Okay, good afternoon, everybody. Oh, I'll turn this on.
Good afternoon, everybody. My name's Joe Pantginas, Managing Director here at H.C. Wainwright. Welcome back to our next Fireside Chat. Very happy to have with us Brian Culley, Chief Executive Officer of Lineage Cell Therapeutics. Thank you very much for being here. A little before this presentation, I thought of a little analogy. I feel like I'm in front of a Senate panel, and I've prepared a statement before we get into our questions. Honestly, I just want to cut to the chase about one of your lead indications, lead assets too. Actually, it's Roche's asset now, OpRegen. You know, really think this is one of Lineage's key differentiators in dry AMD with geographic atrophy, or GA. Two drugs have been approved, and we all get inundated with the ads in the media and questions from investors regarding Izervay and Syfovre.
They were approved in 2023, and the key takeaway here is they only slow the progression of geographic atrophy in the range of about 14%-20%. I know that was a long-winded intro, but I think it's important perspective. Now let's just dive into some key thesis points. Again, now enter OpRegen. Based on data that Lineage delivered, Roche came in and signed a global partnership based on only five patients' worth of data, based on you showing something essentially unheard of, namely the restoration of retinal structure, function, and visual acuity improvements. That's pretty remarkable. Can you give us a snapshot of these data, please, that include the two-year follow-up for these patients, number one, and for number two, next month, Roche is expected to update your study with a three-year follow-up. What should we expect to see and hear?
Thank you for the opportunity to talk about, talk about the lead program in particular. Just a quick reminder, Lineage Public Company, please refer to the risks of investing, through our filings at sec.gov. A key term in there, Joe, I think was, unheard of, right? Great claims require great evidence to back them up. I would maybe make one correction. I think the Roche and Genentech transaction, the license agreement that we entered into, was heavily informed by five patients in particular. The totality of that data was a 24-patient trial. Those five patients that you mentioned, and I'm glad you called them out, they received our RPE cells right onto the area of atrophy. This is a transplant. This is a cell transplant.
What we were able to show with those five patients in particular were both anatomical and functional improvements in the setting of dry AMD with GA. Heretofore, that's been impossible. Those approved agents that you referenced, they do not improve function. I think it's been, you know, demonstrated very clearly that they do not have a functional benefit, merely a, a, approximately 20% reduction in growth of the area of atrophy or the lesion in the back of the eye. We come in with our lead program, transferring these RPE cells, and we were able to not only increase the layers, the key retinal layers, so the internal limiting membrane, the ELM, the RPE layer, but also increase patient vision. That's unheard of. That's the right way of describing it. It's unheard of.
The two-year data that was presented on this, which is relevant because this is a, a degenerative condition where patients only get worse. Looking over a two-year timeframe is really insightful because we know that patients that are not treated will lose seven, eight, nine letters of vision over that timeframe. In fact, even patients on the best available therapy are going to lose seven, eight, nine letters over that timeframe. Those patients that you mentioned, they had gained seven letters in that same timeframe. That is really significant because human beings do not have regenerative capability of their retina. You should have, and you can go and find in the literature everywhere the word irreversible is used.
It's an irreversible condition, but perhaps for the handful of patients that have been treated with our therapy, where we've been able to actually increase the vision for a durable and very clinically relevant timeframe.
Excellent. With the upcoming three-year data that's expected next month, and again, this is in Roche's hands now, what do you expect that they'll show us?
I've seen what I think is likely to come from that data. What I can say is these effects have persisted, I mean, without any detail. And if you can already be moved by seeing an increase in vision at year one compared to untreated, and then that delta at year two gets larger because untreated patients are continuing to lose sight. They're going blind. If you go out for a third year, you would expect at least that comparator, that untreated patient is going to get worse. It remains to be seen in some detail exactly what happens with our patients, but the benefits have persisted. I think it's safe and comfortable to say that it's not a two-year therapy. It looks like it's going, you know, potentially lifetime.
This potentially could be single treatment that lasts for the patient's life and durably preserves their vision. That's just something that appears to be on a trajectory of becoming more and more clear and convincing with every passing assessment that's performed because, again, we know that an untreated patient is only going to get worse. It's really exciting now that the details coming forthcoming at the CTS conference on June 21st. To be really clear about this, although Lineage collected the raw data, the analysis that will be presented, that's not done by Lineage. That's been done by Genentech. They've got proprietary algorithms and, you know, their conclusions that they're drawing, and they have a speaker who presents that on their behalf. You know, that's really independent. Even their quality control of the data, that's done independently from us.
It really is, you know, our, their interpretation of our raw data, and I think their interpretation is that there's, there's something very special happening here.
Good to know and look forward to seeing the update. I just feel it's necessary to repeat again, you know, with the approved drugs, vision continues to get worse, albeit potentially slower, and you are reversing it at least through the two-year data, which is unheard of. That's what attracted Roche, Genentech. With that said, before we talk more about what they're doing, before what they're doing clinically, I should say, since the OpRegen program is 100% in their hands, they signed a global partnership with you around these limited numbers of patients. Can you discuss some of the terms around that partnership? It actually has a couple layers to it.
Yeah, it does. In many ways, it's a conventional looking deal, even though it's an unconventional approach or an unconventional asset. We're very proud of the economics because, you know, cell therapies haven't always attracted the highest and best terms of deals out there. But we received the $50 million upfront payment, $50 million upfront payment. We're eligible for an additional $620 million of developmental and commercialization milestones and then additionally double-digit royalties that increase, as certain sales thresholds are hit. That deal was signed a few years ago. It looks like a cancer therapy deal, but yet it's an ophthalmology deal with a radical new approach. I wish I could do that deal today, right? I'd want ten times that money upfront, but I also have the benefit of a lot more evidence to support this approach.
You know, I applaud Roche and Genentech for having the courage to take a new way of treating this disease that almost surely will be shown to be superior to what's currently available. But, you know, there's certainly a lot of economics that are reverting to Lineage through this arrangement as well.
I know with another layer, there was some manufacturing or supply agreement that added to it as well.
Yeah, it's really nice. You know, we, without touching the original agreement, we entered into an additional agreement around some certain services. So they expanded the agreement. That really has been, you know, one of the things that I've been helping investors kind of recognize is that in the first year or so of this alliance, there wasn't a lot of public information available, but there's been an acceleration. We have this additional agreement that happened in the second year. Additional clinical sites were opened in the second year. Genentech went, sought and obtained RMAT designation for the asset in the second year. The reason why I emphasize that is this is an open label study with, you know, clinical benefits that are hard to miss.
If you have, on a control arm or an untreated arm, you're going to have no events where people spontaneously regrow retinal tissue or regain vision. When you see that occurring, it's hard to miss, right? It's a very obvious effect. When you think about an open label study, although we do not have access to this data, you know, certainly not on this granular level, our belief system is that good things are happening, our partners are seeing those good things, and they're increasing their investment, including with respect to the ongoing study that they're conducting today.
Got it. No, thanks for that. My next question really has two parts, and I want to ask them very specifically if you can address them just, you know, each independently. Now that OpRegen is fully in Roche's hands, can you first describe the clinical program that they're conducting on their own, which I know also has to do with assessing various delivery techniques?
Yeah. I would just say that, with respect to clinical development, completely in their hands, right? We're not, we're not meaningfully involved in that. We are still today the manufacturer of the product. We are tech transferring that process. Normal deals, you think of like a small molecule, it has a structure, maybe a straightforward synthesis, you hand it over to your partner, and you might never hear from them again. We are very actively involved in the process because we are the manufacturer of a complex biologic. We do not expect to continue to be that manufacturer. We are tech transferring it, which is an important skill because we want to have additional transactions of this kind in other areas of our business. With respect to the ongoing study, it's called the GAlette study.
This is a phase II- A clinical trial that Genentech is managing, and they call it a surgical optimization study. One of the things that we showed was that if you place the cells right onto the area of atrophy, you got the best possible clinical outcomes. In fact, if you place the cells away from the area of atrophy, you really did not see very much. There might not be much of a trophic effect. This really might be a transplant effect. That is very important because it means you want to go through the step of figuring out what is the best way to place these cells into a very delicate area of the retina called the subretinal space.
They are exploring various methods, tools to deliver our material to the subretinal space because it, it must get there in order to get the best possible effects. When you go through that process of improving how you deliver, if you are simultaneously reducing the AE profile and you're having higher percentages of, of delivery, you know, if you're, if you're landing the helicopter in the circle where it's supposed to be, more and more frequently, you're getting better outcomes and you are separating, creating separation between the benefit and the risk of a therapy, which ultimately is FDA's, you know, process of evaluating whether the, the benefits of a therapy are worth the risks. What I really like about this in particular is typically in a phase II trial, you're asking questions around efficacy. Does my intervention work?
In this case, we, I think, have a belief system that it works. We could demonstrate that. The question becomes, how can you make it better? This is more of an engineering question. This is more of a delivery question. It's a procedural question. I believe that the probability of success that you can improve a therapy through those arms rather than trying to squeeze out efficacy of a molecule, but through dosing or something like that, I'm much more comfortable with the kind of work that they're doing right now from a risk perspective because I think about things like laser surgery. It used to be kind of crude, you know, scalpel, and over time it got better and better. That's the arc of new technology, right?
This is a new approach, and I think it's going to get better and better and easier for surgeons to employ it. That's going to lead to better outcomes and make it a more valuable asset.
Oh, fantastic. Okay. Part two, and I think I would put this as the main driver, driver of your investment case and my belief and one of the main reasons we have a buy rating on your stock. That is, when are we going to see data from GAlette? Now, since it's in Roche's hands, you do not have any control over that with regard to data release. I think it's not necessarily a black and white answer because, you know, we're saying, oh, we're expecting Roche to present data at ARVO or, you know, when present data anywhere. I guess how do we view the progress of Roche? Will we see data? What are the components that might impact about the program moving forward that could impact the investment case?
Yeah, it's, it's, it is correct that we don't know exactly what that looks like and we don't know exactly when that occurs. There's a tarot card exercise, right? You know, even simple little things like naming the study, right? Like, you know, you imagine it having a podium presentation at some point, but we don't know. What we, our view of that is while there are indicators that suggest to us that things are going well and we're comforted, we feel some asymmetry in a possible positive outcome from the ongoing work. Ultimately, if the work that's being done by our partners is increasing the probability of success and the value of the asset, we're less worried about the timing of it. Do I want news to break tomorrow? Everyone does, of course, right? I don't control it.
I don't know when. I don't know when I'm going to know, but if the work that's being done now is creating a more valuable lead asset for us, it's okay. We can wait. We'll get there. It's not like a revenue-generating pharma company is going to run out of money to conduct their trial, right? That's a small company problem. You know, we're confident that we've picked the right leader, you know, one of the best ophthalmology global pharmas you could ever conceive of. They've made billions of dollars in ophthalmological products. I'm pretty sure that they know exactly what they're doing. You know, we just be patient and confident and we'll see what we're able to say at some point in the future.
I look at multiple components there, and I would also add the addendum that I guess, you know, part of the street's proverbial impatience around seeing data is that the GAlette study has been ongoing for quite some time. I think that's what is adding to the excitement and the impatience. You know, from a big pharma standpoint, you don't necessarily see, I'll put in quotes, earlier stage data. You know, they keep it close to their chest or what have you. Are there other avenues that might show that the study or the asset is progressing?
I think it, I think Roche and others of that ilk tend to be somewhat conservative in their data sharing, especially for earlier stage pipeline programs. It does not move their stock, right? Many billion dollar company. It is tremendously important to our little company, and so we are encouraged by and thankful for our partner doing things like analyzing and presenting our long-term phase I data. I mean, honestly, they do not have to put the work in to do that. Now, is it correct of me and others to interpret that, that there is a positive signal there that they want people to know about what is, but yep, maybe, but you know, the truth of the matter is we do not know. We look at things like, for example, Roche had a new leadership.
They went through a rationalization of their pipeline and they eliminated, and I see different numbers, 25-30% of their pipeline. They got rid of things that just were not working for them anymore. In their language, focused on best in class, first in class opportunities, transformative medicines. I really feel like we fit pretty solidly inside of a box called transformative medicines. I am encouraged that they have an open label study. They have had plenty of opportunities to kill this program. If that is the bare thesis that it is not working, I do not think there is very much evidence to support that. I want to be abundantly clear. I have not seen the data from the ongoing study, from the GAlette study. I do not know even how many patients have been enrolled. We do not have full visibility into that.
That is okay because we want it to be done correctly. We want it to be well done. Well, when we get there, you know, there will be a moment and hopefully it will be a very happy moment.
Great. Again, looking forward to it. We're all getting impatient. Want to see something nut because we think it's going to be very nice, at least in our belief. A little bit changing gears here on the periphery. You've made some comments recently. We've looked at them as well. The competitive environment that you might feel is validating to your RPE or cellular approach from others.
Yeah, this was, this was tremendously important to us. There are a couple of companies that also manufacture RPE cells and administered them to the, the same location. They probably learned from us how to do this, right? Because we were pretty open about it. And they reported some great results. They have reported that people with dry AMD with GA, so advanced atrophic AMD, have increased vision over very reasonable timeframes, six months, 12 months. That is tremendously validating independent corroborating evidence, right? Independent companies with their RPE cells in the same kind of patient getting these extraordinary outcomes. Now, I do not happen, respectfully, because I think there is some great science being done, I do not happen to consider those companies to represent very meaningful competitive threats because Lineage has outstanding manufacturing capabilities. Genentech has outstanding clinical development capabilities. Roche has outstanding commercialization capabilities, right?
They don't have that. I do think it's really important for those who say, well, Lineage only had 24 patients and only five of those were the specials that got the cells in the right place. You can now look at other companies that have done this and you can add those and like almost a meta analysis, start to answer questions about whether or not this mechanism works. I think it provides tremendous independent proof that the mechanism works without reflecting risk that those entities will meaningfully compete for market share at some point in the future.
Got it. Going to move over to, you know, one of the key topics that I think is not really paid attention to that much and that is your overall manufacturing capabilities. If you look at the time continuum, having been one of the early analysts that covered Geron, a lot of this technology came from Geron and these embryonic cells that have been differentiated, differentiated into specific cell types. It's essentially night and day now with regard to how they've evolved to where you are now. Can you talk about some of your major successes recently for manufacturing of different cell types, as well as how that might even, again, I want to throw it out there, being a separate commercial model on the manufacturing front?
Yeah, I mean, I was probably in grad school when the first era of cell transplants was, was sort of, you know, coming around and, you know, the tools and techniques were not very advanced. But the vision here, the dream, if you will, is that a pluripotent cell line, whether ES or IPS, doesn't matter, but a self-renewing cell line, meaning you've got an abundant and never-ending supply of starting material, which can then go through a directed differentiation process into a specific cell type. That's your medicine. Being able to control that process, the scale, the purity, the potency, all the criteria that are necessary, not only to have to receive marketing authorization, but also to be able to satisfy the addressable patient population affordably, right?
Because you're not going to charge $500,000 for, you know, an 87-year-old woman to, to get, you know, cells in the back of her eye. You have to be able to fit these pieces together. The only way you can do that is through allogeneic cell transplants, similar to what we're doing. It has been very difficult for the field to be able to manufacture on a platform that can demonstrably show that it's capable of this kind of cost of goods, right? The affordability, the accessibility, off-the-shelf use, right? Nobody wants hours of manipulation, growing cells on feeder cells, on flat plates, right?
Like there are technologies now, and we recently announced, and I think this is what you're, you're aiming at, that we had reduced to practice on two separate occasions, a GMP manufacturing system where we're able to make the master cell bank, which itself can generate, any of those vials can generate a working cell bank, and any of those vials can generate the product. When you do that process, your process is the same every time, which means you get to multiply bank one times bank two, but times your production. We have reduced to practice a capability of manufacturing millions of vials of therapy, each which would contain millions of cells. To be able to do so with multiple cell lines, so it's not unique to the cell line, but multiple cell lines and making multiple cell types.
We have in doing this two things. We have, one, not noticed that anyone else has been able to do this, so we think it's special. And two, this opens up a whole new opportunity to partner and to collaborate with others who are struggling with this. You know, if you're taking a bag of blood and you're going and you're harvesting T cells and expanding them and editing, and by the way, editing reduces your yield. You know, that's a custom therapy. It goes back into the patient. It's extremely expensive to do that. But if you have frozen away thousands or tens of thousands or hundreds of thousands of vials of material and it's off-the-shelf use and it's stable, that is the vision for allogeneic cell therapy.
You know, I think we've made an important step toward realizing that vision.
Look forward to seeing a lot more with that. I mean, we're out of time. However, I would be remiss. I mean, we could still spend another hour literally talking about OpRegen, but you know, you've had a long-standing program that's about to hit the clinic again after seeing some encouraging data, and that's the OPC1 program. Can you give me an elevator pitch around OPC1?
Yeah, yeah. Building upon the success of OpRegen and what we've been able to do there, you know, controlling our material and validating that cell transplantation can be safe and reproducible and drive extraordinary clinical outcomes, we want to go far beyond just dry AMD with GA. We want to go into other areas. Yes, we're manufacturing oligodendrocyte progenitor cells to treat spinal cord injury, to help people regain their functional abilities after a traumatic injury. We're looking at auditory neurons now. We have that in preclinical testing. And we've got, you know, some really interesting stuff kind of behind the curtain that, you know, it's inexpensive to just think and talk about it.
I think that's really the future of this company is using the success of the lead program, the partnership, the validation, and hopefully that also is going to bring a better cost of capital and then be able to reinvest and repeat that success. I'm really excited about having a whole basket of opportunities, different kinds of partnerships, different internal ownership. That's what a platform can do for you.
Great. Appreciate the discussion, Brian.
My pleasure, Joe. Thank you.