Welcome to the Lineage Cell Therapeutics Third (sic) [ Fourth ] Quarter 2025 Conference Call. [Operator Instructions] An audio webcast of this call is available on the Investors section of Lineage's website at www.lineagecell.com. This call is subject to copyright and is the property of Lineage. And recordings, reproductions or transmission 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, Jamie. Good afternoon, and thank you for joining us. A press release reporting our fourth quarter and full year 2025 financial results was issued earlier today, March 5, 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 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'll now hand the call over to Brian.

Thank you, Ioana, and good afternoon, everyone. We appreciate you taking the time to join us on the call today. We have a great call planned highlighted by recent warrant exercises that further extend our runway and a positive result for our initial go/no-go development milestone in our islet cell research initiative. I want to start by reminding everyone that we have a significant number of employees who live and work in Israel. And while our manufacturing facility is not located near a metropolitan center, some of our staff do commute from larger cities. Their safety is our top priority, and we are, of course, monitoring the situation. To date and as expected, a few employees and employee spouses have been called into military service, which is similar to what we've experienced and successfully navigated in 2023. We cannot know what the future holds, but thanks to the incredible dedication of the team we've hired, our operations are continuing, and we expect things will continue to progress. Thank you also for the many messages of concern and support I've received from our colleagues and shareholders alike. Moving ahead, as many of you know, cell therapy has revolutionized oncology saving lives and creating tremendous shareholder value. But the use of cell therapy in oncology is maturing, while the application of cell therapy the fields outside of cancer remains in the early stages. For this reason, we are focused on delivering the next wave of innovation and value creation in this emerging branch of medicine. We'll begin with the exciting results seen from our lead program in geographic atrophy as a testimonial to what cell therapy is capable of. And as that program matures, we have begun turning our focus to how we can apply our manufacturing success and the lessons we…

Thanks, Brian. Before presenting our financial results, I want to address some points that may have caught your attention. The reported net loss for the full year is approximately $45 million higher than in 2024, this increase is mainly due to noncash charges linked to our rising stock price over the year, which resulted in higher warrant liability. Additionally, we incurred a noncash charge relating to an asset we acquired in 2019, which we elected to no longer develop. You may have also noticed that the reported cost for -- OpRegen costs are higher this year. This is due to a standard accounting treatment applied when recording the expense associated with our downstream obligations after we received the first milestone from Roche and Genentech. If you look at the expenses without this cost, the OpRegen developmental expenses were lower year-over-year. As of December 31, 2025, our overall cash position was $55.8 million, which together with the approximate $5.4 million in proceeds from warrants exercised this March is expected to support our planned operations into Q2 of 2028. This is a significantly higher runway than we guided to during our last call, with the biggest contributors being the $21 million in gross proceeds received from an ATM block trade in November, the warrant exercise of $5.4 million this week along with the achievement of the first $5 million milestone under our Roche collaboration. This revised guidance also does not take into account any other potential sources of funding, including additional milestone payments we are eligible for under our Roche collaboration, or any additional partnerships, which we may elect to enter into in the future. Separately, a large additional source of potential capital is the approximately $32 million remaining of underlying warrants priced at $0.91 per share, which is below our current…

Thanks, Jill. I'll quickly summarize by repeating 2 key themes. First, we continue to remain confident in the potential for OpRegen to drive positive clinical outcomes in dry AMD and we're encouraged by our partner signs of commitment to the program. We also believe the independent evidence generated by others RPE cell transplant trials supports and elevates our replace and restore philosophy. Second, we're preparing for a successful future by making new investments in our cell transplant platform and using our recent manufacturing innovations as a foundation from which additional pipeline programs can be advanced either by a funded partnerships or independently. We believe our approach offers powerful optionality, which we consider essential for a company at our stage of growth and development. We appreciate your support and belief in our vision. With that operator, we are prepared to take analyst questions.

[Operator Instructions] Your first question comes from the line of Joe Pantginis with H.C. Wainwright.

Actually, Brian, I have 3 questions, a strategic one, a technical one and probably a question you can't answer. So first, on the strategic question, I mean, you have many ongoing programs now with specific cell types, and you also have this broader AlloSCOPE program with pluripotent cells ready to go. How do you look to potentially translate, say, over the longer term with regard to business development strategy around all your various options?

Thank you, Joe, for the first of those 3 questions. Again, excellent business development team. Clearly, I can point to the Roche and Genentech transaction. I can point to the Demant deal. And of course, these are just things that you've seen. It is normal and common for us to have other interactions, maybe deals that could come together but don't for various reasons. So they're a reliable and productive group. What we can do, what we have the opportunity to do is to take the AlloSCOPE platform and apply it in different ways to generate a basket of assets. And then we can make some decisions that are good for the company in terms of partnering or retaining. We don't have a particular objective to launch any of the products we manufacture, although that's certainly not off the table either. We are really being mindful of our cost of capital, the spending, the risk and our own capability to make decisions about what and whether to partner and what time, assuming that there is an appropriate economic arrangement to be struck at all. So I think the way to maximize the value of the platform that we have developed is in part to generate new assets that can be partnered fairly early and to use some of that capital to offset our needs to rely on traditional capital markets and through that mix of creating assets that are funded by others as well as adding programs and taking them a little bit further. I think we may be solving to optimize for the best return on invested capital that we can with the technology that we have developed here at Lineage.

That's extremely helpful. And then I guess my technical question is without giving away the secret sauce here. For the islet cell component that you're working on here, what would you consider to be the rate-limiting step or steps with regard to moving beyond the 0.5 liter scale?

That's an excellent question and the very nature of the exploratory work is that we do not know. So we cannot predict the linearity of going from half liter to multi liter to ultimately up in the neighborhood of 80-liter or 300 liters. There are incredible new technologies that are available that help companies with this work, but it's very difficult to say. I would say this, though, I do think going from 0 to a 0.5 liter was a much larger achievement than what I expect going from a 0.5 liter to 2, 3, 4 liters will be. And the reason for that is that it hadn't been done before and as I explained earlier on the call, it's very hard to get the control that you want from a 2D process and apply it into the scale of a 3D process. So to be clear about one thing here, AlloSCOPE describes our basic platform, our banking or manufacturing. AlloSCOPE 5.0 is the application where we're essentially tricking cells to think that they're being grown in a 2D environment while actually putting them in a 3D environment. So quite simply 2 plus 3 equals 5, perhaps the additional dimensions are scale and cost in that situation. But I think what's really exciting about the next step is that if you do have control in the lower mid-leader scale, you really could begin to have discussions about pooling that output and feeding maybe an 80-liter reactor or it could give you some insights and confidence about the linearity as you scale. Not every cell line is going to be amenable and can adapt to these larger scales and perhaps some of the technologies don't fit well depending on the cell type that you plan to differentiate. So it's very much unexplored territory, which is why I wanted to spend a lot of time talking about it today.

Very helpful. And then I think we're essentially done because I think the next one is unanswerable, as I said. But with regard to the GAlette study, I'm sure you get questions on this all the time. But is there any visibility or anecdotes you could provide with regard to the types of deliveries that Roche might be testing or methods?

There have been some presentations at conferences where images of different devices have been provided. I don't know in every case whether those presentations have been made available to the public online or are they exclusive to the registrants of these conferences. But what I would say as a general matter is that the 2 big chunky approaches are to deliver [ transvitreally ] through the front of the eye or via a suprachoroidal approach, which is going around the eye and accessing the subretinal space from below. They have trade-offs. I won't go through all of the trade-offs right now, but that is just one basic way of looking at delivery to the subretinal space. Within that, there, of course, are more refined approaches regarding the kinds of needles or the methods that one uses. But if you were to pull up or request from us the 2025 CTS desk -- slide deck, I think some examples of some of the technologies that Genentech acquired are available. But this is an important reminder. This is not -- the study that they're doing is a surgical optimization study. So they're going to be looking at different cohorts of patients and evaluating what works well. So they may try some things that don't go well and abandon those, and that's appropriate. They may find some things that seem to go well and want to push the envelope, and that's also appropriate. In fact, desirable. But this is not a responder analysis. So there -- it's not some number out of 60 is a success threshold. We know that you get the best results if the cells go to the subretinal space. So of course, it is obvious and appropriate to try and simplify that as much as you can before moving into and committing to larger trials. So we're hopeful that everything that has happened is an indication that, that work is going well. I think if that work we're going clearly poorly, they've had abundant time to abandon this initiative, but we also remain confident that our partners know best how to find the right level of risk and reward moving as quickly as they can while not jeopardizing their leadership position in the space.

Our next question comes from the line of Jack Allen with Baird.

Congrats to the team on all the progress made over the course of 2025. Looking forward to a productive 2026. Just 2 quick questions from my end. The first one is on the OPC1 program. I was hoping if you could provide some more color on the timing of the functional measures? And anything you can also add as it relates to the baseline characteristics of that first participant in the study there being a chronic participant. I'm curious as it relates to their baseline functionality. And then secondly, on OpRegen. I know you guys have presented 3-year data in the spring of 2025. I'm curious if 4-year data could be on the docket as it's been great to see the continued durability response as it relates to OpRegen.

Thank you, Jack. I will ask your second question of our partner. I do not know their plans for 4-year data. But obviously we are excited by the fact that the benefits that we're seeing in year one did continue into year 2 and year 3, which mechanistically makes sense for a transplant that is not rejected. We think that's a great sign, especially because the untreated eye in the same patient continues to lose letters of vision. So the delta, the clinical benefit and the confidence in that benefit only seems to get better with each passing year. With respect to OPC1, we do -- I do want to remind everyone that the OPC1 study is a safety and performance study of a device. So it is not an efficacy design. So we have a more limited set of function measurements that we are collecting. But we are collecting things like an E-ISNCSCI exam and quality of life measures, SCIM is one of the tools that we've -- one of the assessment tools that we've employed in this trial. So we collect baseline data or screening data prior to the cells being administered and then we have some early functional assessments probably too early to see anything. So these are functional assessments that occur in the first 90 days. They provide some reinforcement or reliability about your baseline measures and ensure that the patient isn't experiencing any decline. And then we wait until a year in most cases because we aren't looking every 30, 60, 90 days at these patients because, again, that's not what the study was designed to do. But when we collect the 1-year functional assessments, if we do see some changes, those are things that perhaps would be more meaningful if they're occurring at 12…

Awesome. Maybe if I can just follow up one more on AlloSCOPE. But before I do, it's great to hear about the anecdotal progress of the OPC1 program, while it's not necessarily well-vetted clinical data. There's a high unmet need in spinal cord injury. So that's great to hear that there's some enthusiasm there. On AlloSCOPE, I just wanted to ask very briefly how you think about ramping expense of that program as you move up from the half liter bioreactor, I know if you get more expensive as you move into larger reactors, how are you planning to contain cost there?

Yes. It's not too difficult. The cells are eating the media that we feed them, and we have done a lot of batches and the multi-liter batch size, I've spoken frequently about OpRegen already being manufactured at a 3-liter scale. So we have abundant experience at that scale. I think where it starts getting really exciting is when you go up one level beyond, I don't want to get ahead of myself at this point. There still are risks and uncertainties associated with this. But one of the really powerful attributes of our approach of inverting our development plan and focusing on manufacturing is that we are able to put a relatively modest amount of capital to work to get answers as to the scalability of these lines. If we were doing it the other way, if we were doing expensive animal studies or very expensive human studies, and we were deferring the important questions around scale, we would be spending a tremendous amount of money running studies that others have already shown can be successful and not necessarily proving anything about our viable product candidate in terms of its ability to meet the commercial demand. But if instead, you follow the Lineage approach and you say, well, I'm going to answer the question of scale first, then you are looking at the risk profile of your subsequent preclinical and preclinical studies with a little bit of a different view because you already know you can make a lot of your material. So I really like the overall approach. I think it's prudent. I think it's investor friendly. And from our perspective, we have experienced a lot of experience already at a single leader or multi leader scale production. So we have a well-trained team that can fill and finish vials out of that scale in a GMP environment. So we'll have to see. But as Jill said, we're very committed to high returns on our invested research dollars and trying hard to maintain something close to our historic investment of capital on an annual basis.

Next question comes from the line of Mayank Mamtani with B. Riley Securities.

Thanks also to your company employees and their families in Israel. So Brian, just to piggyback on the last -- kind of framing you had on this inverted risk framework you have on the scale-up of the manufacturing first for this islet cell research initiative. Could you maybe just double-click on what have been the learnings to date from the OpRegen work since inception and also as part of specifically the Roche partnership? And maybe also if you could recap what milestones should we be watching for potential candidate being identified here? Or is this being used by a strategic partner since obviously this would draw a lot of interest? And then I have a follow-up.

Thank you, Mayank, for that multipart question. Yes, the inverted risk, I think, as I say, attractive because we're putting what I believe is the least expensive and most challenging step first. And so we're trying to invert the risk profile of islet cell transplant product initiative or campaign. The specific learnings and lessons from the OpRegen program are coupled with independent learnings and lessons we have because, of course, we have other programs that we've had to solve different problems for whether that's our hearing loss program or our spinal cord program. Altogether, a lot of these have taught us some clever and sometimes patentable material and insights. Overall, I would say that AlloSCOPE is comprised of 3 components. There are physical or engineering-type components. So these are the physical properties of how we do the manufacturing. There are biological aspects to it, i.e., exactly what we expose the cells to and when. And then you have an engineering component, which is a little bit more of like the know-how. So it is not that there's a magical molecule that makes AlloSCOPE work or a special coding of plastic or type of plastic that makes everything click. It is the combination through years, in fact, decades of experience coming together, finally being able to show that this capability can legitimately make millions of vials, as I said, trillions of cells and then applying it in a very unique way to solve a specific problem in the setting of islet cells. I don't envision that being a fee-for-service business of our company. I'll never say never because our job here is to create value, it's not necessarily to make medicine. So if we see an opportunity and it makes sense, we may pursue it. But what we would envision with…

Yes. No, that new cell type would be great to learn about that. Thank you for that level of detail. And then on the OpRegen program, if that was to theoretically start a Phase III tomorrow, like, what's your capacity for the amount of doses you can provide because these could be like very large trials, at least historically that have been done. And do you have any visibility of regulatory interaction that has occurred beyond the RMAT designation that was secured last year or 2 years ago?

Thank you for that additional question. Unfortunately, again, that's a question that really can only be answered by Roche and Genentech. I am not a party to regulatory strategy discussions or regulatory interactions that they have regarding OpRegen. So I cannot say because I do not know.

Okay. And one last for Jill. In your cash runway, how much of the additional warrants are factored in? If you could just clarify.

Yes. So of the existing runway that we talked through today, it only includes the $5.4 million in warrants that we collected this week on an exercise, sort of, the $32 million remaining is not factored into our future runway at this point.

Mayank, I neglected to answer the remainder of your question. And I'm happy to say that perhaps one of the least of my concerns at this company is being able to manufacture sufficient material. It really speaks to the power of our technology. We literally are manufacturing more OpRegen than we can reasonably fill and finish in a day's work. So I do not think that supply of clinical material will be gating because the 2-part banking system and then the production vessel scale that we're at, really does generate a very large number of cells on each run that we perform.

Next question comes from the line of Albert Lowe with Craig-Hallum.

I was wondering how you'll be applying the hypoimmune cell line that you recently received from the partnership with Factor? And I believe this is an iPSC line. Can you please also speak on some advantages of using induced pluripotent stem cell line?

Albert, thank you for that question. The hypoimmune line that we obtained through our Factor alliance is a line that we designed for a neurological indication. That indication is as yet undisclosed. I may or may not -- I think I'll probably just say that I cannot confirm that it is even the same indication that I suggested could be coming out in the next 3 to 6 weeks. But you're correct that it is an iPSC line. I don't know if there are advantages of iPS over ES or vice versa. Our view is that it is appropriate to follow the data and the behavior of these lines. I do think that there is an important discussion that occurs about various attributes that may make one or the other more attractive but there simply have not been enough approved agents to be able to definitively say one is superior. Typically, what one finds is it when you work with one form of a line, that is the line type or source that you defend for us, we are indifferent. We have both types of -- excuse me, we have both types of pluripotent lines. But in this case, the experience that Factor had with gene editing, with iPS, with hypoimmunity and we also engineered in an additional functional, hopefully, relevant edit into that line. That is about us accessing capabilities that we think are valuable, but that we didn't want to build in-house. And because ourselves are always fully characterized before they go into a patient, we can be confident that there are a number of different editing technologies that could be applied because we can always confirm [ materially ] as it was designed to be before we utilize it and before we invest in the scale-up of that material.

And looking forward to hearing about this new cell type that's coming soon.

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

This is Yang for Sean. We have one quick question. Could you speak to the process of getting a new OPC1 formulation into the DOSED study? And how much do you think that may shorten the time line versus bridging study? And are you in dialogue with FDA on that front?

Thank you, Yang. Very appropriate question. We elected to separate the new device that we are testing from the new cells that we have manufactured. So we have completed the manufacturing -- the new process by which we manufacture those cells. We have completed the comparability testing including in-life comparability testing and all the other features that go into a meeting package with FDA, but we have not yet presented or delivered that information to FDA to request us to bridge in those studies. We thought it would be prudent to get a little bit of experience with the new device so that then the focus could shift away from the new device and into the new cells. So what we are hopeful for is that the new device will perform as it was designed to be performing in the first 4, 5, 6 patients and then proposed to FDA that we would switch over to the lineage new process in the last handful of patients in the DOSED study. If successful with that endeavor, that would save a lot of time. It would prevent us from having to establish and conduct a separate safety cohort with our new cells. So you can imagine that the bioinformatics data, the animal data, all of the analytical work that we have done to propose that switch has been exhaustive in order to give us the best probability of success in accelerating that process because it is correct that in order to run a larger study, our view is that we need to have this superior device deployed and we need to use our higher quality, higher purity, higher scale and better control OPC1 cells. And so that is our plan. And when that is complete, then I believe we would be in a position to run a larger study, either ourselves or in a partnership but a larger study of spinal cord injury patients.

There are no further questions at this time. I will turn the call back over to Brian Culley, CEO, for closing remarks.

Thanks, everyone. I know it was long and complicated, but it's very important, and I think also very exciting. So stay tuned. Clearly, we have some exciting stuff coming up not too far away. Thank you for your interest and support of the company, and we'll talk again soon.

That concludes today's call. Thank you all for joining, and you may now disconnect.