LCTX US Equity☆

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our audited consolidated financial statements for the two-year period ended December 31, 2025, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations. In particular, the discussion is intended to provide an analysis of significant trends and material changes in our financial position and the operating results of our business during the year ended December 31, 2025 as compared to the year ended December 31, 2024. This discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. These historical financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this report, particularly in “Item 1A. Risk Factors.”

Company and Business Overview

We are a clinical-stage biotechnology company developing cell replacement therapies to treat serious medical conditions. Certain diseases and medical events can arise from the loss of critical cellular activity and lead to devastating or difficult-to-treat conditions or impairments. Our work is grounded in the emerging evidence that replacing or supporting those cells that have become dysfunctional or “lost” (destroyed or dead) can restore or replenish normal function and improve treatment and recovery paradigms. We call this approach “Replace and Restore”. We believe cellular therapies aimed at entirely replacing dysfunctional or destroyed cells may have more durable, broader, or suitable applicability than traditional pharmaceutical products, which often seek to affect just a single molecular target or group of biological pathways. Transplantation of replacement cells represents an emerging branch of medicine, and we believe we are uniquely positioned to capitalize on its opportunities by demonstrating the value of administering mature, differentiated cells to patients. We are developing a portfolio of assets based on this mechanism and our most clinically-advanced program to date is OpRegen (RG6501), an allogeneic retinal pigmented epithelial (RPE) cell replacement therapy currently in Phase 2a development under a worldwide collaboration with F. Hoffman-La Roche Ltd. and Genentech, Inc., a member of the Roche Group (collectively or individually, “Roche” or “Genentech”), for the treatment of geographic atrophy (GA) secondary to dry-AMD.

Our programs are based on our proprietary, in-house, cell-based manufacturing platform, which we call AlloSCOPETM (Allogeneic, Scalable, Consistent, Off-the-shelf, Pluripotent Cell Engineering), and supported by our associated development, formulation, manufacturing, and delivery capabilities. To date, we have successfully completed a current cGMP production run from our two-tiered cell banking system for two of our product candidates, one of which was used in a clinical trial in 2025.

Our business strategy aims to efficiently leverage our AlloSCOPE platform and our development and manufacturing expertise to create a pipeline of related but discrete cell-based assets, some of which we may advance internally toward commercialization and some of which we may seek to partner during early or late development, if we believe doing so will enhance their value to us and probability of success and value to Lineage and our shareholders.

Our lead program, OpRegen, an allogeneic RPE cell replacement therapy, is currently in Phase 2a development under a worldwide collaboration with Roche, for the treatment of geographic atrophy (GA) secondary to dry-AMD. Our second clinical-stage program, OPC1, is an allogeneic oligodendrocyte progenitor cell therapy designed to improve recovery following a spinal cord injury. One of our preclinical programs, ReSonance (ANP1), is an allogeneic auditory neuron progenitor cell transplant therapy currently in preclinical development under collaboration with William Demant Invest 2 Aps (WDI) for the treatment of auditory neuropathy.

In addition, we have a pipeline of allogeneic cell therapy research initiatives, and are evaluating a novel hypoimmune induced pluripotent stem cell line under a gene editing partnership with Factor Biosciences Limited.

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In addition to the collaboration agreements mentioned above with Roche and WDI, we have received grants from governmental agencies that have supported the development of OpRegen and OPC1.

For additional information regarding our clinical programs, business strategy, AlloSCOPE platform, pipeline of preclinical programs and research initiatives, our collaborations and the grants we have received from governmental entities, see “Item 1. Business,” above.

Israeli Regional Conflict

All of our 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 based in that 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 the clinical trial sites for the OpRegen GAlette study in Israel. As of the date of the filing of this report, our operations in Jerusalem have not been materially or adversely disrupted, and we are not aware of any material disruption to the clinical trial sites for the OpRegen GAlette study in Israel. 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 in Jerusalem or on the clinical trial sites for the OpRegen GAlette study in Israel. See the risk factor in Item 1A. Risk Factors in Part I of this report titled, “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.”

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.

Our commercial insurance may not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.

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Macroeconomic, Political, and Regulatory Environment Considerations

Our business, financial condition, operating results, stock price, and our ability to raise additional capital may be adversely affected by evolving macroeconomic, political, and regulatory developments and conditions, such as inflation, trade disruptions and restrictive measures, including tariffs, high interest rates, slowed economic growth or recession, uncertainty with respect to the federal budget and debt ceiling, potential or prolonged U.S. government shutdowns, volatility in financial markets, liquidity concerns at financial institutions, supply chain disruptions, changes in the regulatory landscape in the U.S., including due to significant reductions in funding and staffing of federal agencies and changes in leadership, and geopolitical factors. Further, third parties with whom we have business relationships, including clinical investigative sites, financial institutions, and our collaborators, may be adversely affected by the foregoing risks, which could directly impact our ability to achieve our operating goals within planned timelines and budgets.

In addition, there may be significant future effects on the pharmaceutical and biopharmaceutical industries as a result of federal policy and regulatory changes under the current U.S. presidential administration, including in areas relating to regulatory framework and oversight, research and development funding, drug pricing reform, global trade policy and tariffs, and others. Recent initiatives have resulted in significant reductions in staffing levels at the FDA and other governmental agencies. The foregoing could impact agencies’ ability to retain remaining key personnel and hire additional personnel, which may disrupt their ability to perform routine activities or function in the normal course. For example, with respect to the FDA, this may result in delays or limitations on our ability to obtain guidance from agency staff and slow review times for applications we submit with respect to clinical studies, any of which could negatively impact the cost and timelines for developing and obtaining regulatory approval of our product candidates. Moreover, the current U.S. presidential administration has taken and may take additional future actions to freeze or reduce federal funding for medical research, which could decrease the ability of facilities that rely on such funding to conduct clinical trials or increase the costs to us of conducting clinical trials at those facilities. Given the high level of uncertainty regarding federal policy, enforcement and regulatory changes, and that circumstances are rapidly evolving, we cannot reasonably predict the potential impact on our business at this time.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements and related notes. We have identified below our critical accounting policies and estimates that we believe require the greatest amount of judgment. On an ongoing basis, we evaluate estimates which are subject to significant judgment, including those related to revenue recognition under collaborative agreements, impairment of intangible assets, deferred income taxes and tax reserves, and judgments used to determine whether warrants, at the time of their issuance, should be classified as liabilities or equity. Actual results could differ materially from those estimates.

On an ongoing basis, we evaluate our estimates compared to historical experience and trends which form the basis for making judgments about the carrying value of assets and liabilities. To the extent that there are material differences between our estimates and our actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe the assumptions and estimates associated with the following have the greatest potential impact on our consolidated financial statements. For information on all of our significant accounting policies, see Note 2 (Significant Accounting Policies) in the accompanying notes to the consolidated financial statements included in this report.

Revenue Recognition Under Collaborative Agreements

We review collaborative agreements to determine if the accounting treatment falls under Accounting Standards Codification (“ASC”), Topic 606, Revenue from Contracts with Customers (“ASC 606”), or ASC Topic 808, Collaborative Arrangements (“ASC 808”). For agreements that may be within the scope of ASC 808, we may analogize to ASC 606 for some aspects of the agreements. If elements of the collaboration reflect a vendor-customer relationship, then those elements are within the scope ASC 606. The classification of transactions under our

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arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants.

We determine revenue recognition for arrangements within the scope of Topic 606 by performing the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the customer obtains control of the product or service. We consider the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard. We apply the revenue recognition standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances. As part of the accounting treatment for these contracts, we must develop estimates and assumptions that require judgment, including estimated collaboration costs, to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. After the transaction price is allocated to the performance obligation, an input method of costs incurred over total estimated costs to be incurred is used to measure progress toward completion of the performance obligation and to calculate the corresponding revenue to recognize each period. This input method requires significant judgment by management to estimate total costs to complete and to measure the progress toward completion of the performance obligation. We believe the input methodology represents the most appropriate measure of progress towards satisfaction of the identified performance obligations. For further information, see Note 3 (Revenue) in the accompanying notes to the consolidated financial statements included in this report.

Impairment of Intangible Assets

Our intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, we evaluate recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets.

Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed in the acquisition transaction. Goodwill is tested for impairment in accordance with Accounting Standards Update ("ASU") 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In-process research and development (“IPR&D”) assets are indefinite-lived intangible assets until the completion or abandonment of the associated research and development (“R&D”) efforts. Once the R&D efforts are completed or abandoned, the IPR&D will either be amortized over the asset’s estimated life as a finite-lived intangible asset or be impaired, respectively, in accordance with ASC Topic 350, Intangibles – Goodwill and Other ("ASC 350"). In accordance with ASC 350, goodwill and acquired IPR&D are determined to have indefinite lives and, therefore, are not amortized. Instead, they are tested for impairment at least annually and between annual tests if we become aware of an event or a change in circumstances that would indicate the asset may be impaired. For further information, see Note 6 (Goodwill and Intangible Assets, Net) and Note 13 (Commitments and Contingencies) in the accompanying notes to the consolidated financial statements included in this report.

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Income Taxes ("ASC 740"), whichprescribes the use of the asset and liability method, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect. Valuation allowances are established when necessary to reduce deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will not be realized. ASC 740 guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more-likely-than-not sustainable upon examination by taxing authorities. We file a U.S. federal income tax return as well as California combined and foreign income tax returns. Our judgments regarding future taxable income may change over time due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If our assumptions, and consequently the estimates, change in the future with respect to our own deferred tax assets and liabilities, the valuation allowance may be increased or decreased, which may have a material impact on our consolidated financial statements. Lineage recognizes accrued interest and penalties

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related to unrecognized tax benefits, if any, as income tax expense; however, no amounts were accrued for the payment of interest and penalties as of December 31, 2025 and 2024. We provided a reserve against our federal and California research and development credits generated. The carryforward amounts for these credits have been reported net of these reserves. Accordingly, no accrued interest and penalties related to unrecognized tax benefits have been recorded as of December 31, 2025 and 2024. For further information, see Note 12 (Income Taxes) in the accompanying notes to the consolidated financial statements included in this report.

Warrants

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common shares, whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance. Liability and equity-classified warrants are valued using a Black-Scholes option pricing model at issuance, and for liability-classified warrants, upon warrant exercise, and at each reporting period end date while the warrants are outstanding. Changes in fair value of liability-classified warrants are recorded in the consolidated statements of operations.

Results of Operations

Comparison of Years Ended December 31, 2025 and 2024

Revenues

The following table shows our revenues for the years ended December 31, 2025 and 2024 (amounts in thousands except percentages).

Year Ended December 31, DollarIncrease PercentIncrease

For the twelve months ended December 31, 2025, the $5.1 million increase in total revenues as compared to the prior year was primarily attributable to the $5.5 million increase in collaboration revenues, partially offset by a decrease of approximately $0.4 million in royalty revenue. The $5.5 million increase in collaboration revenue was driven by: (i) the achievement of the first milestone under the Roche Agreement in the amount of $5.0 million whereby $4.6 million was recognized as revenue in 2025; (ii) $2.5 million in revenue from our research collaboration agreement with WDI signed in 2025; (iii) an approximate $0.7 million increase in revenue related to the remaining deferred revenue recognized upon the termination of the license agreement with Immunomic Therapeutics, Inc. in 2025, partially offset by (iv) approximately $2.4 million in lower revenue recognized from deferred revenue under the Roche Agreement. See Note 13 (Commitments and Contingencies) to our consolidated financial statements included in this report for additional information.

Collaboration revenues may fluctuate from period to period based on changes in estimated costs to support the performance obligations. Under the collaboration agreements with Roche and WDI, delivery is determined to be over time and revenue is recognized utilizing an input method of costs incurred over total estimated costs to complete the performance obligation. See Note 3 (Revenue) to our consolidated financial statements included in this report for additional information.

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Operating Expenses

Our operating expenses generally consist of cost of royalties, research and development expenses, and general and administrative expenses.

Cost of royalties. These expenses consist of costs associated with royalty revenue which has resulted from product sales by our sublicensees.

Research and development expenses. These expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct expenses and indirect research-related overhead expenses including compensation and related benefits, stock-based compensation, consulting fees, research and laboratory fees, rent of research facilities, amortization of intangible assets, and license fees paid to third parties to acquire patents or licenses to use patents and other technology. Research and development costs with no future benefit or alternative use are expensed as incurred. Research and development expenses incurred and reimbursed by grants from third parties approximate the grant income recognized in our consolidated statements of operations. Royalties and sublicensing fees are recorded as research and development expenses, unless they are associated with product royalties, which we classify as cost of royalties in our consolidated statements of operations. We expect our total research and development expenses to fluctuate each reporting period based on several factors including (i) the stage of development for each cell therapy program, (ii) the availability of resources to work on each program, and (iii) the timing of contractual obligations.

General and administrative expenses. These expenses consist of employee and director compensation and related benefits, including stock-based compensation, professional and consulting fees, and allocated overhead such as facilities rent and equipment rent and maintenance, insurance costs allocated to general and administrative expenses, costs of patent applications, prosecution and maintenance, stock exchange-related costs, depreciation expense, marketing costs, legal and accounting costs, and other miscellaneous expenses.

The following table shows our operating expenses for the years ended December 31, 2025 and 2024 (amounts in thousands, except percentages).

Year Ended December 31, DollarIncrease PercentIncrease

The following table shows the amount of our total research and development expenses allocated to our primary research and development projects for the periods presented (amounts in thousands, except percentages).

Year Ended December 31,

Amount Percent of Total

Other programs and non-program expenses 1,087 150 6 % 1 %

Research and development expenses. For the twelve months ended December 31, 2025, the $5.3 million year-over-year increase in total research and development expenses is mainly attributable to: (i) a $1.6 million increase for

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our OpRegen program; (ii) a $0.7 million increase for our ANP1 program; (iii) a $0.2 million increase for our OPC1 program; and (iv) a $2.8 million increase for our preclinical and other undisclosed programs.

General and administrative expenses. For the twelve months ended December 31, 2025, the $0.3 million year-over-year increase in general and administrative expenses was primarily attributable to: (i) a $0.2 million increase in personnel costs and (ii) a $0.1 million overall increase for services provided by third parties.

Loss on impairment of intangible asset. In 2025, we abandoned the VAC platform and its related research and development efforts, and concluded the IPR&D asset had no alternative future use. Consequently, we derecognized the intangible asset and recorded a non-cash pre-tax impairment charge of $14.8 million within total operating expenses of the consolidated statement of operations. See Note 6 (Goodwill and Intangible Assets, net) and Note 13 (Commitments and Contingencies) to our consolidated financial statements included in this report for additional information.

Other Income and Expenses, Net

The following table shows the amount of other income (expenses), net, during the year ended December 31, 2025 and 2024 (in thousands):

Year Ended December 31, Dollar Increase Percent Increase

Other income (expenses) 2025 2024 (Decrease) (Decrease)

Loss on marketable equity securities, net (8 ) (8 ) — 0%

Interest income, net. For the twelve months ended December 31, 2025 as compared to the prior year, the change in interest income, net, was de minimis.

Loss on marketable equity securities, net. We expect our net gain or loss on marketable equitable securities to fluctuate each reporting period based on the changes in the market price of marketable equitable securities held by us which could impact our net income or loss reported in our consolidated statements of operations for a particular reporting period. These marketable equitable securities are carried at fair market value on our consolidated balance sheet. See Note 4 (Marketable Securities) to our consolidated financial statements included in this report for additional information regarding our marketable equity securities. For the twelve months ended December 31, 2025 as compared to the prior year, the change in the values of our marketable equity securities was de minimis.

Change in fair value of warrant liability. The liability-classified warrants issued in November 2024 and January 2025 in connection with the November 2024 registered direct offering (“November 2024 RDO”) are valued at issuance, at each reporting period end date while the warrants are outstanding, and at the time of each warrant exercise, using a Black-Scholes option pricing model that maximizes the use of observable inputs and minimizes the use of unobservable inputs to the extent possible. A significant increase or decrease in these inputs could result in significantly higher or lower fair value measurements. The changes in fair value of the liability-classified warrants are non-cash adjustments recorded in the consolidated statements of operations and we expect this fair value to fluctuate each reporting period. For the twelve months ended December 31, 2025 as compared to the prior year, the change in the fair value of the warrants was primarily driven by fluctuations in the Company’s common share price during the period.

Foreign currency transaction gain(loss), net. Foreign currency transaction gain (loss), net, for each of the years ended December 31, 2025 and 2024 consisted of net foreign currency transaction gains and losses primarily recognized by our subsidiaries CCN and ES Cell International Pte. Ltd. (“ESI”). The functional currency of CCN and ESI is the Israeli New Shekel (“ILS”) and the Singapore Dollar (“SGD”), respectively. The majority of the net foreign currency transaction gains (losses) were generated by CCN’s intercompany notes payable and notes receivable with Lineage,

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which is U.S. dollar-denominated. The year-over-year net increase in foreign currency transaction gain was the result of the combined impact of: (i) changes in intercompany balances in 2025 as compared to 2024, and (ii) volatility of the ILS and SGD as compared to the U.S. dollar during 2025 and 2024.

Other income (expenses), net. For the twelve months ended December 31, 2025 as compared to the prior year, the change in other expenses was primarily related to the transaction costs for warrants issued in connection with the first closing of the November 2024 RDO and its second closing in January 2025. Transaction costs in the first closing were $0.7 million, while transaction costs in the second closing were $0.2 million and driven by lower quantity of warrants issued.

Income Taxes

Under ASC 740, Income Taxes, a valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. Since inception, we’ve had a full valuation allowance due to the uncertainty of realizing future tax benefits from our deferred tax assets. During the year ended December 31, 2025, based on sustained profitability and other positive evidence related to the Israel subsidiary, the Company released the valuation allowance associated with the Israel subsidiary’s deferred tax assets. The Company recorded a deferred tax benefit of $5.3 million in 2025,which was primarily related to the release of the valuation allowance on the Israel subsidiary’s deferred tax assets. The Company continues to maintain a valuation allowance against the U.S. and Singapore deferred tax assets.

Liquidity and Capital Resources

Overview

As of December 31, 2025, we had $55.8 million in cash, cash equivalents and marketable securities and our accumulated deficit was $467.0 million. For the year ended December 31, 2025, we incurred a loss from operations of $36.6 million and had negative cash flow from operations of $18.9 million. Since inception, we have incurred significant operating losses and we expect to continue to incur significant operating losses for the foreseeable future.

We have historically funded our operations primarily through proceeds from the sale of our common shares and securities exercisable for or convertible into our common shares, the sale of common stock of our former subsidiaries, research grants, revenues from collaborations, and royalties from product sales that are unrelated to our current cell therapy product candidates.

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Cash Flows

Year Ended December 31,

Cash provided by (used in):

Cash Used In Operating Activities

Net cash used in operating activities in 2025 was $18.9 million and consisted of a net loss attributable to Lineage of $63.5 million plus the net changes in operating assets and liabilities of approximately $4.1 million, partially offset by $48.6 million in non-cash adjustments. The net changes in operating assets and liabilities were primarily due to a $6.1 million reduction in deferred revenues, partially offset by a $2.3 million increase in accounts payable and accrued liabilities. The non-cash adjustments were primarily due to a $35.7 million change in the fair value of the warrant liability, a $14.8 million loss on impairment of our IPR&D intangible asset related to the VAC platform, and $4.8 million in stock-based compensation partially offset by a $5.3 million deferred tax benefit.

Net cash used in operating activities in 2024 was $23.1 million and consisted of a net loss of $18.6 million plus the net changes in operating assets and liabilities of $8.8 million offset by $4.3 million in non-cash adjustments. The net changes in operating assets and liabilities was primarily due to a $7.7 million reduction in deferred revenues and $1.7 million reduction in accounts payable and accrued liabilities. The non-cash adjustments of $4.3 million were primarily due to stock-based compensation and depreciation, partially offset by the change in the fair value of the warrant liability.

Cash Used In Investing Activities

Cash used in investing activities for the year ended December 31, 2025 was $13.5 million and primarily consisted of cash used to purchase U.S. Treasury securities, net of proceeds from maturities of U.S. Treasury securities.

Cash used in investing activities for the year ended December 31, 2024 was $2.3 million and primarily consisted of cash used to purchase U.S. Treasury securities, net of proceeds from maturities of U.S. Treasury securities.

Cash Provided by Financing Activities

Cash provided by financing activities for the year ended December 31, 2025 was $27.0 million and consisted of net proceeds from the sale of common shares under our at-the-market offering program, net proceeds from the sale of our common shares and warrants in the November 2024 RDO, as well as proceeds from the exercise of options and warrants. These cash inflows were partially offset by principal payments related to our financed insurance liability and finance lease liabilities.

Cash provided by financing activities for the year ended December 31, 2024 was $35.9 million and primarily consisted of net proceeds from the sale of our common shares and warrants in the November 2024 RDO and from the

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sale of our common shares in a registered direct offering we closed in February 2024, and from the sale of our common shares under our at-the-market offering program.

The purchase and sale of our common shares and warrants in the November 2024 RDO was made pursuant to the registration statement on Form S-3 (File No. 333-277758), filed with the SEC on March 7, 2024 and declared effective on May 14, 2024.

The purchase and sale of our common shares in the registered direct offering we closed in February 2024 was made pursuant to the registration statement on Form S-3 (File No. 333-254167), filed with the SEC on March 5, 2021 and declared effective on March 19, 2021.

Financial Obligations

Our financial obligations primarily consist of obligations to our licensors under license agreements, obligations related to grants received from government entities, including the Israel Innovation Authority (“IIA”), obligations under vendor contracts for research services and other purchase commitments with suppliers.

As discussed in “Part I—Item 1. Business—Grants from Government Entities,” above, we have received grants under the Innovation Law and are required to pay royalties to the IIA from the revenues generated from the sale of product candidates and related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA. Under the Innovation Law, we are also required to pay redemption fees to the IIA. To date, through a series of separate grants beginning in 2007, CCN has received a total of $15.4 million from the IIA to support the OpRegen program. We are obligated to pay approximately 24.1% of any future payments we may receive under the Roche Agreement to the IIA, up to an aggregate cap on all payments to IIA, such cap growing over time via interest accrual until paid in full. In December 2025, Lineage funded CCN to pay the IIA 24.1% of the $5.0 million received from Roche upon the achievement of the first milestone under the Agreement. As of December 31, 2025, the aggregate cap amount was approximately $96.2 million. Redemption fees due to the IIA under the Innovation Law are due upon receipt of any milestone payments and royalties received under the Roche Agreement. As of December 31, 2025, we have not included any future financial obligations due to the IIA under the Innovation Law in the accompanying consolidated balance sheet because the achievement and timing of the events that would require future payments to the IIA under the Innovation Law is not fixed and determinable. See Note 13 (Commitments and Contingencies) to our consolidated financial statements included in this report for additional information.

Our obligations to licensors under license agreements and to other government entities under the terms of grants we have received require us to make future payments relating to sublicense fees, developmental, regulatory and/or commercial milestone payments, redemption fees, royalties and patent maintenance costs. Sublicense fees are payable to licensors or government entities when we sublicense underlying intellectual property to third parties; the fees are based on a percentage of the license-related revenue we receive from sublicensees. Milestone payments are due to licensors or government entities upon future achievement of certain developmental, regulatory and/or commercial milestones. Royalties are payable to licensors or government entities based on a percentage of net sales of licensed products or of products covered by the in-licensed intellectual property, including those related to the Roche Agreement. In December 2025, CCN accrued a payment obligation to be funded by Lineage due to Hadasit for 21.5% of the $5.0 million received from Roche upon the achievement of the first milestone under the Roche Agreement. Patent maintenance costs are payable to licensors as reimbursement for the cost of maintaining licensed patents. Due to the contingent nature of the payments, the amounts and timing of payments to licensors under our in-license agreements and to government entities under the terms of grants we have received are uncertain and may fluctuate significantly from period to period. As of December 31, 2025, we have not included these future commitments on our consolidated balance sheet because the achievement and timing of these events are not fixed and determinable.

As of December 31, 2025, under the terms of the leases for the facilities from which CCN and Lineage operate, a total of $2.3 million of rent payments will become due, of which $0.9 million will become due in 2026.

In the normal course of business, we enter into services agreements with contract research organizations, contract manufacturing organizations and other third parties. Generally, these agreements provide for termination upon notice, with specified amounts due upon termination based on the timing of termination and the terms of the

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agreement. The amounts and timing of payments under these agreements are uncertain and contingent upon the initiation and completion of the services to be provided.

Future Funding Requirements and Potential Sources

We expect to continue to incur losses for at least the next several years. We expect that our operating expenses will continue to increase for the foreseeable future as we continue the development of, and seek regulatory approval for, our product candidates. As a result, we will need significant additional capital to fund our operations. Our determination as to when we will seek additional capital and the amount of additional capital that we will need will be based on our evaluation of the progress we make in our research and development programs, changes to the scope and focus of those programs, changes in grant funding for certain of those programs, and projection of future costs, revenues, and rates of expenditure. If we are unable to raise additional capital when and as needed, we may be required to delay, postpone, or cancel our clinical trials or limit the number of clinical trial sites.

In March 2026, we received $5.4 million in gross proceeds from the exercise of warrants issued under our November 2024 RDO. We may receive up to an additional $30.2 million in gross proceeds upon the full cash exercise of the warrants we issued to the investors in the November 2024 RDO. We have received $5.7 million through the filing date of this report. However, no assurances can be given as to the extent to which additional warrants will be exercised. As of December 31, 2025, $17.4 million remained available for sale under our at-the-market offering program. See Note 10 (Shareholders’ Equity) to our consolidated financial statements included in this report for additional information regarding our at-the-market offering program.

We may seek to obtain the additional capital we may need through one or more equity offerings, debt financings, government or other grant funding, or other third-party funding transactions, including potential strategic alliances and licensing or collaboration agreements, or structured financings such as royalty monetization transactions. We cannot provide any assurance that adequate additional capital will be available on favorable terms, if at all. The issuance of additional securities, whether equity or debt, or the possibility of such issuance, may cause the market price of our common shares to decline, and the issuance of additional equity securities could result in the dilution of the interests of our current shareholders. If we obtain additional capital through strategic alliances and licensing or collaboration agreements or structured financing, we may be required to relinquish rights to our intellectual property, our product candidates or rights to future revenue streams or otherwise agree to terms unfavorable to us. The unavailability or inadequacy of additional capital to meet future capital needs could force us to modify, curtail, delay, or suspend some or all aspects of our current planned operations. Our ability to raise additional capital may be adversely impacted due to external factors beyond our control, such as unfavorable global economic conditions, disruptions to and volatility in the credit and financial markets in the United States and worldwide, political and economic uncertainty, geopolitical conflicts, rising inflation and interest rates, and other macroeconomic factors.

We believe that our $55.8 million in cash, cash equivalents and marketable securities at December 31, 2025, will be sufficient to fund our planned operations through at least twelve months from the issuance date of our consolidated financial statements included elsewhere in this report. We believe we will meet our longer-term expected future cash requirements and obligations with our current cash and cash equivalents, marketable securities, milestone and other payments we expect to receive under our collaboration agreements, and proceeds we receive from sales of our common shares under our at-the-market offering program.

Off-Balance Sheet Arrangements

None.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Under rules and regulations of the SEC, as a smaller reporting company, we are not required to provide the information required by this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to consolidated financial statements

Financial Statements:

Consolidated Balance Sheets 116

Consolidated Statements of Operations 117

Consolidated Statements of Comprehensive Loss 118

Consolidated Statements of Shareholders Equity 119

Consolidated Statements of Cash Flows 120

Notes to the Consolidated Financial Statements 121

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

Lineage Cell Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lineage Cell Therapeutics, Inc. and Subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, shareholders’ equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue recognition based on a cost input measure of progress

Critical Audit matter Description

As described in Note 3 to the consolidated financial statements, the Company recorded total deferred revenue of $15.7 million as of December 31, 2025 and revenue of $13.6 million for the year ended December 31, 2025 from collaboration agreements. The Company concluded the grant of licenses for the Company’s technology or programs,

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research and development services, and services or obligations in connection with participation in research or steering committees represent a combined performance obligation for which the Company recognizes collaboration revenues as the services are performed over time. The Company used a cost-based input method to measure progress toward completion of the performance obligation for each collaboration agreement and to calculate the corresponding revenue to recognize each period.

We identified revenue recognition based on a cost input measure of progress as a critical audit matter because of the significant judgment required by management to estimate total costs to complete and measure the progress toward completion of the performance obligation for each collaboration agreement. This, in turn, led to a high degree of auditor judgment and increased audit effort in performing procedures to evaluate key assumptions, including the use of a subject matter expert on technical accounting matters.

How we Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures related to total estimated contract costs and estimated progress toward completion included the following, among others:

•

Inspecting, on a test basis, supporting documentation for costs incurred which are used to measure progress toward completion and to calculate revenue recognition.

•

For new collaboration agreements executed in the current year or existing collaboration agreements with milestones achieved, reviewing the collaboration agreements and management’s related analysis, with the assistance of a subject matter expert on technical accounting matters, to evaluate the reasonableness of management’s accounting conclusion to recognize revenue each period based on a cost-based input method to measure progress toward completion.

•

Inquiring with research and development personnel to evaluate factors related to the nature of the work to be performed and their impact on the total contract costs to be incurred, including progress to date and the estimate of remaining contract costs.

•

Performing a retrospective review to assess the Company’s historical estimates of remaining costs to complete the research and development services by comparing the total actual project expenses to the forecasted amounts for the same period for consistency of the estimates prepared for the current period and period immediately following the year-end based on information available during fieldwork.

•

Recalculating the corresponding revenue recognized each period based on the cost-based input method to measure progress toward completion of the performance obligation for each collaboration agreement.

/s/ Baker Tilly US, LLP

San Diego, California

March 5, 2026

We have served as the Company's auditor since 2024.

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LINEAGE CELL THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

ASSETS

CURRENT ASSETS

Prepaid expenses and other current assets 2,485 2,554

NONCURRENT ASSETS

Operating lease right-of-use assets 2,131 2,144

Deposits and other long-term assets 558 614

Deferred tax asset, net 5,800 —

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable and accrued liabilities $ 7,181 $ 5,437

Operating lease liabilities, current portion 816 1,097

Finance lease liabilities, current portion 37 55

Deferred revenues, current portion 3,333 7,388

LONG-TERM LIABILITIES

Deferred tax liability, net 22 273

Deferred revenues, net of current portion 12,377 14,433

Operating lease liabilities, net of current portion 1,534 1,295

Finance lease liabilities, net of current portion 32 67

Commitments and contingencies (Note 13)

SHAREHOLDERS’ EQUITY

Accumulated other comprehensive loss (3,920 ) (2,876 )

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 112,584 $ 113,218

See accompanying notes to the consolidated financial statements.

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LINEAGE CELL THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Year Ended December 31,

REVENUES:

Royalties, license and other revenues 947 1,350

OPERATING EXPENSES:

Loss on impairment of intangible asset (Note 6 and Note 13) 14,840 —

OTHER INCOME (EXPENSES):

Loss on marketable equity securities, net (8 ) (8 )

Change in fair value of warrant liability (35,727 ) 2,128

Foreign currency transaction gain (loss), net 2,148 (269 )

Other income (expense), net (132 ) (670 )

Income tax benefit 5,280 —

Net (income) loss attributable to noncontrolling interest (166 ) (27 )

NET LOSS ATTRIBUTABLE TO LINEAGE $ (63,533 ) $ (18,609 )

See accompanying notes to the consolidated financial statements.

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LINEAGE CELL THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(IN THOUSANDS)

Year Ended December 31,

Other comprehensive loss:

Foreign currency translation adjustment, net of tax (1,046 ) 189

Unrealized gain on marketable debt securities 2 3

Comprehensive (income) loss attributable to noncontrolling interest (166 ) (27 )

See accompanying notes to the consolidated financial statements.

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LINEAGE CELL THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(IN THOUSANDS)

Accumulated

Other Total

Common Shares Accumulated Noncontrolling Comprehensive Shareholders’

Shares Amount Deficit Deficit Income / (Loss) Equity

Shares issued through registered direct financings 45,041 29,711 — — — 29,711

Shares issued through ATM financing 56 70 — — — 70

Financing related fees — (1,685 ) — — — (1,685 )

Shares issued upon exercise of stock options 287 229 — — — 229

Stock-based compensation — 5,077 — — — 5,077

Unrealized gain on marketable debt securities — — — — 3 3

Foreign currency translation adjustment, net of tax — — — — 189 189

Shares issued through registered direct financing 7,895 3,795 — — — 3,795

Financing related fees — (2,092 ) — — — (2,092 )

Shares issued upon exercise of stock options 1,265 1,250 — — — 1,250

Shares issued upon exercise of warrants 350 319 — — — 319

Stock-based compensation — 4,752 — — — 4,752

Unrealized gain on marketable debt securities — — — — 2 2

Foreign currency translation adjustment, net of tax — — — — (1,046 ) (1,046 )

See accompanying notes to the consolidated financial statements.

.

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LINEAGE CELL THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss attributable to Lineage $ (63,533 ) $ (18,609 )

Net income (loss) attributable to noncontrolling interest 166 27

Issuance costs for common stock warrant liabilities 183 688

Loss on impairment of intangible asset 14,840 —

Loss on marketable equity securities, net 8 8

Accretion of income on marketable debt securities (44 ) (229 )

Depreciation and amortization expense 699 587

Change in right-of-use assets and liabilities (58 ) (42 )

Amortization of intangible assets — 22

Change in fair value of warrant liability 35,727 (2,128 )

Deferred income tax benefit (5,280 ) —

Foreign currency remeasurement (2,269 ) 273

Changes in operating assets and liabilities:

Prepaid expenses and other current assets 46 489

Accounts payable and accrued liabilities 2,271 (1,681 )

Net cash used in operating activities (18,919 ) (23,092 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from the sale of marketable equity securities — 18

Purchases of marketable debt securities (14,935 ) (8,761 )

Maturities of marketable debt securities 2,000 7,000

Purchase of equipment (522 ) (565 )

Net cash used in investing activities (13,457 ) (2,308 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from employee options exercised 1,250 229

Proceeds from exercise of warrants 319 —

Common shares received and retired for employee taxes paid (16 ) (23 )

Proceeds from sale of common shares under ATM, net of offering costs 20,908 68

Payment of financed insurance premium (684 ) (171 )

Payment of finance lease liabilities (59 ) (54 )

Net cash provided by financing activities 26,950 35,857

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest $ 29 $ 9

SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:

Financing costs in accounts payable and accrued liabilities $ 3 $ 179

Financed insurance premium $ — $ 855

Reconciliation of cash, cash equivalents and restricted cash, end of period:

Total cash, cash equivalents, and restricted cash $ 41,324 $ 46,354

See accompanying notes to the consolidated financial statements.

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LINEAGE CELL THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Organization, Basis of Presentation and Liquidity

We are a clinical-stage biotechnology company developing cell replacement therapies to treat serious medical conditions. Our programs are based on our proprietary, in-house, cell-based manufacturing platform, which we call AlloSCOPETM (Allogeneic, Scalable, Consistent, Off-the-shelf, Pluripotent Cell Engineering), and supported by our associated development, formulation, manufacturing, and delivery capabilities.

Our lead program, OpRegen, an allogeneic retinal pigmented epithelial (RPE) cell replacement therapy, is currently in Phase 2a development under a worldwide collaboration with F. Hoffman-La Roche Ltd. and Genentech, Inc., a member of the Roche Group (collectively or individually, “Roche” or “Genentech”), for the treatment of geographic atrophy (GA) secondary to dry-AMD. Our second clinical-stage program, OPC1, is an allogeneic oligodendrocyte progenitor cell therapy designed to improve recovery following a spinal cord injury. One of our preclinical programs, ReSonance (ANP1), is an allogeneic auditory neuron progenitor cell transplant therapy currently in preclinical development under collaboration with William Demant Invest 2 Aps (WDI) for the treatment of auditory neuropathy.

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period with consideration given to materiality. Estimates and assumptions which are subject to significant judgment include those related to revenue recognition under collaborative agreements, impairment of intangible assets, deferred income taxes and tax reserves, and assumptions for valuing warrants. Actual results could differ materially from those estimates.

Segments and Principles of Consolidation

Our chief operating decision maker (“CODM”), our Chief Executive Officer, manages our business activities as a single operating and reportable segment at the consolidated level. The information in our consolidated financial statements is the only financial information regularly provided to our CODM and there are no other significant expense categories regularly reviewed by our CODM. Accordingly, our CODM uses consolidated net loss to measure segment profit or loss, allocate resources and assess performance. Further, our CODM reviews and utilizes revenue and functional expenses (cost of royalties, research and development, general and administrative, and loss on impairment of intangible asset) at the consolidated level to manage our operations. Other segment items included in consolidated net loss are interest income, loss on marketable equity securities, change in fair value of warrant liability, foreign currency transaction gain (loss), and other income (expense), and the provision for income tax benefit, which are reflected in the consolidated statements of operations

The following table reflects Lineage’s ownership, directly or through one or more subsidiaries, of the outstanding shares of its operating subsidiaries as of December 31, 2025.

Subsidiary Field of Business Lineage Ownership Country

(1)

Includes shares owned by Lineage and ESI.

All material intercompany accounts and transactions have been eliminated in consolidation. Lineage consolidates its direct and indirect wholly owned or majority-owned subsidiaries because Lineage has the ability to control their operating and financial decisions and policies through its ownership, and the noncontrolling interest is reflected as a separate element of shareholders’ equity on Lineage’s consolidated balance sheets.

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Liquidity

On December 31, 2025, we had $55.8 million of cash, cash equivalents and marketable securities. Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities will be sufficient to enable us to carry out our planned operations through at least twelve months from the issuance date of our consolidated financial statements.

Capital Resources

Since inception, we have incurred significant operating losses and have funded our operations primarily through the issuance of equity securities, the sale of common stock of our former subsidiaries, receipt of proceeds from research grants, revenues from collaborations, royalties from product sales, and sales of research products and services.

As of December 31, 2025, we had $25.3million of marketable securities, of which $10.3 million is classified as cash equivalents. We may use our marketable securities for liquidity as necessary and as market conditions allow. The market value of our marketable securities may not represent the amount that could be realized in a sale of such securities due to various market and regulatory factors, including trading volume, prevailing market conditions and prices at the time of any sale and subsequent sales of securities by the entities. In addition, the value of our marketable securities may be significantly and adversely impacted by deteriorating global economic conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from pandemics, geopolitical conflicts, political and economic instability, rising inflation and interest rates, and other macroeconomic factors.

Additional Capital Requirements

Our financial obligations primarily consist of obligations to licensors under license agreements, obligations related to grants received from government entities, including the Israel Innovation Authority (“IIA”), obligations under contracts with vendors who provide research services and purchase commitments with suppliers.

Our obligations to licensors under license agreements and our obligations related to grants received from government entities require us to make future payments, such as sublicense fees, milestone payments, redemption fees, royalty fees and patent maintenance fees. Sublicense fees are payable to licensors or government entities when we sublicense the applicable intellectual property to third parties; the fees are based on a percentage of the license-related revenue we receive from sublicensees. Milestone payments, including those related to the worldwide collaboration with Roche (Roche Agreement), are due to licensors or government entities upon achievement of commercial, development and regulatory milestones. Redemption fees due to the IIA under the Innovation Law are due upon receipt of milestone payments and royalties received under the Roche Agreement. See Note 13 (Commitments and Contingencies) for additional information. Royalties, including those related to royalties we may receive under the Roche Agreement, are payable to licensors or government entities based on a percentage of net sales of licensed products. Patent maintenance fees are payable to licensors as reimbursement for the cost of maintaining license patents. Due to the contingent nature of the payments, the amounts and timing of payments to licensors under our in-license agreements are uncertain and may fluctuate significantly from period to period. As of December 31, 2025, we had not included these commitments on our consolidated balance sheet because the achievement of events that would trigger our payment obligations and the timing thereof were not fixed and determinable.

In the normal course of business, we enter into services agreements with contract research organizations, contract manufacturing organizations and other third parties. Generally, these agreements provide for termination upon notice, with specified amounts due upon termination based on the timing of termination and the terms of the agreement. The amounts and timing of payments under these agreements are uncertain and contingent upon the initiation and completion of the services to be provided.

2. Significant Accounting Policies

Cash and cash equivalents – Lineage considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

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Restricted cash– At December 31, 2025 and 2024, CCN had restricted cash related to its office lease. See Note 13 (Commitments and contingencies).

Marketable debt securities - Lineage accounts for its holdings of U.S. Treasury securities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320-10-50, Debt Securities. Marketable debt securities purchased with an original maturity of three months or less have been classified as cash equivalents and those purchased with an original maturity of more than three months have been classified as “available-for-sale” and are carried at estimated fair value on the consolidated balance sheet. Unrealized gains and losses are excluded from earnings and are included in other comprehensive income or loss and reported as a separate component of stockholders’ equity or deficit until realized. Realized gains or losses on available-for-sale debt securities are included in other income (expense). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, together with interest on securities, are included in interest income on the Company’s consolidated statement of operations. The cost of securities sold is based on the specific-identification method. In accordance with the Company’s investment policy, management invests in debt securities with high credit quality, including U.S. government securities.

Any unrealized losses attributable to current expected credit loss (“CECL”) would be recorded through an allowance for credit losses, limited to the amount by which the fair value is below amortized cost, with the offsetting amount recorded in other income or expense in the consolidated statement of operations. To date, no such credit losses have occurred or have been recorded. See Note 4 (Marketable Securities) for additional information.

Marketable equity securities - Lineage accounts for the shares it holds in HBL Hadasit Bio-Holdings Ltd (“HBL”) and for the shares held in OncoCyte Corporation (“OCX”) as marketable equity securities in accordance with ASC 320-10-25, Investments – Debt and Equity Securities, as amended by Accounting Standards Update (“ASU”) 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, further discussed below.

The HBL shares have a readily determinable fair value quoted on the Tel Aviv Stock Exchange (“TASE”) under the trading symbol “HDST” where share prices are denominated in New Israeli Shekels (NIS). Lineage has not owned any shares of OCX since June 30, 2024. Shares of OCX have readily determinable fair values quoted on the NYSE American under trading symbol “OCX”.

Accounts receivable - Accounts receivable are recorded at the net invoice value and are non-interest bearing. Lineage establishes an allowance for credit losses based on the evaluation of the collectability of its receivables using a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customers operating results or financial position, and historical experience. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. Lineage has deemed the risk of customer default to be low, as the receivable amounts: i) are from creditworthy customers, ii) have not historically been impacted by macro-economic uncertainties (i.e., interest rates, inflation, GDP growth) as it relates to collectability, and iii) with respect to royalties, are based on estimates and/or reports directly communicated by its sublicensees. As such, a credit loss allowance per the provisions of CECL is not determined to be necessary and no reserves have been recorded as of December 31, 2025 or 2024. The Company reevaluates such reserves on a quarterly basis and adjusts its reserves as needed. Once a receivable is deemed to be uncollectible, such balance is charged against the reserve.

Concentrations of credit risk, significant sources of supply, and significant customers – Financial instruments that potentially subject Lineage to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable debt securities. Lineage limits the amount of credit exposure of cash balances by maintaining its accounts in high credit quality financial institutions. Cash equivalent deposits with financial institutions may occasionally exceed the limits of insurance on bank deposits; however, Lineage has not experienced any losses on such accounts. Lineage mitigates its credit exposure on marketable debt securities by investing in short term U.S. Treasuries securities.

Lineage relies on single-source, third-party suppliers for a few key components of our product candidates. If these single-source, third-party suppliers are unable to continue providing a key component, the initiation or progress of any clinical studies of its product candidates may be impeded.

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For the year ended December 31, 2025, the Company’s top two customers collectively represented 92% of the Company’s total revenue. For the year ended December 31, 2024, the Company's top single customer represented 92% of the Company’s total revenue.

Property and equipment, net– Property and equipment, including finance lease right-of-use assets, are stated at cost, net of accumulated depreciation and amortization. The cost of property and equipment is depreciated or amortized using the straight-line method over the estimated useful life of the asset, ranging from 3 to 10 years. Finance lease right-of-use assets are amortized over the lease term. Leasehold improvements are amortized over the shorter of the useful life or the lease term. See Note 5 (Property and Equipment, Net) for additional information.

Goodwill and IPR&D – Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. Goodwill is tested for impairment in accordance with ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. In-process research and development (“IPR&D”) assets are indefinite-lived intangible assets until the completion or abandonment of the associated research and development (“R&D”) efforts. Once the R&D efforts are completed or abandoned, the IPR&D will either be amortized over the asset’s estimated life as a finite-lived intangible asset or be impaired, respectively, in accordance with ASC 350, Intangibles – Goodwill and Other. In accordance with ASC 350, goodwill and acquired IPR&D are determined to have indefinite lives and, therefore, are not amortized. Instead, they are tested for impairment at least annually and between annual tests if we become aware of an event or a change in circumstances that would indicate the asset may be impaired.

Intangible assets – Intangible assets, consisting primarily of acquired patents, patent applications, and licenses to use certain patents are stated at acquired cost, less accumulated amortization. Amortization expense is computed using the straight-line method over the estimated useful lives of the assets, generally over 5 to 10 years.

Impairment of long-lived assets – Long-lived assets, including property and equipment and intangible assets, are reviewed annually for impairment and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, Lineage evaluates recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the estimated fair value of the assets.

Leases - We account for leases in accordance with ASC 842, Leases. We determine if an arrangement is a lease at inception. Leases are classified as either financing or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. Under the available practical expedients for the adoption of ASC 842, we account for the lease and non-lease components as a single lease component. We recognize right-of-use (“ROU”) assets and lease liabilities for leases with terms greater than twelve months in the consolidated balance sheet. ROU assets represent our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating and finance lease ROU assets also includes any lease payments made and excludes lease incentives. Our lease terms used to determine operating and finance lease ROU assets and liabilities may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. Lease expense for finance lease payments is recognized as amortization of ROU assets and related interest. Operating leases ROU assets are included in noncurrent assets and finance leases ROU assets are included in property and equipment; finance and lease liabilities are included in the current and long-term liabilities in the consolidated balance sheets.

Accounting for warrants - The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s common shares,

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whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance. Liability and equity-classified warrants are valued using a Black-Scholes option pricing model at issuance, and for liability-classified warrants, upon warrant exercise, and at each reporting period end date while the warrants are outstanding. Changes in fair value of liability-classified warrants are recorded in the consolidated statements of operations, and reflected as an adjustment to reconcile net loss to net cash used in operating activities in the consolidated statements of cash flows. See Note 8 (Fair Value Measurements) and Note 10 (Shareholders’ Equity) for additional information on the warrants.

Transactions with noncontrolling interests of subsidiaries - Lineage accounts for a change in ownership interests in its subsidiaries that does not result in a change of control of the subsidiary by Lineage under the provisions of ASC 810-10-45-23, Consolidation – Other Presentation Matters, which prescribes the accounting for changes in ownership interest that do not result in a change in control of the subsidiary, as defined by GAAP, before and after the transaction. Under this guidance, changes in a controlling shareholder’s ownership interest that do not result in a change of control, as defined by GAAP, in the subsidiary are accounted for as equity transactions. Thus, if the controlling shareholder retains control, no gain or loss is recognized in the statements of operations of the controlling shareholder. Similarly, the controlling shareholder will not record any additional acquisition adjustments to reflect its subsequent purchases of additional shares in the subsidiary if there is no change of control. Only a proportional and immediate transfer of carrying value between the controlling and the noncontrolling shareholders occurs based on the respective ownership percentages.

Foreign currency translation adjustments and other comprehensive income or loss- In countries in which Lineage operates where the functional currency is other than the U.S. dollar, assets and liabilities are translated using published exchange rates in effect at the consolidated balance sheet date. Revenues and expenses and cash flows are translated using an approximate weighted average exchange rate for the period. Resulting foreign currency translation adjustments are recorded as other comprehensive income or loss, net of tax, in the consolidated statements of comprehensive income or loss and included as a component of accumulated other comprehensive income or loss on the consolidated balance sheets. Foreign currency translation adjustments are primarily attributable to CCN and ESI, Lineage’s consolidated foreign subsidiaries. For the years ended December 31, 2025 and 2024, the total comprehensive loss includes foreign currency translation adjustment losses of $1.0 million and foreign currency translation adjustment gains of $0.2 million, respectively, net of tax. As of December 31, 2025 and 2024, we had cumulative translation adjustments of $3.9 million and $2.9 million, respectively, net of tax.

Foreign currency transaction gains and losses - For transactions denominated in other than the functional currency of Lineage or its subsidiaries, Lineage recognizes transaction gains and losses in the consolidated statements of operations and classifies the gain or loss based on the nature of the item that generated it. Lineage’s foreign currency transaction gains and losses are primarily generated by CCN’s and ESI’s intercompany debt owed to Lineage which is U.S. dollar-denominated, while the functional currency is the Israeli New Shekel (“ILS”) and the Singapore Dollar (“SGD”), respectively. At each balance sheet date, Lineage remeasures the intercompany debt using the current exchange rate at that date pursuant to ASC 830, Foreign Currency Matters.

Revenue recognition from royalties, license and other revenues - For agreements that include sales-based royalties, including commercial milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, Lineage recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Lineage estimates and recognizes royalty revenues based on all available information, including estimates provided by the customer or licensee from which Lineage obtains such estimates directly for each reporting period. Actual revenues ultimately received may differ from those estimates recorded and are adjusted in the period when information on actuals is available to Lineage. Other revenues are generated from service agreements and are recognized as revenue in the period earned.

Revenue Recognition from collaborative agreements - At contract inception, we review collaborative agreements to determine if the accounting treatment falls under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), or ASC Topic 808, Collaborative Arrangements (“ASC 808”). For agreements that may be within the scope of ASC 808, we may analogize to ASC 606 for some aspects of the agreements. If elements of the collaboration reflect a vendor-customer relationship, then those elements are within the scope ASC 606. The

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classification of transactions under our arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants.

The Company determines revenue recognition for agreements within the scope of Topic 606 in accordance with ASU 2014-09, Revenues from Contracts with Customers (Topic 606), and in a manner that depicts the transfer of control of a product or a service to a customer and reflects the amount of the consideration it is entitled to receive in exchange for such product or service. In doing so, Lineage follows a five-step approach: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the customer obtains control of the product or service. Lineage considers the terms of a contract and all relevant facts and circumstances when applying the revenue recognition standard. Lineage applies the revenue recognition standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances.

The terms of our collaborative agreements typically include one or more of the following: (i) upfront fees; (ii) milestone payments related to achievement of development or commercial milestones; (iii) royalties on net sales of licensed products; and (iv) reimbursement of cost-sharing of research and development (“R&D”) expenses. Each of these payments eventually result in collaboration revenues. When a portion of non-refundable upfront fees or other payments received are allocated to continuing performance obligations under the terms of a collaborative agreement, they are recorded as deferred revenue and recognized as collaboration revenue when (or as) the underlying performance obligation is satisfied.

To identify the performance obligations within the collaboration agreements, we first identify all the promises in the contract (i.e., explicit and implicit), which may include a customer option to acquire additional goods or services for free or at a discount. We exclude any immaterial promises from the assessment of identifying performance obligations. When an option is identified as providing a customer with a material right, the option is identified as a performance obligation. A portion of the transaction price is then allocated to the option and recognized when (or as) the future goods or services related to the option are provided, or when the option expires.

As part of the accounting treatment for these agreements, we must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation which determines how the transaction price is allocated among the performance obligations. The following items are estimated in the calculation of the stand-alone selling price: forecasted revenues and development costs, development timelines, discount rates and probabilities of technical and regulatory success. We evaluate each performance obligation to determine if they can be satisfied at a point in time or over time, and we measure the services delivered to our collaboration partners each reporting period, which is based on the progress of the related program; if necessary, we adjust the measure of performance and the related revenue recognition. Any such adjustments are recorded on a cumulative catch-up basis which would affect revenue and net income (loss) in the period of adjustment. In addition, variable considerations (e.g., milestone payments) must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

•

Upfront fees - If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize collaboration revenues from the transaction price allocated to the license when the license is transferred to the licensee, and the licensee is able to use and benefit from the license. When the license is determined to be non-distinct, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time, and, if over time, the appropriate method of measuring progress for purposes of recognizing collaboration revenue from the allocated transaction price. For example, when we receive upfront fees for the performance of research and development services, or when research and development services are not considered to be distinct from a license, we recognize collaboration revenue for those units of account over time using a measure of progress. We evaluate the measure of progress at each reporting period and, if necessary, adjust the measure of performance and related revenue as a change in estimate.

•

Milestone payments - At the inception of each collaboration agreement that includes milestone payments (variable consideration), we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our or the collaboration partner’s control,

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such as non-operational developmental and regulatory approvals, are generally not considered probable of being achieved until those approvals are received. At the end of each reporting period, we re-evaluate the probability of achievement of milestones that are within our or the collaboration partner’s control, such as operational developmental milestones and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and net income (loss) in the period of adjustment. Revisions to our estimate of the transaction price may also result in negative collaboration revenues and net income (loss) in the period of adjustment.

•

Royalties - For collaboration agreements that include sales-based royalties, including commercial milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

•

Reimbursement, cost-sharing payments - Under certain collaborative agreements, we will receive reimbursement for a portion of our R&D expenses. Such reimbursements are reviewed for gross versus net reporting considerations and reflected either as a reduction of R&D expense or as reimbursement revenue in our consolidated statements of operations.

Research and development expenses - Research and development expenses consist of costs incurred for company-sponsored, collaborative and contracted research and development activities. These costs include direct expenses and indirect research-related overhead expenses including compensation and related benefits, stock-based compensation, consulting fees, research and laboratory fees, rent of research facilities, amortization of intangible assets, and license fees paid to third parties to acquire patents or licenses to use patents and other technology. Research and development costs with no future benefit or alternative use will be expensed as incurred. Research and development expenses incurred and reimbursed by grants from third parties approximate the grant income recognized in the consolidated statements of operations. Royalties and sublicensing fees are recorded as research and development expenses, unless these costs are associated with royalties from product sales, which we classify as cost of sales in our consolidated statements of operations. We expect our total research and development expenses to fluctuate each reporting period based on several factors including (i) the stage of development for each cell therapy program, (ii) the availability of resources to work on each program, and (iii) the timing of contractual obligations.

General and administrative expenses - General and administrative expenses consist of employee and director compensation and related benefits, including stock-based compensation, for executive and corporate personnel, professional and consulting fees, and allocated overhead such as facilities rent and equipment rent and maintenance, insurance costs allocated to general and administrative expenses, costs of patent applications, prosecution and maintenance, stock exchange-related costs, depreciation expense, marketing costs, legal and accounting costs, and other miscellaneous expenses.

Stock-based compensation - Lineage follows accounting standards governing share-based payments in accordance with ASC 718, Compensation – Stock Compensation, which require the measurement and recognition of compensation expense for all share-based payment awards made to directors and employees based on estimated fair values.

The Company recognizes share-based compensation for equity awards granted to employees, non-employee director and consultants as an expense on the consolidated statements of operations. Share-based compensation is recognized over the requisite service period of the individual awards using the straight-line attribution method, which generally equals the vesting period. Employees stock options primarily have a ten-year life and generally vest 25% on the first anniversary of the grant and in 1/36th equal installments on each monthly anniversary thereafter, such that options are fully vested on the four-year anniversary of the date of grant. The exercisability and vesting periods of options granted to directors and consultants vary. Restricted stock units subject to time-based vesting generally vest in four equal annual installments beginning on the first anniversary of the grant date. Restricted stock units subject to performance-based vesting will vest in connection with the achievement of certain development milestones (see Note 11 (Stock-Based Awards) for additional details).

For employee, non-employee director and consultant stock options, we utilize the Black-Scholes option pricing model for valuing share-based payment awards. Lineage’s determination of fair value of share-based payment awards

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on the date of grant using that option-pricing model is affected by the price of Lineage’s common shares as well as by assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to: (i) the expected stock price volatility over the term of the awards, based upon our historical volatility; (ii) the expected term of options granted, which is derived using the simplified method, which is an average of the contractual term of the option and its vesting period, as we do not have sufficient historical exercise data upon which to estimate the expected term; and (iii) the risk-free rate, which is based on the U.S. Treasury yield in effect at the time of grant for U.S. Treasury notes with maturities similar to the expected term of the awards. Stock option forfeitures are accounted for as they occur.

For restricted stock units (“RSUs”) subject to service and/or performance vesting conditions, the grant-date fair value is established based on the closing price of Lineage’s common shares on the grant date. Stock-based compensation expense for RSUs subject to only service conditions is recognized on a straight-line basis over the service period. Stock-based compensation expense for RSUs with both service and performance conditions is recognized on a graded basis only if it is probable that the performance condition will be achieved. Lineage accounts for forfeitures of RSUs as they occur in determining stock-based compensation expense.

Although the fair value of employee stock options and RSUs are determined in accordance with FASB guidance, changes in the assumptions can materially affect the estimated value and therefore the amount of compensation expense recognized in the consolidated financial statements.

Income taxes- Lineage accounts for income taxes in accordance with ASC Topic 740, Income Taxes ("ASC 740"), which prescribe the use of the asset and liability method, whereby deferred tax asset or liability account balances are calculated at the balance sheet date using current tax laws and rates in effect. Valuation allowances are established when necessary to reduce deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will not be realized. ASC 740 guidance also prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more-likely-than-not sustainable upon examination by taxing authorities. Lineage files a U.S. federal income tax return as well as California and foreign income tax returns. Lineage’s judgments regarding future taxable income may change over time due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If Lineage assumptions, and consequently the estimates, change in the future with respect to Lineage’s own deferred tax assets and liabilities, the valuation allowance may be increased or decreased, which may have a material impact on Lineage’s consolidated financial statements. During the year ended December 31, 2025, the Company released the valuation allowance related to its Israel subsidiary; a valuation allowance continues to be maintained against the Company’s remaining deferred tax assets. Lineage recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense; however, no amounts were accrued for the payment of interest and penalties as of December 31, 2025 and 2024. We provided a reserve against our federal and California research and development credits generated. The carryforward amounts for these credits have been reported net of these reserves. Accordingly, no accrued interest and penalties related to unrecognized tax benefits have been recorded as of December 31, 2025 and 2024.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted in the United States. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740 requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. OBBBA contained U.S. corporate tax provisions under which the Company elected to expense U.S. incurred research or experimental expenditures immediately. The enactment of OBBBA did not have a material impact on the financial statements for the year ended December 31, 2025.

Basic and diluted net income (loss) per share attributable to common shareholders - Basic earnings per share is calculated by dividing net income or loss attributable to Lineage common shareholders by the weighted average number of common shares outstanding, net of stock options and RSUs, subject to repurchase by Lineage, if any, during the period. Diluted earnings per share is calculated by dividing the net income or loss attributable to Lineage common shareholders by the weighted average number of common shares outstanding, adjusted for the effects of potentially dilutive common shares issuable under outstanding stock options, restricted stock awards and warrants, using the

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treasury-stock method, convertible preferred stock, if any, using the if-converted method, and treasury stock held by subsidiaries, if any.

For the years ended December 31, 2025 and 2024, respectively, Lineage reported a net loss attributable to common shareholders, and therefore, all potentially dilutive common shares were considered antidilutive for those periods.

The following common share equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive (in thousands):

Year Ended December 31,

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and its adoption did not have a significant impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The new standard requires a company to expand its existing income tax disclosures, specifically related to the rate reconciliation and income taxes paid. The standard is effective for us beginning in fiscal year 2025. We adopted ASU 2023-09 prospectively for the year ended December 31, 2025 and applied the new disclosure requirements and its adoption did not have a significant impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). The purpose of ASU 2024-03 is to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development) ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently assessing the impact that this new guidance will have on our consolidated financial statements.

3. Revenue

Our revenue is primarily generated from our collaborative research and development agreements as well as royalty and other service agreement revenues.

Collaboration revenues

The following paragraphs provide information regarding the accounting treatment of the Company’s most significant collaborative agreements, which are all within the scope of ASU 2014-09 – Revenue from Contracts with Customers (Topic 606).

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For our collaboration agreements where revenue is recognized over time, an input method of costs incurred over total estimated costs to be incurred is used to measure progress toward completion of the performance obligation and to calculate the corresponding revenue to recognize each period. During each reporting period, we update our total estimated collaboration costs, and any resulting adjustments are recorded on a cumulative basis, which would affect revenue and deferred revenue (the latter, if applicable) in the period of adjustment. For our collaboration agreements where revenue is recognized over time, we believe the input methodology represents the most appropriate measure of progress towards satisfaction of the identified performance obligation.

Roche Agreement - From the inception of the December 2021 Roche Agreement through the quarter ending September 30, 2025 the total transaction price was equal to the $50.0 million upfront payment received and was allocated among two performance obligations. The license, technology transfer and related clinical deliverables were determined to be highly interdependent and interrelated and were combined as the first performance obligation. Delivery related to the first performance obligation is determined to be over time using the input methodology which we believe represents the most appropriate measure of progress towards satisfaction of the identified performance obligation. A material customer option for additional goods and services was included in this initial total transaction price, of which $12.0 million was allocated to a second performance obligation. This customer option will be recognized as revenue, as appropriate, when the customer exercises the option or when this option expires. Regulatory and development milestones within the agreement are variable considerations that are fully constrained until the uncertainty of each milestone has been resolved. Sales-based milestones and royalties are variable considerations that will not be included in the transaction price until the related commercialization milestones and sales targets have occurred.

In the fourth quarter of 2025, the achievement of the first milestone under the agreement in the amount of $5.0 million resulted in a corresponding increase in the transaction price for the first performance obligation. Revenue recognized during 2025 from performance obligations satisfied in prior periods was $3.9 million, driven by the $5.0 million change in the transaction price. There were no further changes to the transaction price in the current year. See Note 13 (Commitments and Contingencies) for additional information.

WDI Agreement - In August 2025, the Company entered into a multi-year, multi-phase research collaboration agreement (the RCA) with WDI. During the RCA period, the parties will perform preclinical development activities to support a potential IND and/or clinical trial application (CTA) filing related to the Company’s ReSonance (ANP1) program, for the treatment of hearing loss. The preclinical research activities assigned to Lineage were determined to be highly interdependent and interrelated and have been combined as one performance obligation. Delivery is determined to be overtime and revenue will be recognized utilizing an input method of costs incurred over total estimated costs to complete the performance obligation. We believe the input methodology represents the most appropriate measure of progress towards satisfaction of the identified performance obligation.

The initial transaction price for the RCA of $3.6 million includes a non-refundable upfront payment and variable consideration attributed to cost reimbursement for Lineage’s costs incurred during the first phase of the research program. Based on the billing and payment terms of the arrangement, the Company’s actual costs will be known each period and therefore the variable consideration will be recognized as revenue as these costs are incurred as there is no estimation uncertainty at such time. Additional variable consideration related to the second and third phase of the research program are excluded from the initial transaction price until the uncertainty of progressing into these phases is resolved. As of December 31, 2025, the Company recognized $2.5 million from partial satisfaction of its first phase of the single performance obligation. See Note 13 (Commitments and Contingencies) for additional information.

Royalties, license and other revenues

Revenues from royalties, licenses and service agreements are recognized as revenue in the period earned and are generated from royalty and service agreements. Costs related to royalties are included within costs of royalties and costs from service agreements are included within research and development expenses in our consolidated statements of operations.

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Our disaggregated revenues were as follows for the periods presented (in thousands):

Year Ended December 31,

Revenues under collaborative agreements

Event-based milestones and other collaborative revenue (2) 7,164 —

Total revenues under collaborative agreements 13,609 8,149

Royalties, license and other revenues (3) 947 1,350

(1)

All of the upfront license fee revenue recognized each period was included within deferred revenue as contract liabilities at the beginning of each period. Effective June 30, 2025, Lineage notified ITI of the termination of the ITI Agreement in accordance with its terms, which resulted in approximately $0.7 million in revenues recognized out of the remaining deferred revenues from this customer. See Note 13 (Commitments and contingencies) for additional information.

(2)

None of the event-based milestones and other collaborative revenue recognized in 2025 was included within deferred revenues as contract liabilities as of the beginning of the period.

(3)

Of the royalties, license and other revenues recognized each period, $45,000 and $30,000 was included within deferred revenues as contract liabilities as of January 1, 2025 and 2024, respectively.

For contracts with customers, including collaboration partners which are within the scope of ASU 2014-09 – Revenue from Contracts with Customers (Topic 606), the aggregate amount of the transaction price allocated to remaining performance obligations as of December 31, 2025 was $18.4 million, of which $15.7 million is reported as deferred revenues. The $18.4 million is estimated to be substantially recognized as revenue by December 2027.

For the year ended December 31, 2025 based on the location of our customers, $2.5 million of our revenues were attributed to countries outside of the United States. For the year ended December 31, 2024, there were no revenues generated outside of the United States.

Accounts receivable and deferred revenues (contract liabilities) from contracts with customers, including collaboration partners, consisted of the following (in thousands):

Accounts receivable - beginning of the year $ 638 $ 676

Accounts receivable - end of the period $ 891 $ 638

Contract liabilities

Deferred revenues - beginning of the year $ 21,821 $ 29,501

Deferred revenues - end of the period $ 15,710 $ 21,821

Contract assets, which consist of revenue recognized and performance obligations satisfied or partially satisfied in advance of customer billing were $671,000 and zero as of December 31, 2025 and 2024, respectively, and was included within prepaid expenses and other current assets on the consolidated balance sheet. There were no contract assets at the beginning of the twelve months ending December 31, 2025 or 2024.

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4. Marketable Securities

The following table summarizes the fair value of marketable securities held by the Company and their location in the Company’s consolidated balance sheet (in thousands):

Marketable debt securities

Included within cash and cash equivalents $ 10,282 $ 17,432

Included within marketable securities $ 14,973 $ 1,992

Marketable equity securities

Included within marketable securities $ 17 $ 24

Marketable Debt Securities

The following tables summarize the available-for-sale debt securities classified within cash and cash equivalents and within marketable securities in the Company’s consolidated balance sheet (in thousands):

Financial Assets: Amortized Cost Unrealized Gains Unrealized Losses Fair Value

Financial Assets: Amortized Cost Unrealized Gains Unrealized Losses Fair Value

The Company has not recognized an allowance for credit losses on any securities in an unrealized loss position as of December 31, 2025 and 2024. The Company believes that any individual unrealized losses represent temporary declines resulting from changes in interest rates, and do not reflect a deterioration of the credit quality of the issuer. The Company does not intend to sell these securities before their maturity, and does not anticipate that these securities will be required to be sold before recovery. The costs basis of the available-for-sale debt securities upon sale or maturity is determined using the specific identification method.

As of December 31, 2025, the amortized cost and estimated fair value of the Company’s available-for-sale debt securities by contractual maturity are shown below (in thousands):

Available-for-sale debt securities maturing: Amortized Cost Estimated Fair Value

Total available-for-sale debt securities $ 25,248 $ 25,255

Marketable Equity Securities

Marketable equity securities with readily determinable fair values are reported at fair value with unrealized gains and losses related to mark-to-market adjustments included in income. Lineage’s marketable equity securities are classified as trading securities and for the periods reported have consisted of shares of common stock of OCX and HBL. The value of marketable equity securities is based on the closing price of OCX and HBL common stock on the last trading day of the applicable quarter.

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The following table represents the realized and unrealized loss on marketable equity securities for the periods presented (in thousands):

Year Ended December 31,

Loss on marketable equity securities, net $ (8 ) $ (8 )

Less: Loss recognized in earnings on marketable equity securities sold — 4

5. Property and Equipment, Net

At December 31, 2025 and 2024, property and equipment, net was comprised of the following (in thousands):

Equipment, furniture and fixtures $ 5,280 $ 4,131

Right-of-use assets - finance lease 221 204

Accumulated depreciation and amortization (5,684 ) (4,384 )

Property and equipment, net $ 2,566 $ 2,251

Depreciation and amortization expense was $699,000 and $587,000 for the years ended December 31, 2025 and 2024, respectively. These amounts include amortization expense for right-of-use finance lease assets of $59,000 and $55,000 for the years ended December 31, 2025 and 2024, respectively.

Geographic Area Information

The composition of Lineage’s long-lived tangible assets, consisting of plant and equipment, net, and operating lease right-of-use assets between those in the United States and in foreign countries, as of December 31, 2025 and 2024, is set forth below (in thousands):

Property and equipment, net Operating lease right-of-use assets

(1)

Assets in foreign countries are principally located at CCN in Israel.

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6. Goodwill and Intangible Assets, Net

At December 31, 2025 and December 31, 2024, goodwill and intangible assets, net consisted of the following (in thousands):

Intangible assets:

Acquired IPR&D – OPC1 (from the Asterias Merger) (2) $ 31,700 $ 31,700

Acquired IPR&D – VAC (from the Asterias Merger) (2) — 14,840

Intangible assets subject to amortization:

Acquired royalty contracts (3) 650 650

— —

(1)

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and liabilities assumed in connection with our acquisition of Asterias Biotherapeutics, Inc. (“Asterias”) in March 2019 (the “Asterias Merger”). The Company conducted a qualitative goodwill assessment for the second quarter of 2025 and took into consideration the impairment of the VAC indefinite-lived intangible asset. After assessing the totality of relevant events and circumstances, there was no impairment to the goodwill carrying value as of June 30, 2025, and through December 31, 2025, the Company has not recognized any goodwill impairment.

(2)

Asterias had two IPR&D intangible assets that were valued at $46.5 million as part of the purchase price allocation that was performed in connection with the Asterias Merger. The fair value of these assets at the acquisition date consisted of $31.7 million pertaining to the OPC1 program and $14.8 million pertaining to the VAC platform. As of June 30, 2025, the VAC platform was deemed to be abandoned. As the Company has abandoned the VAC platform and its related research and development efforts, and the IPR&D asset has no alternative future use, the Company derecognized the intangible asset and recorded a non-cash pre-tax impairment charge during the quarter ending June 30, 2025 of $14.8 million, within total operating expenses of the consolidated statement of operations. See Note 13 (Commitments and Contingencies) for additional information.

(3)

Asterias had royalty cash flows under patent families it acquired from Geron Corporation. Such patent families are expected to continue to generate revenue, are not used in the other acquired IPR&D intangible assets, and are considered to be separate intangible assets under ASC Topic 805, Business Combinations.

(4)

Lineage recognized $22,000 in amortization expense of intangible assets during the three months ended March 31, 2024 and did not recognize any amortization expense in subsequent periods as the acquired patents and acquired royalty contracts were fully amortized as of March 31, 2024.

7. Accounts Payable and Accrued Liabilities

At December 31, 2025 and 2024, accounts payable and accrued liabilities consist of the following (in thousands):

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8. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value in accordance with (ASC 820-10-50), Fair Value Measurements and Disclosures:

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Level 1 – Inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

•

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 – Inputs to the valuation methodology that are unobservable. Unobservable inputs are those in which little or no market data exists and are therefore determined using estimates and assumptions developed by the Company, which reflect those that a market participant would use,.

We have not transferred any instruments between the three levels of the fair value hierarchy.

The carrying value of cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their respective fair values due to their relative short maturities. We measure our cash equivalents, marketable securities and our liability classified warrants at fair value on a recurring basis. The fair values of such assets and liabilities were as follows as of December 31, 2025 and 2024 (in thousands):

Fair Value Measurements Using

Assets:

Marketable equity securities (2) 17 17 — —

Total assets measured at fair value $ 45,965 $ 45,965 $ — $ —

Liabilities:

Total liabilities measured at fair value $ 43,906 $ — $ — $ 43,906

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Fair Value Measurements Using

Assets:

Marketable debt securities 1,992 1,992 — —

Marketable equity securities (2) 24 24 — —

Total assets measured at fair value $ 41,018 $ 41,018 $ — $ —

Liabilities:

Warrant liabilities (3) $ 6,161 $ — $ — $ 6,161

Total liabilities measured at fair value $ 6,161 $ — $ — $ 6,161

(1)

Included in cash and cash equivalents in the accompanying consolidated balance sheet. Marketable debt securities purchased with an original maturity of three months or less have been classified as cash equivalents.

(2)

Lineage’s marketable equity securities include the shares of stock of HBL which has a readily determinable fair value quoted on the TASE (Level 1). These securities are measured at fair value and reported as current assets on the accompanying consolidated balance sheet based on the closing trading price of the security as of the date being presented.

(3)

Liability-classified warrants are valued at issuance, upon warrant exercise, and at each reporting period end date while the warrants are outstanding using a Black-Scholes option pricing model that maximizes the use of observable inputs and minimizes the use of unobservable inputs to the extent possible. Changes in the fair value of liability-classified warrants are recorded in the consolidated statements of operations, and reflected as an adjustment to reconcile net loss to net cash used in operating activities in the consolidated statements of cash flows. A significant increase or decrease in these Level 3 inputs could result in a significantly higher or lower fair value measurement. See Note 10 (Shareholders’ Equity) for additional information on the warrants.

The following table sets forth a summary of changes to Level 3 fair value measurements (in thousands):

Balance - beginning of the year $ 6,161 $ —

Level 3 inputs - Significant assumptions used in valuing the warrant liabilities were as follows:

Expected dividend yield — —

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The expected stock price volatility assumption is determined using historical volatility of the Company’s common stock. The risk-free interest rate assumption is based on the U.S. Treasury yield curve whose term is consistent with the expected term of the stock options. The expected dividend yield is 0% as the Company has not paid and does not anticipate paying dividends on its common stock. The expected term represents the period from the date of warrant issuance to May 21, 2028. At each reporting period end date, the expected term is reduced to reflect the remaining term of the warrants. Because the term of the warrants will expire earlier than May 21, 2028 upon the occurrence of a future event and subject to specified conditions being satisfied, the expected term could be shortened in subsequent periods. See Note 10 (Shareholders’ Equity) for additional information regarding the warrants.

9. Related Party Transactions

In the February 2024 RDO (as such term is defined in Note 10 (Shareholders’ Equity)), we sold 6,730,770 common shares to Broadwood Partners, L.P. (“Broadwood Partners”), an affiliate of Neal Bradsher, a member of our board of directors, and 96,155 common shares to Don Bailey, a member of our board of directors at the time of the February 2024 RDO. See Note 10 (Shareholders’ Equity) for additional information regarding such offering.

In January 2025, we sold 7,894,737 common shares and an accompanying warrant to purchase up to 7,894,737 common shares to Broadwood Partners in the November 2024 RDO (as such term is defined in Note 10 (Shareholders’ Equity)). See Note 10 (Shareholders’ Equity) for additional information regarding such offering.

10. Shareholders’ Equity

Preferred Shares

Lineage is authorized to issue 2,000,000 preferred shares. The preferred shares may be issued in one or more series as the Lineage board of directors may determine by resolution. The Lineage board of directors is authorized to fix the number of shares of any series of preferred shares and to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed on the preferred shares as a class, or upon any wholly unissued series of any preferred shares. The Lineage board of directors may, by resolution, increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series of preferred shares subsequent to the issue of shares of that series. There were no preferred shares issued or outstanding as of either December 31, 2025 or December 31, 2024.

Common Shares

Lineage is authorized to issue 450,000,000 common shares. As of December 31, 2025 and 2024, there were 243,121,801 and 220,416,326 common shares issued and outstanding, respectively.

At-The-Market Offering Program

In March 2024, Lineage entered into a sales agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc., as sales agent (“Sales Agent”), under which Lineage may offer and sell its common shares from time to time through an ATM program.

In March 2024, Lineage filed a prospectus supplement with the SEC in connection with the offer and sale of $40.00 million of common shares through the ATM program under the ATM Sales Agreement which was updated, amended and supplemented by a prospectus supplement filed with the SEC on May 14, 2024 in connection with the offer and sale of $39.97 million of common shares through the ATM program under the ATM Sales Agreement (the prospectus supplement filed in March 2024, as updated, amended and supplemented by the prospectus supplement filed in May 2024, the “2024 Prospectus Supplement”).

During the year ended December 31, 2025, 13.1 million common shares were sold under the ATM program at a weighted average price per share of $1.72 for gross proceeds of $22.6 million. During the year ended December 31,

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2024, 56,000 common shares were sold under the ATM program at a weighted average price per share of $1.26 for gross proceeds of $70,000.

The shares offered under the 2024 Prospectus Supplement are registered pursuant to Lineage’s effective shelf registration statement on Form S-3 (File No. 333-277758), which was filed with the SEC on March 7, 2024 and declared effective on May 14, 2024.

Lineage agreed to pay Sales Agent a commission of up to 3.0% of the aggregate gross proceeds from the sale of shares under the ATM Sales Agreement, reimburse its legal fees and disbursements, and provide Sales Agent with customary indemnification and contribution rights. The Sales Agreement may be terminated by Sales Agent or Lineage at any time upon notice to the other party, or by Sales Agent at any time in certain circumstances, including the occurrence of a material and adverse change in Lineage’s business or financial condition that makes it impractical or inadvisable to market the shares or to enforce contracts for the sale of the shares.

Additionally, as part of the 12.0 million shares issued under the ATM program in November 2025 for gross proceeds of $21.0 million, Lineage paid H.C. Wainwright & Co., LLC (“Wainwright”), a 6% placement agent fee.

February 2024 Registered Direct Offering

In February 2024, Lineage entered into a stock purchase agreement with certain investors relating to the purchase and sale in a registered direct offering of an aggregate of 13,461,540 of its common shares (the “February 2024 RDO”). The offering price was $1.04 per common share resulting in gross proceeds of $14.0 million. Finance related fees for this offering totaled approximately $0.1 million. See Note 9 (Related Party Transactions) for shares issued in this offering to a related party.

November 2024 Registered Direct Offering

On November 19, 2024, we entered into securities purchase agreements with unaffiliated healthcare focused institutional investors and with Broadwood Partners relating to the purchase and sale in a registered direct offering of an aggregate of up to 39,473,688 of our common shares and accompanying warrants to purchase an aggregate of up to 39,473,688 of our common shares at a combined purchase price of $0.76 per common share and accompanying warrant (the “November 2024 RDO”).

On November 21, 2024, we closed the first tranche of the offering and in connection therewith we issued to the unaffiliated healthcare focused institutional investors an aggregate of 31,578,951 common shares and accompanying warrants to purchase an aggregate of up to 31,578,951 of our common shares. The warrants have an exercise price of $0.91 per common share, have been exercisable since May 21, 2025 and will expire on the earlier of (a) May 21, 2028, and (b) the 90th day following the date of the public disclosure of the intent to advance OpRegen® (also known as RG6501) into a multi-center phase 2 or 3 clinical trial which includes a control or comparator arm, subject to extension if certain conditions, including equity conditions, some of which are outside of our control, are not satisfied. The warrants also provide for cashless exercise in certain circumstances, including if the shares issuable upon exercise thereof are not covered by an effective registration statement. The aggregate gross proceeds from this closing was $24 million, with $2.3 million for related issuance costs. The warrants issued at this closing had a fair value of approximately $7.9 million at issuance and are classified as warrant liabilities in the Company’s consolidated financial statements. See Note 8 (Fair Value Measurements) for additional information.

The offering of the securities to Broadwood Partners in the November 2024 RDO was subject to obtaining shareholder approval to satisfy applicable NYSE American rules, which was obtained at our special meeting of shareholders on January 27, 2025. Following such meeting, we closed the second tranche of the offering and in connection therewith we issued to Broadwood Partners 7,894,737 common shares and an accompanying warrant to purchase up to 7,894,737 common shares. The terms of such warrant are substantially the same as those described above. The aggregate gross proceeds from this closing was $6.0 million, with approximately $0.6 million for related issuance costs. The warrant issued to Broadwood Partners at this closing had a fair value of approximately $2.1 million at issuance and is classified as a warrant liability in the Company’s consolidated financial statements. See Note 8 (Fair Value Measurements) and Note 9 (Related Party Transactions) for additional information.

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We entered into an engagement letter with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which Wainwright agreed to serve as our exclusive placement agent, on a reasonable best efforts basis, in connection with the November 2024 RDO. Pursuant to the engagement letter, we paid Wainwright a cash fee equal to 7.0% and a management fee equal to 1.0%, in each case, of the aggregate gross proceeds we received at each closing. In addition, at each closing, we issued to Wainwright (or its designees) warrants to purchase our common shares with terms that are substantially similar to those described above except that the warrants issued to Wainwright (or its designees) have an exercise price of $0.95 per share. In the aggregate we issued to Wainwright (or its designees) warrants to purchase up to 1,973,684 of our common shares. The warrants issued to Wainwright (or its designees) in connection with the first and second closings had a fair value of approximately $0.4 million and $0.1 million, respectively, at issuance and are classified as warrant liabilities in the Company’s consolidated financial statements. See Note 8 (Fair Value Measurements) for additional information.

Summary of Common Stock Warrant Activity and Outstanding

The following roll-forward presents the Company’s common stock warrants outstanding as of December 31, 2025 and 2024 (in thousands, except per share amounts):

Balance at December 31, 2023 — —

Warrants exercised (350 ) $ 0.91

Warrants expired/forfeited/cancelled — —

See Note 8 (Fair Value Measurements) for additional information on the warrants. See Note 15 (Subsequent Events) for information regarding warrants exercised in March 2026.

11. Stock-Based Awards

Equity Incentive Plan Awards

In September 2021, our shareholders approved the Lineage Cell Therapeutics, Inc. 2021 Equity Incentive Plan, and our shareholders approved amendments to increase the number of common shares that may be issued thereunder by 19,500,000in September 2023 and by an additional 19,500,000 in June 2025 (as amended to date, the “2021 Plan”). The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSUs, and other stock awards. Generally, all of our employees (including those of our affiliates), non-employee directors and consultants are eligible to participate in the 2021 Plan.

Subject to adjustment for certain changes in our capitalization, the aggregate number of our common shares that may be issued under the 2021 Plan will not exceed the sum of (i) 54,500,000 shares and (ii) the number of shares subject to awards granted under the Lineage Cell Therapeutics Inc. 2012 Equity Incentive Plan (the “2012 Plan”) that were outstanding when the 2021 Plan initially became effective in 2021 and are not issued because such awards expire or otherwise terminate. As a result of the approval of the 2021 Plan by our shareholders in 2021, no additional awards will be granted under the 2012 Plan. As of December 31, 2025, there were 35,837,519 shares available for grant under the 2021 Plan.

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A summary of activity under the 2021 Plan is as follows (in thousands, except per share amounts):

Options exercised (479 ) $ 1.20

Options expired/forfeited/cancelled (860 ) $ 0.81

A summary of activity of the 2012 Plan, and the 2018 inducement option (which was issued to a Lineage executive outside of all equity plans), is as follows (in thousands, except per share amounts):

Options exercised (786 ) $ 0.86

Options expired/forfeited/cancelled (1,311 ) $ 2.33

Stock-based Compensation Expense

The fair value of each option award is estimated on the date of grant using a Black-Scholes option pricing model applying the weighted-average assumptions noted in the following table:

Year Ended December 31,

Expected life (in years) 6.21 6.11

Risk-free interest rates 4.0 % 4.2 %

Dividend yield — —

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Operating expenses include stock-based compensation expense as follows (in thousands):

Year Ended December 31,

Research and development $ 676 $ 646

Total stock-based compensation expense $ 4,752 $ 5,077

As of December 31, 2025, total unrecognized compensation costs related to unvested stock options and unvested RSUs under all equity plans, were $6.2 million, which is expected to be recognized as expense over a weighted average period of approximately 2.4 years for stock options and 0.5 years for RSUs. For the years ended December 31, 2025 and 2024, the weighted average grant-date fair value per share for options granted during the year under the 2021 Plan was $0.40 and $0.77, respectively. No RSUs were granted in the year ended December 31, 2025 or 2024. The total intrinsic value of options exercised during the years ended December 31, 2025 and 2024 was $800,000 and $135,000, respectively. The fair value of the options vested during the years ended December 31, 2025 and 2024 was $5,270,000 and $4,853,000, respectively.

12. Income Taxes

The domestic and foreign breakout of loss before income taxes was as follows (in thousands):

Year Ended December 31,

Income taxes paid, net of refunds received, were $0 for the years ended December 31, 2025 and 2024, as the Company did not make any federal, state, or foreign income tax payments during the periods.

The provision (benefit) for income taxes consists of the following (in thousands):

Year Ended December 31,

U.S. federal $ (251 ) $ —

U.S. state — —

Total provision (benefit) for income taxes (1) $ (5,280 ) $ —

(1)

There was no current or deferred income tax expense (benefit) for the year ended December 31, 2024. There was no current tax expense (benefit) for the year ended December 31, 2025. As a result, the income tax benefit for the year ended December 31, 2025 consists entirely of deferred tax adjustments.

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During the year ended December 31, 2025, we adopted ASU 2023-09 to enhance the income tax disclosures regarding income taxes paid and the rate reconciliation disclosure. For the year ended December 31, 2025, the income tax provision (benefit) related to continuing operations differs from the amounts computed by applying the statutory income tax rate of 21% to pretax loss as follows (in thousands):

U.S. federal statutory tax benefit and rate $ (14,297 ) 21.00 %

State income taxes, net of federal effect (1) (37 ) 0.05 %

Change in valuation allowance 6,608 (9.71 )%

Nontaxable or nondeductible items;

Fair market value adjustment on warrants liabilities 7,503 (11.02 )%

Other nontaxable or nondeductible items 185 (0.27 )%

Changes in tax laws or rates — — %

Cross-border tax laws 374 (0.55 )%

Worldwide changes in unrecognized tax benefits 154 (0.23 )%

Foreign tax effects;

Israel;

Increase (decrease) valuation allowance (5,847 ) 8.59 %

Other foreign jurisdictions (38 ) 0.06 %

Total income tax benefit and rate $ (5,280 ) 7.74 %

(1)

California comprised all of the tax effect in this category for 2025.

A reconciliation between the statutory federal income tax expense and the Company’s effective income tax expense for the year prior to the adoption of ASU 2023-09 is as follows:

Year Ended

Computed tax benefit at federal statutory rate 21 %

Research and development and other credits 2 %

Permanent differences 1 %

Change in valuation allowance (34 )%

State tax benefit 10 %

GILTI inclusion — %

Income tax benefit (expense) (0 )%

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Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities for federal and state income taxes at December 31, 2025 and 2024 are as follows (in thousands):

Deferred tax assets:

Research and development and other credits 9,922 9,433

Deferred revenue 4,225 —

Reserves and accruals 716 —

Operating lease liability 267 233

Section 481(a) - intangible amortization 8,061 —

Deferred tax assets, net of valuation allowance 20,105 7,114

Deferred tax liabilities: