LCTX US Equity☆

ITEM 1A. RISK FACTORS

An investment in our common shares involves a high degree of risk. You should carefully consider all the risk factors described below, as well as the other information in this report, when evaluating our business and before deciding whether to purchase, hold or sell our common shares. Each of these risk factors, as well as additional risks not presently known to us or that we currently consider immaterial, could harm our business, financial condition, results of operations and/or growth prospects, as well as adversely affect the market price of our common shares, in which case you may lose all or part of your investment. The matters described below reflect our beliefs and views as to factors, events or contingencies that could materially and adversely affect our business, financial condition, results of operations, and growth prospects, and/or the price of our common shares in the future. References in this section to past events or conditions are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not the factors, events or contingencies discussed below have occurred in the past or their likelihood of occurring in the future.

Risks Related to Our Business Operations and Capital Requirements

We are dependent on our third-party collaboration with Roche to develop and commercialize OpRegen. If Roche is not successful and/or terminates the collaboration, we will lose a significant source of potential revenue, further development of OpRegen may be significantly delayed or terminated and its commercial potential could be significantly diminished. Additionally, if OpRegen is not successful, prospects for our other product candidates and our business could be significantly harmed.

OpRegen is our lead cell therapy program. We currently have a collaboration and license agreement with Roche, pursuant to which we license to Roche rights to develop and commercialize our retinal pigment epithelial (“RPE”) cell therapies, including OpRegen (the “Licensed Products”), for the treatment of ocular disorders, including age-related macular degeneration with geographic atrophy. Roche is obligated to pay us milestone payments upon the achievement of specified developmental, regulatory and commercialization milestones. In addition, Roche is obligated to pay us royalties upon sales of the Licensed Products, if any. All regulatory and commercial milestone payments and royalty payments are subject to the existence of certain intellectual property rights that cover OpRegen at the time such payments would otherwise become due, and the royalties on net sales of OpRegen are subject to financial offsets based on the existence of competing products.

We are exposed to numerous risks associated with the Roche Agreement, including Roche having sole control over the clinical development and commercialization of any Licensed Products developed under the agreement. The Roche Agreement also prevents us from developing or commercializing RPE cell therapies for the treatment of ocular disorders on our own or with any third party. Our collaboration with Roche involves risks that are different from the risks associated with independently advancing product candidates, including that Roche may have or develop economic or business interests that are inconsistent with ours; take actions contrary to our requests or objectives; take actions that reduce our return on investment for this collaboration; or take actions that harm our reputation.

Roche’s degree of control of the collaboration, clinical development and commercialization efforts may impact the payment amounts that we receive under the Roche Agreement. For example, Roche may suspend development of OpRegen or other product candidates covered by the Roche Agreement or decide not to pursue commercialization of OpRegen or such other product candidates at all, or it may agree to pay royalties to third parties or adopt a pricing model that reduces the amount of royalties we might otherwise expect.

In recent years, the pharmaceutical industry has experienced a significant trend toward strategic portfolio rationalization—commonly referred to as “pipeline pruning”—in which large pharmaceutical companies have increasingly discontinued, divested, or deprioritized development programs that do not meet internal return-on-investment thresholds, in favor of concentrating resources on a smaller number of high-value or near-term commercial assets. For example, in recent years, Roche has announced that it decided to halt the development of certain programs on the basis that such programs did not provide sufficient grounds for Roche to continue investing in the program. More broadly, Roche has undertaken substantial reductions in its development pipeline in recent years, which illustrates how large pharmaceutical companies may prioritize return on investment and near-term commercial prospects over breadth of pipeline and early-stage or platform-based collaborations of the type we are seeking to enter into or expand. No assurances can be given that Roche will dedicate the resources necessary to carry OpRegen through clinical development, regulatory approval, or commercialization.

38

We are expecting Roche to develop and commercialize the Licensed Products, and if Roche is not able to develop and commercialize the Licensed Products, determines not to continue to pursue development and commercialization of the Licensed Products, or determines to terminate the collaboration at any time in its sole discretion, which it has the right to do, we will not receive any future milestone or royalty payments under the agreement which would harm our business, business prospects, financial condition and results of operations. Even if Roche develops and commercializes the Licensed Products, Roche may not do so on the timelines we expect, or which align with our internal business needs, and the Licensed Products may not be commercially successful, each of which could harm our business, business prospects, financial condition and results of operations.

Roche may determine not to pursue development and commercialization and/or to terminate the collaboration, in its sole discretion, for many reasons, including:

•

delays in development, manufacture or clinical supply of OpRegen (see the risk factor titled, “The manufacture of our cell therapy product candidates is complex, highly regulated and subject to a multitude of risks. We have limited experience manufacturing our product candidates on a clinical scale and no experience manufacturing on a commercial scale. Roche also has limited experience manufacturing OpRegen in a research and development setting, and no experience manufacturing it on a clinical or commercial scale. Any failure to manufacture our product candidates in sufficient quantities in accordance with applicable quality standards and regulatory requirements and at acceptable costs, may result in significant clinical development delays or impair our ability, or that of a strategic collaborator, to obtain approval for or commercialize our product candidates,” below);

•

Roche may conclude that clinical supply of OpRegen does not meet its internal standards;

•

Roche may believe that data generated in clinical trials for OpRegen may be negative, inconclusive, or do not otherwise demonstrate adequate safety, efficacy or clinical benefit to warrant further development or commercialization;

•

Roche may not dedicate the resources necessary to carry OpRegen through clinical development, regulatory approval, or commercialization;

•

Roche may conclude, prior to completion of clinical development of OpRegen, that the commercial landscape in GA secondary to AMD has changed in a manner that would significantly limit the commercial potential of OpRegen;

•

Roche may conclude that the commercial potential of OpRegen does not meet its internal thresholds or yield a timely return on its investment in OpRegen;

•

Roche may choose not to develop and commercialize OpRegen in certain, or any, markets or for one or more indications, if at all;

•

Roche may change the focus of its development or commercialization efforts or prioritize other programs and, accordingly, reduce the efforts and resources allocated to OpRegen;

•

Roche may be unable to obtain regulatory clearances or approvals to continue clinical development or commercialization of OpRegen in a timely manner, or at all;

•

the failure to develop a formulation and/or manufacturing process for OpRegen that Roche believes is commercially viable in a timely manner, or at all;

•

Roche may determine to find or develop, and subsequently seek regulatory approval for, a surgical device for OpRegen, and Roche may not be able to do so in a commercially viable and timely manner, or at all;

•

Roche controls patent prosecution and could make decisions to abandon one or more patent applications or patents; or

•

the loss or impairment of intellectual property rights related to OpRegen.

If Roche terminates the collaboration:

•

we would no longer have the right to receive any milestone payments or royalties thereunder;

39

•

further development of OpRegen, if any, would be significantly delayed or terminated;

•

we would bear all risks and costs related to any further clinical development, manufacturing, regulatory approval and commercialization OpRegen, if any;

•

we might determine that the commercial potential of OpRegen does not warrant further development of OpRegen;

•

we would need to raise additional capital if we were to choose to pursue OpRegen development on our own, or we would need to establish alternative collaborations with third parties, which might not be possible in a timely manner, or at all;

•

if we were to choose to pursue OpRegen development independently, we would need to work collaboratively with Roche to transfer the OpRegen program back to us, and such a transfer might take significant amounts of time, would be resource intensive and costly, and might not be feasible; and

•

it may adversely affect the interest of other third parties in pursuing strategic collaborations relating to our product candidates, including OpRegen, or technology or the terms of any such potential collaboration.

Any loss or termination of rights under the collaboration will cause us to lose a significant source of potential revenue and could significantly delay or result in the discontinuation of development of OpRegen or significantly diminish the commercial potential of OpRegen, which would have a material and adverse effect on our company, financial condition and results of operations and could cause the market price of our common shares to decline.

In addition, we are required under the Roche Agreement to transfer certain manufacturing process know-how to Roche to facilitate manufacture of OpRegen and other potential Licensed Products for clinical trials and commercialization. Transferring manufacturing testing and processes and know-how is complex and involves review and incorporation of both documented and undocumented processes that may have evolved over time. We have never completed such transfer and we can give no assurances that we will be successful in doing so. In addition, transferring production to different facilities may require utilization of new or different processes to meet the specific requirements of a given facility. We and Roche will need to conduct significant development work to transfer these processes. In addition, the cells generated by Roche will need to be demonstrated to be comparable to the cells we previously produced and used in testing. See the risk factor below titled, “Changes in or disruptions to our manufacturing operations could materially and adversely affect our business.” Any failure or delay in the successful transfer of manufacturing process know-how to Roche or the inability of Roche to manufacture comparable cells could halt or delay the continued development of OpRegen and other potential Licensed Products.

We have incurred operating losses since inception, and we do not know if or when we will attain profitability.

Our total operating losses for the fiscal years ended December 31, 2025 and 2024 were $36.6 million and $21.5 million, respectively, and we had an accumulated deficit of $467.0 million as of December 31, 2025. Since inception, we have incurred significant operating losses and we expect to continue to incur significant operating losses for the foreseeable future. Unless and until we or a third-party collaborator succeed in developing, obtaining regulatory approval for, and generating substantial revenue from sales of one or more of our product candidates, we do not expect to become profitable. All of our product candidates will require substantial additional development time and resources before we or any collaborator would be able to apply for or receive any regulatory approval to market and sell a product, and the timeline for and outcome of these development efforts is highly uncertain. In addition, our current strategy includes further investment in our AlloSCOPE manufacturing platform and leveraging that platform and our other technology and know-how to expand our product candidate pipeline. Any new development program will likewise require substantial additional time and resources by us and/or a collaborator before we or any collaborator would be able to apply for marketing approval, and likewise be subject to significant uncertainty. We anticipate our operating losses will increase substantially as we continue our development of, seek regulatory approval for and potentially commercialize our product candidates and seek to identify, assess, acquire, in-license or develop additional product candidates. We may never achieve profitability.

To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This will require us and our collaborators to be successful in a range of challenging activities, including completing clinical and nonclinical studies of our product candidates, obtaining regulatory

40

approval for these product candidates, manufacturing, marketing, and selling any approved products, and satisfying any post-marketing regulatory requirements.

We are attempting to develop new technology and therapeutic products and we and our collaborators must overcome significant challenges to develop, manufacture, and commercialize our product candidates. Cell therapy is a nascent field with limited regulatory approval precedent, which makes it difficult to predict the time and cost of product candidate development and seeking regulatory approval. The regulatory pathway with the FDA and comparable foreign regulatory authorities may be more complex, time-consuming, and unpredictable relative to more well-known therapeutic approaches. We and our collaborators may never succeed in these activities and, even if we do, may never generate revenues that are significant enough for us to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business, or continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

Our investigational allogeneic cell therapies represent a novel approach to the treatment of serious medical conditions, which gives rise to significant challenges. We or our collaborators may not succeed in developing any of our product candidates.

We are developing a pipeline of allogeneic cell therapy product candidates with cells that we create by applying proprietary directed differentiation processes to established pluripotent cell lines. The cells we manufacture must be transplanted into patients in an effort to replace or support cells that are absent or dysfunctional due to degenerative disease, aging, or traumatic injury, and restore or enhance the patient’s functional activity. Allogeneic cell therapy is still an emerging area of therapeutic medical intervention, and as such, it is difficult to accurately predict the type and scope of challenges we and our collaborators may face during the identification and development of our product candidates. To date, there is only one FDA-approved allogeneic RPE cell-based product and it is an encapsulated cell-based gene therapy; it does not integrate into the retina. Although there are clinical trials of other pluripotent stem cell-derived therapeutic candidates ongoing, we do not believe that the FDA has granted marketing approval to any pluripotent stem cell-based therapeutic product, and we are not aware of any regulatory approvals of any iPSC-derived therapeutic candidate anywhere in the world other than conditional and time-limited approvals granted in February 2026 by a committee of Japan’s Ministry of Health, Labor and Welfare's Pharmaceutical Affairs Council for Reheart and Amchepry. Those conditional and time-limited approvals were based on the likelihood of the efficacy of these candidate therapeutics, allowing them to be sold provisionally; further testing will be needed to demonstrate safety and efficacy. These candidate therapeutics were only presumed to be effective by the committee of Japan’s Ministry of Health, Labor and Welfare's Pharmaceutical Affairs Council, with trials observing symptom improvement in four of six Parkinson's patients and in all eight heart failure patients, but with no comparisons against patients who did not receive the treatments. Accordingly, these conditional approvals should not be construed as establishing confirmed safety or efficacy of iPSC-derived therapies, and the framework under which they were granted is not equivalent to the full marketing authorization process that our product candidates would need to satisfy to be commercialized in the United States or other major markets, including generating substantially more clinical data—including from large, controlled trials with direct comparator arms.

If any cell therapies that have received conditional, accelerated, or other non-traditional regulatory approvals in Japan or other jurisdictions subsequently experience serious adverse events (“SAEs”) or adverse events (“AEs”), clinical trial halts, regulatory enforcement actions, product withdrawals, or the imposition of additional restrictions, such developments could have significant negative consequences for us, even if our product candidates are not implicated in the underlying events. For example, adverse safety events in other conditionally approved or investigational cell therapies could cause the FDA or other regulatory authorities to adopt more conservative regulatory positions, impose additional preclinical requirements, increase evidentiary expectations for clinical development, require more extensive manufacturing controls or long-term follow-up studies, or impose additional post-marketing conditions for cell therapy programs broadly. Any such changes could increase our development costs, extend our development timelines, or reduce the likelihood or timing of approval for our product candidates. In addition, negative developments involving cell therapies — whether our product candidates or those of third parties — can reduce investor confidence in the cell therapy sector broadly, adversely affect the market price of cell therapy companies' securities, and impair the ability of companies in our industry to access capital, and adverse safety signals or negative public perception arising from SAEs in other cell therapy programs could cause potential collaboration

41

partners to reduce their interest in cell therapy programs more broadly, demand more extensive safety data before entering into collaborations, or seek more favorable terms reflecting perceived sector-wide risk.

Because cell therapy remains a nascent and rapidly evolving field, and the regulatory framework for the approval of pluripotent stem cell-derived and iPSC-derived therapies has limited established precedent in major markets, we and our collaborators face heightened challenges and uncertainties and potentially a longer regulatory approval process for our product candidates compared with therapeutic candidates with more established clinical development and regulatory approval pathways. We and our collaborators face significant challenges and uncertainties associated with the identification, manufacture, preclinical and clinical development, regulatory approval pathway, and third-party payor coverage and reimbursement of our product candidates required for successful commercialization, including:

•

successfully identifying potential product candidates;

•

manufacturing our product candidates to our internal standards and those of our collaborators, as applicable, as well as to applicable regulatory specifications, in a timely manner, and on the scale necessary to support larger-scale clinical trials, and, if approved, commercialization;

•

understanding and addressing variability in our cell manufacturing processes, which could affect our ability, or the ability of our collaborators, as applicable, to produce clinical trial material and, if approved, commercial product in a reliable and consistent manner;

•

designing and completing clinical trials of our product candidates that will demonstrate their safe and effective use to treat the targeted disease or other medical condition;

•

sourcing clinical and, if approved, commercial supplies of key components required for the manufacture of our product candidates;

•

developing formulations of our cells that reduce or eliminate dose preparation or other complexities of handling and administration of our product candidates at the point of care;

•

identifying and developing the appropriate hypoimmune strategies to prevent or reduce immune rejection of our cell-based product candidates;

•

identifying, developing and validating delivery systems and methods for successful surgical transplantation of our cells;

•

obtaining regulatory approval, as the regulatory frameworks for approval of potential allogeneic cell therapy products and products created with gene-editing technology in and outside of the U.S. are evolving;

•

establishing sales, marketing, and compliance capabilities to gain acceptance of a novel therapy, if approved;

•

obtaining sufficient product coverage and reimbursement from third-party payors such as government healthcare administration authorities and private healthcare insurers for any approved product to enable the product to compete in the marketplace and become commercially profitable; and

•

obtaining and maintaining meaningful intellectual property protection for our product candidates, the process used to manufacture them and the methods for using them in order to prevent third parties from making, using, selling, offering to sell or importing our product candidates or otherwise exploiting our cell manufacturing processes.

If we and our collaborators are not successful in addressing key challenges in development and commercialization of our cell therapy product candidates, or if our product candidates and technologies do not prove to be safe or effective for the indications for which they are being developed, our business prospects and revenue opportunities will be materially limited.

We will continue to spend a substantial amount of our capital on research and development, but we might not succeed in identifying or developing product candidates that are safe and effective for their target indications or are commercially viable.

Our research and development activities are costly, time consuming, and their results are uncertain. We incurred research and development expenses amounting to approximately $17.7 million and $12.5 million during the fiscal

42

years ended December 31, 2025 and 2024, respectively, and we expect to continue to incur substantial research and development expenses. If we successfully identify and develop a new technology or product candidates, refinement of the new technology or product and definition of the practical applications and limitations of the technology or product may take years and require large sums of money. Clinical trials of new therapeutic products, particularly those products that are regulated as biologics, drugs, or devices, such as our product candidates, are very expensive and take years to complete. Only a small percentage of therapeutic product candidates that enter the development process ever receive marketing approval. Even with substantial spending on research and development of our product candidates, they might not prove to be safe or efficacious in the human medical applications for which they are being developed, or they may prove too expensive to manufacture or otherwise fail to gain sufficient market acceptance to be commercially viable.

We will need to obtain substantial additional funding to complete the development and seek regulatory approval of our product candidates and to commercialize products approved for marketing, if any. If we are unable to obtain adequate capital when needed, we may delay, reduce, limit the pace of, suspend or discontinue our product and technology development programs or other operations, which could significantly harm our business and prospects and cause the market price of our common shares to decline.

We believe that our cash, cash equivalents and marketable securities as of December 31, 2025 will be sufficient to fund our planned operations for at least twelve months after the issuance date of our consolidated financial statements included elsewhere in this report; however, these resources will not be sufficient to fund our product candidates through regulatory approval, and we will need to raise substantial additional capital to complete the development and seek regulatory approval of our product candidates and to commercialize products approved for marketing, if any. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our planned operations.

Until such time as we are able to generate sufficient revenues from product sales, royalties or license fees, if ever, we expect to fund our operations through equity offerings, debt financings or other third-party capital sources, including potentially new grants from governmental entities or strategic alliances, collaborations, licenses or other similar arrangements. However, additional capital may not be available to us when needed, on favorable terms, or at all, and any additional capital raised may not be sufficient to enable us to complete development or obtain regulatory approval of our product candidates or commercialize approved products, if any. Our past success in raising capital through equity offerings, strategic collaborations and grants from governmental entities should not provide any assurance that we will be successful in raising additional capital through any of those means when needed, or at all. We expect our ability to raise additional capital will depend not only on progress we and our collaborators make in developing our technologies and product candidates, but also on factors outside of our control that affect access to capital and conditions in the capital markets. A low trading volume, share price and market capitalization together with limited revenue and net losses, may make it difficult and expensive for us to raise additional capital through equity or debt financings. Our ability to obtain additional funds and the amount and type of financing available to us may be adversely impacted by unstable and unfavorable market conditions. Due to our significant operations in Israel, the ongoing Israeli regional conflict may also, directly or indirectly, adversely impact our ability to raise additional capital. An economic downturn, recession or recessionary concerns, potential for or actual U.S. government shutdowns, inflation, relatively high interest rates, public health emergencies, pandemics, geopolitical conflicts, terrorist attacks, global supply chain disruptions, natural or environmental disasters, strained relations between the U.S. and various other countries, social and political discord and unrest in the U.S. and various other countries can be expected to negatively impact financial markets. Volatility and deterioration in the financial markets and relatively high interest rates may make equity or debt financings more difficult, more costly or more dilutive and may increase competition for, or limit the availability of, funding from other third-party sources such as from strategic collaborations and grants from governmental and other entities. Our ability to obtain additional funds and the amount, type and terms of any potential financing may also be adversely affected by the performance of other companies perceived as comparable to us. For example, development setbacks or failures in cell therapies being developed by third parties could have a negative effect on potential investor or strategic collaborator sentiment for our technologies and product candidates.

As discussed elsewhere in this report, we issued warrants to purchase our common shares in connection with our November 2024 registered direct offering. As of the filing date of this report, warrants to purchase up to approximately 35.2 million common shares remain outstanding and, if those warrants are exercised in full on a cash

43

basis, we would receive $32.1 million in gross proceeds. However, no assurances can be given that all or any portion of such warrants will be exercised, or if exercised, that they will be exercised on a cash basis. See also the risk factor below titled “The issuance of common shares upon exercise of warrants will cause immediate and substantial dilution to existing shareholders.”

If we are unable to raise capital when needed or on attractive terms, we may be forced to significantly delay, reduce, limit the pace of, suspend or discontinue some or all aspects of our product and technology development programs or other operations, fail to meet obligations under our in-license agreements and relinquish important rights, and forego opportunities to expand our pipeline, in which case, our ability to achieve our operational goals could be materially and adversely affected. In addition, if we do not have adequate capital, we may seek strategic alliances for research and development programs at an earlier stage than we would otherwise desire or on terms less favorable than might otherwise be available, or relinquish or license on unfavorable terms, our rights to technologies or future product candidates that we otherwise would seek to develop or commercialize ourselves, which could have a material adverse effect on our business and prospects.

Our forecast of the period of time through which our financial resources will support our planned operations is based on a number of assumptions that may prove to be wrong or require adjustment as a result of business decisions, the risks, uncertainties other factors discussed elsewhere in this Risk Factors section or factors not presently known or material to us, and we may use our available financial resources sooner than we currently expect. Our future funding requirements will depend on many factors, including:

•

number, scope, progress and results of our ongoing and planned preclinical studies, clinical trials, and nonclinical activities for our product candidates;

•

unanticipated serious safety concerns related to the use of our product candidates;

•

timing of licensing payments we may be required to make based on the development of our product candidates;

•

the number and development requirements of product candidates that we may pursue;

•

the timing and outcome of regulatory review of our product candidates;

•

changes in laws or regulations applicable to our product candidates and the delivery systems or other tools required for transplant of the cells, including but not limited to clinical trial and manufacturing requirements for approval;

•

our decisions to initiate additional clinical trials, not to initiate any clinical trial or to terminate an existing clinical trial;

•

the cost of obtaining and the availability of materials, equipment and devices that are necessary for the production or administration of our product candidates;

•

our ability to maintain existing development and commercialization collaborations and whether we decide to enter into new third-party collaborations for development or commercialization of our product candidates and the terms of any such collaboration;

•

the cost and timing of establishing and validating new manufacturing processes or facilities for our product candidates and any approved products or of transferring manufacturing responsibilities to a collaborator; and

•

additions or departures of key management or scientific personnel.

If we cannot conduct our planned operations or otherwise capitalize on business opportunities due to a lack of capital, our business, financial condition, and results of operations could be adversely affected and the market price of our common shares may decline.

Raising additional capital may cause dilution to our existing shareholders, restrict our operations, or require us to relinquish rights to or dilute our economic interest in our product candidates or technology on terms unfavorable to us.

We may seek additional capital through a variety of means, including equity offerings, debt financings or other third-party funding, including grants or new strategic alliances and licensing or collaborations. To the extent that we

44

raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a shareholder. Any debt capital financing may involve covenants that restrict our operations, including limitations on additional borrowing and on the use of our assets and may also include equity components, such as warrants, which could cause your ownership interests to be diluted. If we raise capital through upfront payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates and technology or grant licenses on terms that are not favorable to us compared to if we developed and commercialized a product candidate without a strategic collaboration. Any such arrangements may be dilutive to our ownership or economic interest in the products we develop, and we might have to accept royalty payments on product sales rather than receiving the gross revenues from product sales. See, for example, the terms of our agreements with Roche to develop and commercialize OpRegen and with William Demant Invest 2 Aps (WDI) to advance preclinical development of ReSonance. Grants from third parties may involve covenants that restrict our operations, require us to relinquish valuable rights in our products, technology and other intellectual property and may be dilutive to our economic interest in products and technologies we develop with such funding. For example, as discussed in Note 13 (Commitments and Contingencies) to our consolidated financial statements included in this report, pursuant to the terms of grants received by CCN from the Israeli government, there are limitations on our ability to manufacture products and transfer or license technologies outside of Israel and considerable contingent financial obligations to the IIA with respect to products, technologies and intellectual property developed with the support of IIA grant funding, which includes the OpRegen program, and, as discussed below in this Risk Factors section, pursuant to the terms of a grant we received from CIRM in support of clinical development of OPC1, we have royalty payment obligations to CIRM based on net sales of products developed with the support of CIRM funding, if any.

Our ability to raise capital through equity or convertible debt financings may be limited by applicable rules of the SEC and NYSE American.

Our ability to raise capital through the sale of equity securities may be limited by various rules and regulations, including rules of the SEC, the NYSE American or any other securities exchange on which our common shares are listed, which place limits on the amount of securities that we may sell in certain circumstances or require shareholder approval to sell securities in excess of certain amounts. For example, we were required to obtain shareholder approval to sell our securities to Broadwood Capital in our November 2024 registered direct offering. Although such shareholder approval was obtained in this instance, no assurance can be given that our shareholders would approve any future capital raising transaction that requires their approval. We may have to forego opportunities to raise capital on favorable terms if we are limited by applicable rules and regulations, which may include requiring us to obtain shareholder approval.

Obtaining shareholder approval may be a costly and time-consuming process, and seeking shareholder approval could delay our ability to secure otherwise available capital, or cause us to miss such opportunities entirely, which may harm our business and prospects, and there is no guarantee our shareholders ultimately would approve a proposed transaction. We could face difficulties in soliciting a sufficient number of proxies from our shareholders to achieve a quorum at a shareholder meeting, particularly if the majority of our outstanding shares continues to be held by a large number of individual, retail investors, and may have to adjourn or postpone a shareholder meeting, which would further increase the time and expense of obtaining shareholder approval. If our shareholders do not approve a proposed offering and sale involving our equity securities, our ability to raise additional capital may be materially and adversely impacted, as well as our ability to pursue business opportunities where our common shares may be used as consideration, such as strategic transactions to expand our product pipeline, and to retain and recruit key personnel and other employees.

We may expend our limited resources to pursue particular product candidates and fail to capitalize on other product candidates that may be more profitable or for which there is a greater likelihood of success.

We have multiple cell therapy programs in development and limited resources. In addition, we maintain a list of additional undisclosed product candidates which may be considered for development or partnership in the future, and which altogether cover a range of therapeutic areas and conditions. We have and may continue to expand our research and development efforts into therapeutic areas and conditions outside of our initial focus in neurology and ophthalmology and where we have limited experience. We also have contractual commitments to conduct certain manufacturing and development activities, and do not have unilateral discretion to vary from such efforts. As a result,

45

we may forego or delay pursuit of existing or new development opportunities that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. For example, we may invest our resources in a limited number of more advanced programs in the shorter term and reduce our investment in promising earlier stage programs. Such decisions would require us to limit the breadth and diversity of our product candidate pipeline, which could potentially limit the long-term growth of our product portfolio and subject us to greater risk that the failure of any such programs would harm our prospects. Alternately, we may delay or abandon more advanced programs to increase investment in promising earlier stage programs. Our spending on current and future research and development programs, manufacturing technology, and product candidates may not yield any commercially viable products. If we do not accurately evaluate the clinical or commercial potential or target market for a particular product candidate, we may focus our resources on product candidates that do not demonstrate successful preclinical or clinical results or commercial viability at the expense of other programs that may have had greater success, or relinquish valuable rights to that product candidate through future collaborations, licenses and other arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

If we fail to meet our obligations under our in-license agreements, we may lose our rights to key technologies on which our business depends.

Our business depends on several critical technologies that are based in part on technology as well as cell lines licensed from third parties. Those third-party license agreements impose obligations on us, including payment obligations and obligations to pursue development of commercial products under the licensed patents or technology. If a licensor believes that we have failed to meet our obligations under a license agreement, the licensor could seek to limit or terminate our license rights, which could lead to costly and time-consuming litigation and, potentially, a loss of the licensed rights. During the period of any such litigation, our ability to carry out the development and commercialization of potential products, and our ability to raise any capital that we might then need, could be significantly and negatively affected. If our license rights were restricted or ultimately lost, we would not be able to continue to use the licensed technology in our business. Our license agreements are discussed in more detail under “Licensed Technology and Product Development Agreements” in Item 1. “Business” above.

We may fail to enter into new strategic relationships or may not realize the benefits of any strategic relationships that we have entered into, either of which could materially adversely affect our business, financial condition, commercialization prospects, and results of operations.

Collaborative models are central to our business strategy. Our product development programs, the potential commercialization of our product candidates, and diversification and expansion of our pipeline will require substantial additional funding. Therefore, as we have done with OpRegen and certain of our preclinical programs, we have decided or may decide to form or seek strategic alliances, collaborations, or similar arrangements with pharmaceutical or biotechnology companies or other third parties that we believe will complement or augment our development and potential commercialization efforts with respect to such product candidates, including in territories outside the United States or for certain indications. We may also pursue alternative strategies or relationships, such as spin-outs, joint ventures, or investments in complementary businesses that align with our strategy, which may pose risks similar to those described elsewhere in this Risk Factors section with respect to collaborations, as well as additional risks unique to these types of relationships. To the extent we enter into strategic relationships involving parties located outside the United States, we are subject to similar risks to those described elsewhere in this Risk Factors section with respect to foreign acquisitions and licensing arrangements. For example, in August 2025, we entered into a multi-year research collaboration agreement with WDI, a Danish company, to advance preclinical development of ReSonance for the treatment of hearing loss, and development activities are jointly conducted and managed by us and scientists from the from Eriksholm Research Centre, which is located in Denmark and part of Oticon A/S, which is a subsidiary of the Demant Group.

We face significant challenges, including competition, in seeking appropriate collaborators. Collaborations are complex and time-consuming to negotiate and document. We may not be successful in our efforts to establish a collaboration or other alternative arrangements for our product candidates or technologies on acceptable terms or at all, including because our product candidates or technologies may be deemed to be at too early of a stage of development for collaborative effort or third parties may not view our product candidates as having the requisite

46

potential to demonstrate success in clinical trials and ultimately obtain regulatory approval. We may incur costs to continue developing one or more of our product candidates or technologies to establish or support an appropriate collaboration, which costs may outweigh the benefit of any such collaboration, if we are able to enter into a collaboration at all. Additionally, there have been a significant number of recent business combinations among large pharmaceutical companies that have reduced the number of potential future collaborators and changed the strategies of the resulting combined companies. In addition, under the terms of certain license agreements applicable to our product candidates and technologies, we may be restricted from entering into collaboration or similar agreements relating to those product candidates or technologies on certain terms or at all, and when we collaborate with a third party for development and commercialization of a product candidate, we expect that we may have to relinquish some or all of the control over the future success of that product candidate to the third party. See “Item 1. Business— Collaborations,” above. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s evaluation of our technologies, product candidates, and market opportunities. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available for collaboration and could determine that such other collaboration is more attractive than a collaboration with us for our product candidate or technologies. Similar risks exist with respect to any joint ventures we may pursue, as well as risks and uncertainties related to the costs, time, and other resources required to manage and gain the benefit of any such joint venture, and any potential liabilities we may incur in connection with a joint venture.

In instances where we enter into collaborations, we could be subject to the following risks, each of which may materially harm our business, commercialization prospects, and financial results and condition:

•

collaborators may have significant discretion in determining the efforts and resources that they will apply to a collaboration and may not commit sufficient efforts, funding, and other resources to the development or marketing programs for collaboration product candidates or may misapply those efforts, funding, or resources;

•

collaborators may have significant discretion in determining to discontinue programs, to terminate or suspend development of programs, reprioritize internal resources, or decline to exercise options for additional programs, in each case without our consent and potentially at commercially critical times;

•

collaborators may experience financial difficulties, including those that could negatively impact their ability to perform their obligations pursuant to the collaboration agreement, such as funding and development obligations;

•

collaborators may not pursue development and commercialization of collaboration product candidates or may elect not to continue or renew development or commercialization programs based on preclinical or clinical study results or changes in their strategic focus;

•

collaborators may decide or may be required by regulatory authorities to delay clinical trials, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, address delivery device concerns, including the development of new devices, or require a new formulation of a product candidate for clinical testing;

•

we may be required to relinquish important rights to our product candidates or technologies, such as marketing, distribution, and intellectual property rights;

•

we may be required to agree to exclusivity, non-competition, or other terms that restrict our ability to research, develop, or commercialize certain existing or potential future product candidates or technologies, including our ability to develop our product candidates in certain indications or geographic regions or combine our product candidates or technologies with certain third-party products or technologies;

•

collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property rights or proprietary information or expose us to potential liability;

•

collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

47

•

collaborators may acquire outside of the collaboration or develop, independently or in collaboration with third parties, including our competitors, products that compete directly or indirectly with our product candidates and may decide to advance such product candidates instead of ours;

•

collaborators may own or co-own intellectual property rights covering the product candidates or technologies that result from our collaboration, and in such cases, we may not have the exclusive right to commercialize such product candidates or technologies;

•

we and our collaborators may disagree regarding the development plan for a collaboration product candidate, including, for example, with respect to target indications, inclusion or exclusion criteria for a clinical trial, or the decision to seek approval as front-line therapy versus second-, third-, or fourth-line therapy;

•

disputes may arise with our collaborators that could result in the delay or termination of the research, development, or commercialization of the applicable product candidates or costly litigation or arbitration that diverts management attention and resources;

•

business combinations or significant changes in a collaborator’s business strategy may adversely affect our or the collaborator’s willingness to complete our or such collaborator’s obligations under the collaboration;

•

collaborations may be terminated, which may require us to obtain additional capital to pursue further development or commercialization of the applicable product candidates or technologies; or

•

we may not achieve the revenue, specific net income, or other anticipated benefits that justify our having entered into, or otherwise led us to enter into, the collaboration.

If our strategic collaborations do not result in the successful development and commercialization of product candidates, or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone, royalty, or other payments under the collaboration. Moreover, our initial estimates of the potential revenue we are eligible to receive under our strategic collaborations may include potential payments related to therapeutic programs for which our collaborators may discontinue development. If we are unable to enter into strategic collaborations, or if any of the other events described in this Risk Factor section occur after we enter into a collaboration, we may have to curtail the development of a particular product candidate, reduce or delay the development program for such product candidate or one or more of our other product candidates, delay its potential commercialization or reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we will not be able to bring our product candidates to market and generate product revenue.

Our decisions regarding whether to advance our programs internally or through strategic relationships may not maximize the value of our pipeline for our shareholders, and misjudgments in these decisions could materially adversely affect our business.

We evaluate strategic alternatives for programs in our pipeline, including whether to continue internal development or enter into strategic alliances, collaborations, or similar arrangements with pharmaceutical or biotechnology companies or other third parties. As we have done with OpRegen and certain of our preclinical programs, we expect to continue to pursue collaborations and other strategic transactions as part of our value creation strategy. These decisions involve complex and inherently uncertain judgments regarding scientific and clinical risk, manufacturing feasibility, regulatory pathway and timeline, competitive dynamics, capital and resource requirements, and the timing and nature of potential value inflection points. There can be no assurance that we will correctly assess the optimal timing, structure, or counterparty for any collaboration or other strategic transaction.

If we out-license or partner a program at an early stage when internal advancement might have generated substantially greater value, we may forego a significant portion of the potential upside of that program. Conversely, if we retain a program internally for too long or attempt to advance it without a partner when a collaboration might have increased the probability of success or reduced capital consumption, we may incur substantial additional costs, experience delays, or ultimately be unable to fund continued development on acceptable terms.

48

Any of the foregoing could materially adversely affect our business, financial condition, results of operations, and prospects, as well as the market price of our common shares.

We may acquire or acquire rights to new technologies, product candidates and other assets or businesses, which could fail to result in a commercial product or net sales, divert our management’s attention, result in additional dilution to our shareholders or otherwise disrupt our business and adversely affect our results of operations.

We evaluate and consider strategic opportunities on an ongoing basis that we believe could complement or expand our portfolio, enhance our technical capabilities or otherwise offer growth opportunities. We may in the future acquire or acquire rights to develop and commercialize new technologies, product candidates and other assets or businesses or pursue joint ventures or investments in complementary businesses. However, we may not be able to successfully complete any in-license, acquisition or other strategic transaction we choose to pursue, and we may not successfully integrate any acquired or licensed technology, development program or business in a cost-effective and non-disruptive manner. The pursuit of these potential transactions may divert the attention of management and cause us to incur significant costs and expenses in identifying, investigating and pursuing suitable opportunities and transactions, even if we do not complete the transaction. We may not be able to identify desirable targets or be successful in entering into an agreement with any particular target. Furthermore, the anticipated benefits of any strategic transaction may not materialize.

In addition, we may not be able to successfully integrate any acquired personnel, operations and technologies, or effectively manage the combined business following an acquisition. Acquisitions could also result in dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could harm our operating results. We also face risk of shareholder lawsuits in connection with acquisitions that can divert management’s focus from operating our business and result in significant legal and other expenses, which could harm our operating results and financial condition. For example, in 2023, we settled a putative shareholder class action lawsuit relating to our acquisition of Asterias after more than three years of litigation. See Note 13 (Commitments and Contingencies) to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 10, 2025. In addition, if an acquired technology, product candidate or other asset or business fails to meet our expectations, our business, financial condition and results of operations may be negatively affected. Additional risks we may face in connection with acquisitions include:

•

diversion of management time and focus from operating our business to addressing acquisition and integration challenges;

•

integration of cGMP manufacturing operations from an acquired business or company;

•

retention of key employees from an acquired business or company;

•

changes in relationships with other collaborators as a result of new program or product acquisitions or strategic positioning resulting from the acquisition;

•

the need to implement or improve controls, procedures, and policies at the acquired business or company;

•

financial reporting, revenue recognition or other financial or control deficiencies of an acquired company that we don’t adequately address and that cause our reported results to be incorrect;

•

liability for activities of an acquired company before the acquisition, including intellectual property infringement claims, misappropriation or other violation, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

•

unanticipated write-offs or charges; and

•

litigation or other claims in connection with an acquired company, including claims from terminated employees, vendors, former shareholders or other third parties.

In addition, foreign acquisitions and licensing arrangements are subject to additional risks, including those related to integration of operations across different cultures and languages, currency risks, potentially adverse tax consequences of overseas operations, and the particular economic, political, regulatory, and compliance risks

49

associated with specific countries. The occurrence of any of these risks or uncertainties may preclude us from realizing the anticipated benefit of any acquisition or licensing arrangement, and our financial condition may be harmed.

Our failure to address these risks or other problems encountered in connection with acquisitions and investments could cause us to fail to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities, and harm our business generally.

All of our manufacturing operations currently are conducted at our facility in Jerusalem, Israel. Accordingly, political and economic conditions in Israel and war, cyberattacks, terrorist attacks or other armed conflicts involving Israel and the broader region could directly affect our business. Any event or condition that significantly disrupts our ordinary course of operations at our Jerusalem facility could harm our business and materially and adversely affect our financial condition and operating results.

We, or our collaborators, suppliers, CROs, other service providers, or other third parties on which we rely, may experience interruptions that could significantly disrupt or harm our operations, including the conduct of our research and development programs, clinical trials, and manufacturing operations, due to natural disasters, public health emergencies, geopolitical conflicts, political and economic instability, acts of terrorism, or hardware, software, telecommunication or electrical failures.

Currently, all of our cGMP manufacturing processes, including cell banking and product manufacturing for our cell therapy product candidates, are conducted by our subsidiary, CCN, at its facility in Jerusalem, Israel, and more than two-thirds of our workforce are CCN employees who are based in the same facility. In addition, certain of the clinical trial sites for the OpRegen GAlette study are in Israel.

The recent escalation of conflict and hostilities in the Middle East—including the strikes by Israel and the United States on Iran that began on February 28, 2026 and the retaliatory attacks thereto— has increased the risk of broader regional military escalation, cyberattacks, disruptions to transportation and logistics infrastructure, interruption of utility and communications services, and other events that could directly disrupt our operations in Jerusalem and our ability to source and ship materials and supplies to and from Israel, and the clinical trial sites for the OpRegen GAlette study in Israel. Any such disruption could increase our costs, delay our development timelines, or render us unable to manufacture clinical material in sufficient quantities or on required timelines and otherwise materially adversely affect our business and results of operations. The situation continues to rapidly evolve, and it is currently not possible to predict the scope, duration or severity of present or future regional instability or its effects on our operations, financial condition or operating results, on our ability to raise additional capital, as well as the overall economy in Israel and the value of the New Israeli Shekel.

As a result of safety concerns and in response to government-imposed restrictions on movement and travel and other precautions taken to address the Israeli regional conflict that began in October 2023, our operations at our CCN facility in Jerusalem were temporarily impacted in the past. In light of the recent escalation of hostilities and conflict in the Middle East, we expect that similar government-imposed restrictions on movement and travel and other precautions will be implemented, which could materially and adversely affect the operations at our Jerusalem facility. Further, a number of our CCN employees in Israel are members of the military reserves and subject to immediate call-up in response to regional instability. Male Israeli citizens are obligated to perform several days, and in some cases more, of annual military reserve duty each year until they reach the age of 40 (or older, for reservists who are military officers or who have certain occupations) and, in the event of a military conflict, may be called to active duty. Several employees in Israel, including CCN’s chief executive officer, were activated for military duty in the past, and they and other employees may be activated for military duty in the future, particularly in light of the recent escalation of hostilities and conflict in the Middle East, which could disrupt our operations. In addition, the general impact on employees operating in a region of conflict could adversely impact our operations. Although we have business continuity plans in place to address medium- or long-term disruptions that could result from regional instability, those plans are limited and do not account for every possible scenario, and in addition, any long-term closure of our CCN facility, or if that facility were damaged, or if hostilities otherwise disrupt the ongoing operations at that facility, or if a meaningful number of employees are unable to work for significant portions of time, our operations would be materially and adversely impacted.

50

The regional conflict and instability could adversely affect the operations of the clinical trial sites for the OpRegen GAlette study in Israel, including their ability to enroll patients, administer doses, monitor patients, or collect and verify data at those sites. Any such disruption could delay or halt enrollment, require the modification of trial protocols, impair the completeness or integrity of clinical data, any of which could materially delay development of OpRegen.

Our operations are vulnerable to significant disruption if a natural disaster, public health emergency, terrorist attack, cyber attack, war or other armed conflict, power outage or any other sudden, unforeseen and severe event or condition damages, destroys or otherwise prevents us from using, or disrupts normal operations at, our CCN facility. For example, a natural disaster, explosion, cyber attack, fire or prolonged power outage could result in damage to or destruction of materials and equipment that are critical for our research and manufacturing operations, including our cell banks, or otherwise prevent us from conducting product testing or manufacturing sufficient clinical supplies, which would delay the advancement of our programs and materially harm our business, operating results, prospects, or financial condition. Our cell therapy product candidates are manufactured by starting with cells which are stored in the form of a master cell bank or working cell bank. While we have taken precautions to safeguard our cell banks from catastrophic events, including through world-wide physical cell storage diversification, and we take precautions when transporting our cell banks, it is possible that we could lose one or more master or working cell banks and have our manufacturing severely impacted by the need to replace a cell bank. The disaster recovery and business continuity plans we currently have in place are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. Any natural or man-made disaster affecting our CCN facility or employees could materially harm our business.

Hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners, or a significant downturn in the economic or financial condition of Israel, could adversely affect our operations. Although Israel has entered into various agreements with Egypt, Jordan, the Palestinian Authority and with various states in the Persian Gulf, there has been a continuous unrest and terrorist activity with varying levels of severity. Israel faces threats from its neighbors, in particular, Iran and Iran-backed militia groups, which have heightened since the escalation of hostilities in the Middle East. Our insurance policies do not cover us for the damages incurred in connection with these conflicts or for any resulting disruption in our operations. The Israeli government, as a matter of law, provides coverage for the reinstatement value of direct damages that are caused by terrorist attacks or acts of war; however, the government may cease providing such coverage or the coverage might not be enough to cover potential damages.

Several countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, such as CCN. Several other countries have suspended relations with Israel and additional countries may impose restrictions on doing business with Israel and Israeli companies, whether as a result of ongoing instability or hostilities in the region or otherwise. In addition, there have been efforts by activists to cause companies, research institutions and consumers to boycott Israeli goods and cooperation with Israeli-related entities based on Israel’s military operations including in Gaza and Israeli government policies. Such actions, particularly if they become more widespread, may adversely impact our ability to obtain supplies necessary to our manufacturing operations, cooperate with research institutions and collaborate with other third parties. Any hostilities involving Israel, any interruption or curtailment of trade or scientific cooperation between Israel and its present partners, or a significant downturn in the economic or financial condition of Israel could adversely affect our business, financial condition and results of operations. We may also be targeted by cyber terrorists specifically because CCN is an Israeli-related company. See also the discussion in this Risk Factors section under “If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.”

We have historically relied on equity financings and other capital market transactions to fund our operations, and geopolitical conflicts, wars, and other macroeconomic events outside our control can contribute to capital markets volatility and reduce risk appetite for small-capitalization biotechnology issuers. The escalation of hostilities in the Middle East could contribute to broader macroeconomic uncertainty, equity market volatility, and reduced investor appetite for companies with operations in the Middle East, which could adversely affect our ability to raise additional capital on acceptable terms, if at all.

51

CCN has received Israeli government grants for certain of its research and development activities. The terms of these grants may require us to seek approvals and to satisfy specified conditions to manufacture products and transfer or license grant-supported technologies outside of Israel. In the context of such approvals, we will be required to pay penalties in addition to the repayment of the grants.

CCN has received Israeli government grants for certain of its research and development activities, including grants under the Innovation Law for OpRegen and our photoreceptor research initiative, PNC1. The terms of these grants require prior approval and the satisfaction of specified conditions to manufacture products and transfer or license technologies outside of Israel. See “Item 1. Business—Grants from Government Entities,” above. For example, the OpRegen program has been supported in part by the IIA through a series of separate research grants, beginning in 2007. As a result, and subject to the requirements of the Innovation Law, we paid the IIA approximately 24.1% of the upfront payment we received under the Roche Agreement, or approximately $12.1 million, and we are obligated to pay to the IIA approximately 24.1% of any milestone and royalty payments we may receive under the Roche Agreement, up to an aggregate cap on all payments to the IIA, such cap growing over time via interest accrual until paid in full. In accordance with obligations under the Innovation Law, Lineage continues to fund CCN to pay the downstream obligation to the IIA. As of December 31, 2025, the aggregate cap amount was approximately $96.2 million.

The restrictions under the Innovation Law may impair our ability to enter into any future agreements which involve IIA-funded products or know-how without the approval of the IIA, or limit the economic benefit that we might derive under such agreements. We cannot be certain that any approval of the IIA will be obtained on terms that are acceptable to us, or at all. We may not receive the required approvals should we wish to transfer or license IIA-funded know-how, manufacturing and/or development outside of Israel in the future. Furthermore, in the event that we undertake a transaction involving the transfer to a non-Israeli entity of know-how developed with IIA funding pursuant to a merger or similar transaction, the consideration available to our shareholders may be significantly reduced by the amounts we are required to pay to the IIA. Any approval, if given, will generally be subject to additional financial obligations. Failure to comply with the requirements under the Innovation Law may subject CCN to mandatory repayment of grants received by it (together with interest and penalties), as well as expose its directors and management to criminal proceedings. In addition, the IIA may from time-to-time conduct royalty audits.

Clinical development of OPC1 has been supported in part by grant funding from CIRM. We may not be able to timely obtain additional CIRM funding, which could negatively impact our ongoing clinical trial and our ability to advance clinical development of OPC1, as well as our operating results and financial condition. In addition, our profits from the sale of products resulting from CIRM-funded development, if any, will be reduced by amounts that we are required to pay CIRM.

The clinical development of OPC1 has been supported in part by $14.3 million of funding from CIRM, a state agency established to fund stem cell research and development of new stem cell-based treatments. In June 2025, we applied for approximately $7.0 million of additional funding from CIRM to support continued clinical development of OPC1 for the treatment of SCI. In November 2025, we elected to withdraw that application following comments we received from CIRM to the application. There were no specific content deficiencies identified by CIRM in the application. We submitted a revised application in January 2026, which we believe responds to feedback we received from CIRM in November 2025. However, CIRM may determine not to accept our application for review or, even if our application is accepted, CIRM may decline to award any additional funding or may award significantly less additional funding than we applied for. Moreover, we expect that any CIRM funding will only be applicable to expenses we incur after the date of receipt of an appliable grant and that expenses incurred by us prior to the receipt of any such grant will not be eligible for CIRM funding. If we are unable to timely obtain another CIRM grant or if the amount of grant funding we receive from CIRM, if any, is significantly less than we applied for , the timeline for the DOSED clinical study may be adversely affected and we may be unable to complete the study or we may need to raise funds through other means to continue clinical development of OPC1, which could have a higher cost of capital, cause dilution to our shareholders, restrict our operations or require us to relinquish rights on unfavorable terms.

In addition, the terms of our grant award from CIRM require, and we expect the terms of any future grant from CIRM, if any, will require, royalty payments to CIRM based on sales of products developed with CIRM funding, if any, which will reduce our profits on sales of such products. See Item 1. “Business—Grants from Government Entities,” above for additional information.

52

Our international business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States.

CCN is our 94% owned subsidiary located in Jerusalem, Israel. Currently, all of our cGMP manufacturing processes, including cell banking and product manufacturing for our cell therapy product candidates, are conducted by CCN at its Jerusalem facility. A portion of our OpRegen Phase 1/2a clinical trial has been conducted at sites in Israel. Conducting operations internationally involves a number of risks, including:

•

difficulty in staffing and managing foreign operations;

•

failure by us to obtain the appropriate regulatory approvals;

•

logistics and regulations associated with shipping drug product or patient samples, including infrastructure conditions and transportation delays;

•

financial risks, such as longer payment cycles and exposure to foreign currency exchange rate fluctuations and tariffs;

•

becoming subject to U.S. tax on income of our foreign subsidiaries;

•

political and economic instability, including wars, terrorism, cyber attacks, and political unrest, inter-governmental disputes, outbreak of disease, boycotts, curtailment of trade and other business restrictions;

•

multiple, conflicting and changing laws and regulations such as tax laws, export and import restrictions, tariffs, trade protection measures, trade sanctions, labor and employment laws, data and privacy laws, regulatory requirements and other governmental approvals, permits and licenses; and

•

regulatory and compliance risks that may fall within the purview of the U.S. Foreign Corrupt Practices Act, UK Bribery Act, anti-boycott laws and other anti-corruption laws.

Any of these factors could significantly harm our international operations and, consequently, our results of operations. In addition, any failure to comply with applicable legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties, including imprisonment of individuals, fines and penalties, denial of export privileges, seizure of shipments, and restrictions on certain business activities. Also, the failure to comply with applicable legal and regulatory obligations could result in the disruption of our clinical trial activities. Further, the ongoing Israeli regional conflict may have the effect of heightening many of the risks and uncertainties of conducting significant aspects of our operations outside of the United States and, in particular, in Israel.

Our success internationally will depend, in part, on our ability to develop and implement policies and strategies that are effective in anticipating and managing these and other risks, particularly in Israel. Failure to manage these and other risks may have a material adverse effect on our operations in Israel and on our business as a whole.

The administration of our cell therapy product candidates requires surgical transplantation, which exposes us to additional regulatory, clinical, operational and commercial risks that could materially adversely affect our business, results of operations and prospects.

Our product candidates are administered via surgical procedures, which depend on the use of specialized instruments and other tools, such as needles, catheters, cannulas, injectors, imaging‐guided systems. For some of our product candidates, we or our collaborators plan or may seek to investigate the administration of our product candidates utilizing novel, specialized delivery systems or devices. These tools may be used to deliver our cells to precise anatomical locations and may be deemed integral to achieving the intended therapeutic effect. As a result, our business is subject to a number of added risks, including that:

•

a product candidate could be regulated as biologic-device combination product or otherwise require compliance with device‐specific regulatory requirements, which could increase the complexity, cost and timeline for its development and regulatory approval;

•

the use of invasive or technically complex transplantation procedures increases the risk of adverse events, including those unrelated to the cells themselves, such as tissue injury, bleeding, infection, ophthalmological

53

damage, neurological damage, off‐target cell placement, or other serious adverse outcomes, and, even if caused primarily by the delivery tool or procedure, such events may be attributed to our product candidate in clinical trials or post‐marketing surveillance, which could result in clinical holds, delays, additional study requirements, labeling restrictions, reputational harm, or product liability claims;

•

inconsistent or imprecise transplantation of our cell therapies may adversely affect clinical outcomes and trial results, particularly where the therapeutic effect of a cell therapy may depend on precise placement, injection depth, dosing, or handling during administration;

•

delivery tools may adversely affect cell viability, potency, or stability, which could adversely affect clinical outcomes and trial results and require additional preclinical and clinical studies,

•

we or our collaborators may be dependent on third parties over whom we have limited control for supply of delivery tools and these third parties may fail to perform as expected, including by discontinuing products, experiencing quality or regulatory compliance issues, increasing pricing, failing to supply adequate quantities, declining to support our intended use, or exposing us to intellectual property infringement claims, and disruption in access to necessary delivery tools could delay clinical trials or commercialization efforts and force us or our collaborators to adopt alternative devices that require additional validation and testing and may be less effective;

•

complex or invasive administration may require highly trained clinicians, specialized facilities, or longer procedure times, which could limit use to select healthcare centers and reduce physician or hospital willingness to adopt our therapies;

•

third-party payors may be reluctant to reimburse therapies that require costly procedures or equipment, which could adversely affect commercial uptake and revenue potential of our product candidates; and

•

disputes may arise in the event of patient injury claims regarding whether harm was caused by the cells, the delivery tools, the procedure, or inadequate instructions or training, and such disputes could complicate indemnification arrangements, increase litigation costs, and expose us to significant financial and reputational harm.

See also the discussion in this Risk Factors section under, “Some of our product candidates, may be considered combination products by the FDA and other regulatory authorities, which could increase the complexity, cost and timeline for their development and regulatory approval,” and “In some cases, specialized delivery systems or devices may be used to administer our cell therapy product candidates, and we may rely on third parties to manufacture and supply those systems or devices and provide us with intellectual property rights to develop and commercialize them with our cell therapies, if approved. If we are not able to obtain those systems or devices in quantities needed in accordance with our quality standards and regulatory requirements and at acceptable costs, or at all, or those systems or devices fail to perform as expected, clinical development and possible regulatory approval of our product candidates may be significantly delayed and more expensive than anticipated and our business may suffer.”

If we or our collaborators are unable to effectively manage risks related to the tools and procedures used to administer our cell therapies, prospects for successful clinical development, regulatory approval, and commercialization of our product candidates, and our overall business could be materially adversely affected.

Our business could be adversely affected if we lose the services of the key personnel upon whom we depend or if we fail to attract and retain senior management and key scientific personnel.

We believe that our continued success depends to a significant extent upon our efforts and ability to retain highly qualified personnel. All of our officers and other employees, including CCN employees, are at-will employees and may terminate their employment with us at any time with no advance notice. Given the novel and specialized nature of our cell manufacturing technology and the fact that we are operating in an emerging field, there is an inherent scarcity of personnel with the requisite experience to fill the roles in our organization as our business expands. The loss of the services of key personnel could delay or otherwise impact our cell manufacturing and other research and development activities, for example, through loss of institutional knowledge, capabilities, or subject matter expertise, or otherwise disrupt our operations and our ability to conduct our business. The replacement of any of key personnel would likely involve significant time and costs and may significantly delay or prevent the achievement of our business and clinical objectives and would harm our business.

54

In addition, we could experience difficulties attracting qualified employees in the future. For example, competition for qualified personnel in the biotechnology and medical device field is intense due to the limited number of individuals who possess the skills and experience required by our industry and our cell therapy business in particular. Further, for some key positions at CCN, candidates will need to be already living in or willing to relocate to Israel, which further limits the pool of potential candidates. We will need to hire additional personnel as we continue developing our technology and product candidates and building our pipeline, including personnel with specialized and/or program-specific medical, scientific, or technical qualifications and experience. We may not be able to attract quality personnel on acceptable terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential information or that their former employers own their research output.

Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition or results of operations.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances to which we are subject in the U.S. or Israel could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances to which we are subject in the U.S. or Israel could be interpreted, changed, modified or applied adversely to us. For example, the One Big Beautiful Bill Act (“OBBBA”) was signed into law in July 2025 and made significant changes to U.S. federal tax law, including reinstatement of 100% bonus depreciation, allowing domestic research cost expensing, and modifies the business interest expense limitation. The OBBBA permits the deduction of certain expenditures incurred for research and development performed in the U.S. in tax years beginning on or after January 1, 2025, but expenditures attributable to research and development conducted outside of the U.S. must continue to be capitalized and amortized over a 15-year period. A material portion of our research and development activities are conducted in Israel. It cannot be predicted whether, when, in what form, or with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or issued that could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. or Israeli tax expense or require changes in the manner in which we operate to minimize or mitigate any adverse effects of changes in tax law.

The Organization for Economic Co-operation and Development (OECD) has a framework to implement a global minimum corporate tax of 15% for companies with global revenue and profits above certain thresholds (referred to as Pillar 2). Although the U.S. has not enacted legislation to implement Pillar 2, certain countries in which we operate have adopted legislation, and other countries are in the process of introducing legislation to implement Pillar 2. The OECD issued new administrative guidance on January 5, 2026, with respect to Pillar 2 which modifies key aspects of the framework for countries to enact in their own laws. Pillar 2 did not have an impact on the Company’s 2025 financial statements because the Company does not currently meet the 750 million Euro sales threshold but it could in future years.

Our ability to use our net operating losses and other tax attributes to offset future taxable income or taxes may be limited, which may effectively increase our future income tax obligations.

As of December 31, 2025, we had substantial net operating loss (“NOL”) carryforwards for U.S. federal and state tax purposes and other tax attributes to offset future taxable income. However, our federal NOL carryforwards and other tax attributes may not be available to offset future taxable income because of restrictions under U.S. tax law and similar limitations that may apply under state tax laws. A portion of our federal and state NOL carryforwards will begin to expire, if not utilized, in varying amounts between 2030 and 2045. Our federal research and development tax credit carryforwards expire in varying amounts between 2024 and 2045, the California research and development tax credit carryforwards have no expiration date. See Note 12 (Income Taxes) to our consolidated financial statements included in this report for additional information. NOL carryforwards and research and development and other tax credits that expire unused will be unavailable to offset future income tax liabilities. Under federal income tax law, federal NOL carryforwards generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such NOL carryforwards is limited to 80% of taxable income. In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “IRC”), and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. We have

55

experienced ownership changes in the past and we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. As a result, our ability to use our pre-change NOL carryforwards and tax credits to offset post-change taxable income, if any, could be subject to significant limitations. Similar provisions of state tax law may also apply. In addition, the state of California suspended the use of the NOL deduction for tax years 2024 through 2026 if their California taxable income is greater than or equal to $1 million. Accordingly, we may not be able to offset taxable income with our NOL carryforwards during these years. The state of California also limited the use of their research and development credits to $5 million for tax years 2024 through 2026, which could accelerate or permanently increase state taxes owed. As a result of limitations on our ability to use our NOL carryforwards and tax credits, we may be unable to gain the benefit of a material portion of our NOL carryforwards and tax credits, which could harm our future operating results by effectively increasing our future income tax obligations.

Taxing authorities could reallocate our taxable income among our subsidiaries, which could increase our overall tax liability.

We are organized in the United States, and have subsidiaries in Israel and Singapore. If we succeed in growing our business, we may conduct increased operations through subsidiaries in various tax jurisdictions pursuant to transfer pricing arrangements between us and our subsidiaries. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that such arrangements be priced the same as those between unrelated companies dealing at arm’s length and that appropriate documentation is maintained to support the value of such arrangements. Our transfer pricing policies were formulated with the assistance of third-party experts; however, tax authorities in any country may disagree with our transfer pricing policies and procedures and we are subject to more tax audits as a result of having subsidiaries in foreign countries. If tax authorities in any of these countries were to successfully challenge our transfer prices as not reflecting arm’s length transactions, they could require us to adjust our transfer prices and thereby reallocate our income to reflect these revised transfer prices, which could result in a higher tax liability to us. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, resulting in double taxation. If tax authorities were to allocate income to a higher tax jurisdiction, subject our income to double taxation or assess interest and penalties, particularly in relation to our subsidiary CCN, it would increase our tax liability, which could adversely affect our financial condition, results of operations and cash flows.

Because a portion of our expenses are incurred in currencies other than the U.S. Dollar, our results of operations may be harmed by currency fluctuations.

Our reporting and functional currency is the United States Dollar, but a material portion of our research and development and other operating expenses are incurred in Israeli New Shekels through our subsidiary CCN. As a result, we are exposed to some currency fluctuation risks. We do not currently manage our foreign currency exposure in a manner that would eliminate the effects of changes in foreign exchange rates. For example, we do not engage in any active hedging techniques, and we do not employ any derivative instruments. Unfavorable fluctuations in the exchange rate between Israeli New Shekels and U.S. dollar may adversely affect our comprehensive loss and cash flows.

Disruptions at the FDA, SEC and other government agencies, including due to a lack of funding, government shutdowns, policy changes, leadership and organizational changes, or significant personnel turnover, could delay or disrupt clinical and preclinical development and potential marketing approval of our product candidates and hinder our ability to raise additional capital.

The ability of the FDA to review and approve new product applications and take action with respect to other regulatory matters can be affected by a variety of factors, including the U.S. federal government budget and funding levels, government shutdowns, public health crises, leadership changes, statutory, regulatory and policy changes, federal government policy actions, including reduction-in-force initiatives, ability to hire and retain key personnel, ability to accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated in recent years. In 2025, as a result of initiatives of the new presidential administration, the FDA experienced leadership turnover, significant workforce cuts and voluntary departures, requirements to reduce regulation, shifts in scientific and regulatory priorities, and political pressure to increase scrutiny of certain products. These and other factors increased the uncertainties associated with

56

interpreting the FDA’s guidance and predicting its areas of focus and responses to various issues. In addition, companies experienced reduced engagement with review divisions and reported slower reviews and missed review deadlines. Changes and disruptions at the FDA that have occurred or may occur in the future may make it more difficult or costly to progress the development of our product candidates by resulting in delayed meetings and other communications with agency staff, slower application acceptances and reviews, and increased unpredictability in review outcomes for applications to commence clinical studies or to market a new product in the U.S. In addition, government funding of the FDA and other government agencies, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable and could lead to changes in agency funding that make it more difficult or costly to operate our business. For example, recent actions by the current presidential administration and National Institutes of Health may adversely impact research and development of new biologics products, and we cannot predict how and the extent to which such action may impact our business.

The failure of the U.S. Congress to pass a new appropriations bill or continuing resolution to temporarily extend funding by the applicable legislative deadline or the occurrence of a public health crisis may cause federal agencies to reduce or halt non-essential operations, which could prevent or delay staff at federal agencies from performing key functions and may adversely affect our business. For example, over the last several years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities to the extent they are not funded by existing available user fees. For further example, as a result of the COVID-19 pandemic, the FDA’s inspectional activities were interrupted and restarted on a risk-based basis, which had the effect of delaying review and potential approval of product candidate marketing applications. In addition, disruptions at the SEC could prevent or delay SEC staff from performing key functions, including, for example, granting acceleration requests for registration statements, declaring registration statements or amendments thereto effective and providing interpretive guidance or no-action letters. If a prolonged government shutdown, public health crisis, or other event or condition occurs that prevents or significantly delays the FDA, SEC or other regulatory agencies from hiring and retaining personnel and conducting their regular activities, or if an agency is restructured or experiences significant reduction in funding, leadership changes or employee turnover, it could significantly impact the ability of these agencies to timely review and process our regulatory submissions and may impede our access to the public markets and ability to obtain additional capital needed to maintain or expand our operations or to complete important acquisitions or other transactions, which could have a material adverse effect on our business.

Risks Related to Government Regulation

If we or our strategic collaborators are unable to obtain FDA or comparable foreign regulatory authority approvals for our product candidates on a timely basis, or at all, our product candidates may not be marketed or sold and our business will be substantially harmed.

The clinical development, manufacturing, labeling, packaging, storage, recordkeeping, advertising, promotion, export, import, marketing, distribution, adverse event reporting, including the submission of safety and other post-marketing information and reports, and other activities we may engage in relating to our product candidates are subject to extensive regulation. No action can be taken to market any therapeutic biologics product in the U.S. until a BLA has been approved by the FDA. A BLA must be supported by extensive clinical and preclinical data, as well as extensive information regarding pharmacology, chemistry, manufacturing, and controls. Outside the United States, many comparable foreign regulatory authorities employ similar approval processes. Any issues encountered by such regulatory authorities could delay or otherwise negatively impact the development and commercialization of our product candidates. For example, changes in leadership, loss of key personnel, and staffing shortages and furloughs, lapses in government appropriations or funding, government shutdowns, or other disruptions could increase the time required for interactions with regulatory authorities, including with respect to the review, acceptance, or approval of regulatory applications or other correspondence or submissions related to our product candidates, as well as our patent or other intellectual property applications, and could also result in delays in the interpretation and implementation of important laws and regulations relevant to our business. In addition, there is uncertainty regarding how the FDA and other government agencies may evolve in the coming years, as well as with respect to the regulatory approval process for biopharmaceutical products. For example, in January 2025, an executive order entitled “Unleashing Prosperity Through Deregulation,” which is applicable to the FDA, called for at least ten existing regulations to be repealed whenever an executive department or agency publicly proposes for notice and comment or otherwise promulgates a new regulation. There have also been numerous recent developments at the FDA, including implementation of a generative artificial intelligence tool, referred to as Elsa, across all centers at the FDA, announcement of a plan to

57

phase out animal testing for certain drugs, announcement of a plan to expand its use of unannounced inspections of foreign manufacturing facilities that produce medicines and other medical products intended for U.S. patients and consumers, establishment of a program designed to facilitate new U.S. drug manufacturing facilities, and the rollout of a new Commissioner’s National Priority Voucher pilot program to accelerate the development and review of products that align with U.S. national health priorities and interests. We cannot fully predict how developments such as those described above, including any future developments, will impact our business.

To date, neither we nor any collaborator has submitted a BLA to the FDA or similar applications to comparable foreign regulatory authorities for any of our cell therapy product candidates, and we cannot be certain that any of our product candidates will receive regulatory approval once a BLA or similar application has been submitted. The process of obtaining regulatory approval is expensive, uncertain, often takes many years following the commencement of clinical trials, and can vary substantially based upon the type, complexity, and novelty of the product candidates involved, as well as the target indications, patient population, and regulatory authority involved. As a company, we have no experience with the preparation and submission of a BLA. Further, the FDA has not yet granted approval for any pluripotent stem cell-based or iPSC-derived therapeutic candidate, which we believe may increase the complexity, uncertainty, and length of the regulatory approval process for our product candidates. In addition, the FDA has the authority to require a Risk Evaluation and Mitigation Strategy (REMS) plan as part of a BLA approval or after BLA approval, which may impose further requirements or restrictions on the distribution or use of an approved biologic, such as limiting prescribing to certain physicians or medical centers that have undergone specialized training, limiting treatment to patients who meet certain safe-use criteria, and requiring treated patients to enroll in a registry. Our product candidates could fail to receive regulatory approval for many reasons, including the following:

•

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

•

we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate satisfies the FDA’s or such comparable foreign regulatory authorities’ legal standards with respect to safety, purity, and potency, or efficacy, for its intended patient population;

•

the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

•

we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

•

the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

•

the data collected from clinical trials may not be sufficient to support the submission of a BLA or other comparable foreign submission or to obtain regulatory approval in the U.S. or elsewhere, or regulatory authorities may not accept a submission due to, among other reasons, the content or formatting of the submission;

•

the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities for a product candidate;

•

FDA requirements with respect to HCT/Ps are still evolving, and FDA could increase and/or expand requirements for keeping and/or maintaining marketing approval; and

•

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may change in a manner that renders our clinical data insufficient for approval, including, for example, as a result of positive or negative data from third parties regarding other cell-based products or product candidates.

The lengthy approval process, as well as the unpredictability of clinical trial results, may prevent us or a collaborator from obtaining regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects. The FDA and comparable foreign regulatory authorities have substantial discretion in the approval process and in determining whether and when regulatory approval will be granted for any product candidates, including those that we may submit for approval in the future. For example, regulatory authorities in various jurisdictions have in the past had, and may in the future have, differing requirements for, interpretations of, and opinions on preclinical and clinical data, and certain regulatory authorities may more closely scrutinize our data, including our processes for maintaining the integrity of and disseminating such data, in particular,

58

as our product candidates advance into later stages of development. We or our collaborator may be required to conduct additional preclinical studies, alter proposed clinical trial designs, or conduct additional clinical trials to satisfy the regulatory authorities in each of the jurisdictions in which we hope to conduct clinical trials and develop and, if approved, market our products. In addition, from time to time, the FDA and other governmental or regulatory authorities across jurisdictions may adopt or promulgate laws, regulations, guidance, standards, or policies, or issue communications in areas applicable to various aspects of our research and development programs. Our efforts to comply with or address such laws, regulations, guidance, standards, policies, or communications could increase the time and expense required, or make it more difficult, to complete development activities and ultimately obtain regulatory approval for our product candidates. Further, certain of such laws, regulations, guidance, standards, policies, or communications may be subject to varying interpretations, which may increase our risk of potential noncompliance. Additionally, as discussed elsewhere in these Risk Factors, the FDA’s “real-time” release of newly issued CRLs, if received for any of our product candidates, could materially harm our business. In such a case, the deficiencies in the BLA for our product candidate may be publicly disclosed before we or our collaborator have an opportunity to fully evaluate or address them, and even if a CRL contains redactions, our confidential or proprietary information may be revealed, which could harm our intellectual property strategy and competitive position, trigger disclosure requirements, and increase our exposure to potential litigation.

In addition, even if we obtain approval for any of our product candidates, regulatory authorities may grant such approval for fewer or more limited indications than we request, may not approve the price we intend to charge for such product, may grant approval contingent on the performance of costly post-marketing clinical trials, may require lengthy post-treatment follow-up, or may approve such product with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

Government-imposed bans or restrictions and religious, moral, and ethical concerns about the use of hES cells could prevent us from developing and successfully marketing stem cell products.

Government-imposed bans or restrictions on the use of embryos or hES cells in research and development in the United States and abroad could generally constrain stem cell research, thereby limiting the market and demand for our products. During March 2009, the federal government, pursuant to a presidential executive order, lifted certain restrictions on federal funding of research involving the use of hES cells, and in accordance with the executive order, the NIH has adopted guidelines for determining the eligibility of hES cell lines for use in federally funded research. The central focus of the guidelines is to assure that hES cells used in federally funded research were derived from human embryos that were created for reproductive purposes, were no longer needed for this purpose, and were voluntarily donated for research purposes with the informed written consent of the donors. However, the hES cells that were derived from embryos created for research purposes rather than reproductive purposes, and other hES cells that were not derived in compliance with the guidelines, are not eligible for use in federally funded research. Further, However, on January 22, 2026, NIH announced a new policy, effective immediately, that NIH funds will no longer be used to support research involving hES from elective abortions – which provides an additional layer of restriction for hES use in federally funded research on top of the 2009 policy. Additionally, California law requires that stem cell research be conducted under the oversight of a SCRO Committee. Many kinds of stem cell research, including the derivation of new hES cell lines, may only be conducted in California with the prior written approval of the SCRO Committee. A SCRO Committee could prohibit or impose restrictions on the research that we plan to do. Federal and or state regulations may change unexpectedly which could adversely affect our current or future hES cell development. Moreover, the use of hES cells may give rise to religious, moral, and ethical issues. These considerations could lead to more restrictive government regulations or could generally constrain stem cell research, thereby limiting the market and demand for our product candidates, and/or our ability to supply them.

Our reliance on pluripotent cell lines that may be exempt from certain donor eligibility requirements could create regulatory, labeling, and commercialization constraints, and could require us to undertake additional steps that delay, limit, or prevent commercialization of one or more product candidates.

Our product candidates are subject to extensive regulation by the FDA and other regulatory authorities, including requirements applicable to HCT/Ps that are intended to prevent the introduction, transmission, and spread of communicable disease. Where applicable, these requirements include donor screening and testing and may give rise to labeling conditions or other restrictions as a condition of approval.

59

Certain of our programs are based on hES cell lines, including OpRegen, OPC1 and ANP1, which were derived from embryos created for IVF purposes and donated for research prior to adoption of certain current requirements under 21 CFR Part 1271 governing donor eligibility. Because these lines were derived prior to the effective date of current donor eligibility requirements, they may qualify as exempt from certain contemporaneous donor screening and testing obligations that would apply to HCT/P donor material sourced today. Notwithstanding any such exemption, upon commercialization of a product derived from any such exempt cell line, we may be required to label the product to reflect its exempt donor eligibility status, and regulatory authorities may impose additional risk-based conditions, post-market requirements, or use limitations as part of the approval process. //

Our iPSC line was derived under donor screening and testing practices that were consistent with 21 CFR Part 1271 requirements applicable at the time of donation and derivation. However, scientific understanding of infectious disease risk and donor eligibility standards continues to evolve, and future changes in regulatory expectations, advances in testing science, or identification of new infectious agents or transmission pathways could lead regulatory authorities to reassess the sufficiency of historical donor screening or testing information for iPSC-derived products, potentially requiring additional characterization, testing, or disclosure.

Any of these outcomes could require us to modify product labeling, conduct additional preclinical or clinical studies, implement additional manufacturing controls, or discontinue development of one or more product candidates derived from an affected cell line. Because our allogeneic product candidates are generally derived from a single master cell line for the life of the product, any regulatory constraint that applies to a foundational cell line could affect the entire dependent program. These events could materially and adversely affect our business, financial condition, results of operations, and development prospects.

Some of our product candidates, may be considered combination products by the FDA and other regulatory authorities, which could increase the complexity, cost and timeline for their development and regulatory approval.

To the extent our product candidates meet the FDA’s or other regulatory authority’s definition of a combination product, the regulatory approval requirements can be more complex because in addition to the individual regulatory requirements for each component, e.g., a biologic and a medical device, additional combination product regulatory requirements may apply. The cost and timeline for development of any of our cell therapy product candidates determined to be a combination product may be substantially greater than that of other product candidates. In addition, even if the FDA does not determine that our product candidates are combination products, we may nevertheless be required to obtain approval or allowance to proceed from more than one Center of the FDA because a device will need to deliver our product candidates to patients. For example, we had to obtain allowance to proceed from two Centers of the FDA (the Center for Biologics Evaluation and Research and the Center for Devices and Radiological Health) before the FDA would allow us to proceed with the DOSED clinical study. Having to obtain feedback and allowance to proceed from more than one center of the FDA increases the chances of not receiving approval and adds complexity, time and cost.

We expect that the commercial opportunity for some of our products may depend on our ability, or that of a commercial collaborator, to obtain and maintain reimbursement and continued coverage from various payors, including government agencies and insurance companies.

If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

For example, in the United States, healthcare providers are reimbursed for covered services and products they deliver through Medicare, Medicaid and other government healthcare programs, as well as through private payers. No uniform policy for coverage and reimbursement exists in the United States, and coverage and reimbursement can differ significantly from payor to payor. Decisions regarding whether to cover any of our product candidates, if approved, the extent of coverage and amount of reimbursement to be provided are made on a plan-by-plan basis. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement rates, but also have their own methods and approval process apart from Medicare determinations. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance. We may be

60

required to provide specified rebates or discounts on the products we sell to certain government funded programs, including Medicare and Medicaid, and those rebates or discounts have increased over time. The Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act (collectively, the “ACA”), enacted in 2010, increased many of the mandatory discounts and rebates and imposed a new branded prescription pharmaceutical manufacturers and importers fee payable each year by certain manufacturers.

If we are unable to establish or sustain coverage and adequate reimbursement for any product candidates from third-party payors, the adoption of those products and sales revenue will be adversely affected, which, in turn, could adversely affect the ability to market or sell those product candidates, if approved. Further, coverage policies and third-party payor reimbursement rates may change at any time. Therefore, even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future.

We face similar issues outside of the United States. In some non-U.S. jurisdictions, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, the EU provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. A member state may approve a specific price for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products. Historically, products launched in the EU do not follow price structures of the United States and generally tend to be significantly lower.

In addition, we are subject to the risk that a negative perception of the future pharmaceutical pricing environment by potential collaborators and investors could negatively impact their financial models and their decision to invest in, or enter into a collaboration, with us. If investors have a negative view on the future pharmaceutical pricing environment, this could cause us to raise capital at higher cost and our stockholders could suffer greater dilution. If potential collaborators have such a view, this could make it more challenging for us to enter into collaborations on acceptable terms or at all, which could require us to fund clinical trials on our own, which we currently do not have the capital to do. See the risk factor above titled “Raising additional capital may cause dilution to our existing shareholders, restrict our operations, or require us to relinquish rights to or dilute our economic interest in our product candidates or technology on terms unfavorable to us.”

Certain of the clinical sites for the GAlette study are outside of the United States and we or our collaborators may in the future conduct certain of our clinical trials for one or more of our product candidates outside of the United States. However, the FDA and other foreign equivalents may not accept data from such trials, in which case our development plans will be delayed, which could materially harm our business.

OpRegen is currently being evaluated by our partners Roche and Genentech in the GAlette study, which is currently at clinical sites across the U.S. and Israel, and we or our collaborators may in the future conduct one or more of our clinical trials for our product candidates outside the United States. The acceptance of study data from clinical trials conducted outside the United States or another jurisdiction by the FDA or comparable foreign regulatory authority may be subject to certain conditions or may not be accepted at all. In cases where data from foreign clinical trials are intended to serve as the sole basis for regulatory approval in the United States, the FDA will generally not approve the application on the basis of foreign data alone unless the data are applicable to the United States population and United States medical practice; the trials were performed by clinical investigators of recognized competence and pursuant to GCP regulations; and the data may be considered valid without the need for an on-site inspection by the FDA, or if the FDA considers such inspection to be necessary, the FDA is able to validate the data through an on-site inspection or other appropriate means. In addition, even where the foreign study data are not intended to serve as the sole basis for approval, if the relevant study was not conducted pursuant to an IND, the FDA will not accept the data as support for a marketing application unless the study was conducted in accordance with GCP requirements and the FDA is able to validate the data from the study through an onsite inspection if deemed necessary. Many foreign regulatory authorities have similar requirements for clinical data gathered outside of their respective jurisdictions. There can be no assurance the FDA will accept data from clinical trials conducted outside of the United States. If the FDA does not accept data from our clinical trials of our product candidates, it would likely result in the need for

61

additional clinical trials, which would be costly and time-consuming and delay or permanently halt our development of our product candidates.

A party conducting a clinical trial outside the United States also exposes such party to additional risks, including risks associated with: additional foreign regulatory requirements; foreign exchange fluctuations; compliance with foreign manufacturing, customs, shipment, and storage requirements; inconsistent standards for reporting and evaluating clinical data and adverse events; diminished protection of intellectual property in some countries; public health concerns or political instability, civil unrest, war, or similar events that may jeopardize our ability to commence, conduct, or complete a clinical trial and evaluate resulting data; challenges with enrolling enrolled patients in foreign countries to adhere to clinical protocols as a result of differences in healthcare services or cultural customs; and political and economic risks, including war, relevant to such foreign countries.

Legislation and legislative, executive and regulatory proposals intended to contain health care costs may adversely affect our business.

There has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. As an example, in August 2022, Congress passed the Inflation Reduction Act of 2022, which includes prescription drug provisions that have significant implications for the pharmaceutical industry and Medicare beneficiaries, including allowing the federal government to negotiate a maximum fair price for certain high-priced single source Medicare drugs, imposing penalties and excise tax for manufacturers that fail to comply with the drug price negotiation requirements, requiring inflation rebates for all Medicare Part B and Part D drugs, with limited exceptions, if their drug prices increase faster than inflation, and redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, among other changes. Further, the Biden administration released an additional executive order on October 14, 2022, the U.S. Department of Health & Human Services to submit a report within 90 days on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries. It is unclear whether this executive order or similar policy initiatives will be implemented in the future. Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act of 1980. On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights, which would allow the U.S. government to share a company’s drug patents developed with federal funds with other companies. While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework. The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented on the pharmaceutical industry as a whole is unclear. The implementation of cost containment measures, including the prescription drug provisions under the Inflation Reduction Act, as well as other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our product candidates if approved.

The ACA and future changes to that law may adversely affect our business.

As a result of the adoption of the ACA, in the United States, substantial changes have been made to the system for paying for healthcare in the United States. Among the ACA’s provisions of importance to our industry are that it:

•

created the branded prescription pharmaceutical manufacturers and importers annual fee;

•

increased the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program, to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively and capped the total rebate amount for innovator drugs at 100% of the Average Manufacturer Price. However, on March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate cap for single source and innovator multiple source drugs, beginning January 1, 2024;

•

created new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for certain drugs and biologics that are inhaled, infused, instilled, implanted or injected;

•

extended manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

62

•

expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability;

•

expanded the entities eligible for discounts under the Public Health program;

•

created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

•

established a Center for Medicare & Medicaid Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending, potentially including prescription drug spending; and

•

created a licensure framework for follow on biologic products.

There have been executive, judicial and Congressional challenges to certain aspects of the ACA. While Congress has not passed comprehensive repeal legislation, it has enacted laws that modify certain provisions of the ACA such as removing penalties for not complying with the ACA’s individual mandate to carry health insurance, and eliminating the implementation of certain ACA-mandated fees. In June 2021, the United States Supreme Court dismissed a challenge on procedural grounds that argued the ACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. Thus, the ACA will remain in effect in its current form. Moreover, prior to the United States Supreme Court ruling, in January 2021, President Biden issued an executive order that, among other things, instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is unclear how any such challenges, other litigation, and the healthcare reform measures of the Biden administration will impact the ACA.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of 2011, includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2031, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken. Under current legislation, the actual reduction in Medicare payments will vary from 1% in 2022 to up to 3% in the final fiscal year of this sequester. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. In 2024, CMS built upon the then U.S. presidential administration’s goals of advancing health equity by expanding access to quality, affordable health coverage and care by increasing access to health care services, simplifying choice and improving the plan selection process. Considerable uncertainty exists regarding the nature and scope of healthcare reform measures under the new U.S. presidential administration.

Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in several recent presidential executive orders, congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. At the federal level, the Trump administration used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy initiatives. For example, in 2020 the Trump administration announced several executive orders related to prescription drug pricing that attempted to implement several of the administration’s proposals. As a result, the FDA concurrently released a final rule and guidance in September 2020, providing pathways for states to build and submit importation plans for drugs from Canada. Further, in November 2020, the HHS finalized a regulation removing safe harbor protection for price reductions from pharmaceutical manufacturers to plan sponsors under Medicare Part D, either directly or through pharmacy benefit managers, unless the price reduction is required by law. The implementation of the rule has been delayed until 2032 by the Inflation Reduction Act of 2022. The rule also creates a new safe harbor for price reductions reflected at the

63

point-of-sale, as well as a new safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which has been delayed until 2032 by the Inflation Reduction Act of 2022. On November 20, 2020, CMS issued an interim final rule implementing President Trump’s Most Favored Nation executive order, which would tie Medicare Part B payments for certain physician-administered drugs to the lowest price paid in other economically advanced countries. The Most Favored Nation regulations mandate participation by identified Medicare Part B providers and will apply in all U.S. states and territories for a seven-year period beginning January 1, 2021, and ending December 31, 2027. As a result of litigation challenging the Most Favored Nation model, in December 2021, CMS published a final rule that rescinds the Most Favored Nation model interim final rule. Further, in July 2021, the Biden administration released an executive order that included multiple provisions aimed at prescription drugs. In response to President Biden’s executive order, in September 2021, the HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform. The plan sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles. No legislation or administrative actions have been finalized to implement these principles. Additionally, based on a recent executive order, the Biden administration expressed its intent to pursue certain policy initiatives to reduce drug prices. At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In January 2025, the new U.S. presidential administration issued Executive Order 14148, which rescinded the prior U.S. presidential administration Executive Order 14087, which had built upon a July 2021 Executive Order by setting out the policy to have the HHS Secretary test healthcare payment and delivery models to lower drug costs. Considerable uncertainty exists regarding how the new U.S. presidential administration will reform the Inflation Reduction Act and other drug pricing policies.

If we fail to comply with the extensive legal and regulatory requirements affecting the healthcare industry, we could face increased costs, penalties and loss of business.

Our activities, and the activities of our collaborators, distributors and other third-party providers, are subject to extensive government regulation and oversight both in the U.S. and in foreign jurisdictions. The FDA and comparable agencies in other jurisdictions will directly regulate many of our most critical business activities, including the conduct of preclinical and clinical studies, product manufacturing, future advertising and promotion, product distribution, adverse event reporting and product risk management. Our current and future interactions in the U.S. or abroad with physicians and other healthcare providers that may prescribe or purchase our products once commercialized are also subject to government regulation designed to prevent fraud and abuse in the sale and use of the products and place greater restrictions on the marketing practices of healthcare companies. Healthcare companies are facing heightened scrutiny of their relationships with healthcare providers from anti-corruption enforcement officials. In addition, healthcare companies have been the target of lawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of healthcare business, submission of false claims for government reimbursement, antitrust violations or violations related to environmental matters. Risks relating to compliance with laws and regulations may be heightened as we bring products to the market globally.

Regulations governing the healthcare industry are subject to change, with possibly retroactive effect, including:

•

new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or decisions, related to healthcare availability, pricing or marketing practices, compliance with wage and hour laws and other employment practices, method of delivery, payment for healthcare products and services, compliance with health information and data privacy and security laws and regulations, tracking and reporting payments and other transfers of value made to physicians and teaching hospitals, extensive anti-bribery and anti-corruption prohibitions, product serialization and labeling requirements and used product take-back requirements;

•

changes in the FDA and foreign regulatory approval processes that may delay or prevent the approval of new products and result in lost market opportunity;

•

as a result of the U.S. Supreme Court’s July 2024 decision to overturn prior established case law giving deference to regulatory agencies’ interpretations of ambiguous statutory language, which has introduced

64

uncertainty regarding the extent to which the FDA’s regulations, policies and decisions may become subject to increasing legal challenges, delays or changes;

•

requirements that provide for increased transparency of clinical trial results and quality data, such as the EMA’s clinical transparency policy, which could impact our ability to protect trade secrets and competitively sensitive information contained in approval applications or could be misinterpreted leading to reputational damage, misperception or legal action which could harm our business;

•

changes in FDA and foreign regulations that may require additional safety monitoring, labeling changes, restrictions on product distribution or use, or other measures after the introduction of our products to market, which could increase our costs of doing business, adversely affect the future permitted uses of approved products, or otherwise adversely affect the market for our products; and

•

changes the new U.S. presidential administration may institute to federal regulatory agencies including the FDA, including reductions in funding levels or restructuring of such agencies.

Additionally, conditions and regulations governing the health care industry in the U.S. are subject to greater risk of change and uncertainty as a result of changes in legislative and regulatory priorities and personnel.

Violations of governmental regulation may be punishable by criminal and civil sanctions against us, including fines and civil monetary penalties and exclusion from participation in government programs, including Medicare and Medicaid, as well as against executives overseeing our business. In addition to penalties for violation of laws and regulations, we could be required to repay amounts we received from government payors or pay additional rebates and interest if we are found to have miscalculated the pricing information we have submitted to the government. We cannot ensure that our compliance controls, policies and procedures will in every instance protect us from acts committed by our employees, collaborators, partners or third-party providers that would violate the laws or regulations of the jurisdictions in which we operate. Whether or not we have complied with the law, an investigation into alleged unlawful conduct could increase our expenses, damage our reputation, divert management time and attention and adversely affect our business.

Even if we receive approval to market a product candidate, we may be subject to extensive post-approval regulatory obligations that may have a significant adverse effect on our business, results of operations, financial condition and reputation.

Even after initial FDA or foreign regulatory agency approval has been obtained, further studies may be required to provide additional data on safety or to gain approval for the use of a product as a treatment for clinical indications other than those initially targeted. Use of a product during testing and after marketing could reveal side effects that could delay, impede, or prevent marketing approval, result in a regulatory agency-ordered product recall, or in regulatory agency-imposed limitations on permissible uses or in withdrawal of approval. For example, if the FDA or foreign regulatory agency becomes aware of new safety information after approval of a product, it may require us to conduct further clinical trials to assess a known or potential serious risk and to assure that the benefits of the product outweigh the risks. If we are required to conduct such a post-approval study, periodic status reports must be submitted to the FDA or foreign regulatory agency. Failure to conduct such post-approval studies in a timely manner may result in substantial civil or criminal penalties. Data resulting from these clinical trials may result in expansions or restrictions to the labeled indications for which a product has already been approved. Any of these requirements or actions may negatively impact our business or operations.

The FDA has granted orphan drug designation to OPC1 for the treatment of acute SCIs. However, there is no guarantee we will be able to maintain this designation, receive this designation for any other product candidate, or obtain the benefits associated with such designation, including marketing exclusivity.

We have orphan drug designation from the FDA for OPC1 for the treatment of acute SCIs and we may seek orphan drug designation for other product candidates. As discussed in more detail in Item 1. “Business—Government Regulation—FDA and Foreign Regulation of Therapeutic Products,” above, generally, if a biologic with orphan drug designation from the FDA subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to seven years of marketing exclusivity in the United States. Other benefits of an

65

orphan drug designation may include a waiver of the marketing application fee. However, the orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

We may not obtain any future orphan drug designations that we apply for. Orphan drug designations do not guarantee that we will be able to successfully develop our product candidates, and there is no guarantee that we will be able to maintain any orphan drug designations that we receive. For instance, orphan drug designations may be revoked if the FDA determines that our request for orphan drug designation was materially defective, if the FDA determines that the product candidate was not eligible for designation at the time of the submission of the request, or if we are unable to assure sufficient quantities of the commercial product for which the designation was granted to meet the needs of patients.

Moreover, even if we are able to receive and maintain orphan drug designations, we may ultimately not receive any period of regulatory exclusivity if our product candidates are approved. For instance, we may not receive orphan product regulatory exclusivity if the indication for which we receive FDA approval is broader than the orphan drug designation. Orphan exclusivity may also be lost for the same reasons that orphan drug designation may be lost. Orphan exclusivity may further be lost if we are unable to assure a sufficient quantity of the product to meet the needs of patients with the rare disease or condition.

Even if we obtain orphan exclusivity for any of our current or future product candidates, that exclusivity may not effectively protect the product from competition as different products can be approved for the same condition or products that are the same as ours can be approved for different conditions. Even after an orphan product is approved, the FDA can also subsequently approve a product containing the same principal molecular features for the same condition if the FDA concludes that the later product is clinically superior. The FDA may further grant orphan drug designation to multiple sponsors for the same compound or active molecule and for the same indication. If another sponsor receives FDA approval for such product before we do, we would be prevented from launching our product in the United States for the orphan indication for a period of at least seven years, unless we can demonstrate clinical superiority. Moreover, third-party payors may reimburse for products off-label even if not indicated for the orphan condition.

Regenerative Medicine Advanced Therapydesignation may not lead to a faster development or regulatory review or approval process and it does not increase the likelihood that a product candidate will receive marketing approval.

We received RMAT designation from the FDA for OPC1 for the treatment of subacute SCIs and Genentech received RMAT designation from the FDA for OpRegen for the treatment of GA secondary to AMD, and we or our partners may seek RMAT designation for other product candidates. There is no assurance that we or our partners will obtain RMAT designation for any other current or future product candidates. RMAT designation does not change the FDA’s standards for product approval, and there is no assurance that such designation will result in expedited review or approval or that the approved indication will not be narrower than the indication covered by the RMAT designation. Additionally, RMAT designation can be revoked if the criteria for eligibility cease to be met as clinical data emerges.

We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, including anti-kickback and false claims laws, transparency laws, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

Our current and future operations may be subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute, the federal False Claims Act, and healthcare professional transparency laws and regulations. These laws may impact, among other things, our research activities and our proposed sales, marketing, and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

•

the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

66

•

federal civil and criminal false claims laws, including the federal False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

•

HIPAA, which created new federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

•

HIPAA, as amended by HITECH and their implementing regulations, which imposes certain requirements on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, and their subcontractors that use, disclose, access, or otherwise process individually identifiable protected health information, relating to the privacy, security, and transmission of individually identifiable health information;

•