Welcome to the Lineage Cell Therapeutics First Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. An audio webcast of this call is available on the Investors section of Lineage website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. And recordings, reproduction, or transmission of this call without the express written consent of Lineage are strictly prohibited. As a reminder, today's call is being recorded.I would now like to hand the call to your host today, Ms. Ioana Hone, Director of Investor Relations at Lineage. Ms. Hone, please go ahead.

Thank you, Nita. Good afternoon and thank you for joining us. A press release reporting our first quarter 2020 financial results was issued earlier today, May 7th, 2020 and can be found on the investors section of our website.Please note that today's conference call and webcast will contain forward-looking statements within the meaning of federal securities laws, including statements regarding our strategy, goals, product candidates, clinical trials, financings and cost savings matters. Such statements are subject to significant risks and uncertainties including those described in our press release issued on May 7th, 2020 and our recent filed Form 10-K and 10-Q.Actual results or performance may differ materially from the expectations indicated by our forward-looking statements due to those risks and uncertainties. We caution you not to place undue reliance on any of the forward-looking statements which speak only as of today.Joining us today are our Chief Executive Officer, Brian Culley; our Chief Financial Officer, Brandi Roberts; and Senior Vice President of Clinical and Medical Affairs, Gary Hogge. The executives will provide prepared remarks and then take questions from analysts.With that, I'd like to turn the call over to Brian Culley, our CEO.

Thank you, Ioana. Good afternoon everyone. We appreciate you joining us on the call today. In addition to our financials, we're going to address each of the three announcements that we made this week. It's obviously been a very busy time for us. Really proud, the team's been able to maintain a high rate of progress, even with the current restrictions related to the COVID-19 pandemic.Just before we dive in, I want to say that we're not aware of any cases of COVID-19 among our staff or our critical consultants, and we will continue to follow appropriate measures to maintain the team's safety and performance.So on today's call, we're going to cover four main topics. First, I will review the new data we announced from the OpRegen clinical trial, that's our lead program for Dry AMD.Second, I'll explain why we conducted an early exercise of the VAC option with Cancer Research U.K., which will make our immune oncology efforts significantly more prominent going forward.Third, I will talk about our plans to apply the VAC platform toward developing a vaccine for COVID-19. And fourth, and finally, I'll provide an update on progress we've made recently with OPC1, our cell therapy to address spinal cord injuries. And then after those program updates, Brandy will review our financials and we'll open the line up for questions.Starting with OpRegen, this is again our product candidate for Dry AMD with GA, for which there are millions of sufferers, but no FDA-approved therapies. We believe the commercial opportunity for OpRegen is incredibly attractive with only a modest number of competitors. The OpRegen therefore, continues to be our most important asset and we were please to present new clinical data at the Virtual ARVO Meeting this past Wednesday.The presentation was given by Dr. Christopher Riemann, Vitreoretinal Surgeon…

Thank you, Brian. I'd like to start with some highlights of our balance sheet accounts. As of March 31, 2020, we had $25.8 million in cash, cash equivalents and marketable securities. Additionally, the value of our note receivable due from Juvenescence since it was $24 million as of this date.During the first quarter of 2020, we sold 2.4 million shares of OncoCyte stock for net proceeds of $5 million. In April 2020 we sold another 1.6 million shares of OncoCyte stock for net proceeds of $3.7 million. After this sale, we still have about 4.3 million shares of OncoCyte stock on our books. The value of this stock as of May 5 was approximately $11.3 million. Our ownership in OncoCyte is now at about 6.3%.Cash management is an important priority at Lineage. Throughout 2019 and continuing into 2020, we have worked to reduce our operating expenses considerably, while also advancing our programs in an efficient manner. We regularly re-forecast our anticipated expenses to ensure that we are staying the course. We also carefully evaluate our assets on a regular basis to determine how best to fund our operations.We are excited about the future of lineage and the positive changes we announced this week. It's unfortunate that the COVID-19 pandemic has delayed our origin timeline somewhat. But we've fortunately been able to fund our operations without conducting a sale of Lineage stock.Instead, we have funded our operations by selling additional portions of our OncoCyte, AgeX and Hadasit positions. We also continue to evaluate other non-dilutive options for funding, such as the CIRM grant request we submitted earlier this week.Now let's turn to the statement of operations for the first quarter of 2020. Total revenues for the first quarter were $500,000, a decrease of $400,000 as compared to the same period last…

Thanks, Brandi. Our focus this year is really to advance each of our clinical programs, obviously with an emphasis on completing enrollment in the OpRegen study as quickly as safety permits. We also expect 2020 to feature substantial partnering activity, in part because we have now expanded our pipeline of assets and in part because we're making greater efforts and before to identify and obtain support for our assets, both in the form of direct financial and/or operational support, as well as through strategic partnering, which can help us access new capabilities.So we're excited about the new opportunities that we're evaluating with our VAC platform for oncology and infectious diseases, and look forward to sharing more on those and other initiatives in the coming weeks and months.So, thank you for joining us today. And operator, The Lineage team will be ready for analyst questions.

Thank you. [Operator Instructions] And your first question comes from online of Jason McCarthy with Maxim Group.

I’ll jump right into the obvious. It's really nice first of all to see the cell therapy space, your peers are on the therapeutic side in COVID. Now you're moving on to the vaccine side for COVID. So there's a nice bright light shining on cell therapy for, I think, for the first time in a long time.So can you help us understand a little bit more about how a dendritic cell based vaccine approach positions itself in this vaccine race, if you would, there's 120 vaccines -- was actually 123 vaccines, you'll be 124 in development, and we all know that the mRNAs are out in front for a lot of reasons from speed to geopolitical reasons mainly because they're scalable. How does a dendritic cell based vaccines fit into this paradigm this race for an effective vaccines the coronavirus?

Hey, Dr. McCarthy, terrific question. One of the interesting things about cell therapy is that it really has some areas where other approaches don't always fit quite as well. So one example of that is that I like talking about on the dry AMD side that we have not -- we as an industry have not been successful at identifying dry AMD, small molecules, pretreatment or antibodies, because we don't really know what's wrong, whereas replacing the whole cell is kind of a nice solution. And so that's one example.And I think another example is in the vaccine measles. So when I looked even just this morning, I don't recall if it was a major publication or a cell publication, but a publication came out sort of categorizing all of the different vaccine approaches. And what I look -- when I look at that, I'm so pleased that we don't look like the majority of the approaches that are in there, because at our size and scale, we're not going to directly compete with Moderna. We're not going to directly compete with a company that is looking to use full length attenuated vaccine as a therapeutic.What we have done is, we've looked at the emerging biology and I really have to emphasize emerging, because a lot of what is being known about SARS-CoV-2 is to be determined.But when we look at the data that's been come out, whether it's been coming out, it's clear that this virus has certain immune evasion strategies, which -- among which includes impairing immune cells like T cells and dendritic cells, and dendritic cells; they're the sentinels of the immune system, right? Their job is to present these antigens and to prime the adaptive B and T cell responses.So, if you have a virus that…

It does. And just a quick follow up to that. Obviously, there's a lot of enthusiasm and momentum around the mRNA vaccines and it's not just Moderna, the other one, BioNTech, but the sense that I get and I could say this, just as analysis that it just feels like yes, because it's scalable because it's safe. And yes, they've rushed it into Phase 2 there is almost a guarantee in some ways that this Moderna vaccine is going to find emergencies use authorization somewhere before we get to the end of the year, you know, whether -- whatever side somebody falls on good or bad, like it or not. How does that change the development landscape for others? That are coming up from behind it kind of lower the barriers and kind of open the doors, for you to kind of accelerate your program?

Yes, it's simultaneously beneficial and horrifying. And the reason why I say that is--

Yes.

It's beneficial, were able to see things like data collection and enrollment and reporting. I mean, publications are going out without peer review. And, and in some ways, that is incredible. It shows you the potential of what happens when, when a community really focuses on an objective.So, I think it's amazing and it's, I mean, it's literally lifesaving, that we are knocking down some of the traditional obstacle that slow things down. But it's horrifying because you end up making highly concentrated bets. And there's the old, you know, saying about, you know, you can be faster, you can be good or you can, you know, you can't be both that sort of thing. And I think that's with tremendous respect for what Moderna is doing.There is a massive bet, being placed on that approach, and the funding is going there and patients are going there. And, and if it's unsafe, or if it's not all it's cracked up to be. Have we impaired all of the other programs? It's really it's really unsettling. A benefit for Lineage in our situation is that we are going to first work on the process development if we're going to be able to treat huge numbers of people if we're going to be going into thousand liter bio reactors to growing these cells.We need to get the fundamental attributes of the product right from the outset and it's beneficial for us that that kind of work to build the scale of the DCS is going to be applicable to any infectious disease program, or any oncology program that we dream up.And you could literally come up with billions of different antigens that one could imagine presenting, that in itself is going to be a really fun and interesting project. But my point is that the work that we're doing is so applicable to each of these programs, that even if you see a different SARS virus, or you see a mutation of the existing virus, or we have a totally new class of virus, we want to create a platform where you can just drop in the kinds of antigen presentation, and you're dropping it into a delivery vehicle that you're already testing you're already happy with.It could be a solution for 10, 20, 50 years' worth of vaccine development if we get all the right pieces in place in the right way from the outset. So we're definitely in it for the long road, long road, meaning individual treatment, individual multi-year protection, also on a societal level, all of the multiple, you know, unknowable infections that come. And then we're going to double dip because we're also doing the same work for the aiming oncology platform.

Thank you, Brian.

You bet. Thank you.

Your next question comes from no line of Jason Kolbert with Dawson James Security.

Hi, this is actually Tucker on behalf of Jason. And my question is that we understand option as our focus. And would you be able to just take some time and walk us through the next couple of data points and catalysts, as we see them coming to fruition in the next few weeks and months?

Yes, of course, I think the things to look forward to from the OpRegen study is news from the companies that we have been able to enroll again. And I think I made some comments earlier on the call that we maybe as few as just a few weeks away from being able to do that we have a patient identified, we just are waiting for the site to be able to be unrestricted. And that's totally out of our control.Obviously, that has to do with a lot of factors like whether or not there's a second wave, this sort of stuff and everyone monitors that. So, the first sign that we are enrolling again, I think it's going to be a real encouraging positive sign. We only have four subjects left in the orbit portion.So our agreement with Gyroscope now for the orbit device is for six subjects. The first two have been treated. They actually have quite a large amount of follow-up at this point. And we've been really happy with the performance of the surgery. The surgery is adaptable to different individuals, and for patients is a fairly small number.So, if we get some relief from enrollment restrictions, I do not think it's going to take very long at all before we will have completed that cohort. And then, with the evidence that our thought and inject formulation are off the shelf dawn and jack formulation, plus the handful of more orbit experiences, because two are great, but you'd rather see sick.When we have those in hand, then I think it's pencils down, I don't see a strong reason to continue the study. I think we take those patient data and prior patient data, and we can take that to the agency and in talking about designs, and we can take those two partners and say, look, here's the data set as we see it. And, and so as has been for the last year and a half since I joined the company, it has been all about collecting enough individual data points, that there's a picture there that you can see. I believe with confidence that there is a treatment effect.So, I don't think we're far from saying that, I think internally we already feel that way very strongly. But we do want to get external enthusiasm for that. So just a few more patients for specifically in this cohort, and then I think we will, we will look to conclude the Phase 1/2a study, do some follow-up some safety follow-up and take that data, the FDA and partners as I just described.

All right. Great. Thank you so much.

Thank you, Tucker.

And your final question comes from the line of Joe Pantginis with H.C. Wainwright.

Hey, everyone, good afternoon. Thanks for taking the question. And I'm really glad you're all doing well. Brian, I want to focus on that too. And the CR U.K. study. So I know obviously, you said you'll get more information when you bring it in house. But I wanted to focus maybe on some of the nuances of the trial conduct to date that you can share, hopefully, so it's sort of a multi part.So I'll just split it up in maybe two parts, if you don't mind. So, first, I was curious if the study had enrolled all 12 patients and of those 12. If I looked at the study design, do you know the balance between advanced patients versus adjuvant patients?

So, Joe, hi thanks for the question. Enrollment is at six currently. And CR U.K. is going to go to eight. I don't, offhand, I pretty sure the majority were advanced, but, I'm going to need to follow up on that. The reason for that absence of specific knowledge is that our greatest level of interest from the VAC2 clinical study was seeing evidence of immunogenicity that was specific to our antigen.We put in this little booger, do we see a response to VAC and clinical responses from just four, six or eight patients, although potentially exciting as standalone evidence, they weren't really the focus of this study. It's extensively -- it's a safety study, we want to show that this treatment is well tolerated. But really what we're trying to do is demonstrate proof of the mechanism that we put in that fragment; we see a specific response to that fragment.So that that was apparent to us through multiple assays as pentamer staining and Eli spot and things like this, T cell activation exhausts Nastase, and just making sure that that all coincided with the timing of the vaccination. And we thought that that was highly biologically relevant. So, that's not to say that we will not report on clinical outcomes. We will, those obviously, are lagging because it takes longer and patience when you're looking at overall survival, even though that these are largely advanced cancer patients.But for us, our focus was really on the immunogenicity samples and demonstrating that we were able to trigger and drive really an education of the T cells and measure that in multiple ways.

Got it. Got it. And so, the part two of my question, then I'm going to steal a phrase you just used for OpRegen. When you do bring it in house, is it pencils down? Or is this study going to be continued or are you going to continue enrollment under Lineage? Or are you going to then define the next steps and move on to a different study potentially different indication?

It could even be seen, both, so the nice thing is that CR U.K. has agreed that they will continue to monitor the existing patients and enroll a couple of more. So, the study will be open and going for a number of months. I mean, certainly more than a year. It would be at our discretion whether we would either invite them to enroll additional patients or not? We could have that conversation. I think that would be to be determined.There would need to be, of course, a good rationale. I don't think that, as I explained in the body of the call, I don't think that doing that for the purpose of seeing additional immunogenicity is going to tell us anything more. We already saw that. We're confident in it. I don't think that's a good use of our money.Doing that to try to get some clinical responses, again, we're talking about very small numbers of patients. So I'm not so sure, I think what I would prefer to do would be to move back to into an area that we're really excited about, which is in combination with checkpoint inhibitors, because biologically being able to simultaneously take the brakes off of the immune system, which is what checkpoint inhibitors are kind of doing a colloquial way, and then simultaneously hitting the accelerator, which is what our technology does by directly educating the T cells what to attack, we think that combination is going to be really powerful.So the study that that CR U.K. has done is fine. But I think what it's really telling us is that we've got into this city, it's well tolerated. Now let's go into the optimal or more optimal settings, in combination with checkpoint inhibitors. Let's bring every indication back onto the table. Let's look at bladder, let's look at CLL. Let's look at everything and find the best places where a small company can really win. Maybe we drive it toward a partnership; maybe we drive it into a niche indication. So everything will be on the table as we bring in that data. But specifically for the VAC2 study, it was really all around the immunogenicity signal. And once we got that first report, it was champagne. It was it was a great day.

I really appreciate that extra data. And then with regard to -- the question is still for VAC2, but I do appreciate all the extra comments you gave around OPC, on process development. So with that in mind, maybe can you just maybe list out the top two or three factors that you want to address with regard to VAC process development?

Yes, so I mean, there's some really nice things that CR U.K. did. They've got this business unit dedicated to cell therapy. They might have some Carty in there. I'm not I'm not sure about all of their programs, but the directed differentiation, right, directing the Lineage of cells, that methodology is pretty well established. We'll Of course, investigate it and look to tweak it, but the directed differentiation is pretty good. The analytical steps are pretty good.The things that we will want to do would be to establish an intermediate cell bank, so that we can kind of stop and start in different places as we look to introduce some of the improvements, growth in large suspension volumes with or without micro carriers. It's so important, especially with the DC approach, because we're talking about large numbers of cells, much larger numbers than we use in dry AMD where there is only 100,000 cells are administered. We need to be able to have really high volume.And this is something I've been talking about since I got here is that the winners and losers in cell therapy, I think are going to be just inevitably, inextricably linked to your ability to manufacture the same thing over and over in huge numbers. So, a lot of our folks, I can't say all of it, but a lot of our focus is going to be process development that leads to high scale production first, high enough to enable larger clinical studies, and then going from there into late stage clinical studies, then ultimately, obviously, you've got to be able to remove any obstacles to commercialization. The great thing is that we've had a lot of success with the retina program doing that for DRI MD.We're in the middle of that right now with the oligodendrocytes. We're going to be able to hit the ground running with VAC2 to and so this all keeps coming back to this notion that we have the center of excellence in cell manufacturing. And so, getting these programs in getting them to our GMP facility, and letting the folks who are the experts and figuring out how the heck you can you can grow these cells without them, derailing halfway through a differentiation is really the key here. And that's really how we're trying to add value to the program.

Got it. Brian, thank you so much. And I hope you all get to get some rest coming into the weekend ahead of what was a very productive and busy week. Thanks a lot.

You bet. Thank you.

At this time, there are no further questions. I would like to hand the call back over to Brian Culley for his final remarks.

All right. Well, thanks, everyone. I really appreciate you joining us this afternoon. You can tell I'm excited about our plans, I think we have a lot to look forward to. As always, I really appreciate our shareholder support. And we'll continue to do our best to position Lineage to be a leader in cell therapy and transplant medicine as we demonstrate what our assets and operation in particular can do for DRI MD. Thanks very much and we'll be in touch

And this does conclude today's conference call. Thank you for your participation. You may now disconnect.