Lineage Cell Therapeutics Inc

TASE:LCTX

Earnings Call Analysis

Earnings Call Transcript 2023-Q4

[Operator]

Welcome to the Lineage Cell Therapeutics Fourth Quarter and Fiscal Year-End 2023 Conference Call. [Operator Instructions] An audio webcast of this call is available on the Investors section of Lineage's website at www.lineage.com. This call is subject to copyright and is the property of Lineage. And recordings for productions or transmissions 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 you to your host for today's call, Ioana Hone, Head of Investor Relations of Lineage. Ms. Hone, please go ahead.

[Ioana Hone, executive]

Thank you, John. Good afternoon, and thank you for joining us. A press release reporting our fourth quarter and fiscal year 2023 financial results was issued earlier today, March 7, 2024, 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 annual report on Form 10-K, for the year ended December 31, 2023.

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. Now let me turn the call over to Brian.

[Brian Culley, executive]

Thank you, Ioana, and good afternoon, everyone. We appreciate you taking the time to join us today for a recap of 2023 and an update on some important items occurring in 2024.

Over the past year, our team continued to focus on the advancement of our pipeline of differentiated cell transplants, while also providing support for our lead program, which is partnered with Roche and Genentech. We continue to have many reasons to be excited about our future.

I will, as usual, begin with OpRegen. During 2023, we had numerous scientific forums at which we broadened awareness of this exciting program and provided data updates from the Phase I/IIa trial, which we conducted. Some of these updates included new analyses and findings collected and observed by our partner, Roche. Each medical and scientific conference, which we participate, at targets a certain audience and some such as the ARVO Annual Meeting are widely known, but I think the most compelling among the OpRegen presentations given last year, was the one delivered by Dr. Adi Barak during the 23rd Annual EU Retina Congress.

At that event, updated analyses, which describe durable findings of increased areas of retinal tissue, specifically of the RPE and ELM layers were provided in detail. To our knowledge, none of the complement inhibitors are capable of increasing the amount of RPE or ELM in patients and human beings are genetically incapable of this sort of self recovery. So we continue to believe, we are on the right track for a game-changing approach to potentially address this massive unmet need of dry AMD.

While the original data released by Lineage were obviously compelling on their own and have been confirmed by 3 independent external parties, I often find myself turning to these more recent analyses when speaking with investors because they are coming by one of the most commercially successful ophthalmology companies in the world and offer insights beyond our original exciting observations.

So if you haven't had a chance to review the slides from the EU Retina Congress in detail, I encourage you to do so, and they are available on our website. Additional and similarly, elective data releases from Roche and Genentech include a presentation delivered at the recent Angiogenesis Meeting in January.

The insights at that event include independently generated observations of the rapid time to onset of retinal structure improvements in OpRegen treated patients, which I will note exert their effects far faster than anti-complement approaches which take 12 to 24 months to detect. Because complement inhibition is commonly criticized for its small treatment effect and can require years of therapy before it meaningfully diverges from no treatment at all.

Many followers of this field are interested in the effects of complement inhibition after a third consecutive year of monthly treatment or as I like to call it, after 36 consecutive injections into your eye. For those patients who actually remain committed to therapy for that long, they presumably should enjoy a slowing of disease progression, but further deterioration of retinal structure and vision is always expected even on best available therapy.

In contrast, our data from cohort 4 patients, which are the patients with comparable disease severity to patients suitable for complement inhibition. And in all cases, with foveal involvement, they showed that after just a single administration of OpRegen RPE cells, improvements in the retinal structure were detectable in some cases, just days later, and always within 3 months.

In most cases, those anatomical changes were accompanied by functional improvements. And most notably, all 5 patients who had extensive coverage of the GA lesion with a surgical bleb containing OpRegen RPE cells, demonstrated evidence of improvement in outer retinal structure at 12 months and visual acuity gains averaging 7 letters. Maintenance or greater improvements in retinal structure were also observed over time.

And now to go further, there still are 10 patients from Cohort 4 on long-term follow-up. And I'm pleased to share with you for the first time today that Cohort 4 patients treated with OpRegen, who previously exhibited average visual acuity gains of 7.6 letters, after 12 months are still remaining above baseline after 24 months with an average gain of 5.5 [indiscernible] among the 10 patients still evaluable on study.

Furthermore, as we expected, the BCVA gains averaged slightly higher among the 5 patients with extensive surgical bleb coverage of their GA lesion, when compared to those with no or limited bleb coverage. These greater BCVA gains were associated with evidence of anatomical improvement in outer retinal structure.

Additionally, evidence engraftment for OpRegen RPE cells has now extended to 4 years in one of the earliest treated patients, which continues to support the potential for OpRegen to be a one-time treatment. So as you can see, while we await data from the ongoing Phase IIa trial, which Genentech is conducting, updates from the original Phase I/IIa study can and do continue to provide new evidence which supports OpRegen, as a promising therapeutic candidate. And they secondarily provide indications of Roche Genentech's interest and support of the program.

Fortunately, neither Lineage nor Roche and Genentech are likely done providing these kinds of updates and in particular, we anticipate that our partner will provide a detailed overview of the 24-month data, which I just shared today at an upcoming medical meeting to be held in the second quarter.

In addition and separate from the 24-month functional data, I just revealed today, last Friday, abstracts for the 2024 RFO Annual Meeting were made publicly available. You will see there that Roche and Genentech plan to present preclinical results from a surgical development study evaluating the survival and distribution of OpRegen using varied surgical instrumentation and methodology. We believe these results are a complement to the ongoing clinical work and are intended to help guide and develop insights into the delivery and engraftment process.

This study also serves as an example of how partnering with an experienced and well-resourced company can enhance the probability of success of a program in so far as lineage may not have been in a position to perform this supplemental work. Therefore, this also serves as even more evidence of our partner's commitment to the optimization and further development of this program, beyond the ongoing Phase IIa clinical trial, which continues to enroll patients.

Medical publications often state that dry AMD is an irreversible and degenerative disease leading to vision loss. We aim through the OpRegen program, to eliminate the word irreversible from those descriptions and literally rewrite the language in future textbooks.

Moving next to OPC1, our spinal cord program. Last month, we announced a very important milestone, and that is the FDA clearance of our IND amendment, which will enable us to initiate clinical testing of OPC1 and in particular, to test the clinical safety and performance of a new delivery device called my PSD.

As a reminder, the pioneering work on this program was originally conducted by Geron and thereafter by Asterias, a company which we acquired. Their foundational work provides us with a significant advantage because, while other cell therapy companies are just now beginning their human studies and don't yet know how their cells will behave in people.

We have in some cases, as long as 10 years of safety data with OPC1. Nevertheless, when we acquired the program, we knew it was not at that time, ready to move into later-stage studies. The process by which the cells were made did not meet our vision for a commercially successful product candidate and the method by which they were delivered was too cumbersome and inefficient. The original formulation required plating, washing and counting the cells, which added complexity, cost and risk. And the injection itself required the surgical team to turn off ventilation to the patient while administering the cells.

Obviously, performing a procedure on a patient, who is not breathing creates a time constraint, so we wanted to create a solution for that issue. Fortunately, the same team which successfully developed a commercially viable process for OpRegen, which thereafter successfully contributed to the deal with Roche, was deployed on solving similar changes for OPC1. For example, they developed an immediate use to inject formulation, which eliminates the washing and plating steps. Our team's success, the details of which we have only partly shared publicly permitted us to invest next in developing a new delivery system.

That new system which we developed through a collaboration we struck with a medical device company is the subject of the clinical trial we are in the process of launching. We believe this new device will be far superior to the delivery system, which was employed in the first 30 patients.

Given our objective to simplify and improve the surgical delivery device, we conducted extensive engineering and in vivo experimentation to develop the manual inject perencamal spinal delivery system or MyPSD. MyPSD is designed to be easier for the surgeon to use and safer for the patient. The proposed study called delivery of oligodendrocyte progenitor cells for spinal cord injury, evaluation of a novel device or dose, is designed to evaluate the safety and efficacy of the MyPSD to deliver OPC1 to patients with any of sub-acute or chronic and cervical or thoracic spinal cord injury.

Importantly, the myPSD system has been designed to deliver OPC1 without stopping patient ventilation during cell administration. This study also will be the first time OPC1 is administered to patients with a chronic spinal cord injury, which will be a significant milestone for this program. And in addition to the safety and performance of the new device, we also will be collecting functional assessments on all patients, which gives us the exciting opportunity to investigate whether any signals of efficacy are present among chronic injury patients.

Pursuant to the protocol in the IND, which recently cleared the FDA process, we have begun activities to open our first clinical site in the dose study, which we anticipate will occur next quarter. There are very few opportunities for SCI patients to participate in clinical trials. So it is a privilege to be able to reengage with the SCI community, as part of our efforts to improve outcomes for individuals with a condition, for which there currently are no FDA-approved treatments.

And we are even more excited by the opportunity to build upon promising results achieved with OPC1 in previous trials and to continue to seek improvements in how this therapy is manufactured, prepared and administered. Some of you will recall that OPC1 was a recipient of one of the first cell therapy clinical awards granted by CIRM, the California Institute for Regenerative Medicine.

We believe the OPC1 program is a strong match with CIRM's goals to accelerate the development of regenerative medicine, and we submitted an application for funding support for our dose study last month. But as many of you may have seen, the success of the CIRM program has led to a surge of funding applications.

Consequently and quite unexpectedly, Late last month, the CIRM Board of Directors announced that they would be halting the acceptance of new applications with an effective date of January 31. Our application was submitted on February 21, so we will not be reviewed as expected in the February cycle. I am, of course, disappointed on behalf of the Lineage team, which put a lot of work in to prepare the grant, but I'm comforted because CIRM has informed us that they are striving to reopen the clin1 and clin2 programs, as soon as reasonably possible suggesting to us that this is simply a pause to address workload issues and to our knowledge, is not specific to our application in any way.

We believe the grant reviews will be restored following the June meeting, and presumably, we will be able to enter the July review cycle. If so, the overall impact looks simply to be a 1.5 quarter delay to potentially receiving funding for the dose study. In the meantime, start-up activities for the dose study are already underway. We expect to have our first site open next corner, and we'll begin enrolling patients as soon as we're able. And we will simultaneously monitor things with CIRM, so that we can hopefully partner with that excellent organization for a second time on this novel program.

Related to OPC1, I also want to update you on our efforts to expand collaborative partnerships in the SCI field with the dual goals of enhancing awareness and informing our development strategies. In June last year, we launched a newly created forum to discuss the innovations, advancements and challenges in the treatment of SCI. The spinal cord injury Investor symposium, which we presented included sponsors, such as the Christopher Denari Foundation, the Sanford Stem Cell Institute at UC San Diego, AbbVie and CIRM. This event presented an opportunity for an open and collaborative dialogue among leading experts, researchers, companies persons with lived experience caregivers, advocacy organizations, investors, health care analysts and members of the public and media.

It was a wonderful success and we currently are in the planning stages for the second annual Spinal Cord Injury Investor Symposium, which is being expanded and planned to be a 2-day event, held on June 26 and 27, here in San Diego. You can expect to hear additional updates from us on this event in the coming months.

For our preclinical programs, I will be brief. As planned, we are initiating a functional animal study of ANP 1, our cell transplant program to address hearing loss, which is the subject of a collaboration with the University of Michigan. Our initial objectives from this collaboration were to evaluate the delivery of our cells into specific target areas to monitor initial engraftment and to assess whether our cells survive after transplantation.

We also wanted to see whether the cells migrated. And if they are expressing certain markers of neuronal identity. We have been satisfied with the results from those early studies. And last month, evidence of successful engraftment and survival of our ANP 1 cells were presented at the 47th Association for Research in Autolerinology Annual Meeting by Dr. Yash Rafael, at the University of Michigan Kresge Hearing Research Institute.

Given the early success of ANP 1, we next want to ask the critically important question of whether our cells can influence hearing, which is measured and detectable by electrical signaling, which occurs in specific regions of the brain. We are working closely with Dr. Rafael to develop and conduct those models, and we'll be excited to see what we learned from them later this year.

The other project worthy of a mention today is our alliance with Eterna, which is important because it provides us with access to gene editing technology and supports our long-term vision of capitalizing on the combination of our extensive and proprietary process development capabilities with cell engineering and cell editing technologies together for the purpose of creating novel and potentially superior cell therapies to those in development today.

In the case of Eterna, we are working to generate a hypo immune iPSC line designed to reduce the immunogenicity of certain product candidates. And in at least one instance, we are making an additional edit that is intended to confer clinical differentiation and a competitive advantage in the applicable indication. I believe it's premature of us to provide details on any of our grassroots programs at this time but we look forward to sharing more on this initiative, as we reach certain developmental milestones, which could occur later this year.

And my final comments today will serve as a transition to Jill's remarks because I wanted to provide some quick context around the financing we conducted last month. As you may have seen in our announcement, we raised approximately 2 additional quarters of cash, which improves our balance sheet and provides additional operating runway. Unlike most of the deals I have seen this year, at least the deals which didn't include a simultaneous data release, our raise was conducted as an at-market financing with no discount no warrants or other structural elements.

We didn't even pay a banking fee because, while not all of the buyers were existing holders, two of the buyers were board members and all of them were familiar with the company, which we believe helped secure favorable terms for us as the issuer.

It's well understood that developing new therapies is very expensive, but I'm proud that during the past 5 years, and in particular, during the years when biotech was out of favor and the XBI was languishing at $70 to $80, that lineage relied on a wide assortment of ways to raise funds, seeking out the lowest available cost of capital and diversifying our raises across BD deals, spin-offs, grants, ATM transactions and for the first time in my tenure, a conventional equity raise.

Our view is that creating new medicines is clearly exciting and rewarding, but we also will never lose sight of the importance of protecting shareholder interest. So to summarize 3 key points for today. One, we continue to be extremely happy with our alliance with Roche and Genentech, not only for their commitment to advancing OpRegen through the clinic, but also for enhancing awareness of the program at medical and scientific meetings.

Two, we are excited to be putting a second cell transplant program into active enrollment this year in a disease with an enormous unmet need and limited competition. And three, we will continue to look for ways to build value from our early-stage pipeline and from strategic collaborations, which can help advance our programs and validate our approach. With that, I will hand the call to Jill for a review of our financials.

[Jill Howe, executive]

Thanks, Brian, and good afternoon, everyone. Beginning with our balance sheet, I'm happy to report that we remain well capitalized to conduct the near-term activities which Brian just outlined.

Our reported cash, cash equivalents and marketable securities of $35.5 million as of December 31, 2023, and along with the $13.8 million net proceeds we added to the balance sheet from our registered direct offering last month, is expected to support planned operations into Q3 2025.

Next, I will review our fourth quarter operating results. Our revenue is generated primarily from collaboration revenues and royalties. Total revenues were approximately $2.1 million, a net increase of $0.2 million, as compared to $1.9 million for the same period in 2022. Our operating expenses are comprised of research and development expenses and general and administrative expenses.

Total operating expenses were $8.2 million, a decrease of $0.3 million, as compared to $8.5 million for the same period in 2022. R&D expenses were $3.9 million, a decrease of $0.2 million, as compared to $4.1 million for the same period in 2022. The net decrease was primarily driven by $0.2 million in OpRegen program expenses and $0.4 million for other research and development program expenses, partially offset by $0.2 million in OPC1 program expenses and $0.2 million for preclinical programs.

G&A expenses of $4.3 million were in line with expenses for the same period in 2022. Loss from operations were $6.4 million, a decrease of $0.2 million, as compared to $6.6 million for the same period in 2022. Other income and expenses were $1.6 million, compared to other income of $0.3 million for the same period in 2022.

The change was primarily driven by exchange rate fluctuations related to our international subsidiaries and fair market value changes in marketable equity securities. The net loss was $4.8 million or $0.03 per share, compared to a net loss of $6.4 million or $0.03 per share for the same period in 2022.

Now I will review our full year operating results. Total revenues were $8.9 million, a decrease of $5.8 million, as compared to $14.7 million for the same period in 2022. The decrease was primarily driven by lower collaboration revenue that was recognized from deferred revenue under the Roche agreement. Total operating expenses were $33 million, a decrease of $3.5 million, as compared to $36.5 million for the same period in 2022.

The R&D expenses were $15.7 million, an increase of $1.7 million, as compared to $14 million for the same period in 2022. The increase was primarily driven by $0.4 million in OpRegen program expenses, $1.2 million in OPC1 program expenses and $2 million in preclinical programs. These increases were partially offset by $1.9 million in other research and development programs, primarily related to reduced manufacturing activities.

G&A expenses were $17.3 million, a decrease of approximately $5.2 million, as compared to $22.5 million for the same period in 2022. This decrease was primarily due to $4.2 million in lower litigation and legal expenses, as well as an overall reduction in costs incurred for services provided for third parties, consulting costs and rent-related expenses.

Loss from operations were $24.7 million, an increase of $2.2 million, as compared to $22.5 million for the same period in 2022. Other income expenses reflected other income of $1.5 million, compared to other expenses of $3.3 million for the same period in 2022. The net change was primarily attributable to fluctuations in intercompany balances and exchange rates applicable to our international subsidiaries as well as fair market value changes on marketable equity securities.

The net loss was $21.5 million or $0.12 per share, compared to a net loss of $26.3 million or $0.15 per share for 2022. As we've mentioned, last month, we added approximately 2 quarters worth of cash to our balance sheet and improving our operating runway. Our plan is to continue to maintain the same level of spending discipline, which has served us well to date. We believe this will continue to support our plan towards making important progress through reaching meaningful milestones and creating value for shareholders from our continued investment in our programs. Now I will hand the call back to Brian.

[Brian Culley, executive]

Thanks, Jill. To wrap up, we've all seen how cell therapy has revolutionized the oncology world. It now stands alongside chemo and surgery, as one of the pillars of cancer therapy. We believe a similar cell therapy revolution will extend beyond oncology into other important areas, including ophthalmology, and we will continue to strive to apply differentiated cells in a replace and restore approach to help achieve this end.

I believe Lineage continues to be well positioned to advance our business and become a very important company in the years ahead. I appreciate your attention today. And with that, John, we are ready to take analyst questions.

[Operator]

[Operator Instructions] Your first question comes from Joe Pantginis from H.C Wainwright.

[Joseph Pantginis, analyst]

So Brian, I wanted to focus my 2 questions on your OpGen update today. Obviously, that's believe that's very promising, and I think this solidifies Roche's investment in you guys global partnership. So thank you for sharing that. So I have specific points I want to ask and then a broader question about the overall program.

So first, when you look at 24 months in, you said the is still the average BCVA. Can you describe why that's clinically meaningful? Because based on the natural history of these patients, have they not gotten OpRegen? And what are -- would you say are factors that have contributed to these, I'd call it, minor reductions in BCVA because it's a long time.

Is it some [indiscernible] comes back or other factors contributing? And how often are these patients essentially looked at for these components?

[Brian Culley, executive]

Thank you for the question, Joe. Yes, I recognize I may have very the lead in this presentation. 24 months and still exhibiting an increase in visual acuity is certainly clinically meaningful. The reason that -- that all of these sponsors conduct clinical trials is to create commercially successful products. So I think the ultimate example that I would point to, is the recent rejection in January by EMA of CYFOVRI. So the CHMP issued a negative opinion attributable to the lack of a functional benefit.

And when I look at the recent data that was reported in the Lancet, at 24 months, patients on monthly or every other month SYFOVRI, we're losing 8 or 9 letters at 2 years and patients that were untreated were losing 7. In contrast, our average of gaining 5.5%, that's a 12 13, 14 letter delta. And to be clear about this, this is not one patient with a 40-letter gain driving the average up 80% of these patients were at baseline or better. Only 2 of the 10 patients lost vision and neither of them were as bad as the best available therapy.

So put it differently, 100% of our patients are doing better at 2 years, than if they had been on CychoVRi. So I think that there is a compelling difference between what we are seeing, albeit a small number of patients, but small changes can be very meaningful in this disease. I'm not sure that I'm ready to agree necessarily, but the difference between the 7 letters at 12 months and the 5.5 letters at 24 months is indicative of anything. I can it's conceivable, it's reasonable and conceivable that our therapy, while it has evidence of being very durable, it does not cure the underlying disease.

These are elderly individuals that still suffer from dry AMD. So it's quite possible that what you said is occurring that patients are continuing to have the disease. There's continued degradation presumably happening in other areas, not with our healthy transplanted cells, but perhaps in other areas where the cells are -- where our cells are not delivered.

But I can also state that compared to what you would expect in an untreated case, the difference between 7 and 5.5, compared to the difference between 7 and minus 7, minus 8, minus 9 in is really striking. So I don't know what's happening on a biological level and whether the changes which we make anatomical and functional changes we make will persist for 5, 10, 15 years. But certainly, it is quite evocative to see these changes in these benefits persisting at least for 24 months from a single administration.

[Joseph Pantginis, analyst]

Got it. That's really great perspective, I appreciate that. And my general question about the program is, I mean, look, everyone's going to be looking towards Phase IIa data at a Roche and my difficult or extremely difficult question to you is any visibility of when that might happen? Which is everyone's question on the street. But I guess I want to comment or ask with the upcoming ARVO data, and this is how you've described it in the past, and tell me if we're correct here. I mean this Phase IIa is a very iterative study. Like you said, that they're going to be presenting preclinical data about different methods or injection methods or what have you, and you gave the -- not the impression, but you basically shared with us that this is going -- that the Phase IIa itself is also testing various methods.

So it's a very iterative study. So I guess how do all the current data in this preclinical study help [indiscernible] to eventual data. I apologize for the static. I'm not sure where that's coming from.

[Brian Culley, executive]

You're fine. I heard and understood, and it is correct that I'm not yet able to provide any details about results from the ongoing trial, which Genentech is conducting. And one of the messages I sought to deliver today is that the Phase I/IIa, which we conducted is still generating new information. Which continues to be directionally positive for this program. And Roche and Genentech are supporting that by conducting and releasing their own findings in this case at ARVO for the preclinical study.

So while I agree that there's tremendous interest in the ongoing study and when that data is released and what it looks like, there still are a lot of things that people can sink their teeth into on an ongoing basis.

I do think that it's correct, your interpretation that the preclinical study is intended to be informative of the clinical work that's ongoing now. And I would just only mention that by its very nature, the pig model is a model. So pigs are going to behave slightly differently than humans, and it's not going to be a perfect model in every case. But the general approach of saying that that if you take that the delivery of OpRegen to the area of atrophy is, if not necessary, it is at least driving better outcomes than OpRegen that's delivered in the neighborhood, then it is important to invest in and understand how best to get the cells to that area.

So if preclinical models can help guide that through methodology or equipment, those learnings and lessons can then be applied to the clinical situation in order to generate comparable data and improve upon it. And I often use the example of Lasik surgery, that when it first came out, many of us would be reluctant to undergo that procedure because it was new and people didn't have thousands of procedures under their belts. And now it's almost routine.

So I think that the history of new technologies would suggest and indicate that improvements are possible. They require some investment and some work. But I am encouraged by the fact that the the historic arc of scientific discovery would suggest that there will be improvements that ought to lead to improvements in clinical outcomes for patients.

[Operator]

The next question comes from the line of Jack Allen from Baird.

[Jack Allen, analyst]

Congratulations on the progress. A pleasant surprise today with the 24-month update around OpRegen, and I'll start there and some of the comments you're making around the preclinical model and the need to deliver these cells directly to the lesion or where I'm going to start with my first question. Any color as it relates to those patients? I know there were 5 from the first trial here, that by happenstance, had it delivered across lesion, how did they perform relative to the mean of 5.5 or must I wait until the second quarter of this year in the presentation to hear more?

[Brian Culley, executive]

I appreciate your comment and your question, Jack. Thank you. All I can say, because I don't want to take away any thunder from Roche Genentech's forthcoming disclosure of some of this information is that the patients that did receive OpRegen more fully across the area of atrophy on average did have higher, as a subgroup had a higher elevation in BCVA, compared to the 5.5 number for all patients. And I referred to that as is expected by me, expected by Lineage because we do feel that having the cells directly on to the area of atrophy, where the photoreceptors are are hanging in there, not quite obliterated, makes a lot of sense.

But I am trying to caution with respect to the -- how tight, the correlation is, could want to imagine that delivering a bleb of OpRegen off center, compared to 30% on compared to 65% on and totally covering -- then you have this beautiful correlation perhaps in theory, that is exactly what you would get. But each patient's area of atrophy is unique.

They are fingerprints. Some of them are very rounded. Some of them have these large lows. Some people have very healthy Brooks membranes. So one needs to think about sort of the 3-dimensional characteristics of a bleb. And while we and I believe our partners agree that delivering the cells as closely as you can to the area of atrophy and getting as much coverage probably is the -- is associated with the best possible clinical outcome, that's not to say that people -- that there couldn't be someone who maybe gets 50% coverage and has a better outcome than someone that got a 90% coverage and for whatever reason, it did not.

So there are multiple variables that are moving when we think about these patients. But I think that we do have alignment that this is not a cell therapy that is exerting its effects at great distances the way that some of the systemic delivery of stem cells has aspired to in early iterations of these technologies.

Instead, we believe in 2 things. One, that a differentiated cell type, i.e., replacing the actual cell type is one condition that's required. And increasingly, two, delivering those cells directly to the place where they belong is also necessary for optimal clinical outcomes.

[Jack Allen, analyst]

Got it. Got it. And then just to follow up. You mentioned some of the external comparisons and the progression and some with some other mechanisms of action. But it's my understanding that you did have an internal control here and that there were fellows that were tracked throughout the study. Any contextual evidence around the progression from those [indiscernible] of 24 months? And then I have one last one. I'll just give it my try on the Roche data. How do you contextualize the cash runway into the third quarter '25 and your expectations around the Roche Phase IIa data? Was that a strategic move to push beyond the Roche data? Or how should we think about that from a cash flow line perspective?

[Brian Culley, executive]

With respect to the contralateral eye, that is one that you will need to wait for the second quarter to get details on. With respect to financing, although I understand that interpretation and I can't sit here and reject it 100%, I do want to add for you and for everyone listening to this particular answer that there are many factors that go into a decision to raise capital.

So that's really the right answer. For example, to illustrate this point, if a company is getting down to approximately a year of cash and has a going concern, it might get flagged as attractive short for some investors. And so it's nice, but not always required to avoid that. That is, again, just an example it happens to be unrelated to timing of Roche data, but it is illustrative of the many factors that go into when and how much capital you raised.

And I'm only talking about it from the issuer side, there's also the demand side. And of course, there's the pricing, right? Nobody likes to raise a lot of money at prices that they find unattractive. So I just want to caution you about oversimplifying or overinterpreting our financial moves as indicative of signals, as to when and where and how Roche data could be available in the future.

[Operator]

The next question comes from the line of Kristen Kluska from Cantor Fitzgerald.

[Kristen Kluska, analyst]

And apologies, my line cut off. So I'm sorry if I'm asking things that have already been asked. Maybe just for OPC1, Obviously, I understand the upcoming study will be focused on safety. But how are you thinking about setting expectations in the bar you hope to achieve in light of some of the differentiating factors and potential improvements you think you can have with this process?

[Brian Culley, executive]

I appreciate that, Kristen, because -- the -- I feel that the landscape is open, with respect to a definition of clinically meaningful change. There is a commonly cited television commercial in this field, where Christopher Reeve, aka Superman steps up out of a wheelchair and walks across the stage. I believe it was shown during Super Bowl. So it had a very large number of viewers. And it's memorable and it's powerful and emotional and fantastic and probably very unrealistic given the severity of the damage, at least where technology resides today.

And I think where you find that example and that disconnect is when you speak with patients who say things like, well, if I could control my bladder function, it would change my world or if I could increase the angle between my thumb and index finger, it would permit me to hold a pen or a paint brush. So we have found through our research, primary research with people who are affected by spinal cord injuries, that the reaction or the response to very small changes in their functional activities, could be enormously valuable to them as individuals. Which tells us as the developer of new therapies that we want to use sensitive assessments.

We want to use endpoints, that have high sensitivity so that if those changes are driven by our therapy, we can detect them and show that convincing evidence to the regulatory bodies. So I think there's an opportunity because there's a tremendous amount of work by leading academics to investigate new and in some cases, even sort of AI-oriented endpoints because there's high awareness in the space that we need to find better tools than using the end of a cue tip and poking someone in the arm, while their eyes are closed and saying, did you feel that?

[Operator]

The next question comes from the line of Mayank Mamtani from B. Riley.

[Mayank Mamtani, analyst]

So maybe just related to a prior question, Brian, could you talk to what percentage of your spend is OpRegen related? And how might the global manufacturing supply chain has evolved with your partners since you struck the deal initially in December 2021? And does your cash runway include any milestone payment from Roche? And then I have a couple of callouts.

[Jill Howe, executive]

So I can speak to the balance of the investment that we've put for OpRegen. And I would say it's about 2/3 -- sorry, excuse me, 1/3 of our investment to date is really what we focused on through this operating year, that's helpful. .

[Brian Culley, executive]

And I can address global supply, I heard 2021. So if we're going back into COVID, there were 2 things that we did to address that. One is we were very early to react one of our Board members' insights helped us anticipate that there would be disruptions to supply chains and they are continuing in different ways with tanker, shipments, et cetera. We also benefit by the fact that we are a multinational organization.

We have more employees located in Israel, than we have in the U.S. So we are able to source materials, reagents talent from very diverse parts of the world. With respect to the ongoing war in Israel, we initially had a very brief disruption, which would not be surprising. I think we characterize that as a week or 2, before work went back to normal.

So we're thankful that our extremely valuable and appreciated and dedicated staff are not in direct harm's way, and there have only been a very small number of individuals whose spouses or they individually have been called up for military duty. So I want to be very careful not to diminish the emotional impact, while at the same time, making it very clear that our business productivity and output has been almost entirely unaffected.

[Mayank Mamtani, analyst]

No, I ask them we appreciate that, and appreciate your comments on the empty there just to clarify if assuming that the demand in the Roche study is for the 60 patients, pretty rapid thinking from a patient perspective, are you able to supply doses that are needed? I understand we don't have full color on how the enrollment is going. But are you able to comment on that?

[Brian Culley, executive]

Unfortunately, I'm not. I think that Three of the first 4 questions, including a component of the ongoing trial is a notable highlight of the interest in that data. But unfortunately, I'm not able to add any additional information beyond the comments I've made so far today.

[Mayank Mamtani, analyst]

Understood. And then on the hybrid, yes, and then on the hyperimmune platform development activities, if you're able to comment any progress in September, you and your partner [ Turnas ] had in the gene target identification, applicable indication. As you know, there's a big derisking event coming up for one of your peers, which could be very helpful for you.

[Brian Culley, executive]

Yes. I we do follow the small number of peers, that have hypoimmune cell therapy approaches in development. I think in light of the open questions over which kind of edits are perhaps best or effective being a fast follower may be advantageous in this situation, although that's not the reason why we initiated at this time, we initiated a hypoimmune program because we're interested in moving into areas beyond those handful of areas that have immune protection such as the eye and such as the spinal cord.

I don't -- we're not at the point that we're comfortable talking about specific indications. And frankly, in light of the interest, enthusiasm around the OpRegen program, I'm not sure we get much recognition. So I feel as a business, it makes much more sense for us to make some progress, advance some things through research. And then if we have something interesting to talk about, but I have been comfortable sharing that the intent here is to continue to expand the platform, which is being validated through the AMD program and to expand it into some other areas so that if in the not very far future, we find ourselves a very different company with a lot of options with respect to capital and partnerships, we might be able to accelerate our expansion of this platform and not have failed to anticipate that success and be ready for it.

But I think it's premature to -- I don't want to be overstating the things that we're doing. I would rather bring them out and roll them out later when they're a little bit more fully packaged. And I think those will have a greater impact at that time.

[Operator]

The next question comes from the line of Sean Machin from Raymond James.

[Unknown Analyst]

Just a couple for me. So first, can you give us some detail on the OPC1 device study expected target enrollment, maybe necessary waiting period for each patient, in the rank order of which subset of patients you're aiming to enroll first across sub-acuchronic cervical thoracic? And then maybe just broadening out, trying to get a sense for time lines. How much follow-up do you think you'll need across all patients within the device study?

And what package will you need in order to get the device approved for subsequent studies? How much of this can be accomplished in parallel or in sequence with the necessary regulatory steps for the new manufacturing protocol?

[Brian Culley, executive]

Thanks, Sean. Appreciate the questions. 6 to 10 patients in the current protocol, there is a stagger that's built in, we can go with chronic right away, but there is a staging that reflects the Asia Impairment Scale of being both cervical and thoracic. So we're aiming for 3 to 5 sub-acute and 3 to 5 chronic.

The question as to how many patients will be enough to have the agency be comfortable with us using this device in larger studies, is unknowable because it will, of course, depend on the performance of the device. My operating assumption is that because we're using the same size needle positioned in the same way that we will not have any particular challenges.

And hopefully, we'll have some great insights. But there's nothing that is entering the patient that has not been in these patients before. So I think from a success perspective, we are well positioned. The work that we aim to do toward the end of the study and the reason why it's difficult for me to tell you when we think it will conclude, is that the next thing that we will do is introduce the new cells, which we have manufactured.

We have shared some of the data around the new process and how much cleaner and more pure and reproducible. We have made the production of those cells but those cells have not yet made it into clinical testing. So the sequence of events here is a small number of patients with the device, a small number of patients, presumably a small number of patients with the new cells, as a bridging and then going into larger comparative or larger controlled studies.

So I don't know yet because we have not asked the question, how many patients at the end of the dose study would we be doing with the new cells? Or would that be a separate protocol alongside? It depends on the regulatory interactions that we'll be having this year. So I will be informing everyone about what I think that will look like as we get a little bit further into this year and have those meetings with FDA.

[Operator]

The next question comes from the line of Michael Okunewitch from Maxim Group.

[Michael Okunewitch, analyst]

I guess to kick things off, I would just like to see if you could provide a bit more color on the rationale for going into chronic, instead of just the subacute. Is this because you really just need to prove the device work? So the more exploratory data you can get, the better?

[Brian Culley, executive]

I think that's correct. The injury and the delivery of cells is not likely to be meaningfully, i.e., anatomically all that different between a subacute injury and a chronic injury.

However, and I think that's what is being reflected by the FDA's permissiveness to allow us to go into chronic patients for the first time. But I do want to point out that there are not a small number of academics that believe that patients with chronic injuries do retain all of the biological capacity to regenerate. If it can be unlocked, and we have, as a field, been unsuccessful in not figuring out how to do that. So I think the highest and best use with respect to probability of success is in a subacute patient.

That's where we saw in the animals, and that's where we've seen a signal in patients -- in human patients. So having the opportunity to go into chronic patients, as a way to accelerate the device study and along the way getting a free look, a free open label look into a chronic patient, I think, is really a nice way to get double information from a single study.

And what makes it particularly exciting is that a chronic patient is going to, by definition, have reached a plateau in their recovery. So whereas you treat a subacute patient and you really don't know their trajectory, you can make some educated guesses, but there are exceptions and that noise and variability makes it more difficult to tease out a signal.

But a chronic patient, perhaps 3 years since their injury, who has a very level and predictable ability for performance scores, if that individual goes through a procedure, receive cells and then has a change in some of their scores, that is going to stand out, as a very notable event. It won't be conclusive on its own, but it sure as heck is going to create a lot of questions, and some of those questions will include what the addressable market could look like if you're able to access individuals, whose injuries are more than 3 to 6 weeks old.

[Michael Okunewitch, analyst]

Yes. So just on the assumption that if you do end up getting some strong signals in the chronic setting, is it something where you might consider then working off into a parallel program looking at both subacute and chronic -- or do you think for now at least, the plan is just to move forward to subacute after that?

[Brian Culley, executive]

I think not having seen that data yet. But if the data reflects what you just described, I think it would not be particularly difficult to find enthusiastic investment for that fork. So I would be delighted to be able to have that opportunity. And I hope very much that we do have that opportunity because it would be just earth shaking in the field.

[Operator]

The next question comes from the line of Julian Harrison from BTIG.

[Unknown Analyst]

This is Ray on for Julian. And congrats on the IND amendment for OPC1 getting cleared last month. You touched on this earlier, but we were wondering at what point could a partner makes sense for the program?

[Brian Culley, executive]

At what price, Ray? No, I don't answer that. But I think that my philosophy with respect to partnering has always been that there are points at which you may be able to get superior economics relative to other points.

And to be a little bit more detailed, I think being able to show a partner that you have an excellent process of manufacturing yourselves and an excellent method to deliver the cells and perhaps even concurrence around a study design, although that one is less -- that one's more debatable, I think that could be an optimal time.

However, partners that come in and offer compelling economics can get companies to change their mind about the right time to do that. if at all. Spinal cord injury is an orphan condition, and it's not like every pharma company in the world has got a spinal cord cell therapy, commercial sales team that they need to have an asset for.

So the population of partners is more narrow but perhaps more dedicated. So it really is a fluid situation, and it has to also reflect our own share price and our thoughts on continuing to advance programs, without sharing the upside and if we're sitting in an environment like we were in the last 2 or 3 years and a lot of people are looking at biotech unfavorably, doing partnerships makes a lot of sense.

And look no further than the Roche agreement, I shudder to think what our situation would be had we not entered into that Roche agreement. And we're fortunate that the economics of that deal were so favorable to the company. But we are entering a better period. And so that gives us choices. And I think that makes we, as the innovators more powerful in those negotiations. So I'm sorry that I can't necessarily put a pin on exactly a strategy of complete Phase IIb of x number of patients and then seek a partnership because we approach value creation a lot more fluidly than that.

But I do think that going to a potential partner and saying, I've solved these problems is a more interesting proposition than saying, "I have a program that's available, but it has these problems. And I hope that answer makes sense.

[Operator]

The next question comes from the line of Joseph Pantginis from HC Wainright.

[Joseph Pantginis, analyst]

Brian, I want to go back to your -- one of your earlier highlights going back to OpRegen, and that is with patients, obviously, having a lot of the own personal variability with the what their dosing and what their geographic atrophy looks like. So it's highly variable. I'm glad you highlighted that.

So with that said, as we look towards Roche getting to a pivotal and commercial process, and you combine that with sort of the area being a relatively small surface area and iDocs have a lot of expertise in injecting the eyes, what do you personally feel or the company personally feel the level of the rate limiting step that getting the instruments and the methods down pat?

[Brian Culley, executive]

I believe that it's reasonable to say that there is no end to innovation and investigation of that matter. We have a baseline. The baseline was the time at which we entered into the agreement with Roche and Genentech. And we had 24 treated patients, one compassionate use of 25 treated patients, 7 using a suprachoroidal delivery device, the rest using a standard vitrectomy and retinotomy approach and that was data that obviously supported a nearly $700 million deal.

So it was a good starting point. The question, I believe that you're asking me is what -- how far do you -- how far can you go? What do you want to improve? And I would presume, without being able to speak for our partner, specifically, this is, as you asked, my view, I would presume that they would be looking at both benefits, as well as risk.

And I think that the SYFOVI experience is a lovely example of this. The benefit is very small. Thus, a small risk is causing a lot of heartache for that program. If you have an enormous clinical benefit, and I think it's fair to say that the things that we have shown in patients, especially now with today's update of 2-year data, is exactly that. It's an enormous benefit with vision going in the opposite direction of what is expected.

I think that does give you some greater permissibility with respect to safety because the surgical intervention, I presume, will always be more complex and lead to more adverse events than a simple injection into the eye, I will say that we don't have polyethylene glycol in our formulation. So we don't have to worry about the particular issue that CIFOVRI and Apellis are dealing with.

However, it is still a surgery. And so infrequent surgical events, that are occurring with these kinds of interventions probably can be reduced with effort, but probably will never go completely away. And that will ultimately be part of the product profile and the package insert and black boxes are relevant for different products. That's how those things get addressed and ultimately, their adoption by the surgeon and by the patient is going to determine whether it's successful or not.

What I feel particularly good about is that the clinical benefit that we're showing has been very significant the product to date has been well tolerated in the patients that have received it. We have, to my knowledge, received no notices or reports a rejection of our cells, no notices of reports of cysts or tumors or the other kinds of things that people sometimes worry about. And with every passing day, it increasingly looks like a onetime intervention. And that is a product profile that I think is going to win the day every single time.

[Operator]

This concludes our Q&A session. I will now turn the call over to Mr. Brian Culley for closing remarks.

[Brian Culley, executive]

I have nothing more to add today, John. Thank you very much.

[Operator]

I would like to thank our speakers for today's presentation, and thank you all for joining us. This now concludes today's conference. You may now disconnect.