these cells are shown to be safe and effective and provide a clinically meaningful benefit in patients with dry-AMD with GA, that we will have little difficulty in being able to address the multiple millions of individuals who suffer from this condition. With that, I am very pleased to hand control of this presentation over to Dr. Riemann, who will walk you through all of the prior and recently announced data from the OpRegen clinical trial. Dr. Riemann, the floor is yours. Thank you.

Brian, thanks so much for your kind introduction. And thanks, everybody, for tuning into our call. So this is really one of the most exciting projects I've had the privilege of being involved in. It's -- and what I hope to talk about today is to kind of tell a story that's compelling and that differentiates the OpRegen product from pretty much everything else that's ever been tried for dry age-related macular degeneration. Dry age-related macular degeneration has a very high incidence, and the unmet need is enormous. So as we look at the overview of the presentation, that I want to talk a little bit about basic anatomy. We can get these cells into the subretinal space and they survive and persist in some cases documented out to 4 years. When the cells are in the subretinal space, what they do is they have measurable, notable effects on retinal structure and on retinal function. And in the process of these beneficial structure function changes, we have a wonderful safety profile and tolerability profile which, of course, is the primary endpoint of any Phase I trial. We'll also talk a little bit about the Thaw-and-Inject formulation that these cells or that this new -- taken out of the freezer and use it correlation works as well, it appears to, at least, as the previous research lab-based way of preparing the cells. And then, of course, we'll talk a bit about the Orbit Subretinal Delivery System, which is my personal -- one of my personal favorite things to talk about and specifically drill down into the Cohort 4 results. So looking at the objectives of this Phase I/IIA clinical trial, the primary objective for all of these early-phase trials is all about safety and tolerability and -- of these OpRegen cells. And the secondary objective is to look and see in these early trials. We're looking to see if there's some sort of effect, is the survival of the cells and is there some sort of beneficial effect. Do we see some sense of some sort of desirable anatomical and functional signal and then the exploratory objectives are to look at the Thaw-and-Inject formulation and talk about the Orbit Subretinal Delivery System as a rationale -- talking about why we are using the Orbit Subretinal Delivery System and the rationale for using this to get the cells into the subretinal space. So looking at some of the key study parameters, the key -- this is kind of a busy slide. The key thing is that there are 4 cohorts to the trial. And the Cohorts 1 through 3 had 12 patients in it. Can we advance the slide? Yes, perfect. Thank you. Cohorts 1 through 3 had 12 patients in it, that have been fully enrolled. And these were patients with very poor vision, very large areas of geographic atrophy and that were a little bit older. And that the typical thing that you would do for a Phase I trial is you tried as brands banking you idea and product out on individuals that really don't have very much to lose. The Cohort 4, the second column here, you see that these eyes had significantly better vision. They were, on average, not legally blind, whereas Cohorts 1 through 3 had vision that was twice as bad as legally blind, had much smaller areas of geographic atrophy. And the really exciting thing about Cohort 4 is -- where, again, we're planning 12 patients and 5 of these have been enrolled, and we'll talk about those 5 a little bit later in the presentation. The really exciting thing about Cohort 4 is that these are eyes that do have something to lose, that don't have as advanced disease as Cohorts 1 through 3, where hopefully, we can -- these retinas and these maculas aren't already irreversibly blind, and where we're hoping to be able to see some sort of signal in terms of improving vision and improving anatomy. So let's -- with that, let's move on to the next slide and look at patient 2, which is a Cohort 1 patient. And the imaging here is pretty compelling. If we can advance the slide, please. So with Cohort 2, with this slide, what we see is on the left, the top frames are color photographs of the -- somebody's retina, and the bottom are black and white pictures taken in what's called an autofluorescence mode. The problem that we're trying to address is the black stuff in the middle of the pictures on the bottom frames. That's the geographic atrophy. And up top, it's a little harder to see on the pictures, but up top, you can see it's a little bit more yellow. There's less pigment there because geographic atrophy is an absence of the pigmented cells in the retina. So the dotted line in the top left represents where the surgical bleb was that we created to place the OpRegen transplant. So the top left, you see is a baseline picture, where we just digitally grew the line of where the cells were placid. And then if you look at the second color picture, the third color picture and the fourth color picture, what you see is that brown subretinal pigmentation though are the OpRegen cells. And you see them as brown pigment on the color pictures and you see them as kind of brown stippling -- as dark stippling on the black and white pictures above the area of geographic atrophy. And the really exciting thing about this particular patient in these pictures is that the brown pigmented cells persist, in this case, documented out to 48 months. The other really interesting thing about this particular patient is the actual geographic atrophy is severe, the central macula is pretty much wiped out at baseline. But if you look at the edges of the geographic atrophy, up top, where the cells have been placed, where the OpRegen cells have been placed, even if you maximize your imagination, there's really no advancement in size of the geographic atrophy up top close to where cells are as opposed to down below, away from where the cells are, you see that little spot kind of in the southeast corner of that big black bleb. And you can see that, that little spot is unequivocally a little bit larger at 48 months than at 24 months. So you can see that there's an asymmetric growth of the geographic atrophy over 4 years of time, that is a little bit more prominent, further away from the cell and there's no visible growth closer to cells. That's really exciting. Let's go to the next slide. And the next slide shows another patient. This is patient number eight. This is a Cohort 3 patients. Where, again, we have color photographs at baseline and at 15 months. And forget the yellow -- the green arrows for just now, we'll talk about those in just a bit. And what you see in the baseline picture is this kind of speckled -- the speckled yellow dots. So the speckled yellow dots are drusen, and drusen are a marker for advancing a dry age-related macular degeneration, and they're a risk factor for progression wet age-related macular degeneration. And again, you see the yellow line and the little red dot, which is where the actual injection occurred. And what you see at baseline, you see yellow dots in the area of the subretinal bleb. And at month 15, you see that, number one, you can see some pigmentary cells kind of below, but you see that the drusen go away. We've never ever seen this level of treatment response, or I've never seen it, with any other experimental therapy for dry age-related macular degeneration. Let's go to the next slide and take a little bit deeper of a dive at the anatomy of those drusen. And if you look at the -- again, those same 2 pictures that I showed in the previous slide are the 2 color slides now above and below one another. Baseline is up top and 15 months is down below -- 15 months a follow-up is down below. And those green arrows represent what's called an OCT cut. And an OCT optical coherence tomography is just a fancy way of taking a cross-sectional optical slice of the retina. So -- and if you look at the irregular balancing deeper layers of the OCT on the baseline, in the top cut there, you can see that there's a very significant amount of irregularity. Those are the -- that's what drusen like on OCT. As the drusen progress -- as time progresses after the cells have been injected, the drusen unequivocally -- and these are all -- all of these OCT cuts are taken at the exact same location. You can see that in the area where the bleb has been administered, where the cells have been administered, the drusen go away. And if you look on the right side of that vertical dotted yellow line, that's the area outside of where the bleb was administered. And you see the drusen and that thickening and that irregularity doesn't go away where the bleb is not is not present, it does not go away, but in the area where the bleb was delivered, the cells go away. Moving on to the next slide, okay? We can also see -- it's the same photograph, the color photographs that we're showing here are the same. But you'll see that in the fifth -- in the -- that there's 2 different slices. So in the treated area, up top, where that -- in the top line, from baseline to 12 months, there's the clear-cut loss of drusenoid material, and that's a very favorable anatomic change. If you look at OCT cuts of this same macula of the same eye, down below the lower green arrow, those -- in that area, the drusen do diminish somewhat, but they don't diminish as much. So the further away we get, especially from where the cells were developed -- were administered, the less of this drusen-removing effect we seem to see. That implies a dose response and that's very, very exciting. Moving on to the primary endpoint of the study. Let's take a look at the systemic ocular safety and tolerability. So in Cohorts 1 through 3, these patients had poor vision to begin with. They ended up with poor vision, but there was no clear-cut sustained reductions in vision. So these patients visually did well. In patient -- in Cohort 4 patients, all of these folks had improved vision, either up to the 1-year time point where the last -- the most recent visit as of this presentation compared to baseline. And those were 5 patients, 5 of the 12 scheduled patients in Cohort 4. Whenever we inject foreign material into an eye, we worry about immune response or inflammatory response. And so far, in the 17 eyes, total of the Cohorts 1 through 4 that have gotten the OpRegen, we've not seen any evidence of an immune response. And that's exciting. Adverse events are common in any kind of surgical trial, an overwhelming majority of them were mild. And in terms of eye-related disorders, the eye-related disorders were much more common in the 15 patients treated with vitrectomy than in the 2 patients treated with the Orbit Subretinal Delivery System. And from a systemic standpoint, it's really a nonstory. There's some asthenia and malaise reported by 4 patients that relates to some immunosuppression that we're administering to hopefully blend any kind of inflammatory response and keep that from happening. Taking a deeper dive into the ocular safety and tolerability. It's very exciting to see the -- hold on just a second. It's very exciting to see that the most common adverse event was subconjunctival hemorrhage. You're going to get that pretty much with any surgical intervention, and it doesn't -- and it's not clinically significant. Moving on to the subretinal pigmentation. This was notable in an overwhelming majority of patients. We called it an adverse event because it was present after the surgery, but not before the surgery. So it was something caused by the surgery. But we feel as if this pigmentation is likely a positive finding, because we are injecting retinal pigment epithelial cells that, by definition, are pigmented so we can see that pigment. And we see that robustly in both the vitrectomy and the Orbit SDS patients. If we move on to the downside, there was a problem in the vitrectomy-treated group, and that was 13 out of 15 of vitrectomy-treated patients. So where the cells were administered by doing a standard vitrectomy surgery, making a retinotomy that means poking hole through the retina and injecting the cells under the retina through the retina or when the cannula comes out, those cells under the retina, but the hole that we made to put the cells under the retina remains -- those cells can exit that hole, layer out on the internal surface of the retina and can cause macular fibrosis or a macular pucker or an epiretinal membrane. Those are all different names for the same thing, some scar tissue forming on the retina. And when we see that, one of these was actually severe enough that it caused visual loss, it needed to be removed surgically. So that was a severe adverse event. So this presented a challenge, a challenge to the group at Lineage. And this was the main reason why we've, in Cohort 4, moved in the direction of the Orbit Subretinal Delivery Device. If you note in the 2 patients that had the Orbit Subretinal Delivery Device here into boxes in green, none of them had macular fibrosis, Lamellar hole, maculoschisis, retinoschisis, retinal detachment or retinal detach -- or any signs of this problem. So we think -- and yes, I understand it's only 2 patients. So we don't want to be too excited. It would be much more exciting if we had 20 patients. But if you actually statistically look and do a chi-square on 13 over 15 versus 0 over 2, that is statistically significant. And we think and hope that we've solved the epiretinal membrane problem using the Orbit Subretinal Delivery System. So let's talk a little bit about the Orbit Subretinal Delivery System. There's a nice diagram here that shows the actual cannula. It's a proprietary cannula. Again, I had a role in developing this, and I'm just so thrilled to be able to see it put to good use here. What it does, it allows for the cells or for that matter, any drug or liquid to be administered into the subretinal space without the need for doing a vitrectomy and without the need of poking a hole through the retina. The surgical approach, you make a sclerotomy. It means a hole in sclera. You dissect and take this big lubricious cannula into the suprachoroidal space, you advance it into the suprachoroidal space to the area where you want to deliver it subretinally, and then there's a little screw drive at the end of the cannula and you turn that little screw drive and it drives a super sharp microneedle through the choroid into the subretinal space and accesses the subretinal space in that fashion. Let's look at the Cohort 4 data now, right? So remember, these are 5 patients. All of whom had vision on average about 21/25, ranging from 20/64 to 22/50. Three of these eyes were operated with the vitrectomy retinotomy approach and 2 of them were operated with the Orbit Subretinal Delivery System and used the Thaw-and-Inject formulation of the cells. Looking at the first Cohort 4 patient, the data is just breath-taking. So in the left panel here, we see in green, the visual acuity that started -- the visual acuity, which stayed the same for the fellow orange eye, the green visual acuity jumped and it jumped by almost 4 lines. And it stayed improved for 15 months of follow-up. This is unprecedented, good signal for us, for retinal surgeons to see for this disease. No -- I've never seen anything like this for dry macular degeneration. So vision gets better. In the right panel, you can see that the size of the geographic atrophy over 15 months continues to grow substantially in the fellow untreated eye in orange but seems to slow in terms of growth with the -- in the treated eye depicted in green. So when we look at exciting visual acuity and we look at exciting anatomy results, it's another important thing is yes, okay, fine, so you were able to measure the vision better on the eye chart, what about functional measures of reading -- of vision, in this case, reading speed. And if you look here within the red box, you can see that the treated eye started off with much worse vision than the better seeing nontreated eye, because we always treat the worse eyes. We select the worse eyes for treatment in these patients. And 6 months after treatment, reading speed jumped from 24 words per minute to 55 words per minute. That's very, very substantial and a meaningful improvement in functional vision. Moving to the fourth Cohort 4 patient. This is the first patient that was operated with the Orbit Subretinal Delivery System. We see no remarkable changes within the area of atrophy. We see some subtle decrease in soft drusen. You need a little bit of imagination to see that. But if you look carefully at these images, I think you can see that the drusen seem a little bit smaller in the area where the cells were delivered super temporally. And you can actually see just a little bit of choroidal in retinal pigment epithelial depigmentation at the site of maximal advancement of the suprachoroidal cannula, super temporarily between the 2 yellow arrows. Looking at the OCT, the ultrastructural anatomy. At baseline, you see reasonably good segmentation of the retina. One day postoperatively, you can see above a little bit of residual subretinal fluid that's from the actual cell slurry, the liquid dose of cells that was injected under the retina. And you can actually see a little bit of clumping on the underside of the retina, just above and a little bit to the left of the tip of the arrow, those are the cells stuck to the bottom of the retina. As the retinal fluid goes away and it resorbs on its own, over -- at 1 month and then at 3 months, you can see a reconstitution of the retinal outer layers and perhaps even an improvement in retinal pigment epithelial and photoreceptor anatomy. Again, with a little bit of imagination, it's only 3 months of follow-up. We're really looking forward to following this data out a little bit longer. Now whenever we do something new, there's going to be new findings. And it turns out that the choroid, which we have to traverse with a little microneedle, is the most profused structure in the human body in terms of blood flow per cubic millimeter. And putting a needle through a highly vascularized tissue, it's no surprise if you look carefully at the 1, 7 -- at 1, at 7 and 28-day post-op pictures, you can see a tiny little bit of hemorrhage under the retina. That hemorrhage was asymptomatic, did not correlate with any kind of visual -- measurable visual loss and auto resolved by about a month out. At the 3-month and the 6-month post-op visits, it's gone, you can see the slight pigmentation up top above the bleb vessel, above where that hemorrhage was, that's where the cannula wind in the -- and where the needle penetrated the choroid. So let's look at the vision in this patient. Again, this is the first OpRegen Thaw-and-Inject delivered Orbit Subretinal Delivery System delivered patient. And we see a stunning improvement, in this case, of at least 10 lines that sustained for 3 months after 9 months of follow-up versus no improvement in vision in the fellow eye. And again, a progression of geographic atrophy in the fellow eye that appears to be somewhat blunted in the treated eye. Reading speed in this patient had a stunning improvement, it stayed the same in the untreated fellow eye in orange and went from 32 to 67 words per minute, that's a stunningly meaningful improvement in function. Looking at the pooled data for all the Cohort 4 patients. We see that the error bars are large because this is only -- it's only 5 patients and only 4 of them have follow-up out to 6 months, and only 3 of them have follow-up out to 15 months. The error bars are large, but magnitude of the signal that we're seeing is very, very meaningful. A 10-letter game, that's a 2 ETDRS -- PETDRS line gain of visual acuity. Relative to the untreated fellow eye, this is unprecedented in treatment of dry age-related macular degeneration. If we go to the next slide, you can -- we'd like to be really transparent with the actual data from all the individual patients. And yes, it's noisy. And as these data sets typically can be, but there's obviously a difference between the left panel in terms of visual acuity and the right panel in terms of visual acuity, and we're excited about it. Going to the next slide and looking at the pooled data average with standard deviation, the standard error bars. We see that for geographic atrophy progression in terms of the area of the geographic atrophy, we again see that the magnitude -- even though they're not statistically significant, the magnitude of these differences are meaningful and that the untreated eyes macular degeneration is getting bigger, geographic atrophy is getting larger at a faster rate than the treated eyes. Going to the next slide. Here is the data for each individual patient in Cohort 4. And if you look at it carefully, yes, the fellow untreated eye deemed to progress faster in each individual case than the treated eyes. So a positive visual signal. So okay, what can we say to conclude this talk and opening up to questions. We can say that we've done 17 of these subretinal injections of the OpRegen cells. The OpRegen appears to be well tolerated in patients treated to date. There's no scary inflammatory signals that we worry about. That's exciting. We've got an improvement in drusen and photoreceptor, ultrastructure and RPE layer anatomies that were observed and persisted in some patients, especially in areas closer to where the cells were transplanted rather than further away. The asymmetric progression of geographic atrophy and less growth -- the asymmetric progression kind of within the eye closer to where the cells are versus further from the cells as well as in the treated eye versus the untreated eye is an important finding that's exciting. With those anatomical improvements come better visual acuity and improved reading speeds that have been observed in some early Cohort patients, Cohorts 1 through 3, and all Cohort 4 patients. That's super exciting and new. The subretinal pigmentation in the treated areas persisted up to 4 years. That shows us that these cells survive or at least we think that these cells survive. We think that the epiretinal membrane problem has been solved, because we haven't seen that to date yet in the Orbit Subretinal Delivery System patients, and there's -- yes, there's only 2 patients. But to go from 13 out of 15 to 0 out of 2 is very, very exciting. We were hoping to have a few more Orbit Subretinal Delivery System patients to share some data with you about but then coronavirus happened, which kind of derailed that somewhat. But that's in the process of ramping back up, our clinical trial activities. There are no unexpected adverse events, no serious adverse events other than the epiretinal membranes in the -- I'm sorry, there are no unexpected adverse events and no serious adverse events in the patients getting the Thaw-and-Inject formulation via the Orbit Subretinal Delivery System. So Cohort 4 patients that all started off on average with better vision and smaller areas of geographic atrophy have shown -- so this is a population where a positive visual signal was more likely and more detectable, all showed meaningful treatment effect following the OpRegen administration. So where are we going, hopefully, we're going to be able to validate these results by treating a bunch more patients, and getting those error bars a little bit smaller and showing that this stuff works. That's our hope and our goal. And with that, I'll thank you for your attention, and be open to questions.

Dr. Riemann, thank you very much for that presentation. I always learn something from you. So thank you. I think that now I can send it back to the -- to Howard. Howard, do you have the question-and-answer queue?

[Operator Instructions] Our first question or comment comes from the line of Jason McCarthy from Maxim Group.

Great presentation. The data looks really, really compelling so far, and I'll start with this. The Cohort 4 patient with the 15 months of follow-up, you described it as an outcome that you've never seen before, would be a long-term result that you would need to see, not that 15-month isn't, but just in general, to commit towards using a therapy like OpRegen for your patients or seeing it as a viable therapy? And maybe another part of that question that might circle back to Brian. What do you think regulators are willing to accept as definitive proof of concept and perhaps approvable improvement?

So I'll be happy to take the first half of that. So what would it take for me to tell my patient, hey, I've got a therapy that I think works for you that makes sense for you, that it requires a surgical procedure. But this is going to help you. And if you look at the wet macular degeneration space, there have been all sorts of drugs approved with a 30% versus 7% chance of improving vision. For example, photodynamic therapy had a very, very -- it's better than placebo, but just barely. What I would want to see is a cessation or a reduction in visual loss. In order for this drug to be approved, and I'm very interested to what Brian has to say here, I think that it just needs to show that with -- that the treated eye stops getting worse and the other treated eye doesn't stop getting worse. I think if we show stabilization of vision versus continued decline in vision, I think we have an approvable drug.

Jason, I'll answer the second part. We don't know, because as there has never been an approved agent for dry-AMD, no one has been able to demonstrate when an approvable endpoint is in this setting. Certainly, from a patient perspective, improvements in vision, reading speed, quality of life, those are obviously very important. The agency has previously been comfortable with reductions in the growth of GA. I think part of the reason for the agency's comfort with a secondary marker of efficacy is because it is quite difficult to impact vision. And there are -- there's noise there. So it kind of leads into the next part, which is what percent of a treated population need to respond to feel like you have a therapy. I think mistakenly, there's sort of this notion out there that cell therapies expectations are that 100% despite the fact that there are plenty of drugs or other treatments that can help 50% or 30% or even fewer in some cases, all hinging on the relative risk and reward. So if we had 12 treated patients, and 4 of them were driving a signal and no one else was getting statistically worse, that certainly seems like a very positive sign to me. And I think that there was a company very recently in the ophthalmic space, who announced a very valuable alliance with a pharmaceutical partner, and a lot of their measurements in their data was, as Dr. Riemann said, the reference, the treated eye versus the untreated eye. So it was curious that even if they didn't have a benefit that was substantial in the treated eye, if the untreated eye got a lot worse, they sort of captured that delta overall. So ultimately, I think it remains to be seen. We will have the discussion with FDA about primary efficacy endpoints and secondary end points as we have collected a little bit more data. Because we want to, of course, understand what our sells and what our treatment is most capable of and that will help us more easily frame the right endpoint, the right delta and then, of course, the size and ultimately cost of the next study.

I think that the endpoint that you -- I'm sorry, go ahead.

So this is Chris. So my sense here is that if we -- if we actually show improvement in vision, that is going to represent an unbelievably high barrier for every competing treatment that's looking at geographic atrophy to me. Most of these -- most of the competing or many of the competing early-phase data in dry age-related macular degeneration, they're not looking for improved vision. They're looking for a reduction in visual loss. The natural history of visual loss for expanding geographic atrophy and dry age-related macular degeneration is pretty miserable and pretty dismal. And just being able to stop it is enough. If we can actually reverse it, like some of the data that we've shown today seems to suggest maybe in the cards, I think that, that will take a lot of the other treatments off the table.

So we -- some of the questions that we got, Brian, from institutional investors who are looking at this was, is there a possibility that improvement in vision in terms of letter improvement, et cetera, is there any -- since you're not injecting the control eye, is there any subjectivity that could find its way into a trial like this? And if you're in earlier-stage patients, you think that you need a larger trial to get above that noise if there is any noise that can emerge from a subjective endpoint, is that possible?

Yes. The answer is absolutely, yes. It's a clinical trial. So there is going to be variability of any assessment tool you can certainly have -- with no change to vision, with not suffering from AMD, you could go into one of these assessments on a good day or a bad day and you're going to exhibit a little bit of noise. So it's not like counting white cells in a blood test. However, there are measures that one can take to help to reduce some of that variability. So as to be illustrative, you could take 2 separate baseline measurements and average them or require that they'd be within a certain number of points. Dr. Riemann probably has some other things that he's seen in practice or other ideas. So the answer is yes, there is going to be variability if you use vision. But there are things that you can do in the setting of a clinical trial to try to mitigate that noise that are better and more powerful than just pouring more and more patients on and trying to shrink the variability.

So I think that's a really insightful question. I agree entirely with what Brian just said. One of the -- so we have -- at the eye institute, we have a very large and robust clinical trial center. We do dozens of these clinical trials. And one of the problems with the Phase I patients is they're all older, sometimes very old, 90, 91, 92 years old, and they all have very advanced disease. And if they're just a little -- if they didn't sleep well the night before, their attention span isn't there. They're not demented per se but -- or that's where the noise comes from. So when I see an individual -- or if they get sick or if their arthritis is acting up and they're in pain, they're just not going to pay attention. They're not going to be as focused and you're not going to get as good of a result. And the interesting thing is, in one of the patients, patient 3, you can see actually that there's this tracking of vision up and down and that actually happens in both eyes. And that's somebody who is just not having a good day. And the way to solve that problem is to move into stage -- into Phase II and Phase III trials, where we can get better-seeing eyes in younger patients. I saw a patient today, for example, that -- she's 65 years old, she's got documented growth, and I'm going to try to get her into the trial because -- and she's awake, alert [indiscernible] herself in and still be a fantastic clinical trial patient.

Our next question or comment comes from the line of Jason Kolbert from Dawson James.

Guys, I really appreciate it. The data is impressive. Brian, you kind of opened up Pandora's box because you mentioned another company. So doctor, how familiar are you with some of the other work that's been done in the cell therapy space with advanced cell therapies or with StemCells, Inc., so that I can compare and contrast and kind of understand how this Phase I data compares to those data sets to understand how this program moves forward?

So I'm not that familiar with studies that I haven't personally participated in. But I can -- I'd be more than happy to share the results, the published results of the PRELUDE trial. The PRELUDE trial was a cell therapy designed by Janssen from J&J for dry age-related macular degeneration, and it was an umbilical cell -- umbilical cord-derived stem cell -- not cells, an umbilical cord-derived cell line and the thinking here was, place them subretinally and they made a -- the name of the drug was palucorcel or [ plaucorcel ]. And to make a long story short, they had the same macular -- they had the same epiretinal membrane problems that -- and fibrosis problems, and that fact pattern resulted in J&J and Janssen developing the Orbit Subretinal Delivery System, which they then spun out, when, to answer your question, we did 21 eyes with great surgical results, great anatomical results in terms of getting the cells where they needed to be, but no signal so they stopped the trial. No visual signal, no geographic atrophy signal, and this data is leaps and bounds better than that was. In terms of other cell lines, even if I had knowledge, which I don't, because I probably wouldn't be at liberty to share that until it's been published.

No, it's just there is lots of published data, actually. And so it would be interesting to do a more apples-to-apples comparison to understand. I never -- first of all, this data does appear very impressive, and it certainly justifies moving forward. But I also felt that some of the data that the 2 other cell therapy companies had moved forward had published in terms of early patient numbers and Phase I results also look compelling, but yet both of those companies haven't moved their programs forward, maybe for other reasons, not related to the data itself. So that's why it would be so interesting to understand the differences. With that said, let me ask one more question, which is in your practice, the practicality, when we look at the market size, it's very, very large. Is this a practical therapy that can be available on a volume basis and how would the volumes of patients be handled?

So there would be centers -- great question. There would be centers of excellence that do a lot of these. It takes me about 15, 20 minutes to do one of these procedures. And so it's probably not quite as quick as doing cataract surgery. So cataract surgery are maybe 10, 15 minutes for a cataract surgery. But if you think about the fact that we do 2.8 million cataract surgeries every year in the United States, I think it is completely reasonable and feasible to be able to scale this therapy up in terms of utilizing existing surgeons, existing surgical skill sets and existing surgical suites that already exist in the United States, to the tune of doing 7 figures numbers of procedures annually in order to treat this condition. I know that if we had to, Cincinnati Eye Institute, where we do about 20,000 incisional surgeries every year. If that went up to 30,000, yes, we've got room to do that, or even 40,000, we could do that. And we could scale as needed. I don't even think we would need construction. Maybe we -- instead of going home at 4, you run a second shift and you go home at 7 and have different people. Instead of a 2 half-day model, morning and afternoon, you have a 3 half-day model in the operating room. I don't think that would be difficult to handle or to manage at all.

You may need to buy some chairs for the -- new chairs for the waiting room. Jason, I would like to add something on your -- the first question. I think that some of the stem cell -- some of the companies are out there that are using cells to treat dry-AMD. Some of them reside in the category that I would call stem cell, where you put the cells somewhere in the body and look for trophic factors, creating a positive environment could be anti-inflammatory or some other benefit. I would say second category would be actually manufacturing and deploying retina cells rather than stem cells. And there, you're thinking more about trying to regenerate lost tissue or recover lost tissue or provide functionality that's missing. And I actually went through the exercise of overlaying our data with the Phase I data from Ocata that had a similar approach. And of course, you'll remember that they were acquired for about $380 million, which is 3x our valuation at today.

Right. I still...

Yes, that's correct. And I think you're correct. It's not clear. It's not known to me why that program didn't advance. But to the extent that it may have been manufacturing, we think that, that is...

Well, you hit the nail on the head, right? You're hitting the nail on the head, which is that program looked pretty good in Phase I and the original StemCells, Inc. program, which were manipulated cells looked pretty good. But of course, they're all different. They're different flavors. But what is exciting is to see both good data here and the practicality that it fits within the current treatment paradigm so that the system can handle it. And I think those 2 things add up to something that could be very exciting.

Great. Thank you, Jason.

Our next question or comment comes from the line of Joe Pantginis from H.C. Wainwright.

I wanted to ask a broader question first. When you look beyond the centers of excellence that you referenced moving forward, so if OpRegen is commercialized, would you view as the biggest hurdles or learning curves in order to be adopted for broader use?

Excellent question. So I'm making some broad assumptions here. In terms of centers of excellence, it's the old 80-20 rule. 80% of the business is going to be done by 20% of the doctors. And in terms of -- if you look at the 80-20 rule as a function of centers, more of that kind of right-hand side of the bell curve doc, those kind of cluster together in centers, 90% of the business is done by 10% of the centers, which is kind of interesting. It's like a pooling of the 80-20 rule. So the biggest barrier to entry, and this has already been solved, it would be training people how to use the Orbit Subretinal Delivery System. So -- and I'm making the assumption that we'd be using the Orbit Subretinal Delivery System. And that this is going to be the preferred way going forward. And we -- I don't think we've established that yet, not with just 2 patients. But if -- but assuming that we're using the Orbit Subretinal Delivery System, it's training people how to do the surgery. That training system is -- has already been robustly put in place. It was developed for the PRELUDE trial by the folks at Janssen. And all of that IP and all of that is now available to be used with other partners, which obviously Lineage is a partner with Gyroscope, who owns that company -- who owns that -- owns all the rights to that. And so I think it's training people how to do it. I've run those trainings. I've been in those trainings as a trainee. I've been a trainer. I helped to develop them. It's about a day, maybe 1.5 days of going through it, of going through these training modules, understanding the steps of the surgery then practicing it on a plastic eye. And we used to do live animal practice on pig eyes, and we shifted to cadaver pig eyes, and we're really moving in the direction of just doing modelized, because it's actually more representative of what the real-life human experience is like. But the fundamental surgical skill sets, that the surgical -- necessary to perform this procedure are well within the very center of the envelope of any competent retinal surgeon. Anyone can learn how to do this. Certainly -- and the right-hand side of the bell curve in terms of surgical aptitude, 50% of all doctors are below average. That means 50% of all doctors are above average. The right-hand side of the bell curve should have no difficulty learning how to do this at all.

That's very helpful. And then so more specifically about the study and looking forward to more advanced studies. Hopefully, when you look at Cohort 4 and you look at the vision of the patients that are coming in, in the geographic atrophy, how comfortable are you with regard to these patient demographics to move forward with? Or would you like to see more defined populations per se?

So that's an interesting almost philosophical question. I'm really excited about getting patients with better vision into this trial. Geographic atrophy, if you look at the OCT use of how geographic atrophy develops, once there's massive atrophy everywhere in the photoreceptor outer segment and the ellipsoid zone are gone on the OCT and the photoreceptor outer segments are all fried, and these maculas are fried, there's really very little to be gained. My -- again, and this is just a guess. My guess is that when we see geographic atrophy start to progress relatively close to the macula, I think that 5 years from now, when the stuff is all FDA approved, I'm guessing, obviously, or 10 years from now or whenever it comes to pass, I think that we're going to be looking at visual cutoffs in the -- we'll be operating 20/25, 20/30, 20/40 eyes without hesitation. Did that answer your question?

It does.

Our next question or comment comes from the line of Keay Nakae from Chardan.

A couple of questions. The first one, the visual acuity of patient 4, is that just a -- where it peaks and then drops off, is that just 1 measurement accounting for that decline? Or is that a trend based on a couple of measurements? And then how would you explain that rapid drop off if it's just a trend?

You're talking about patient number 16, the fourth OpRegen patient, the fourth Cohort 4 patient?

Yes. The first Orbit patient. Yes.

Yes. I don't have any answer to that. I think when we get the data points at 12 and 15 months, we'll be able to say a lot more. The visual acuity in old patients, it's an art, okay? And it sounds almost silly to say this, but if -- and when we check ETDRS -- vision on the ETDRS chart, so much of it -- there's psychology involved. And if on 1 day, you have -- it's supposed to be standardized and it is standardized, and it is much better than checking regular smell and visual acuity, the way we do every day in the clinic. It's a much more involved detailed process. But again, a little bit of arthritis or if the visual acuity, the certified visual acuity tech is per key member of the charismatic member of the opposite gender that engages and gets people to pay attention. And all of a sudden, patients see better. And if it's somebody who's got -- if the visual acuity tech is maybe the same gender and has a more flat effect, there are all sorts of factors. I don't place too much significance in that drop because it's just 1 data point.

Okay. And then going to the second Orbit patient. Visual acuity improvement but not the same degree as the first, any meaningful differences in the baseline characteristics of those 2 patients?

Off the top of my head, I don't know. Gary, do you have an answer to that?

Yes. So the first one was a female patient and the second was a male patient in their late to mid-70s. The first one was around 22/50 coming in, and the second was around 20/125. So within the range that we intended to enroll. No other discernible difference other than different surgeon, was the -- one that administered the cells. So again, we just think that we seem to play out a longer period of time to see how it goes.

Okay. Great. And then just 2 more questions. The first, when do you think we'll see the next set of data for the next group of patients to be enrolled and treated?

Okay, that's really a question for me. The next patient that I'm hopeful that we're going to treat would be at Dr. Riemann's site and hopefully, that won't be too long, but he can do a much better job of answering his time line than I can for him.

Yes. So that's -- this is a patient that we'd gotten approved and had even, I think, tentatively set up a date to operate them in early April. Obviously, that got killed by the whole coronavirus thing. Here in Ohio, we are ramping up to 85% of clinic and OR. So last -- so we were emergencies only, which means all the cataract surgeons were staying home. The retinal surgeons, a lot of the stuff we deal with is emergencies, and we were running at about 25% to 40% census in the operating room, and we weren't doing any clinical trial stuff at all, because that's -- none of that stuff is emergent. We started opening up and we're getting our processes down with social distancing and so on and so forth. My typical day would be somewhere between 60 and 70 patients, including a handful of clinical trial patients. And last week, I was running at about 50% census. Today, I saw 44 patients and I think I've got 50 on the schedule for Wednesday. I have a full surgical day tomorrow. I anticipate that within the next week or 2, we will have worked the king set of our processes, because when you run a clinic that's really high volume, usually our waiting rooms are packed, and you just can't have that in the age of social distancing. So we've got people getting -- issuing them pagers and for the ones that don't have cellphones or waiting out in the parking lot in their cars, and that I think we're doing well. I anticipate that within a week or 2, we're going to be reaching out, running another set of labs and getting this patient back on the schedule relatively soon.

Okay. Great. And then just final question. Final question. In the next study, how comfortable do you think the FDA is in allowing the contralateral eye to be -- to control or would you anticipate they would want you to have a different patient set at the cohort -- as a control, I'm sorry? And if that were the case, how much more difficult is a trial like that to conduct?

I think that a randomized prospective placebo-controlled trial is certainly in the cards. I think it could be done. I -- and there is advantages and disadvantages to doing it that -- I don't really have the regulatory background and experience to be able to answer your question. Beyond the fact that, yes, you could do it either way. I think that either way, there's going to be enough signal to potentially get to a point of approvability. So it doesn't matter. We'll be able to do it cheaper if we can use contralateral eye. Brian, do you have -- Brian or Gary, do you have a thought on that?

Yes. So certainly, a sham-treated or sham-injected, have been part of the stage of going to pivotal in the dry-AMD state to date. And this is something we would have discussions that link with the agency. The possibility would be if an individual was enrolled into the sham-treated with the ability -- have the ability to cross over to treated after a period of time, and that's what we would probably try to explore.

I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Culley and management for any closing remarks.

Thank you all. I hope you enjoyed the presentation. I appreciate Dr. Riemann's time. And if anyone has follow-up questions for either management or Dr. Riemann, and we'll try and get you a transcript of the call if available and so forth. So thanks, everyone. Have a great evening, and thanks for your support of Lineage Cell Therapeutics.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day. Stay safe.