Lineage Cell Therapeutics, Inc. ($LCTX)

Welcome to the Lineage Cell Therapeutics First Quarter 2026 Conference Call. [Operator Instructions] An audio webcast of this call is available on the Investors section of Lineage website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage, and recordings, reproductions or transmissions of this call without the 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, May 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 section in today's press release and in the company's SEC filings, including its most recent annual report on Form 10-K 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 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'm going to try and keep it short so that we can have plenty of time for analyst questions. I do definitely 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 attracting and recognized and established cell therapy executive as its founding member. But before I share those and other updates, I'll begin with the status of our lead clinical program, OpRegen. Data we reported several years ago from the OpRegen Phase I/IIa 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're not known to occur naturally in human beings. And since we made these initial reports, 2 additional and very important advancements have occurred in the field. The first of these is that 3 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. And the second is that Roche and Genentech's long-term analysis of our data showed that vision gains persisted for at least 3 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. And while we await a decision on the future of the OpRegen program, I'll note that while we've 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. Obviously, even discussing disease modification and 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. So 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've 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 partners' commitment to the program. And we believe that the work that 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 appeared to us to still be in the 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 multibillion-dollar and still underserved GA market. And 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, which should explain why we are eager to try and apply these learnings to other cell types. Now because 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. And that is because in cell therapy, the process is the product. Even seemingly insignificant changes to a process can impact your product's characteristics, including its efficacy. So 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. And we believe we've made tremendous strides in this area. Our AlloSCOPE manufacturing platform utilizes a 2-tiered banking system in which a master cell bank generates a working cell bank, which generates the clinical material. The production capability underlining 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 being multiplied at each step. So if each step has 100 vials, even just 100 times 100 times 100 is a 1 million vial production capability. And this is not a prophetic claim about large-scale production. We have performed these individual steps multiple times. And 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 again and again 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 particular program can potentially be in the hundreds of dollars, which we believe offers advantages in terms of patient access and affordability. And the potential for low-cost scale is one of the reasons we're so excited about the allogeneic off-the-shelf product candidates in our pipeline. I'll now turn my focus to how we apply our manufacturing success and lessons we've 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 suffered from a spinal cord injury by delivering new and functional oligodendrocyte progenitor cells to the site of injury. OPC1 has been administered to 30 individuals in 2 Phase I/II 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've 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" formulations, which we've 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, those new cells into the ongoing DOSED trial. DOSED is 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 we would 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 5 years prior to treatment. We have treated 2 such patients to date. And because we will be collecting functional assessments 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. And 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 1-year follow-up visit, so we expect to be able to provide an update on how they're doing on our next earnings call. And while the possibility of a treatment effect in chronic patients is an exciting topic, I don't 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 also has recently been expanded to a second site, the Rancho Research Institute located in Downey, California in conjunction with the Rancho Los Amigos National Rehab 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. So it already has the features I discussed a few minutes ago. And 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 1 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. And as shared previously, 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 dealmaking, 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'm happy to share for the first time today that we have successfully completed 3 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's something we want to complete before speaking with the regulators about human testing. We've 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 2 programs, our islet cell and corneal endothelial cell initiatives. Human body is comprised of more than 200 discrete cell types. And 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 2 new initiatives: one, focused on addressing the issue of scale in type 1 diabetes; and a second one, focused on corneal endothelial disease. One of the things we like about these 2 initiatives is that clinical evidence demonstrating that a cell transplant can address the respective diseases already exists. So 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. And 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 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. And I hope it isn't missed that 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 1 in 70 patients, highlighting the unmet need. The COR1 program aims to solve this limitation because 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. And again, CEnC transplant therapy is already clinically validated with preclinical models, endpoints and clinical and regulatory precedents that are well established and ready to be copied by an innovator with a superior cell source. From a manufacturing and formulation perspective, the anticipated therapeutic dose is small, fewer than 2 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 a little more than an idea into preclinical development and was able to successfully manufacture off-the-shelf corneal endothelial cells on our AlloSCOPE platform with the identity and 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. And I hope at our next quarterly call that I'll be able to provide a timeline for initiation of a clinical trial of COR1. Moving next to type 1 diabetes. We've 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. And we believe significant value in the islet cell transplant community should accrue to whomever solves the scale problem. One reason for the supply gap is that the required dose of islet cells may be as high as 1 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. And because mature islet cells do not expand readily in culture, these optimal calculations don't even apply. Our calculations suggest that you might begin to reach commercial viability at thousands of doses per batch, implying that production will have to occur on the scale of at least an 80-liter reactor. But carrying out a differentiation process in an 80-liter vessel requires feeding that vessel with many billions of undifferentiated pluripotent cells. You can't just rely on cells to divide endlessly. They have to retain their full pluripotency, their genetic stability and do so without losing their homogeneity and synchrony. And 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. But 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, and there is no trade-off. You have to combine the best of both worlds in order 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 predifferentiated cells with reduced manipulation and passaging so that you're capturing 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 and 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 the scale-up of undifferentiated cells first because as I explained in the beginning of this call, once you've 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's appropriate to focus on the unresolved scale problem rather than performing years of expensive preclinical and clinical studies while deferring the problem 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 own proprietary cell lines. After this work was successful at a 0.5 liter scale, we then moved into a larger multiliter 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 don't 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 don't yet know what the upper limit is for our approach, but we've 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'll do our best to keep you informed on ILT1, but I can share today that we believe it's 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 Fruebis, a recognized and established biopharma executive who brings extensive experience across ophthalmology, neurology, diabetes and other areas of interest to us. Dr. Fruebis 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're 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 welcomed Dr. Priyantha Herath as our Senior Vice President and Head of Clinical. Dr. Herath is a Board-certified specialist neurologist with extensive experience spanning early translational development, regulatory affairs and clinical development through successful Phase III 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 Dr. Fruebis and Herath 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're 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 as each dollar we spend on innovation can apply across multiple programs. And 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 controlled purity and scale have somewhat common features in the way we apply them, which 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. And with that, I'll 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 Q2 of 2028. In addition to our cash on hand, we may also receive approximately $32 million from the exercise of existing warrants, maturity date of which will be accelerated if the intent to advance OpRegen into a multicenter trial, which includes the control/comparator arm is publicly disclosed. We also continue to remain eligible for a total of $615 million of developmental and commercial milestone payments under the Roche and 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 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 $0.2 million 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 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 $0.3 million for our OPC1 program, $0.2 million for our ReSonance program and approximately $0.7 million for our preclinical and other undisclosed programs. G&A expenses were approximately $5.1 million, an increase of $0.2 million as compared to $4.9 million for the same period in 2025. The net increase is 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 is 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 quarters. Net loss attributable to Lineage of $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'll now hand the call back to Brian for concluding remarks.

Thanks, Jill. I'll 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're 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 CECs (sic) [ CEnC ] to improve vision in patients with corneal endothelial disease. In other cases, the utility of replacing a cell is less established, but like OpRegen, it might reveal a remarkable new mechanism by which we can modify or even reverse the course of the disease. But 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. And then fourth, as our pipeline advances, we expect we will provide updates prior to as well as following any potential updates our partners may make on the OpRegen program. For example, we're 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. And with that, operator, we are ready to take analyst questions.

[Operator Instructions] Your first question comes from the line of Mayank Mamtani with B. Riley Securities.

Congrats on a lot of progress there. So on OpRegen, 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. And how do you think of the photoreceptor recovery and some of the stratifying bleb coverage data that you have integrated as part of the GAlette trial, some of these learnings that you're having longer term? And then I have a follow-up.

Thank you for the question, Mayank. With regard to disease modification, my comments there, because we do not have access to the data in the ongoing GAlette study, we, just 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 6 sites. We think that, that is consistent with planning for a larger campaign. My comments around disease modification are more nuanced. I'm speaking to the conclusion slide from the CTS data, which was very similar to the FFB data that came out nearly a year later. But the conclusion [ side ] at CTS, call it, 9 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. So it's small, but I highlight it because it is a change that I assume is intentional and purposeful, and I believe that it 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. And even though we do not have access to those data, I think that there is some utility in paying attention to how the partners describe the data they have. And perhaps that also partly answers your second question. The insights that we have regarding bleb coverage and photoreceptor recovery comes entirely from our own Phase I/IIa as well as data that's been presented by other companies -- it does not include any specific insights that we have on the data from the ongoing GAlette study. So we form our opinions and we share those opinions, and we try to help direct investors to things that are out there available in the public, and then they can interpret them as they wish. But we're 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 with you at this time.

That's helpful. And then on the other eye programs that you have preclinical, the corneal endothelial cell, and I think you also disclosed the new PNC1, which is -- it looks like also photoreceptor cell targeted allogeneic. Maybe just on the corneal program, what's the internal criteria you may have met here? And what's sort of the work underway preclinically and sort of what things we should be watching for as you kind of do your next steps on manufacturing and also time to IND filing? If you could maybe just clarify that. And then just on ReSonance, if you may just remind us what are any partner-related milestones now that you've run the -- you had the 3 manufacturing runs completed? And where does that $12 million over sort of 3-year period number kind of get -- start getting recognized as you get closer to IND?

Yes. Thank you so much. So I guess first on -- I'll go in reverse order here. So for ReSonance, I think 2 things are important to us. Completing the engineering runs is a gateway to doing GMP runs, which itself is a gateway to having conversation with FDA. And I know that, that is something that people are going to be really interested in knowing when would we have our first FDA interaction for this program and what might be a timeline to clinical development. A second thing for ReSonance is, there is baked into that alliance a go/no-go decisions that occurs with the advancement of the program. So if the parties are not happy with how things are going, we can elect to conclude. either party has certain rights under those decisions. So we have coming up an annual go/no-go or call it, a continuation decision. I think in certain areas, we're running ahead of schedule, and I think we're really happy. So I'm not particularly concerned, but I'm only speaking for 1/2 of the alliance. So we need to -- and we want to, and we frankly expect that we will go past an affirmative go/no-go decision based on the work that's been conducted to date. The $12 million, which is over an approximate 3-year term of the agreement is roughly 2/3 reimbursement to Lineage and maybe 1/3 to Demant entities. So these will be third-party organizations that are providing various services. Turning back to your question. Yes, hard to ignore that we have 3 ophthalmology programs, OpRegen for GA, the new one, COR1 and then the photoreceptor program. COR1, I think I covered fairly well in the script. In the photoreceptor program, we're keeping a close eye on the photoreceptor program that is under development at Bayer. We're really interested in seeing what they do. And we also unencumbered some of the economics of the photoreceptor program from a third party. We did not wish to rely on that third party's intellectual property anymore. So we abandoned that work, terminated that agreement in order to unfetter that program from those unattractive economics. I will be appropriate here to say that, that also means we cannot utilize the intellectual property that we were relying on. So it caused us to move the photoreceptor program a little bit back in time, a little bit earlier stage than where it was. But I think long term, having superior economics makes a lot of sense to us. Overall, and I think in part also addressing one of your questions, we perhaps look at value creation with these programs and cell therapy more broadly, a little bit differently than many others, especially with programs like COR1, where you know that there's a precedent. We think the value is in what we've been doing recently, which is getting a very high-quality manufacturing process that is reproducible, that is not going to need to be changed during development. And when we have that accomplished, we feel like the risk profile from there forward is very different because we believe that a lot of companies have demonstrated that you can get exciting early clinical data. But then if you can't manufacture your product or you need to change your process, the FDA may tell you that it is not the same product anymore. For example, if you change a growth factor, you change a vessel, you may be altering the output of your product because it's so sensitive to the process. It's literally defined by the process that you employ. So we think that there is a lot of value in being able to manufacture a cell that has the identity markers, the morphology, the performance attributes that define your product. And if you can make that early, especially in indications where there's already a cadaver-sourced precedent for efficacy, we think these are programs that we are launching that offer a much more attractive overall probabilities of success than the conventional development where maybe you race into the clinic and you get a headline and then everyone figures out much later that you're not able to actually manufacture your product. We do not want to get into one of those situations. And so ,the criteria that we invite people to look at as we share these data are how reproducible is your material, how scalable? Do you have narrow specifications? What is your potency assay? And I feel that these are questions that are often not asked of some of the companies that work in this space, yet they are integral to a product's survival. So I hope that is helpful for how Lineage is perhaps a little different in thinking about our business strategy, our development strategy and how we can be able to be successful against what is an increase in companies working in cell therapy, which we otherwise welcome as I think this is a really important part of medicine going forward and is going to continue to grow and attract capital.

Next question comes from the line of Jack Allen with Baird.

Congrats on all the progress. I guess, I'll start with the RPE cell space and the geographic atrophy space. I just wanted to ask Brian and the team for their thoughts on some of the competitive data. I think that Astellas and iStem presented updated data from the RPE cells. And then I also saw at ARVO, there was an update from the complement inhibitor class, IZERVAY from Astellas had some data looking at continuation of driver eligibility at 24 months versus Sham. And I just wanted to kind of hear your thoughts on the broader space there. And then I have a follow-up question as well.

I would start with Astellas. I consider their data update to be an important clearing event for Lineage. What I mean by that is that we haven't heard and we haven't known very much about what they have done. And I think it's normal that if you don't have information about a competitor, it's really easy to fill it in with scary thoughts. But then we saw the presentation, and I find myself comforted because I didn't see any information about manufacturing. I didn't see any information about delivery. I saw limited information about safety, and I saw information on 1 patient out of, I believe, 14 on anatomy. And I didn't find the information in the aggregate to be particularly worrisome or threatening. This is a program that they acquired in 2016, and it is now 2026, and the data in its totality is somewhat limited. So I feel comforted that we are and will continue to be in a leading position, and I am thankful for the investments that our partners are making in optimizing this program because the more we know about what's going on with the competition, the more opportunities we have to develop a superior product profile. And when you're talking about a surgical procedure in the eye, I would assume that even relatively modest differences in safety profiles could turn into very significant decisions as to which product someone might choose if multiple products were approved. So I think that the 4 items that I outlined in the call earlier are working together. And I hope that ultimately, those will lead to the best possible product profile and increase the probability of success of a product ultimately reaching these patients in this market. With respect to complement inhibitors, I view all of them largely the same. I think there is a treatment effect, but I think it is a very small treatment effect. And if I were in charge of a complement inhibitor, whether approved or in development, I would be working very hard to try to generate evidence that it has an effect on visual function because the data to date has suggested or been quite clear perhaps that these interventions do not have an effect on visual function. And I don't think that post-hoc analyses are going to really convince people. I'd love to see an a priori designed study with a functional endpoint that's statistically demonstrated, but I'm not sure that we're going to see that. I have not seen the 24-month driving data. I think driving is really important. And if you're increasing someone's vision, such as with an RPE transplant, you may be able to get them a driver's license back. But if you do not increase someone's vision and they've lost their license, they will never get it back. So I don't know exactly what the various complement inhibitor strategies are, but I do feel comfortable that 4 companies now have shown that an RPE transplant can increase patients' vision. So if you want to measure impact on something like driving ability, I think RPE transplants are going to get more licenses into people's hands, whereas I don't think complement inhibitors can do anything but slow the number of licenses being taken away.

Awesome. That's very helpful comment. And then just to round it out on the RPE space. I did see from someone, a picture of the Roche boost at ARVO, I believe it was. And it seems like they are flagging the OpRegen program. I wasn't sure if you had any comments there. And then my other kind of follow-up question was on the DOSED study of OPC1 and if there were any updates surrounding the CIRM grant application there as well?

Thanks, Jack, for the question. Yes, Genentech did have space at ARVO, which is one of the major ophthalmology medical meetings of the year. That floor space on the exhibit hall, to my recollection, there were 2 areas. There was an area on one side that had a mention of a number of different product candidates, and that's where OpRegen lived. There was another area that was dedicated to the science of RPE transplants. I don't think it was dedicated to OpRegen per se, but I'm not aware of any other RPE transplants in the program -- in their pipeline. So everyone can decide for themselves what it means that Genentech elected to utilize half of their booth space at ARVO in their ophthalmology section to communicating information about RPE transplants. My view of that is they're running an open-label study. We've got multiple independent examples that we can really have some positive effects in patients and that that's important to communicate to future users of this kind of technology. So I take it as an incredible positive. But others -- I don't know, I take it as a positive. Moving to DOSED and CIRM, we applied for a CIRM grant, reapplied rather for a CIRM grant. We did not receive one in the first cycle. We do not know if we will receive one in the second cycle, but we applied or reapplied rather in January. And later this summer, I believe CIRM will be getting together and having a decision. If we get the CIRM grant, that is a wonderful pickup. But as I shared after we did not receive the grant the first time, it does not have a material impact on this program. So I'm hopeful that we get it. If we do not, the program will continue, 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.

So Brian, I wanted to start with the ILT1 program. And I know the answer is probably going to be, we just need to do the experiment. But you mentioned how you really need to scale up and be confident around your scale up around the baseline pluripotent cells. Now when you look to then take those cells and differentiate them into the ILT cells, what are the risks that, if any, I mean, a, you have to go through your differentiation process and any of those processes providing any risk with regard to, say, impacting scale up once you hit the ILT portion?

Joe, it's an excellent question. And if it were easy to differentiate these cells into islets, we wouldn't -- we, the field, wouldn't have a problem with scale-up. Islet cells are unlike RPE, -- they are unlike auditory neurons. They do not like to expand in culture. So we can do a lot of expansion of our RPE after they've become RPE. They can continue to divide. Islet cells don't like to divide once they become islets. So you lose the ability to expand into greater numbers during differentiation, and again, post differentiation. So you have to focus on pre-differentiation. But there is absolutely risk at every step of the way. Everything that you might imagine as having an impact on your production is a valid risk, because cell production is so sensitive to the process. So it would be inaccurate of me to suggest that just because we could make a huge number of undifferentiated cells that I can pledge that those will easily and fully be converted into islet cells. Differentiation of pluripotent cells into specific cell types is very difficult. But -- having said all of that, we've had a lot of success, more success than most. And I said a little bit about this about talking about AlloSCOPE and what we've done in a GMP environment, getting into the clinic. So we've gotten past FDA. These are things that I think a lot of companies talk about but haven't yet successfully done. So there's a lot of talk in the field. And I think we've been able to demonstrate some very credible success. We've reduced to practice, some very difficult things. So I think that we've got confidence in the team's ability to be successful, but it simply doesn't matter. If you cannot generate enough starting material, you will never have a commercially viable product. So Step 1, I've been really clear about this once we launched the program. Step 1 is just showing that we can do a proof of concept at very small scale. Step 2 is moving up to a more moderate scale. That would be multiple leaders. That work is ongoing. And then Step 3 would be to start to work with specific lines that we already know are capable of becoming islet cells. So it's a step-wise sequential risk-reducing approach that also is maintaining our investment in the program in an appropriate way. So these all represent go/no-go decision points that we could make. So if we run into a problem and we can't get somewhere, we can elect to stop the program, and we wouldn't be stuck with all this fixed investment and all of this infrastructure. So I think we're doing it in a really smart way. We've been very committed to trying to keep our spending in the neighborhood of $30 million a year, which we've done for multiple years now. And I think that's appropriate, because we are still waiting for an update that perhaps could change our share price. And until that occurs, we want to be really prudent and thoughtful about how we deploy our capital into these new initiatives. But again, as I said, we're able to manage multiple programs in part because they do have some similarity across them. The equipment that we do this in, the facility that we do this in, the team that we rely on, there are a lot of similarities here, and that's how we're able to manage 5, 6, 7, 8 programs simultaneously.

No, that's very helpful. And you took the words out of my mouth with regard to leveraging the successes that you've had. So I appreciate the answers. And then with the ReSonance, and this is going into the scientific weeds again. ReSonance program, you did mention that you now have a novel model of deafening. So just curious any more details you could provide with this model? Are these genetically genetic-based deafness? Or is it chemically or environmentally induced deafness and why it might be relevant to the cells that you're going to be injecting?

Yes. Thank you. We wouldn't be putting cells into humans that have got fully intact cellular capability. So we need to model disease condition, which means we need to destroy or cause the existing cells to be dysfunctional. There are multiple ways of doing that. Chemical induction is pretty standard. So there are different compounds and different concentrations and different times that people can use to essentially destroy a population of auditory neurons. And then you would take that model. And of course, you would then add your test article, you would deliver the cells and see if they are able to bring some of the hearing from your original baseline down to reduced capability, see if you can bring some of that capability back. These approaches, [ then ] the literature have largely been unsuccessful, but largely been performed using various mesenchymal stem cell preparations. So I don't know if those can work even under the best conditions. But we've needed to develop our own model, because this is very innovative work, and you can't go to one of the vendors and say, I'm going to send you my cells, please use them in your very well-established and regulatory familiar animal model of deafening. Even as to your selection of species, you've got different cochlea that are different sizes and anatomical changes. And it's actually difficult to develop a model that you feel is going to give you reliable information when you introduce the test article to that model. But we think we have one now, and this has always been part of the plan. You establish a model and then you utilize your cells in the model. So we've, I guess, achieved an important, albeit relatively quiet milestone of creating a model of deafening that we can now use with our test article and see what occurs in response. And I think if we are successful in being able to affect hearing or at least minimally brain signaling from the ear in these models, I think that's an important finding and bodes well for future development and moving into human testing.

Great. Thank you, Brian.

I think, Joe, it's just a follow-up that you didn't ask for. Many years ago, I remember working at this company where we had rat data using our RPE cells. And I'm quite sure at that time, I did not think that I was going to see the kinds of treatment effects that we've seen more recently. So it sounds preliminary to be talking about animal models and having to create your own models, but time goes by and then you find yourself with a nearly $700 million partnership with big pharma. And so I'm hopeful that some of the things that we are doing in hearing loss, while they don't have a precedent per se, there was no precedent for RPE cells either.

Next question comes from the line of Sean McCutcheon with Raymond James.

A couple from us. On OPC1, can you speak to the requisite safety waiting period and challenges identifying and getting patients into the DOSED study? Maybe what are your expectations for cadence of new patients to get enrolled and treated moving forward now that the second patient has been treated? And then just secondarily on COR1, can you speak to the currently available interventions for FECD in the U.S. and the unmet need there, perhaps a sense for the low-hanging fruit for a cell therapy and key differences or limitations for the cell therapy approach relative to procedures like DMEK?

Thank you, Sean. Good questions. With respect to OPC1, we've got 2 groups of patients that are part of this device study: chronic injuries, which are from 1 to 5 years; and subacute injuries, which are from 21 to 42 days. These patient journeys are very different from not just the anatomical or procedural changes, but emotional changes and where these individuals are in their lives. And you can imagine that they also represent an incredible spectrum of perspectives as to their interest in participating in clinical trials. So for example, there are some individuals who have had chronic injuries, and for years, they have had no changes. And when they are presented with an opportunity to participate in a study like this, it sounds very exciting. There are other people who, when they find out that it involves a surgical intervention are not interested, because there is no amount of risk that they are willing to tolerate, which could change their function. And that is applicable also for a subacute patient. It's just that they are in a different situation because the injury is so new, it's just weeks old and the evaluation consideration is, I would say, even scarier because you're still sort of trying to reconcile. Between those 2 groups, I would say that chronic is generally easier to enroll because these are individuals who are in the community and they can be reached more easily, whereas a subacute injury unfortunately requires a tragic incident to occur, and that incident has to happen near one of our sites, and then they have to qualify as well. So it's always been very difficult to find subacute patients. And I assume that we will find our chronic patients before we find our subacute patients. It is helpful that we've opened a second site. And I think as we go forward and learn more, there can be additional sites that we can bring on and have a wider net. But it does not surprise me at all that the first 2 patients were chronic for the reasons that I shared. To try to address your second question around COR1, DMEK is utilizing cadaver sources of cells. So there are sort of multiple ways that you might envision the competitive landscape. One is we look at cadaver-sourced cells as being variable. You don't know who was in that car accident or whatever happened and they have an eyeball available. And so you've got a variability concern, and you also have a temporal concern. You have to move quickly to acquire that donor material, prepare it, deliver it to a site. And so we don't -- and there's not enough supply. So we think that cadaver sources are not particularly useful. But there are some very interesting companies in the space, Aurion, Emmecell, Cellusion, these are 3 of them that we remain mindful of. Aurion is actually not even Aurion anymore. It's Alcon. Alcon acquired Aurion and they have an ongoing Phase III using cadaver cells. They just harvest the cadaver cells and then they passage them a number of times in order to increase the amount of supply. And while I don't know if the number was made public, our understanding is that it was quite an interesting acquisition for that company. So that's only a partial solution. I think if we are able to generate in the best case, an off-the-shelf low cost of production, cryopreserved formulation, we could essentially stockpile identical material that could be used for these procedures by schedule rather than being beholden to the unfortunate donor supply. So it's quite exciting as a product profile. It is early. We are just now making these cells. But again, I really can't emphasize enough that perhaps value should be ascribed to companies when they are manufacturing the cells because we already know that these cells have been shown in others' hands to be successful, not just through preclinical testing, clinical testing, but even in commercial setting. And there's an approved product in Japan using cadaver-sourced cells. So it's very exciting to know, and I put know in quotation marks for all the risks that obviously are inherent in product development. But we don't have mechanistic questions about whether CEnCs can improve vision in corneal endothelial diseases. That question has already been answered. And that is such a completely different risk profile than many years ago when I worked at a company like Neurocrine Biosciences, and we'd have an early-stage small molecule that hit a target really nicely, but you have absolutely no idea if it's going to be successful in preclinical testing, let alone clinical testing. So it's one of the reasons that I love this area of medicine so much is that you have the opportunity to create so many changes and use precedent from other sources, but still provide an important and valuable solution by having an off-the-shelf alternative to donor cell material that is used in indications like endothelial diseases or type 1 diabetes.

There are no further questions at this time. I will now turn the call back over to Brian Culley for any closing comments.

Yes. 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.