Welcome to the Lineage Cell Therapeutics Second 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 Web site 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 introduce your host for today's conference, Ioana Hone, Director of Investor Relations at Lineage. Ms. Hone, please go ahead.

Thank you, Tino. Good afternoon and thank you for joining us. A press release reporting our second quarter 2020 financial results was issued earlier today, August 6, 2020, and can be found on the Investors section of our Web Site. 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 August 6, 2020 and our most recent Form 10-K and 10-Q filings. 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 our 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, and good afternoon everyone, we appreciate you joining us on our quarterly call today. This past quarter was extremely productive for the company and on today's call, I'm going to review the most important milestones we reached with each of our three clinical stage cell therapy programs. After I provide these program updates, Brandi will review our financials. Then we'll summarize some upcoming events which shareholders can look forward to, and then we'll open up the line for our analyst questions. I'm going to start with OpRegen our product candidate to treat Dry AMD with geographic atrophy. Dry AMD with GA is one of the leading causes of vision loss in the world and we estimate there between 1 million and 2 million people in the U.S. suffering from the advanced form of the condition, which is the initial form, we hope to treat. The disease is caused by the slow progressive loss of specialized retinal cells. And our approach to treating Dry AMD is to grow and transplant brand new retina cells to replace the ones which are dysfunctional dying or have already died off. This program is currently enrolling patients in a Phase I/IIa clinical trial at five active centers. Because there are no FDA approved therapies to treat Dry AMD, we believe the commercial opportunity for a new treatment is incredibly attractive. And we recently announced a discovery which we believe distinguishes our program substantially from the competition and positions us as the most promising Dry AMD therapeutic currently in development. I make this strong statement because in June, we been reported evidence of what is potentially the first known reported finding of retinal tissue restoration in a patient receiving a transplant of RPE cells. This finding is unprecedented because humans lack the ability…

Thank you, Brian. I'll start off with a statement of operations for the second quarter of 2020. Total revenues for the second quarter of 2020 were $400,000, a decrease of $400,000 as compared to $800,000, for the same period last year. As discussed on prior calls, we expect our revenues to be lower than historical levels as they are now generated primarily from our IAA OpRegen-related grant and royalties from the licenses of patents. Operating expenses are comprised of research and development expenses and general and administrative expenses. Total operating expenses for the second quarter of 2020 were approximately $6.7 million, a decrease of $4.8 million as compared to $11.5 million for the same period in 2019. R&D expenses for the second quarter of 2020 were $2.8 million, a decrease of $2.4 million as compared to $5.2 million for the same period last year. The overall reduction was primarily related to a decrease of $1.7 million in OpRegen, and other ophthalmic application expenses, which was primarily related to a reduced level of manufacturing activity in the second quarter of this year, as compared to the same period last year. Additionally, there was a $700,000 reduction in OPC1 expenses, primarily related to a decrease in development activities in 2020, as compared to 2019, when technology transfer was a heavy focus with OPC1 coming in-house with the Asterias acquisition. G&A expenses for the second quarter of 2020 were $3.9 million, a decrease of $2.4 million as compared to $6.3 million for the same period last year. The decrease was primarily attributable to the following reductions; $1.6 million in Asterias-related expenses, $200,000 in each of these expenses, compensation, accounting and investor and public relations and $100,000 in these expenses, travel, rent and consulting. These decreases were offset by a $200,000 increase related to…

Thanks, Brandi. So moving next to things to look forward to in the remainder of this year, our goal as always will be to continue advancing our clinical programs, but specifically, there are five things we plan to emphasize, which include two data updates. So first, we will meet this month with BARDA to discuss our proposal for non-dilutive funding for coronavirus vaccine candidate. We secondly plan to report initial VAC2 clinical data from patients treated in the ongoing Phase I trial run by Cancer Research U.K.; we expect to complete patients enrollment in the U.S., with the gyroscope orbit SDS and our new thaw-and-inject formulation in the ongoing Phase I/IIa clinical trial of OpRegen for the treatment of Dry AMD with GA. We plan to present new and accumulated OpRegen at the AAO annual meeting the second week of November. And we expect to meet with the U.S. FDA to discuss the further development of the OPC1 program now that we have advanced the manufacturing to a much more mature status. You'll also see us participating more at various events as we increase our engagement with the investment medical communities through virtual participation of medical and healthcare conferences, as well as participating in things like podcasts, interviews and similar communication channels so that we can be sure to reach a broad audience with our progress and achievements. So with that, I again would like to thank you for joining us on the call today. And operator, the team here is ready for any analyst questions.

[Operator Instructions] We do have a question on the queue from Joe Pantginis from H.C. Wainwright. You are now live.

Couple of questions, if you don't mind, Brian. First, real nice to hear about the VAC update with regard to your upcoming BARDA meeting. And I guess during your prepared comments, you just touched upon this. I was hoping you might dive in a little more regarding your specific comments, when you look at the media today and everything focusing on antibodies, but why is a VAC approach might be a little differentiated with regard to its T cell generating properties?

Yes. So, thank you for that question, Joe. So I think there has been an evolution in the thinking. In the early days, it's funny to say early days because they're not long ago but everyone was focused on appropriately, I'm sure focused on the immediate response or antibody generation neutralizing antibodies and then as time has gone on and we've learned a little bit more about the virus, I think the preponderance of the content that's out there seems to have migrated more and more toward the discussion around T cells and the role of the T cells in fighting viruses. Now, none of this is new to an immunologist but there's 300 million amateur immunologists out there now. And so, for us, it was an interesting idea early on to use the VAC platform because the VAC platform relies on the power of a dendritic cell to deliver a message to the immune system. So whereas many vaccine approaches which exist today, rely on the immune system to just naturally pick up antigens and hope that they get presented the right way and the message gets delivered. We sort of skip that first step. We forced the message, right? First, we get to choose the message that we think is important. And there's been a lot of work; it's already determined what parts of the virus are the most important, the most antigenic. So we get to a) choose which part of the virus is the most important signal, and then we pre-package that into the dendritic cell, which is the body's very best communicator of foreign material to the immune system. And so we've already picked the best antigen and then we package it into the dendritic cell and then we put it into the patient. And…

I know it certainly does. Thank you for that. And then my last question is, if you don't mind, just wanted to switch back to the OpRegen data. So after the striking restoration data that you announced, I guess, I would look at it this way. What kind of feedback have you been getting from the field? And how has it evolved from physicians and looking at that restoration data? And I guess I would say it's semi-facetiously saying, look, I mean, our doctors saying, are they looking at it cautiously right now saying this is an N of one or they -- is it along the continuum that says, look, you're just not expected to see this kind of data? But we'd love to see a few more patients are sort of where does it stand on the continuum right now?

Sure. That's a great question, because often make some version of the joke that you could show 100 cases of this. And investors would say, well, you haven't shown me 101 cases. So there's always sort of this eagerness to have more. The difference between zero and one we think is extraordinary. But there's still a big gap between one and two. People always want to have some skepticism and think it's an outlier. And I think what is typical of something like this, is that the folks that are most easily convinced, tend more commonly to be the experts, right? It's the people who understand what the images are showing. It will have a frame of reference to appreciate what you've done. So if I sit down with a generalist investor or I sit down with a retinal expert and I show them what we have, it is far easier to get the retina expert excited about what we have because they have an appropriate context or framework to evaluate what we have on large database of historical evidence of what can and cannot happen in the back of the eye, whereas the generalist has a great difficulty with that. So I think that a continuum here, that as more and more evidence for our approach, whether that includes retinal restoration or not, I mean, we were doing great even before we announced retinal restoration. I mean, we're seeing things happening in the eye that we're very excited about. The restoration is like, eight feet of frosting on a six inch cake. So we're really happy about what we've seen, but I do think that there's going to be, hopefully not too gradual, but somewhat of a gradual continuum through your experts in imaging out to your retinal surgeons…

Next one on the line is Dane Leone from Raymond James. You are now live.

This is [indiscernible] on for Dane. Thanks for taking our question. Just one from us on the AAO updates for OpRegen, can you just give us a little bit more color on what we should expect and then how much more [indiscernible]? Thank you.

Yes. Thank you for the question. Let me invite Gary Hogge into the discussion to talk about what we think we'll be presenting at AAO.

Yes. Thanks for the question. So the AAO will be the second week of November. Unfortunately we've virtual meeting but that's actually not a bad thing. The presentation will live on for a long period of time afterwards. But the goal would be to present all of the Orbit patients hopefully have been enrolled by that point, as well as the three additional [cord for] [ph] patients that were treated the traditional route as well as the safety profile for up to five years for earliest patients. So it'll be the accumulated data for all patients and any data that we have up to that essentially the week before AAO.

I'm showing no further question at this time. I would like to turn the conference back to Mr. Brian Culley for any closing remarks.

Well, thanks everyone. Again, I appreciate you joining us. I'm obviously excited about our plans like we got a lot to look forward to this year. We appreciate the shareholder support and we'll continue to position Lineage to be a successful leader in cell therapy and cell transplant medicine. Thank you and have a great afternoon everyone.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.